Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

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.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of June 30, ~~2016, 46,369,391~~2017, 46,565,213 shares of Life Storage, Inc.’s Common Stock, $.01 par value per share, were outstanding, and the aggregate market value of the Common Stock held by non-affiliates of Life Storage, Inc. was approximately ~~$4,779,975,682~~$3,450,482,283 (based on the closing price of the Common Stock on the New York Stock Exchange on June 30, ~~2016)~~2017). As of February ~~13, 2017, 46,487,121~~12, 2018, 46,515,831 shares of Common Stock, $.01 par value per share, were outstanding.

As of June 30, ~~2016,~~2017, the aggregate market value of the ~~196,008~~217,481 units of limited partnership (the “OP Units”) held by non-affiliates of Life Storage LP was ~~$20,565,159~~$16,115,342 (based on the closing price of the Common Stock of Life Storage, Inc.~~, the sole general partner of Life Storage LP,~~ on the New York Stock Exchange on June 30, ~~2016)~~2017). (For this calculation, the market value of all OP Units beneficially owned by Life Storage, Inc. has been excluded.)

Portions of the registrant’s Proxy Statement for the ~~2017~~2018 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrants’ fiscal year ended December 31, ~~2016.~~2017.

This report combines the annual reports on Form 10-K for the year ended December 31, ~~2016~~2017 of Life ~~Storage, Inc., formerly known as Sovran Self~~ Storage, Inc. (the “Parent Company”) and Life Storage LP ~~formerly known as Sovran Acquisition Limited Partnership~~ (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. Effective August 15, 2016, the Parent Company changed its name from “Sovran Self Storage, Inc.” to “Life Storage, Inc.” and the Operating Partnership changed its name from “Sovran Acquisition Limited Partnership” to “Life Storage LP”. 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 99.5% ownership interest therein as of December 31, ~~2016.~~2017. 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 consolidated statements of shareholders’ equity (or partners’ capital). 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 annual reports on Form 10-K of the Parent Company and the Operating Partnership into a single report will:

facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and

create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

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 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 9A - 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.

TABLE OF CONTENTS


Part I			5
Item 1. Business			5
Item 1A. Risk Factors			12 10
Item 1B. Unresolved Staff Comments			19 15
Item 2. Properties			20 16
Item 3. Legal Proceedings			21 17
Item 4. Mine Safety Disclosures			21 17

Part II			18
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			22 18
Item 6. Selected Financial Data			24 20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27 23
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			42 33
Item 8. Financial Statements and Supplementary Data			43 33
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			81 66
Item 9A. Controls and Procedures			81 66
Item 9B. Other Information			85 70

Part III			70
Item 10. Directors, Executive Officers and Corporate Governance			85 70
Item 11. Executive Compensation			85 70
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			85 70
Item 13. Certain Relationships and Related Transactions, and Director Independence			85 70
Item 14. Principal Accountant Fees and Services			85 70

Part IV			71
Item 15. Exhibits, Financial Statement Schedules			85 71
Item 16. Form 10-K Summary			91 76

SIGNATURES			92 77

~~EX-10.1~~
~~EX-10.5~~EX-3.1
~~EX-10.8~~EX-10.19
~~EX-10.11~~EX-10.24
EX-10.25
EX-10.27
EX-12.1
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-31.3
EX-31.4
EX-32.1
EX-32.2
EX-101

Part I

When used in this discussion and elsewhere in this document, the words “intends,” “believes,” “expects,” “anticipates,” and similar expressions are intended to identify “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the effect of competition from new self-storage facilities, which would cause rents and occupancy rates to decline; the Company’s ability to evaluate, finance and integrate acquired businesses into the Company’s existing business and operations; the Company’s ability to effectively compete in the industry in which it does business; the Company’s existing indebtedness may mature in an unfavorable credit environment, preventing refinancing or forcing refinancing of the indebtedness on terms that are not as favorable as the existing terms; interest rates may fluctuate, impacting costs associated with the Company’s outstanding floating rate debt; the Company’s ability to comply with debt covenants; any future ratings on the Company’s debt instruments; regional concentration of the Company’s business may subject it to economic downturns in the states of Florida and Texas; the Company’s reliance on its call center; the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and tax law changes that may change the taxability of future income.

Item 1.

Business

Effective August 15, 2016, the Parent Company changed its name from “Sovran Self Storage, Inc.” to “Life Storage, Inc.” and the Operating Partnership changed its name from “Sovran Acquisition Limited Partnership” to “Life Storage LP”. Also, consistent with these name changes, and in connection with the rebranding of our storage facilities from “Uncle Bob’s Self Storage^®~~” to “Life Storage~~^®”, the name of the general partner of the Operating Partnership has been changed from “Sovran Holdings, Inc.” to “Life Storage Holdings, Inc.” and the name of the Parent Company’s taxable REIT subsidiary changed from “Uncle Bob’s Management, LLC” to “Life Storage Solutions, LLC”. This name change is intended to be responsive to the changing demographics and consumer trends in the self-storage industry. We believe that the change to the “Life Storage^®” name will allow the Company to continue to maintain its position as a leader in the U.S. self-storage industry and may provide additional growth opportunities that may not have been available under the “Uncle Bob’s Self Storage^®~~” name.~~

The Company is a self-administered and self-managed real estate company that acquires, owns and manages self-storage properties. We refer to the self-storage properties in which we have an ownership interest, lease, and/or are managed by us as “Properties.” We began operations on June 26, 1995. We were formed to continue the business of our predecessor company, which had engaged in the self-storage business since 1985. At December 31, ~~2016,~~2017, we had an ownership interest in and/or managed ~~659~~706 self-storage properties in 2928 states under the ~~names~~name Life Storage^® ~~and Uncle Bob’s Self Storage~~^®. ®. Among our ~~659~~706 self-storage properties are 3998 properties that we manage for an unconsolidated joint venture (Sovran HHF Storage Holdings LLC) of which we are a 20% owner, 30 properties that we manage for an unconsolidated joint venture (Sovran HHF Storage Holdings II LLC) of which we are a 15% owner, and 26ventures, 42 properties that we manage and have no ownership ~~interest. We are also a 20% owner in an unconsolidated joint venture (191 III Life Storage Holdings LLC) which acquired four~~interest, and two properties ~~in January 2017~~ that we ~~have managed since acquisition.~~lease. We believe we are the fifth largest operator of self-storage properties in the United States based on square feet owned and managed. ~~All of our~~Our Properties ~~will~~ conduct business under the customer-friendly name Life Storage^®~~. At December 31, 2016, there remain stores in certain markets that continue to operate under the name Uncle Bob’s Self Storage~~^® ~~and will continue to do so until our transition to the Life Storage~~^® ~~name is complete in the first half of 2017.~~ ®.

At December 31, ~~2016,~~2017, the Parent Company owned ana direct or indirect interest in ~~633~~662 of the Properties through the Operating Partnership, which ~~excludes the 26~~includes 564 wholly-owned properties ~~that we manage~~ and ~~have no ownership interest. Included in the 633~~98 properties ~~are the 69 facilities in our~~owned by unconsolidated joint ventures. In total, we own a 99.5% economic interest in the Operating Partnership and unaffiliated third parties collectively own ~~collectively~~ a 0.5% limited partnership interest at December 31, ~~2016.~~2017. We believe that this structure, commonly known as an umbrella partnership real estate investment trust (“UPREIT”), facilitates our ability to acquire properties by using units of the Operating Partnership as currency. By utilizing interests in the Operating Partnership as currency in facility acquisitions, we may partially defer the seller’s income tax liability which in turn may allow us to obtain more favorable pricing.

The Parent Company was incorporated on April 19, 1995 under Maryland law. The Operating Partnership was formed on ~~April 19,~~June 1, 1995 as a Delaware limited partnership and has engaged in virtually all aspects of the self-storage business, including the development, acquisition, management, ownership and operation of self-storage facilities. Our principal executive offices are located at 6467 Main Street, Williamsville, New York 14221, our telephone number is (716) 633-1850 and our ~~websites are~~website is www.lifestorage.com ~~andwww.unclebobs.com~~.

We seek to enhance shareholder value through internal growth and acquisition of additional storage properties. Internal growth is achieved through aggressive property management: optimizing rental rates, increasing occupancy levels, controlling costs, maximizing collections, and strategically expanding and enhancing the Properties. Should demographic and economic conditions warrant, we may develop new properties. We believe that there ~~continue~~continues to be opportunities for growth through acquisitions, ~~and~~including acquisitions through unconsolidated joint ventures of the Company. We seek to acquire self-storage properties that are susceptible to realization of increased economies of scale and improved performance through application of our expertise.

Industry Overview

We believe that self-storage facilities offer inexpensive storage space to residential and commercial users. In addition to fully enclosed and secure storage space, many facilities also offer outside storage for automobiles, recreational vehicles and boats. ~~Better~~Modern facilities, such as those owned and/or managed by the Company, are usually fenced and well lighted with automated access systems, surveillance cameras, and have a full-time manager. Our customers rent space on a month-to-month basis and typically have access to their storage space up to 15 hours a day and in certain circumstances are provided with 24-hour access. Individual storage spaces are secured by the customer’s lock, and the customer has ~~sole~~ control of access to the space.

According to the ~~2017~~2018 Self-Storage Almanac, of the estimated ~~51,000~~44,000 core self-storage facilities in the United States ~~(including both~~(those properties identified as having self-storage operated as the core ~~and non-core storage businesses)~~business at the address), approximately ~~15.0%~~19.2% are managed by the ten largest operators. ~~The~~This results in a highly fragmented industry as the remainder of the industry is characterized by numerous small, local operators. The scarcity of capital available to small operators for acquisitions and expansions, internet marketing, call centers, and the potential for savings through economies of scale are factors that are leading to consolidation in the industry. We believe that, as a result of this trend, significant growth opportunities exist for operators with proven management systems and sufficient capital resources to grow either through acquisitions or ~~third party~~third-party management platforms.

Property Management

We have 31over 30 years of experience acquiring and managing self-storage facilities, and the combined experience of our key personnel makes us one of the leaders in the industry. ~~All of our stores conduct business under the customer-friendly names Life Storage~~^® ~~or Uncle Bob’s Self Storage~~^®~~. At December 31, 2016, there remain stores in certain markets that continue to operate under the name Uncle Bob’s Self Storage~~^® ~~and will continue to do so until our full transition to the Life Storage~~^® ~~name is complete in the first half of 2017.~~ We employ the following strategies with respect to our property management:

Our People:

We recognize the importance of quality people to the success of an organization. Accordingly, we hire and train to ensure that ~~all~~ associates can reach their full potential. ~~Each strives~~We strive to ~~conduct~~ensure that each associate conducts themselves in accordance with our core values: Teamwork, Respect, Accountability, Integrity, and Innovation. In turn, we support them with state of the art training tools including an online learning management system, a company intranet and a network of certified training personnel. Every store team also has frequent, and sometimes daily, interaction with an Area Manager, a Regional Vice President, an Accounting Representative, and other support personnel. As such, our store associates are held to high standards for customer service, store appearance, financial performance, and overall operations.

Training & Development:

Our employees benefit from a wide array of training and development opportunities. New store employees undergo a comprehensive, proprietary training program designed to drive sales and operational results while ensuring the delivery of quality customer service. To supplement their initial training, employees enjoy continuing edification, coaching, and performance feedback, including customer satisfaction surveying, throughout their tenure.

All learning and development activities are facilitated through our online training and development portal. This portal delivers and tracks hundreds of ~~on-demand computer based~~computer-based training and compliance courses; it also administers tests, surveys, and the employee appraisal process. ~~Life Storage’s~~The Company’s training and development program encompasses the tools and support we deem essential to the success of our employees and business.

Marketing and Advertising:

~~We believe~~The digital age has changed consumer behavior – the ~~avenues for attracting~~way people shop, their expectations, and ~~capturing new customers have changed dramatically over~~ the ~~years.~~way we communicate with them. As such, we ~~have implemented~~utilize the following strategies to market our properties and ~~increase profitability:~~

products:

We employ a Customer Care Center (call center) that services an average of ~~40,000~~43,000 rental inquiries per month. Our Sales Representatives answer incoming sales calls for all of our ~~stores, 361~~locations, 364 days a year, 24 hours a day. In addition, they respond to email inquiries and serve as overnight customer service agents to assist customers outside of regular office hours. The team ~~undertakes~~undergoes continuous training and coaching in effective storage sales techniques and best practices in customer service, which we believe results in higher conversions of inquiries to rentals.

~~The digital age has changed consumer behavior—the way people shop, their expectations, and the way we communicate with them. Our aggressive internet marketing and~~We maintain a website ~~provide customers with real-time pricing, online reservations, online payments,~~ and ~~support for mobile devices. We~~ involve internal and external expertise to manage our internet presence and leverage a ~~mix of mobile, desktop,~~search engine and social media marketing strategy to attract customers and ~~engage customers.~~gain rentals online, through our call center and at our stores. Precise targeting and tracking through campaign management and analysis allows us to attract the right customers, at the right time, for reasonable costs of acquisition.

Since the need for storage is largely based on timing, the ~~ultimate~~ goal is to create ~~as much~~ positive brand recognition ~~as possible.~~through a variety of channels, both digital and traditional. When the time comes for a customer to select a storage company, we want the Life Storage brand to be on the top of their mind. We employ a variety of different strategies to create brand awareness; this includes our Life Storage rental trucks, branded merchandise such as moving and packing supplies, ~~and~~ extensive regional marketing in the communities in which we ~~operate.~~operate, and digital targeting using search, social media and remarketing campaigns. We strive to introduce storage solutions early and often to gain the most exposure as possible for the longest ~~period~~amount of time.

Approximately ~~45%~~47% of our self-storage space is comprised of units with temperature and/or humidity control capabilities which we market to corporate, ~~customers~~retail and ~~retail~~residential customers seeking storage solutions for valuable, sentimental, or otherwise sensitive items.

We also have a fleet of rental trucks that serve as an added incentive to choose our storage facilities. ~~The~~We waive the truck rental charge ~~is waived~~ for new move-in customers, and we believe it provides a valuable service and added incentive to choose ~~us.~~Life Storage. Further, the prominent display of our logo turns each truck into a moving billboard.

Ancillary Income:

We know that our ~~360,000~~393,000 customers require more than just a storage space. Knowing this, we offer a wide range of other products and services that fulfill their needs while providing us with ancillary income. Whereas our Life Storage trucks are available with no rental charge for new move-in customers, they are available for rent to non-customers and existing customers. We also rent moving dollies and blankets, and we carry a wide assortment of moving and packing supplies including boxes, tape, locks, and other essential items. For those customers who do not carry storage insurance, we make available renters insurance through a third party carrier, on which we earn an administrative fee. We also receive incidental income from billboards and cell towers.

Information Systems:

Each of our primary business functions is linked to our customized computer applications, many of which are proprietary. These systems provide for consistent, timely and accurate flow of information throughout our critical platforms:

Our proprietary operating software (“ubOS”) is installed at all locations and performs the functions necessary for field personnel to efficiently and effectively run a property. This includes customer account management, automatic imposition of late fees, move-in and move-out analysis, generation of essential legal notices, and marketing reports to aid in regional marketing efforts. Financial reports are automatically transmitted to our Corporate Offices overnight to allow for strict accounting oversight.

ubOS is linked with each of our primary sales channels (customer care center, internet, store) allowing for real-time access to space type and inventory, pricing, promotions, and other pertinent store information. This robust flow of information facilitates our commitment to capturing prospective customers from all channels.

ubOS provides our revenue management team with raw data on historical pricing, move-in and move-out activity, specials and occupancies, etc. This data is utilized in the various algorithms that form the foundation of our revenue management program. Changes to pricing and specials are “pushed out” to all sales channels instantaneously.

ubOS generates financial reports for each property that provide our accounting and audit departments with the necessary oversight of transactions; this allows us to maintain proper control of receipts.

Revenue Management:

Our proprietary revenue management system is constantly evolving through the efforts of our revenue management team comprised of a group of analysts. We have the ability to change pricing instantaneously for any ~~one~~single unit type, at any single location, based on the occupancy, competition, and forecasted changes in demand. By analyzing current customer rent tenures, we can implement rental rate increases at optimal times to increase revenues. Advanced pricing analytics enables us to reduce the amount of concessions, attracting a more stable customer base and discouraging short-term price shoppers. This system continues to drive revenue stability and/or growth throughout our portfolio.

Property Maintenance:

We take great pride in the appearance and structural integrity of our Properties. All of our Properties go through a thorough annual inspection performed by experienced ~~Project Managers. Those~~project managers. These inspections provide the basis for short and long term planned projects that are all performed under a standardized set of specifications. Routine maintenance such as landscaping, pest control, and snowplowing is contracted to local providers ~~who have a clear understanding of~~to whom we clearly communicate our standards. Further, our software tracks repairs, monitors contractor performance and measures the useful life of assets. As with many other aspects of our Company, our size has allowed us to enjoy relatively low maintenance costs because we have the benefit of economies of scale in purchasing, travel, and overhead absorption. In addition, we continually look to green alternatives and implement energy saving alternatives as new technology becomes available. This includes the installation of solar panels, LED lighting, energy efficient air conditioning units, and cool roofs which are all environmentally friendly and have the potential to reduce energy consumption (thereby reducing costs) in the buildings in which they are installed. We continue to implement and expand the Company’s solar panel initiative which has reduced energy consumption and costs at those installed locations.

Environmental and Other Regulations

We are subject to federal, state, and local environmental regulations that apply generally to the ownership of real property. We have not received notice from any governmental authority or private party of any material environmental noncompliance, claim, or liability in connection with any of the Properties, and are not aware of any environmental condition with respect to any of the Properties that could have a material adverse effect on our financial condition or results of operations.

The Properties are also generally subject to the same types of local regulations governing other real property, including zoning ordinances. We believe that the Properties are in substantial compliance with all such regulations.

Insurance

Each of the Properties is covered by fire and property insurance (including comprehensive liability and business interruption), and all-risk property insurance policies, which are provided by reputable companies and on commercially reasonable terms. In addition, we maintain a policy insuring against environmental liabilities resulting from tenant storage on terms customary for the industry, and title insurance insuring fee title to the Company-owned Properties in an amount that we believe to be adequate.

Federal Income Tax

We operate, and we intend to continue to operate, in such a manner as to continue to qualify as a REIT under the Internal Revenue Code of 1986 (the “Code”), but no assurance can be given that we will at all times so qualify. To the extent that we continue to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the taxable income that is distributed to our shareholders. We have elected to treat one of our subsidiaries as a taxable REIT subsidiary. In general, our taxable REIT subsidiary may perform additional services for customers and generally may engage in certain real estate or non-real estate related business. Our taxable REIT subsidiary is subject to corporate federal and state income taxes. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - REIT Qualification and Distribution Requirements.”

The Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (the “TCJA”) was passed by Congress on December 20, 2017 and signed into law by President Trump on December 22, 2017. The TCJA significantly changed the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their shareholders. Technical corrections or other amendments to the TCJA or administrative guidance interpreting the TCJA may be forthcoming at any time. We cannot predict the long-term effect of the TCJA or any future law changes on us or our shareholders. A brief summary of the key changes from the TCJA that directly impact us and, potentially, our shareholders is set forth below. The changes described are effective for taxable years beginning after December 31, 2017, unless otherwise noted.

Under the TCJA, the corporate income tax rate is reduced from a maximum rate of 35% to a flat 21% rate. The reduced corporate income tax rate, which is effective for taxable years beginning after December 31, 2017, will apply to income earned by our taxable REIT subsidiary. This reduced rate also applies to the amount that we must withhold from our distributions to non-U.S. shareholders that are designated as capital gain dividends (or that could have been designated as capital gain dividends). The TCJA also repeals the alternative minimum tax imposed on C corporations.

The TCJA reduces the highest marginal income tax rate applicable to U.S. individuals from 39.6% to 37% (excluding the 3.8% Medicare tax on net investment income). Domestic non-corporate taxpayers continue to pay a maximum 20% rate on long-term capital gains and qualified dividend income. However, the TCJA also will allow domestic non-corporate taxpayers to deduct 20% of their dividends from REITs, excluding capital gain dividends and qualified dividend income (which continue to be subject to the 20% rate). As a result, dividend income received by our domestic non-corporate shareholders will be subject to a maximum effective federal income tax rate of 29.6% (plus the 3.8% Medicare tax on net investment income). The cumulative amount that a domestic non-corporate taxpayer may deduct for any taxable year with respect to ordinary REIT dividends from all sources (together with certain other categories of income that are eligible for such 20% deduction) may not exceed 20% of such person’s total taxable income (excluding any net capital gain). The income tax rate changes applicable to domestic non-corporate taxpayers and the 20% deduction for ordinary REIT dividends apply for taxable years beginning after December 31, 2017 and before January 1, 2026.

The TCJA generally limits the deduction for net business interest to 30% of adjusted taxable income (excluding non-business income, net operating losses, business interest income, and, for taxable years beginning before January 1, 2022, computed without regard to depreciation and amortization). This limitation on the deductibility of net business interest could result in additional taxable income for us and our taxable REIT subsidiary.

Competition

The primary factors upon which competition in the self-storage industry is based are location, rental rates, suitability of the property’s design to prospective customers’ needs, and ~~the manner in which~~how the property is operated and marketed. We believe we compete successfully on these ~~bases.~~factors. The extent of competition depends significantly on local market conditions. We seek to locate ~~facilities in a manner in which~~where we can increase market share while not adversely affecting any of our existing locations in that market. However, the number of self-storage facilities in a particular area could have a material adverse effect on the performance of any of the Properties.

Several of our competitors are larger and have substantially greater financial resources than we do. These larger operators may, among other possible advantages, be capable of greater leverage and the payment of higher prices for acquisitions.

Investment Policy

While we emphasize equity real estate investments, we may, at our discretion, invest in mortgage and other real estate interests related to self-storage properties in a manner consistent with our qualification as a REIT. We may also retain a purchase money mortgage for a portion of the sale price in connection with the disposition of Properties from time to time. Should investment opportunities become available, we may look to acquire additional self-storage properties via anew or existing joint-venture ~~partnership~~partnerships or similar ~~entity.~~entities. We may or may not elect to have a significant investment in such a venture, but would use such an opportunity to expand our portfolio of branded and managed properties.

Subject to the percentage of ownership limitations and gross income tests necessary for REIT qualification, we also may invest in securities of entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.

Disposition Policy

Any disposition decision of our Properties is based on a variety of factors, including, but not limited to, the (i) potential to continue to increase cash flow and value, (ii) sale price, (iii) strategic fit with the rest of our portfolio, (iv) potential for, or existence of, environmental or regulatory issues, (v) alternative uses of capital, and (vi) maintaining qualification as a REIT.

During 2017, the Company sold two non-strategic properties and received net cash proceeds of $16.9 million, resulting in a loss of a approximately $3.5 million. The Company has subsequently leased one of the properties sold during 2017 and will continue to operate the property through March 2020. Due to the Company’s continuing involvement in this property, the related gain on the sale of this property has been deferred and will be recognized by the Company upon termination of this lease. During 2016, we sold eight non-strategic properties in Alabama, Georgia, Mississippi, Texas and Virginia for net proceeds of approximately $34.1 million, resulting in a gain of approximately $15.3 million. During 2015, we sold three non-strategic storage facilities ~~purchased during 2014 and 2015~~ in Missouri and South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 ~~million. During 2014, we sold two non-strategic storage facilities in Texas for net proceeds of approximately $11.0 million resulting in a gain of approximately $5.2~~ million.

Distribution Policy

We intend to pay regular quarterly distributions to our shareholders. However, future distributions by us will be at the discretion of the Board of Directors and will depend on the actual cash available for distribution, our financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant. In order to maintain our qualification as a REIT, we must make annual distributions to shareholders of at least 90% of our REIT taxable income (which does not include capital ~~gains)~~gains or losses). Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the minimum requirements.

Financing Policy

Our Board of Directors currently limits the amount of debt that may be incurred by us to less than 50% of the sum of the market value of our issued and outstanding Common and Preferred Stock plus our debt. We, however, may from time to time re-evaluate and modify our borrowing policy ~~in light of then~~considering current economic

conditions, relative costs of debt and equity capital, market values of properties, growth and acquisition opportunities and other factors. In addition to our Board of Directors’ debt limits, our most restrictive debt covenants limit our leverage. However, we believe cash flow from operations, access to the capital markets and access to our credit facility, as described below, are adequate to execute our current business plan and remain in compliance with our debt covenants.

~~We have a $500 million revolving line of credit bearing interest at a variable rate equal to LIBOR plus a margin based on~~The following sets forth certain financing activities during the ~~Company’s credit rating (at~~year ended December 31, ~~2016 the margin was 1.10%). At December 31, 2016, there was $247 million available on the unsecured line of credit. The revolving line of credit has a maturity date of December 10, 2019.~~2017.

On ~~March 3, 2015,~~December 7, 2017, the Parent Company completed the public offering of 1,380,000 shares of its common stock at $90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $119.5 million. The Company used the net proceeds from the offering to repay a portion of the indebtedness outstanding on the Company’s unsecured line of credit.

On January 20, 2016, the Company completed the public offering of 2,645,000 shares of its common stock at $105.75 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $269.7 million. The Company used the net proceeds from the offering to repay a portion of the indebtedness then outstanding on the Company’s unsecured line of credit.

~~On June 20, 2016, the Company~~Operating Partnership issued ~~$600~~$450 million in aggregate principal ~~amount~~ of ~~3.50%~~3.875% unsecured senior notes due ~~July 1, 2026~~December 15, 2027 (the ~~“2026~~“2027 Senior Notes”). ~~Net proceeds~~The 2027 Senior Notes were issued at a 0.477% discount to par value. Interest on the ~~Company after original issue~~2027 Senior Notes is payable semi-annually on June 15 and December 15, beginning on June 15, 2018. The 2027 Senior Notes are fully and unconditionally guaranteed by the Parent Company. Proceeds received upon issuance, net of discount to par of $2.1 million and underwriting ~~discounts~~ and ~~commissions and~~other offering expenses ~~were approximately $591.2~~totaling $4.0 million, totaled $443.9 million. On July 15, 2016, the proceeds from the 2026 Senior Notes, the proceeds from the Company’s common stock offering in May 2016, and draws on the Company’s line of credit were used to fund the acquisition of LifeStorage, LP. In conjunction with the issuance of the 2026 Senior Notes, the Company settled its $150 million notional forward starting swap agreements for cash of approximately $9.2 million.

~~On July 21, 2016, the Company entered into a $200 million term note maturing July 21, 2028 bearing interest at a fixed rate of 3.67%.~~ The proceeds ~~from this term note~~ were primarily used to repay ~~a portion~~$225.0 million of the Company’s then existing variable rate term notes and to repay $210.0 million of the then outstanding balance on the Company’s line of credit.

~~During 2015, the Company also issued 949,911 shares of common stock under~~Amounts outstanding on the Company’s ~~continuous equity offering program (“Equity Program”)~~line of credit at a weighted average issue price of $96.80 per share, generating net proceeds of $90.6 million. During 2014, we issued 924,403 shares under the Equity Program and 359,102 shares under our previous Equity Program for net proceeds of approximately $99.2 million. During 2016, the Company did not issue any shares of common stock under the Equity Program. As of December 31, ~~2016, the Company has $59.3 million availability for issuance of shares under the Equity Program which expires in May 2017.~~2017 totaled $105.0 million.

To the extent that we desire to obtain additional capital to pay distributions, to provide working capital, to pay existing indebtedness or to finance acquisitions, expansions or development of new properties, we may utilize amounts available under the line of credit, common or preferred stock offerings, floating or fixed rate debt financing, retention of cash flow (subject to satisfying our distribution requirements under the REIT rules) or a combination of these methods. Additional debt financing may also be obtained through mortgages on our Properties, which may be recourse, non-recourse, or cross-collateralized and may contain cross-default provisions. We have not established any limit on the number or amount of mortgages that may be placed on any single Property or on our portfolio as a whole, although certain of our existing term loans contain limits on overall mortgage indebtedness. For additional information regarding borrowings and equity activities, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and ~~Note~~Notes 5 and 6 to the Consolidated Financial Statements filed herewith.

Employees

We currently employ a total of ~~1,537~~1,792 employees, including ~~659~~706 property managers, 4547 area managers, and ~~581~~785 associate managers and part-time employees. At our headquarters, in addition to our ~~six~~five senior executive officers, we employ ~~246~~249 people engaged in various support activities, including accounting, human resources, customer care, and management information systems. None of our employees are covered by a collective bargaining agreement. We consider our employee relations to be excellent.

Available Information

We file with the U.S. Securities and Exchange Commission quarterly and annual reports on Forms 10-Q and 10-K, respectively, current reports on Form 8-K, and proxy statements pursuant to the Securities Exchange Act of 1934, in addition to other information as required. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330. We file this information with the SEC electronically, and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are available free of charge on our web site athttp://www.lifestorage.com as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. In addition, our Codes of Ethics and Charters of our Governance Committee, Audit Committee, and Compensation Committee are available free of charge on our website athttp://www.lifestorage.com.

Also, copies of our annual report and Charters of our Governance Committee, Audit Committee, and Compensation Committee will be made available, free of charge, upon written request to Life Storage, Inc., Attn: Investor Relations, 6467 Main Street, Williamsville, NY 14221.

Item 1A.

Risk Factors

You should carefully consider the risks described below, together with all of the other information included in or incorporated by reference into our Form 10-K, as part of your evaluation of the Company. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our securities could decline, and you may lose all or part of your investment.

Our Acquisitions May Not Perform as Anticipated

We have completed hundreds of acquisitions of self-storage facilities since our initial public offering of common stock in June 1995. ~~Our strategy~~One of our strategies is to continue to grow by acquiring additional self-storage facilities. Acquisitions entail risks that investments will fail to perform in accordance with our expectations. Our judgments with respect to the prices paid for acquired self-storage facilities and the costs of any improvements required to bring an acquired property up to our standards may prove to be inaccurate. Acquisitions also involve general investment risks associated with any new real estate investment.

We May Incur Problems with Our Real Estate Financing

Unsecured Credit Facility, Term Notes and Senior Notes.We have a line of credit and term note agreements with a syndicate of financial institutions and other lenders, along with senior debt of ~~$600~~$1,050 million. This indebtedness is recourse to us and the required payments are not reduced if the economic performance of any of the properties declines. The facilities limit our ability to make distributions to our shareholders, except in limited circumstances.

Rising Interest Rates. Indebtedness that we incur under the unsecured credit facility and bank term notes bears interest at a variable rate. Accordingly, increases in interest rates could increase our interest expense, which would reduce our cash available for distribution and our ability to pay expected distributions to our shareholders. We manage our exposure to rising interest rates using interest rate swaps and other available mechanisms. If the amount of our indebtedness bearing interest at a variable rate increases, our unsecured credit facility may require us to enter into additional interest rate swaps.

Refinancing May Not Be Available.It may be necessary for us to refinance our indebtedness through additional debt financing or equity offerings. If we were unable to refinance this indebtedness on acceptable terms, we might be forced to dispose of some of our self-storage facilities upon disadvantageous terms, which might result in losses to us and might adversely affect the cash available for distribution. If prevailing interest rates or other factors at the time of refinancing result in higher interest rates on any refinancings, our interest expense would increase, which would adversely affect our cash available for distribution and our ability to pay expected distributions to shareholders.

Covenants and Risk of Default. Our loan instruments require us to operate within certain covenants, including financial covenants with respect to leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and dividend limitations. If we violate any of these covenants or otherwise default under these instruments, then our lenders could declare all indebtedness under these facilities to be immediately due and payable which would have a material adverse effect on our business and could require us to sell self-storage facilities under distressed conditions and seek replacement financing on substantially more expensive terms.

Reduction in or Loss of Credit Rating.Certain of our debt instruments require us to maintain an investment grade rating from at least one and in some cases two debt ratings agencies. Should we receive a reduction in our credit rating from the agencies, the interest rate on our line of credit would increase by up to 0.50% and the interest rate on ~~$325~~$100 million of our bank term notes would increase by up to 0.65%. Should we fail to attain an investment grade rating from the agencies, the interest rates on our $100 million term note due 2021 and our $175 million term note due 2024 would each increase by 1.750%.

Our Debt Levels May Increase

Our Board of Directors currently has a policy of limiting the amount of our debt at the time of incurrence to less than 50% of the sum of the market value of our issued and outstanding common stock and preferred stock plus the amount of our debt at the time that debt is incurred. However, our organizational documents do not contain any limitation on the amount of indebtedness we might incur. Accordingly, our Board of Directors could alter or eliminate the current policy limitation on borrowing without a vote of our shareholders. We could become highly leveraged if this policy were changed. However, our ability to incur debt is limited by covenants in our debt instruments.

We Are Subject to the Risks Posed by Fluctuating Demand and Significant Competition in the Self-Storage Industry

Our self-storage facilities are subject to all operating risks common to the self-storage industry. These risks include but are not limited to the following:

Decreases in demand for rental spaces in a particular locale;

Changes in supply of similar or competing self-storage facilities in an area;

Changes in market rental rates; and

Inability to collect rents from customers.

Our current strategy is to acquire interests only in self-storage facilities. Consequently, we are subject to risks inherent in investments in a single industry. Our self-storage facilities compete with other self-storage facilities in their geographic markets. ~~As a result of~~Due to competition, the self-storage facilities could experience a decrease in occupancy levels and rental rates, which would decrease our cash available for distribution. We compete in operations and for acquisition opportunities with companies that have substantial financial resources. Competition may reduce the number of suitable acquisition opportunities offered to us and increase the bargaining power of property owners seeking to sell. The self-storage industry has at times experienced overbuilding in response to perceived increases in demand. A recurrence of overbuilding might cause us to experience a decrease in occupancy levels, limit our ability to increase rents, and compel us to offer discounted rents.

Our Real Estate Investments Are Illiquid and Are Subject to Uninsurable Risks and Government Regulation

General Risks. Our investments are subject to varying degrees of risk generally related to the ownership of real property. The underlying value of our real estate investments and our income and ability to make distributions to our shareholders are dependent upon our ability to operate the self-storage facilities in a manner sufficient to maintain or increase cash available for distribution. Income from our self-storage facilities may be adversely affected by the following factors:

Changes in national economic conditions;

Changes in general or local economic conditions and neighborhood characteristics;

Competition from other self-storage facilities;

Changes in interest rates and in the availability, cost and terms of financing;

The impact of present or future environmental legislation and compliance with environmental laws;

The ongoing need for capital improvements, particularly in older facilities;

Changes in real estate tax rates and other operating expenses;

Adverse changes in governmental rules and fiscal policies;

Uninsured losses resulting from casualties associated with civil unrest, acts of God, including natural disasters, and acts of war;

Adverse changes in zoning laws; and

Other factors that are beyond our control.

Illiquidity of Real Estate May Limit its Value. Real estate investments are relatively illiquid. Our ability to vary our portfolio of self-storage facilities in response to changes in economic and other conditions is limited. In addition, provisions of the Code may limit our ability to profit on the sale of self-storage facilities held for fewer than two years. We may be unable to dispose of a facility when we find disposition advantageous or necessary and the sale price of any disposition may not equal or exceed the amount of our investment.

Uninsured and Underinsured Losses Could Reduce the Value of our Self Storage Facilities. Some losses, generally of a catastrophic nature, that we potentially face with respect to our self-storage facilities may be uninsurable or not insurable at an acceptable cost. Our management uses its discretion in determining amounts, coverage limits and deductibility provisions of insurance, with a view to acquiring appropriate insurance on our investments at a reasonable cost and on suitable terms. These decisions may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it infeasible to use insurance proceeds to replace a property after it has been damaged or destroyed. Under those circumstances, the insurance proceeds received by us might not be adequate to restore our economic position with respect to a particular property.

Possible Liability Relating to Environmental Matters. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under, or in that property. Those laws often impose liability even if the owner or operator did not cause or know of the presence of hazardous or toxic substances and even if the storage of those substances was in violation of a customer’s lease. In addition, the presence of hazardous or toxic substances, or the failure of the owner to address their presence on the property, may adversely affect the owner’s ability to borrow using that real property as collateral. In connection with the ownership of the self-storage facilities, we may be potentially liable for any of those costs.

Americans with Disabilities Act. The Americans with Disabilities Act of 1990, or ADA, generally requires that buildings be made accessible to persons with disabilities. A determination that we are not in compliance with the ADA could result in imposition of fines or an award of damages to private litigants. If we were required to make modifications to comply with the ADA, our results of operations and ability to make expected distributions to our shareholders could be adversely affected.

There Are Limitations on the Ability to Change Control of the Company

Limitation on Ownership and Transfer of Shares. To maintain our qualification as a REIT, not more than 50% in value of our outstanding shares of stock may be owned, directly or indirectly, by five or fewer individuals, as defined in the Code. To limit the possibility that we will fail to qualify as a REIT under this test, our Amended and Restated Articles of Incorporation (“Articles of Incorporation”) include ownership limits and transfer restrictions on shares of our stock. Our Articles of Incorporation limit ownership of our issued and outstanding stock by any single shareholder to 9.8% of the aggregate value of our outstanding stock, except that the ownership by some of our shareholders is limited to 15%.

These ownership limits may:

Have the effect of precluding an acquisition of control of the Company by a third party without consent of our Board of Directors even if the change in control would be in the interest of shareholders; and

Limit the opportunity for shareholders to receive a premium for shares of our common stock they hold that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8% or 15%, as the case may be, of the outstanding shares of our stock or to otherwise effect a change in control of ~~Life Storage.~~the Company.

Our Board of Directors may waive the ownership limits if it is satisfied that ownership by those shareholders in excess of those limits will not jeopardize our status as a REIT under the Code or in the event it determines that it is no longer in our best interests to be a REIT. Waivers have been granted to the former holders of our Series C preferred stock, FMR Corporation, Cohen & Steers, Inc. and Invesco Advisers, Inc. A transfer of our common stock and/or preferred stock to a person who, as a result of the transfer, violates the ownership limits may not be effective under some circumstances.

Other Limitations. Other limitations could have the effect of discouraging a takeover or other transaction in which holders of some, or a majority, of our outstanding common stock might receive a premium for their shares of our common stock that exceeds the then prevailing market price or that those holders might believe to be otherwise in their best interest. The issuance of ~~additional~~ shares of preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the shareholders’ interest. In addition, the Maryland General Corporation Law, or MGCL, imposes restrictions and requires specific procedures with respect to the acquisition of stated levels of share ownership and business combinations, including combinations with interested shareholders. These provisions of the MGCL could have the effect of delaying or preventing a change in control of Life Storage even if a change in control were in the shareholders’ interest. Our bylaws contain a provision exempting from the MGCL control share acquisition statute any and all acquisitions by any person of shares of our stock. However, this provision may be amended or eliminated at any time. In addition, under the Operating Partnership’s agreement of limited partnership, in general, we may not merge, consolidate or engage in any combination with another person or sell all or substantially all of our assets unless that transaction includes the merger or sale of all or substantially all of the assets of the Operating Partnership, which requires the approval of the holders of 75% of the limited partnership interests thereof. If we were to own less than 75% of the limited partnership interests in the Operating Partnership, this provision of the limited partnership agreement could have the effect of delaying or preventing us from engaging in some change of control transactions.

Our Failure to Qualify as a REIT Would Have Adverse Consequences

We intend to continue to operate in a manner that will permit us to qualify as a REIT under the Code. We have not requested and do not plan to request a ruling from the Internal Revenue Service (“IRS”) that we qualify as a REIT, and the statements in this Annual Report on Form 10-K are not binding on the IRS or any court. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. Continued qualification as a REIT depends upon our continuing ability to meet various requirements concerning, among other things, the ownership of our outstanding stock, the nature of our assets, the sources of our income and the amount of our distributions to our shareholders. The fact that we hold substantially all of our assets through our Operating Partnership and its subsidiaries and joint ventures further complicates the application of the REIT requirements for us. Even a technical or inadvertent mistake could jeopardize our REIT status and, given the highly complex nature of the rules governing REITs and the ongoing importance of factual determinations, we cannot provide any assurance that we will continue to qualify as a REIT. Furthermore, Congress and the IRS might make changes to the tax laws and regulations, and the courts and the IRS might issue new rulings, that make it more difficult, or impossible, for us to remain qualified as a REIT.

If we were to fail to qualify as a REIT in any taxable year and are unable to avail ourselves of certain savings provisions set forth in the Code, we would not be allowed a deduction for distributions to shareholders in computing our taxable income and would be subject to federal income tax (including ~~any applicable alternative minimum tax and~~ possibly increased state and local taxes) on our taxable income at regular corporate rates. Unless entitled to relief under certain Code provisions, we also would be ineligible for qualification as a REIT for the four taxable years following the year during which our qualification was lost. As a result, distributions to the shareholders would be reduced for each of the years involved. Although we currently intend to continue to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors to revoke our REIT election. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the statutory savings provisions in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.

We Will Pay Some Taxes Even if We Qualify as a REIT, Reducing Cash Available for Shareholders

Even if we qualify as a REIT for federal income tax purposes, we are required to pay some federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent we distribute less than 100% of our REIT taxable income (including capital gains). Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. While we will undertake sales of assets if those assets become inconsistent with our long-term strategic or return objectives, we do not believe that those sales should be considered prohibited transactions, but there can be no assurance that the IRS would not contend otherwise. The need to avoid prohibited transactions could cause us to forego or defer sales of properties that might otherwise be in our best interest to sell.

One of our subsidiaries has elected to be treated as a “taxable REIT subsidiary” of the Company for federal income tax purposes. A taxable REIT subsidiary is taxed as a regular corporation and is limited in its ability to deduct interest payments made to us in excess of a certain ~~amount.~~amount, in addition to other limitations imposed on the deductibility of interest under the TCJA. In addition, if we receive or accrue certain amounts and the underlying economic arrangements ~~among~~between our taxable REIT subsidiary and us are not comparable to similar arrangements among unrelated parties, we will be subject to a 100% penalty tax on those payments in excess of amounts deemed reasonable between unrelated parties.

Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income because not all states and localities follow the federal income tax treatment of REITs. To the extent that we are or any taxable REIT subsidiary is required to pay federal, foreign, state or local taxes, we will have less cash available for distribution to shareholders.

Complying with REIT Requirements May Limit Our Ability to Hedge Effectively and May Cause Us to Incur Tax Liabilities

The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate risk will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges interest rate risk on liabilities used to carry or acquire real estate assets or manages the risk of certain currency fluctuations, and such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that do not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges through a taxable REIT subsidiary. This could increase the cost of our hedging activities because our taxable REIT subsidiary would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our taxable REIT subsidiary arising after December 31, 2017 will generally not provide any tax benefit, except for being carried ~~back or~~ forward against ~~past or~~ future taxable income in the taxable REIT subsidiary.

Complying with the REIT Requirements May Cause Us to Forgo and/or Liquidate Otherwise Attractive Investments

To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts that we distribute to our shareholders and the ownership of our shares. To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous. For instance, in order to satisfy the gross income or asset tests applicable to REITs under the Code, we may be required to forgo investments that we otherwise would make. Furthermore, we may be required to liquidate from our portfolio otherwise attractive investments. In addition, we may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. These actions could reduce our income and amounts available for distribution to our shareholders. Thus, compliance with the REIT requirements may hinder our investment performance.

If the Operating Partnership Fails to Qualify as a Partnership for Federal Income Tax Purposes, We Could Fail to Qualify as a REIT and Suffer Other Adverse Consequences

We believe that the Operating Partnership is organized and operated in a manner so as to be treated as a partnership and not an association or a publicly traded partnership taxable as a corporation, for federal income tax purposes. As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of the partners is allocated its share of the Operating Partnership’s income. No assurance can be provided, however, that the IRS will not challenge the Operating Partnership’s status as a partnership for federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership as an association or publicly traded partnership taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT. Also, the failure of the Operating Partnership to qualify as a partnership would cause it to become subject to federal corporate income tax, which would reduce significantly the amount of its cash available for distribution to its partners, including us.

The Tax Cuts and Jobs Act May Impact the Attractiveness of an Investment in our Stock in Ways Difficult to Anticipate

The Tax Cuts and Jobs Act (the “TCJA”), signed into law in late 2017, significantly changed the U.S. federal income tax ~~treatment~~law applicable, and is generally for taxable years beginning after December 31, 2017. The TCJA reduced corporate and non-corporate income tax rates and changed numerous other provisions of the Code that may affect the taxation of REITs and ~~investments~~their shareholders. These changes generally appear favorable to REITs; however, certain changes to the U.S. federal income tax laws pursuant to the TCJA could have a material and adverse effect on us. Some of these changes could reduce the relative competitive advantage of companies operating as REITs as opposed to companies not operating as REITs, including:

the reduction in tax rates applicable to individuals and C corporations, which could reduce the relative attractiveness of the generally single-level of taxation on REIT distributions;

the immediate expensing of capital expenditures, which could likewise reduce the relative attractiveness of the REIT structure; and

the limit on the deductibility of interest expense, which could increase the distribution requirement of REITs.

Many changes applicable to individual taxpayers are temporary – applying to taxable years beginning after December 31, 2017 and before January 1, 2026. The TCJA makes numerous other changes to the tax law that do not affect REITs directly, but these changes could impact our shareholders and, therefore, could indirectly affect us.

Furthermore, the TCJA was adopted in a short period of time without hearings. It is likely that Congress will have to review, and possibly modify, provisions of the TCJA in subsequent tax legislation. It is not possible to predict if or when Congress will address changes to the TCJA or when the Internal Revenue Service will issue administrative guidance on the changes made by the TCJA or how any such changes will impact us or an investment in our stock. It is possible that future changes to tax law or guidance promulgated thereunder could adversely impact us.

Shareholders are urged to consult with their tax advisors about the TCJA and any other regulatory or administrative developments and proposals with respect to taxes and their potential effect on investment in our stock.

U.S. Federal Income Tax Treatment of REITs and Investments in REITs ~~may change, which may result~~May Change, Which May Result in the ~~loss~~Loss of ~~our tax benefits~~Our Tax Benefits of ~~operating~~Operating as a ~~REIT.~~REIT

Current U.S. federal income tax treatment of a REIT and an investment in a REIT may be modified by legislative, judicial or administrative action at any ~~time. The administration of President Trump~~time, and the leaders of the House of Representatives and the Senate have expressed interest in passing comprehensive tax reform this year. The descriptions of tax reform proposals have not specifically addressed the treatment of REITs, amendments to U.S. federal income tax laws and interpretations of these laws could adversely affect us and the tax consequences of an investment in our common shares.

~~Some of the tax benefits identified as possibly being eliminated or reduced include benefits that have been important to the real estate industry, including REITs,~~we cannot predict when such as eliminating the like-kind exchange rules or the deduction of net interest expense. In addition, tax reform proposals contemplate reductions in corporate tax rates. Substantially reduced corporate tax rates could possibly reduce or eliminate the relative attractiveness of REITs as an entity for owning real estate.

action may occur. We cannot predict how changes in U.S. federal income tax law will affect us or our investors nor can we predict the long-term impact of ~~proposed~~ tax reforms on ~~the real estate industry.~~REITs.

We May Change the Dividend Policy for Our Common Stock in the Future

In ~~2016,~~2017, our Board of Directors authorized and we declared quarterly common stock dividends of ~~$0.85~~$0.95 per share in January, and ~~$0.95~~$1.00 per share for April, July and October, for a total ~~2016~~2017 dividend per share annual rate of ~~$3.70~~$3.95 per share. In addition, our ~~board~~Board of ~~directors~~Directors authorized and we declared a quarterly common stock dividend of ~~$0.95~~$1.00 per share in January ~~2017.~~2018. We can provide no assurance that our ~~board~~Board of Directors will not reduce or eliminate entirely dividend distributions on our common stock in the future.

Our Board of Directors will continue to evaluate our distribution policy on a quarterly basis as they monitor the capital markets and the impact of the economy on our operations. The decisions to authorize and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors ~~in light of~~given conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors. Any change in our dividend policy could have a material adverse effect on the market price of our common stock.

Market Interest Rates May Influence the Price of Our Common Stock

One of the factors that may influence the price of our common stock in public trading markets or in private transactions is the annual yield on our common stock as compared to yields on other financial instruments. An increase in market interest rates will result in higher yields on other financial instruments, which could adversely affect the price of our common stock.

Regional Concentration of Our Business May Subject Us to Economic Downturns in the States of Texas and Florida

As of December 31, ~~2016, 244~~2017, 254 of our ~~659~~706 self-storage facilities are located in the states of Texas and Florida. For the year ended December 31, ~~2016,~~2017, these facilities accounted for approximately ~~38%~~36% of store revenues. This concentration of business in Texas and Florida exposes us to potential losses resulting from a downturn in the economies of those states. If economic conditions in those states deteriorate, we may experience a reduction in existing and new business, which may have an adverse effect on our business, financial condition and results of operations.

When We Acquire Properties in New Markets, We Will Be Subject to Increased Operational Risks

We may acquire self-storage properties in markets where we have little or no operational experience. For example, in 2016 we acquired 22 self-storage properties in California, 17 self-storage properties in Nevada, one self-storage property in Utah, and one self-storage property in Wisconsin, all of which are states where we had not previously operated. When we enter into new markets, we will be subject to increased risks resulting from our lack of experience and infrastructure in these markets and may need to incur additional costs, both expected and unexpected, ~~in order~~ to develop our operating capabilities in these markets. These risks could materially and adversely affect us, including our growth prospects, financial condition and results of operations.

Changes in Taxation of Corporate Dividends May Adversely Affect the Value of Our Common Stock

The maximum marginal rate of tax payable by domestic noncorporate taxpayers on dividends received from a regular “C” corporation under current federal law generally is 20%, as opposed to higher ordinary income rates. The reduced tax rate, however, does not apply to distributions paid to domestic noncorporate taxpayers by a REIT on its stock, except for certain limited amounts. The earnings of a REIT that are distributed to its stockholders generally remain subject to less federal income taxation than earnings of a non-REIT “C” corporation that are distributed to its stockholders net of corporate-level income tax. However, the lower rate of taxation to dividends paid by regular “C” corporations could cause domestic noncorporate investors to view the stock of regular “C” corporations as more attractive relative to the stock of a REIT, because the dividends from regular “C” corporations continue to be taxed at a lower rate while distributions from REITs (other than distributions designated as capital gain dividends) are generally taxed at the same rate as other ordinary income for domestic noncorporate taxpayers.

We are heavily dependent on computer systems, telecommunications and the Internet to process transactions, summarize results and manage our business. Security breaches or a failure of such networks, systems or technology could adversely impact our business and customer relationships.

We are heavily dependent upon automated information technology and Internet commerce, with many of our new customers coming from the Internet or the telephone, and the nature of our business involves the receipt and retention of personal information about them. We centrally manage significant components of our operations with our computer systems, including our financial information, and we also rely extensively on third-party vendors to retain data, process transactions and provide other systems services. These systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer worms, viruses and other destructive or disruptive security breaches and catastrophic events.

As a result, our operations could be severely impacted by a natural disaster, terrorist attack or other circumstance that resulted in a significant outage of our systems or those of our ~~third party~~third-party providers, despite our use of back up and redundancy measures. Further, viruses and other related risks could negatively impact our information technology processes. We could also be subject to a “cyber-attack” or other data security breach which would penetrate our network security, resulting in misappropriation of our confidential information, including customer personal information. System disruptions and shutdowns could also result in additional costs to repair or replace such networks or information systems and possible legal liability, including government enforcement actions

and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to move out of rented storage spaces. Such events could lead to lost future sales and adversely affect our results of operations.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

~~Properties~~

Properties

At December 31, ~~2016,~~2017, we held ownership interests in, leased, and/or managed a total of ~~659~~706 Properties situated in ~~twenty-nine~~28 states. Among our ~~659~~706 self-storage properties are 3998 properties that we manage for an unconsolidated joint ~~venture~~ventures of which we ~~are a 20% owner, 30 properties that we manage for an~~have varying percentage ownership interests. For additional information regarding unconsolidated joint venture of which we are a 15% owner, and 26 properties that we manage and have no ownership interest. We are also a 20% owner in an unconsolidated joint venture (191 III Life Storage Holdings LLC) which acquired four properties in January 2017 that we have managed since acquisition.ventures, see Note 11 to the Consolidated Financial Statements filed herewith.

Our self-storage facilities offer inexpensive, easily accessible, enclosed storage space to residential and commercial users on a month-to-month basis. Most of our Properties are fenced and well lighted with automated access systems and surveillance cameras. A majority of the Properties are single-story, thereby providing customers with the convenience of direct vehicle access to their storage spaces. Our stores range in size from 18,000 to 195,000 net rentable square feet, with an average of approximately 70,000 net rentable square feet. The Properties generally are constructed of masonry or steel walls resting on concrete slabs and have standing seam metal, shingle, or tar and gravel roofs. All Properties have a property manager on-site during business hours. Generally, customers have access to their storage space up to 15 hours a day, and some customers are provided 24-hour access. Individual storage spaces are secured by a lock furnished by the customer to provide the customer with control of access to the space.

~~All of the Properties conduct business under the customer-friendly names Life Storage~~^® ~~or Uncle Bob’s Self Storage~~^®~~. At December 31, 2016, there remain stores in certain markets that continue to operate under the name Uncle Bob’s Self Storage~~^® ~~and will continue to do so until our full transition to the Life Storage~~^® ~~name is complete in the first half of 2017.~~

The following table provides certain information regarding the Properties in which we have an ownership interest, lease, and/or manage as of December 31, ~~2016:~~2017:


	Number of Stores at December 31, 2016		Square Feet		Number of Spaces		Percentage of Store Revenue			Number of Stores at December 31, 2017		Square Feet		Number of Spaces		Percentage of Store Revenue
Alabama		21		1,581,803		12,152		2.7	%		21		1,581,503		12,157		2.35	%
Arizona		12		798,474		7,077		1.6	%		25		1,741,275		15,743		3.00	%
California		22		2,040,278		17,981		3.7	%		28		2,538,426		22,751		6.28	%
Colorado		11		776,794		6,826		1.6	%		11		769,437		6,828		1.80	%
Connecticut		10		754,348		7,539		2.4	%		11		834,952		8,705		2.16	%
Florida		87		5,933,877		57,474		13.7	%		95		6,422,451		63,243		13.49	%
Georgia		30		2,091,516		17,870		4.5	%		34		2,355,069		20,193		4.23	%
Illinois		45		3,352,221		33,972		6.1	%		45		3,348,867		33,810		7.40	%
Kentucky		2		142,914		1,322		0.3	%		2		142,764		1,322		0.28	%
Louisiana		16		974,384		8,296		2.0	%		16		954,965		8,088		1.66	%
Maine		4		219,967		2,179		0.7	%		5		233,136		2,295		0.61	%
Maryland		3		138,639		1,618		0.4	%		3		138,839		1,619		0.36	%
Massachusetts		15		824,090		8,296		2.3	%		15		817,298		8,244		2.06	%
Mississippi		12		883,656		6,606		1.6	%		12		885,381		6,614		1.48	%
Missouri		14		912,735		8,206		2.1	%		14		948,066		8,498		1.86	%
Nevada		17		1,303,192		11,169		1.3	%		22		1,633,278		13,708		2.81	%
New Hampshire		10		725,777		6,226		1.5	%		10		725,123		6,222		1.40	%
New Jersey		29		2,089,217		21,867		6.6	%		29		2,091,277		21,891		5.79	%
New York		44		2,651,089		25,451		7.4	%		46		2,827,529		28,684		6.77	%
North Carolina		21		1,272,271		11,572		2.5	%		22		1,361,090		12,632		2.20	%
Ohio		24		1,630,497		13,691		3.0	%		25		1,656,927		13,940		2.72	%
Pennsylvania		11		692,196		5,984		1.5	%		11		688,019		5,961		1.37	%
Rhode Island		4		206,721		1,924		0.6	%		4		205,871		1,922		0.49	%
South Carolina		13		853,791		7,533		1.9	%		14		901,444		7,974		1.67	%
Tennessee		5		348,504		3,005		0.8	%		7		510,619		4,231		0.85	%
Texas		157		11,495,842		95,000		24.7	%		159		11,745,044		97,320		22.51	%
Utah		1		86,000		575		0.1	%
Virginia		17		1,265,058		11,535		2.3	%		18		1,382,818		12,576		2.21	%
Wisconsin		2		121,442		1,138		0.1	%		2		169,595		1,726		0.19	%

Total		659		46,167,293		414,084		100.0	%		706		49,611,063		448,897		100.0	%

At December 31, ~~2016,~~2017, the Properties had an average occupancy of ~~87.76%~~88.7% and an annualized rent per occupied square foot of ~~$13.86.~~$14.07.

Item 3.

Legal Proceedings

~~Item 3.~~

~~Legal Proceedings~~

On or about August 25, 2014, a putative class action was filed against the Company in the Superior Court of New Jersey Law Division Burlington County. The action seeks to obtain declaratory, injunctive and monetary relief for a class of consumers based upon alleged violations by the Company of ~~the New Jersey Truth in Customer Contract, Warranty and Notice Act, the New Jersey Consumer Fraud Act and the New Jersey Insurance Producer Licensing Act.~~various statutory laws. On October 17, 2014, the action was removed from the Superior Court of New Jersey Law Division Burlington County to the United States District Court for the District of New Jersey. The Company brought a motion to partially dismiss the complaint for failure to state a claim, and on July 16, 2015, the Company’s motion was granted in part and denied in part. On October 20, 2016, the complaint was amended to add additional claims. The parties have entered into a ~~claim that~~memorandum of understanding to settle all claims for an aggregate amount of $8.0 million. In February 2018, the motion for the preliminary approval of the proposed class action settlement was granted. The aggregate settlement amount of $8.0 million ($6.0 million after considering income tax impact) has been recorded as a liability of in the Company’s ~~insurance program violates New Jersey consumer protection laws.~~consolidated balance sheet. A portion of the settlement expense relates to self-storage facilities that are managed by the Company through its taxable REIT subsidiary. There is an income tax impact to the Company on that portion of the settlement expense as a result. The ~~Company intends~~settlement is subject to ~~vigorously defend~~final approval by the ~~action, and the possibility of any adverse outcome cannot be determined at this time.~~court, a decision which is expected in 2018.

Item 4.

Mine Safety Disclosures

Not Applicable

~~Part~~Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Common Stock ~~was~~is traded on the New York Stock Exchange under the symbol ~~“SSS” until August 15, 2016 at which time our symbol was change~~ “LSI”. Set forth below are the high and low sales prices for our Common Stock for each full quarterly period within the two most recent fiscal years.


Quarter 2015	High		Low
1st	$	97.76	$	87.40
2nd		94.84		85.95
3rd		99.32		85.69
4th		110.60		93.33

Quarter 2016	High		Low		High		Low
1st	$	118.18	$	98.80	$	118.18	$	98.80
2nd	$	117.81	$	98.93	$	117.81	$	98.93
3rd	$	107.71	$	86.45	$	107.71	$	86.45
4th	$	88.89	$	77.00	$	88.89	$	77.00

Quarter 2017	High		Low
1st	$	89.24	$	79.38
2nd	$	87.87	$	72.08
3rd	$	83.90	$	69.00
4th	$	91.75	$	77.88

As of February ~~13, 2017,~~12, 2018, there were approximately ~~662~~590 holders of record of our Common Stock. These figures do not include common shares held by brokers and other institutions on behalf of shareholders.

We have paid quarterly dividends to our shareholders since our inception. Reflected in the table below are the dividends paid in the last two years.

For federal income tax purposes, distributions to shareholders are treated as ordinary income, capital gain, return of capital or a combination thereof. Distributions to shareholders for ~~2016~~2017 represent ~~95%~~83% ordinary income and 5%17% return of capital.

History of Dividends Declared on Common Stock


~~January 2015~~		$	~~0.750 per share~~
~~April 2015~~		$	~~0.750 per share~~
~~July 2015~~		$	~~0.850 per share~~
~~October 2015~~		$	~~0.850 per share~~

January 2016	$	$	~~0.850~~ 0.85 per share
April 2016	$	$	~~0.950~~ 0.95 per share
July 2016	$	$	~~0.950~~ 0.95 per share
October 2016	$	$	~~0.950~~ 0.95 per share

January 2017	$	0.95 per share
April 2017	$	1.00 per share
July 2017	$	1.00 per share
October 2017	$	1.00 per share

For each quarter in ~~2015~~2016 and ~~2016,~~2017, the Operating Partnership paid a cash distribution per unit in an amount equal to the dividend paid on a share of common stock for such quarter.

~~In 2016,~~

The following table summarizes our purchases of our common stock for the ~~Operating Partnership issued 90,477 OP Units with a fair value~~year ended December 31, 2017.

Issuer Purchases of $9.5 million to pay part of the consideration to acquire certain self-storage properties. The issuance of OP Units in connection with these acquisitions were exempt from registration under Section 4(2) of theEquity Securities ~~Act of 1933, as amended, because it did not involve any public offering.~~

Period	(a) Total number of shares purchased		(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans or programs (1)		(d) Approx. dollar value of shares that may yet be purchased under the plans or programs (1)
August 1, 2017 - August 31, 2017		92,150	$	72.98		92,150	$	193,274,647
September 1, 2017 - September 30, 2017		20,404		73.94		20,404		191,765,955
October 1, 2017 - December 31, 2017		—		—		—		—
Total		112,554		73.16		112,554	$	191,765,955
(1) On August 2, 2017, the Company’s Board of Directors authorized the repurchase of up to $200 million of the Company’s common stock. The program does not have an expiration date but may be suspended or discontinued at any time.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information as of December 31, ~~2016,~~2017, with respect to equity compensation plans under which shares of the Company’s Common Stock may be issued.


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)		Weighted average exercise price of outstanding options, warrants and rights ($)		Number of securities remaining available for future issuance (#)		Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance
Equity compensation plans approved by shareholders:
2005 Award and Option Plan		77,206	$	45.49		—		76,106	$	45.59		—
2015 Award and Option Plan (2)		79,620	$	—		435,570		124,402	$	—		345,383
2009 Outside Directors’ Stock Option and Award Plan		18,500	$	79.58		71,016		18,500	$	79.58		67,871
Deferred Compensation Plan for Directors (1)		20,513		N/A		23,625		21,540	N/A			22,598
Equity compensation plans not approved by shareholders:		N/A		N/A		N/A	N/A		N/A		N/A

(1)

(2)

Includes the maximum number of shares ~~(79,620)~~(124,402) that could be issued as part of 2015, 2016 and ~~2016~~2017 performance-based awards. The actual number of shares to be issued will be determined at the end of the ~~three year~~three-year performance periods in 2018, 2019 and ~~2019.~~2020. See ~~note~~Note 9 ofto our consolidated financial ~~statements.~~statements filed herewith.

CORPORATE PERFORMANCE GRAPH

The following chart and line-graph presentation compares (i) the Company’s shareholder return on an indexed basis since December 31, ~~2011~~2012 with (ii) the S&P Stock Index and (iii) the National Association of Real Estate Investment Trusts Equity Index.

CUMULATIVE TOTAL SHAREHOLDER RETURN

LIFE STORAGE, INC.

DECEMBER 31, ~~2011~~2012 - DECEMBER 31, ~~2016~~2017


	Dec. 31, 2011		Dec. 31, 2012		Dec. 31, 2013		Dec. 31, 2014		Dec. 31, 2015		Dec. 31, 2016		Dec. 31, 2012		Dec. 31, 2013		Dec. 31, 2014		Dec. 31, 2015		Dec. 31, 2016		Dec. 31, 2017
S&P		100.00		116.00		153.57		174.60		177.01		198.18		100.00		132.39		150.51		152.59		170.84		208.14
NAREIT		100.00		118.06		120.97		157.43		162.46		176.30		100.00		102.47		133.35		137.61		149.33		157.14
LSI		100.00		150.49		162.72		226.02		287.95		237.27		100.00		108.13		150.19		191.34		157.66		173.11

The foregoing item assumes $100.00 invested on December 31, ~~2011,~~2012, with dividends reinvested.

Item 6.

Selected Financial Data

LIFE STORAGE, INC.

The following table sets forth selected financial and operating data on an historical consolidated basis for the Parent Company. The selected historical financial data as of and for the five-year period ended December 31, ~~2016~~2017 are derived from the Parent Company’s consolidated financial statements, which have been audited by Ernst & Young LLP, an independent registered public accounting firm. The consolidated financial statements as of December 31, ~~2016~~2017 and ~~2015,~~2016, and for each of the years in the three-year period ended December 31, ~~2016,~~2017, and their report thereon, are included herein. The other data presented below is not derived from the financial statements.

The following selected financial and operating information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and related notes thereto of the Parent Company included elsewhere in this Annual Report on Form 10-K:


	At or For Year Ended December 31,															At or For Year Ended December 31,
(dollars in thousands, except per share data)	2016			2015			2014			2013			2012			2017			2016			2015			2014			2013
Operating Data
Operating revenues	$	462,608		$	366,602		$	326,080		$	273,507		$	234,082		$	529,750		$	462,608		$	366,602		$	326,080		$	273,507
Income from continuing operations		84,956			113,077			89,057			71,472			48,121			96,809			84,956			113,077			89,057			71,472
Income from discontinued operations (1)		—			—			—			3,123			7,520			—			—			—			—			3,123
Net income		84,956			113,077			89,057			74,595			55,641			96,809			84,956			113,077			89,057			74,595
Net income attributable to common shareholders		85,225			112,524			88,531			74,126			55,128			96,365			85,225			112,524			88,531			74,126
Income from continuing operations per common share attributable to common shareholders – diluted		1.96			3.16			2.67			2.26			1.61			2.07			1.96			3.16			2.67			2.26
Net income per common share attributable to common shareholders – basic		1.97			3.18			2.68			2.37			1.88			2.08			1.97			3.18			2.68			2.37
Net income per common share attributable to common shareholders – diluted		1.96			3.16			2.67			2.36			1.87			2.07			1.96			3.16			2.67			2.36
Dividends declared per common share (2)		3.70			3.20			2.72			2.02			1.80			3.95			3.70			3.20			2.72			2.02
Balance Sheet Data
Investment in storage facilities at cost	$	4,243,308		$	2,491,702		$	2,177,983		$	1,864,637		$	1,742,354		$	4,321,410		$	4,243,308		$	2,491,702		$	2,177,983		$	1,864,637
Total assets		3,857,984			2,118,822			1,850,727			1,558,894			1,480,880			3,876,774			3,857,984			2,118,822			1,850,727			1,558,894
Total debt		1,653,552			827,643			797,054			623,273			680,821			1,726,763			1,653,552			827,643			797,054			623,273
Total liabilities		1,751,399			898,336			861,236			675,245			739,480			1,829,078			1,751,399			898,336			861,236			675,245
Other Data
Net cash provided by operating activities	$	225,550		$	186,198		$	146,068		$	120,646		$	98,762		$	248,580		$	225,550		$	186,198		$	146,068		$	120,646
Net cash used in investing activities		(1,796,069	)		(328,689	)		(334,993	)		(114,345	)		(175,664	)		(156,510	)		(1,796,069	)		(328,689	)		(334,993	)		(114,345	)
Net cash provided by (used in) financing activities		1,587,184			140,968			187,944			(4,032	)		76,836
Net cash (used in) provided by financing activities																	(106,588	)		1,587,184			140,968			187,944			(4,032	)

(1)	In 2013 we sold four ~~stores and in 2012 we sold seventeen~~ stores whose results of operations and gain ~~(loss)~~ on disposal are classified as discontinued operations for all previous years presented.

(2)

~~In 2012 we declared regular quarterly dividends of $0.45 in January, April, July and October.~~

In 2013 we declared regular quarterly dividends of $0.48 in January and April, and $0.53 in July and October. In 2014 we declared regular quarterly dividends of $0.68 in January, April, July and October. In 2015 we declared regular quarterly dividends of $0.75 in January and April, and $0.85 in July and October. In 2016 we declared regular quarterly dividends of $0.85 in January and $0.95 in April, July and October. In 2017 we declared regular quarterly dividends of $0.95 in January and $1.00 in April, July and October.

LIFE STORAGE LP

The following table sets forth selected financial and operating data on an historical consolidated basis for the Operating Partnership. The selected historical financial data as of and for the five-year period ended December 31, ~~2016~~2017 are derived from the Operating Partnership’s consolidated financial ~~statements. The consolidated financial~~ statements, ~~for the years ending December 31, 2013 through December 31, 2016~~which have been audited by Ernst & Young LLP, an independent registered public accounting firm. The consolidated financial statements as of December 31, ~~2016~~2017 and ~~2015,~~2016, and for each of the years in the three-year period ended December 31, ~~2016,~~2017, and their report thereon, are included herein. The other data presented below is not derived from the financial statements.

The following selected financial and operating information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and related notes thereto of the Operating Partnership included elsewhere in this Annual Report on Form 10-K:


	At or For Year Ended December 31,															At or For Year Ended December 31,
(dollars in thousands, except per unit data)	2016			2015			2014			2013			2012			2017			2016			2015			2014			2013
Operating Data
Operating revenues	$	462,608		$	366,602		$	326,080		$	273,507		$	234,082		$	529,750		$	462,608		$	366,602		$	326,080		$	273,507
Income from continuing operations		84,956			113,077			89,057			71,472			48,121			96,809			84,956			113,077			89,057			71,472
Income from discontinued operations (1)		—			—			—			3,123			7,520			—			—			—			—			3,123
Net income		84,956			113,077			89,057			74,595			55,641			96,809			84,956			113,077			89,057			74,595
Net income attributable to common unitholders		85,225			112,524			88,531			74,126			55,128			96,365			85,225			112,524			88,531			74,126
Income from continuing operations per common unit attributable to common unitholders – diluted		1.96			3.16			2.67			2.26			1.61			2.07			1.96			3.16			2.67			2.26
Net income per common unit attributable to common unitholders – basic		1.97			3.18			2.68			2.37			1.88			2.08			1.97			3.18			2.68			2.37
Net income per common unit attributable to common unitholders – diluted		1.96			3.16			2.67			2.36			1.87			2.07			1.96			3.16			2.67			2.36
Distributions declared per common unit (2)		3.70			3.20			2.72			2.02			1.80			3.95			3.70			3.20			2.72			2.02
Balance Sheet Data
Investment in storage facilities at cost	$	4,243,308		$	2,491,702		$	2,177,983		$	1,864,637		$	1,742,354		$	4,321,410		$	4,243,308		$	2,491,702		$	2,177,983		$	1,864,637
Total assets		3,857,984			2,118,822			1,850,727			1,558,894			1,480,880			3,876,774			3,857,984			2,118,822			1,850,727			1,558,894
Total debt		1,653,552			827,643			797,054			623,273			680,821			1,726,763			1,653,552			827,643			797,054			623,273
Total liabilities		1,751,399			898,336			861,236			675,245			739,480			1,829,078			1,751,399			898,336			861,236			675,245
Other Data
Net cash provided by operating activities	$	225,550		$	186,198		$	146,068		$	120,646		$	98,762		$	248,580		$	225,550		$	186,198		$	146,068		$	120,646
Net cash used in investing activities		(1,796,069	)		(328,689	)		(334,993	)		(114,345	)		(175,664	)		(156,510	)		(1,796,069	)		(328,689	)		(334,993	)		(114,345	)
Net cash provided by (used in) financing activities		1,587,184			140,968			187,944			(4,032	)		76,836
Net cash (used in) provided by financing activities																	(106,588	)		1,587,184			140,968			187,944			(4,032	)

(1)	In 2013 we sold four ~~stores and in 2012 we sold seventeen~~ stores whose results of operations and gain ~~(loss)~~ on disposal are classified as discontinued operations for all previous years presented.

(2)

~~In 2012 we declared regular quarterly distributions of $0.45 in January, April, July and October.~~

In 2013 we declared regular quarterly distributions of $0.48 in January and April, and $0.53 in July and October. In 2014 we declared regular quarterly distributions of $0.68 in January, April, July and October. In 2015 we declared regular quarterly distributions of $0.75 in January and April, and $0.85 in July and October. In 2016 we declared regular quarterly distributions of $0.85 in January and $0.95 in April, July and October. In 2017 we declared regular quarterly distributions of $0.95 in January and $1.00 in April, July and October.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.

Disclosure Regarding Forward-Looking Statements

When used in this discussion and elsewhere in this document, the words “intends,” “believes,” “expects,” “anticipates,” and similar expressions are intended to identify “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the effect of competition from new self-storage facilities, which would cause rents and occupancy rates to decline; the Company’s ability to evaluate, finance and integrate acquired businesses into the Company’s existing business and operations; the Company’s ability to effectively compete in the industry in which it does business; the Company’s existing indebtedness may mature in an unfavorable credit environment, preventing refinancing or forcing refinancing of the indebtedness on terms that are not as favorable as the existing terms; interest rates may fluctuate, impacting costs associated with the Company’s outstanding floating rate debt; the Company’s ability to comply with debt covenants; any future ratings on the Company’s debt instruments; the regional concentration of the Company’s business may subject it to economic downturns in the states of Florida and Texas; the Company’s reliance on its call center; the Company’s cash flow may be insufficient to meet required payments of operating expenses, principal, interest and dividends; and tax law changes that may change the taxability of future income.

Business and Overview

We believe we are the fifth largest operator of self-storage properties in the United States based on square feet owned and managed. All our stores conduct business under the customer-friendly ~~names~~name Life Storage^® ~~or Uncle Bob’s Self Storage~~^®~~. At December 31, 2016, there remain stores in certain markets that continue to operate under the name Uncle Bob’s Self Storage~~^® ~~and will continue to do so until our full transition to the Life Storage~~^® ~~name is complete in the first half of 2017.~~ ®.

Operating Strategy

Our operating strategy is designed to generate growth and enhance value by:

Increasing operating performance and cash flow through aggressive management of our stores:

We seek to differentiate our self-storage facilities from our competition through innovative marketing and value-added product offerings including:

Strategic and efficient Web and Mobile marketing that places Life Storage in front of customers in search engines at the right time for conversion;

Regional marketing which creates effective brand awareness in the cities where we do business;

Our Customer Care Center, established in 2000, answers sales inquiries and makes reservations for all of our Properties on a centralized basis. Further, our call center and customer contact software was developed in-house and is 100% supported by our in-house experts;

Our truck move-in program, under which, at present, 396 of our stores offer a free Life Storage truck to assist our customers moving into their spaces, and also serve as a moving billboard further supporting our branding efforts;

Our dehumidification system, which provides our customers with a better environment to store their goods and improves yields on our Properties;

Our truck move-in program, under which, at present, 362 of our stores offer a free Life Storage or Uncle Bob’s truck to assist our customers moving into their spaces, and also serve as a moving billboard further supporting our branding efforts;

~~Our dehumidification system, which provides our customers with a better environment to store their goods and improves yields on our Properties;~~

~~Strategic and efficient Web and Mobile marketing that places Life Storage in front of customers in search engines at the right time for conversion;~~

~~Regional marketing which creates effective brand awareness in the cities where we do business.~~

Our customized computer applications link each of our primary sales channels (customer care center, web, and store) allowing for real time access to space type and inventory, pricing, promotions, and other pertinent store information. This also provides us with raw data on historical and current pricing, move-in and move-out activity, specials and occupancies, etc. This data is then used within the advanced pricing analytics programs employed by our revenue management ~~team.~~team;

All of our store employees receive a high level of training. New store associates are assigned a Certified Training Manager as a mentor during their initial training period. In addition, all employees have access to our online training and development portal for initial training as well as continuing education. Finally, we have a company intranet that acts as a communications portal for company policy and procedures, online ordering, incentive rankings, etc.

Acquiring additional stores:

Our objective is to acquire new stores in markets in which we currently operate. This is a proven strategy we have employed over the years as it facilitates our branding efforts, grows market share, and allows us to achieve improved economies of scale through shared advertising, payroll, and other services.

We also look to enter new markets that are in the top 50 Metropolitan Statistical Area (MSA) by acquiring established multi-property portfolios. With this strategy we are then able to seek out additional acquisition or third party management opportunities to continue to grow market share, branding and enhance economies of scale.

•

Expanding our management business:

We see our management business as a source of future acquisitions. We hold a minority interest in ~~two~~multiple joint ventures which hold a total of 6998 properties that we ~~manage and two additional joint ventures which acquired a total of five properties in January 2017 that we have managed since acquisition.~~manage. In addition, we manage 2642 self-storage facilities for which we have no ownership. We may enter into additional management agreements and develop additional joint ventures in the future.

Expanding and enhancing our existing stores:

Over the past five years we have undertaken a program of expanding and enhancing our Properties. In ~~2012, we added 372,000 square feet to existing Properties and converted 35,000 square feet to premium storage for a total cost of approximately $22.5 million; in~~ 2013, we added 295,000 square feet to existing Properties and converted 9,000 square feet to premium storage for a total cost of approximately $17.9 million; in 2014, we added 272,000 square feet to existing Properties and converted 9,000 square feet to premium storage for a total cost of approximately $18.3 million; in 2015, we added 256,000 square feet to existing Properties and converted 5,000 square feet to premium storage for a total cost of approximately $14.1 million; ~~and~~ in 2016, we added 343,000 square feet to existing Properties and converted 55,000 square feet to premium storage for a total cost of approximately $22.4 million; and in 2017, we added 382,000 square feet to existing Properties and converted 122,000 square feet to premium storage for a total cost of approximately $35.2 million. From ~~2011~~2012 through ~~2016~~2017 we also installed solar panels on 2923 buildings for a total cost of approximately ~~$9.6~~$7.7 million. Our solar panel initiative, which began in 2011, has reduced energy consumption ~~and operating costs~~ at those installed locations.

Supply and Demand / Operating Trends

We believe the supply and demand model in the self-storage industry is micro market specific in that a majority of our business comes from within a five mile radius of our stores. ~~The recent~~Suppressed economic conditions and ~~the~~a tight credit market environment ~~had~~ resulted in a decrease in new supply on a national basis from 2010-2015, but the out-performance of the sector compared to other real estate asset classes has drawn new capital to self-storage. The Company experienced significant new competition beginning in 2016, especially in its Texas markets, and expects ~~a modest, but~~ noticeable growth in new supply at least through ~~2018. We~~2019. Despite the inflow of additional properties, we have seen capitalization rates on quality acquisitions in the top fifty major metropolitan markets (expected annual return on investment) remain stable at approximately ~~4.50%~~5.00% to 5.50%.

~~Although our industry~~Beginning in 2010, subsequent to the economic recession in 2009, we have experienced ~~softness in 2008 through 2011, our~~annual same store sales ~~showed positive~~ increases ~~save for 2009, when we showed a 3.1% decrease in same store revenue. That was~~up to and including the ~~first time in recent history that we recorded negative same store sales.~~current year. We feel our recent performance further supports the notion that the self-storage industry holds up well ~~through recessions.~~regardless of the prevailing economic landscape.

We believe our same-store move-ins in ~~2016~~2017 were lower than ~~2015~~2016 due to the fact that our stores had higher occupancy in ~~2016,~~2017, resulting in less space to rent. We believe the reduction in same store move-outs is a result of customers renting with us for longer periods.


	2016		2015		Change			2017		2016		Change
Same store move ins		162,268		166,843		(4,575	)		162,980		167,856		(4,876	)
Same store move outs		159,841		162,948		(3,107	)		160,007		165,193		(5,186	)

Difference		2,427		3,895		(1,468	)		2,973		2,663		310

~~We were able to maintain relatively flat expenses at the store operating level from 2009 through 2012, but did see above average~~

Elevated property tax increases ~~in property taxes and insurance in 2013, and above average increases in property taxes in~~is a trend that we experienced from 2014 through ~~2016.~~2017. We expect same store expense growth resulting from increases in wages, health costs, property insurance and property tax increases in ~~2017.~~2018, partially offset by decreased internet marketing costs. We believe the same store expense increases will be at manageable levels.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts reported in our financial statements and the accompanying notes. On an on-going basis, we evaluate our estimates and judgments, including those related to carrying values of storage facilities, bad debts, and contingencies and litigation. We base these estimates on experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Assigning purchase price to assets acquired: ~~The purchase price~~Upon adoption of Accounting Standards Update 2017-01, most of our self-storage facility acquisitions are not considered business combinations and are treated as asset acquisitions. As a result, the cost of acquired storage facilities is assigned primarily to land, land improvements, building, equipment, and in-place customer leases based on the relative fair values of these assets as of the date of acquisition. We use significant unobservable inputs in our determination of the fair values of these assets. The determination of these inputs involves judgments and estimates that can vary for each individual property based on ~~a number of~~various factors specific to the properties and the functional, economic and other factors affecting each property. To determine the fair value of land, we use prices per acre derived from observed transactions involving comparable land in similar locations. To determine the fair value of buildings, equipment and improvements, we use financial projections and applicable discount rates to estimate the fair values of properties acquired, as well as current replacement cost estimates based on information derived from construction industry data by geographic region as adjusted for the age, condition, and economic obsolescence associated with these assets. The fair values of in-place customer leases isare based on the rent that would be lost due to the amount of time required to replace existing customers which is based on our historical experience with market demand and turnover in our facilities.

Carrying value of storage facilities: We believe our judgment regarding the impairment of the carrying value of our storage facilities is a critical accounting policy. Our policy is to assess the carrying value of our storage facilities for impairment whenever events or circumstances indicate that the carrying value of a storage facility may not be recoverable. Such events or circumstances would include negative operating cash flow, significant declining revenue per storage facility, significant damage sustained from accidents or natural disasters, or an expectation that, more likely than not, a property will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. When indicators of impairment exist, impairment is evaluated based upon comparing the sum of the expected undiscounted future cash flows to the carrying value of the storage facility, on a property by property basis. If the sum of the undiscounted cash flows is less than the carrying value of the storage facility, an impairment loss is recognized for the amount by which the carrying amount exceeds the fair value of the asset group. If cash flow projections are inaccurate and in the future it is determined that storage facility carrying values

are not recoverable, impairment charges may be required at that time and could materially affect our operating results and financial position. Estimates of undiscounted cash flows could change based upon changes in market conditions, expected occupancy rates, etc. No assets had been determined to be impaired under this policy in ~~2016.~~2017.

Estimated useful lives of long-lived assets: We believe that the estimated lives used for our depreciable, long-lived assets is a critical accounting policy. We periodically evaluate the estimated useful lives of our long-lived assets to determine if any changes are warranted based upon various factors, including changes in the planned usage of the assets, customer demand, etc. Changes in estimated useful lives of these assets could have a material adverse impact on our financial condition or results of operations. In 2017, the Company changed the useful lives of certain assets at self-storage facilities that were identified for replacement as part of the Company’s capital improvement efforts in 2017. Additionally, in 2016, the Company changed the useful lives of existing Uncle Bob’s Self Storage^® signs as a result of the change in the name of the Company’s storage facilities from Uncle Bob’s Self Storage^® to Life Storage^® ~~(See Note 1 to the financial statements)~~ which required replacement of the existing signage. These changes resulted in ana combined increase in depreciation expense of approximately ~~$8.2~~$4.4 million in ~~2016~~2017 as depreciation was accelerated over the new useful lives. The Company estimates that ~~this~~the change related to storage-facility asset replacement will result in an additional increase in depreciation expense of approximately $1$0.3 million in ~~2017 as a result of the replacement of this existing Uncle Bob’s Self Storage~~^® ~~signage. Upon completion of the change, the carrying value of the Uncle Bob’s Self Storage~~^® ~~signage will be zero.~~2018. We have not made any other significant changes to the estimated useful lives of our long-lived assets ~~in the past~~ and we do not have any current expectation of making significant changes in ~~2017.~~2018 other than potentially on any assets identified for replacement in 2018.

Consolidation and investment in joint ventures: We consolidate all wholly owned subsidiaries. Partially owned subsidiaries and joint ventures are consolidated when we control the entity or have the power to direct the activities most significant to the economic performance of the entity. Investments in joint ventures that we do not control but over which we have significant influence are reported using the equity method. Under the equity method, our investment in joint ventures are stated at cost and adjusted for our share of net earnings or losses and reduced by distributions. Equity in earnings of real estate ventures is generally recognized based on our ownership interest in the earnings of each of the unconsolidated real estate ventures.

Revenue and Expense Recognition: Rental income is recognized when earned pursuant to month-to-month leases for storage space. Promotional discounts are recognized as a reduction to rental income over the promotional period, which is generally during the first month of occupancy. Rental income received prior to the start of the rental period is included in deferred revenue.

Qualification as a REIT: We operate, and intend to continue to operate, as a REIT under the Code, but no assurance can be given that we will at all times so qualify. To the extent that we continue to qualify as a REIT, we will not be taxed, with certain limited exceptions, on the taxable income that is distributed to our shareholders. If we fail to qualify as a REIT, any requirement to pay federal income taxes could have a material adverse impact on our financial condition and results of operations.

Recent Accounting Pronouncements

See Note 2 to the financial statements.

YEAR ENDED DECEMBER 31, 2017 COMPARED TO YEAR ENDED DECEMBER 31, 2016

We recorded rental revenues of $485.3 million for the year ended December 31, 2017, an increase of $57.2 million or 13.4% when compared to 2016 rental revenues of $428.1 million. Of the increase in rental revenue, $5.6 million resulted from a 1.6% increase in rental revenues at the 430 core properties considered in same store sales (those properties included in the consolidated results of operations since January 1, 2016, excluding stores not yet stabilized, the properties we sold in 2016 and 2017, six stores significantly impacted by flooding in 2016 and 2017, and two stores that the Company began to fully replace in 2017). The increase in same store rental revenues was a result of a 30 basis point increase in average occupancy and a 0.8% increase in rental income per square foot. The remaining increase in rental revenue of $51.6 million resulted from the stores not included in the same store pool. Other operating income, which includes merchandise sales, insurance administrative fees, truck rentals, management fees and acquisition fees, increased by $9.9 million for the year ended December 31, 2017 compared to 2016 primarily due to increased administrative fees earned on customer insurance, increased management fees earned on managed properties, and increased acquisition fees earned on properties acquired by unconsolidated joint ventures.

Property operations and maintenance expenses increased $19.4 million or 18.8% in 2017 compared to 2016. The 430 core properties considered in the same store pool experienced a $2.3 million or 2.9% increase in such expenses as a result of increases in payroll and higher internet marketing costs in an effort to drive more traffic to the Company’s website as a result of our name change to Life Storage. In addition to the same store increase, property operations and maintenance expenses increased $17.1 million due to the net activity from the stores not included in the same store pool. Real estate tax expense increased $9.8 million or 20.4% in 2017 compared to 2016. The 430 core properties considered in the same store pool experienced a $2.5 million or 6.6% increase which is reflective of a net increase in property tax levies on those properties. In addition to the same store real estate expense increase, real estate taxes increased $7.3 million from the stores not included in the same store pool.

Our 2017 same store results consist of only those properties that have been owned by the Company and included in our consolidated results since January 1, 2016, excluding the stores not yet stabilized, the properties we sold in 2016 and 2017, six stores significantly impacted by flooding in 2016 and 2017, and two stores that the Company began to fully replace in 2017. We believe that same store results is a meaningful measure to investors in evaluating our operating performance because, given the acquisitive nature of the industry, same store results provide information about the overall business after removing the results from those properties that were not consistent from year-to-year. Additionally, same store results are widely used in the real estate industry and the self-storage industry to measure performance. Same store results should be considered in addition to, but not as a substitute for, consolidated results in accordance with GAAP.

The following table sets forth operating data for our 430 same store properties. These results provide information relating to property operating changes without the effects of acquisitions.

Same Store Summary

	Year ended December 31,				Percentage
(dollars in thousands)	2017		2016		Change
Same store rental income	$	357,428	$	351,818		1.6	%
Same store other operating income		20,063		19,361		3.6	%
Total same store operating income		377,491		371,179		1.7	%
Payroll and benefits		32,112		30,857		4.1	%
Real estate taxes		40,459		37,960		6.6	%
Utilities		11,686		11,710		(0.2	)%
Repairs and maintenance		13,613		14,236		(4.4	)%
Office and other operating expenses		12,140		12,113		0.2	%
Insurance		4,380		4,257		2.9	%
Advertising		1,070		1,146		(6.6	)%
Internet marketing		8,250		6,609		24.8	%
Total same store operating expenses		123,710		118,888		4.1	%
Same store net operating income	$	253,781	$	252,291		0.6	%

Net operating income increased $37.9 million or 12.2%% as a result of a 0.6% increase in our same store net operating income and the acquisitions completed since January 1, 2016.

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 expense, depreciation and amortization expense, loss on sale of real estate, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, gain on sale of real estate, and equity in income of joint ventures. We believe that NOI is a meaningful measure to investors in evaluating our operating performance because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, and 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 the 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. There are material limitations to using a measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income.

The following table reconciles NOI generated by our self-storage facilities to our net income presented in the 2017 and 2016 consolidated financial statements.

	Year ended December 31,
(dollars in thousands)	2017			2016
Net income	$	96,809		$	84,956
General and administrative		50,031			43,103
Acquisition related costs		—			29,542
Write-off of acquired property deposits		—			1,783
Operating leases of storage facilities		424			—
Depreciation and amortization		127,485			117,081
Interest expense		74,362			54,504
Interest income		(7	)		(67	)
Loss (gain) on sale of storage facilities		3,503			(15,270	)
Gain on sale of real estate		—			(623	)
Equity in income of joint ventures		(3,314	)		(3,665	)
Net operating income	$	349,293		$	311,344
Net operating income
Same store		253,781			252,291
Other stores and management fee income		95,512			59,053
Total net operating income	$	349,293		$	311,344

General and administrative expenses increased $6.9 million or 16.1% from 2016 to 2017. The key drivers of the increase were the New Jersey lawsuit settlement discussed in Note 14 to the consolidated financial statements and $0.9 million in officer severance recorded in 2017.

There were no acquisition related costs recorded in 2017 as no 2017 acquisitions were considered business combinations. Acquisition related costs were $29.5 million in 2016 related to the acquisition of 122 stores during that period, including the acquisition of LifeStorage, LP.

Depreciation and amortization expense increased to $127.5 million in 2017 from $117.1 million in 2016, primarily due to depreciation related to the properties acquired in 2016 and 2017 and accelerated depreciation on storage facility assets identified for replacement in 2017.

Interest expense increased from $54.5 million in 2016 to $74.4 million in 2017. The increase was primarily due to a full year of interest in 2017 on the $600 million 3.5% senior notes issued in June 2016 and the $200 million 3.67% term loan entered into in July 2016, and $9.6 million of interest expense recorded in 2017 related to interest rate swaps settled in 2017 and the termination of the related hedging relationships.

During 2017, we sold two non-strategic storage facilities in Utah (1) and Texas (1) for net proceeds of approximately $16.9 million, resulting in a $3.5 million loss on sale. The Company has subsequently leased one of these properties and has deferred the related gain until the termination of the lease which is scheduled in 2020. During 2016, we sold eight non-strategic storage facilities in Alabama (1), Georgia (1), Mississippi (1), Texas (1), and Virginia (4) for net proceeds of approximately $34.1 million, resulting in a $15.3 million gain on sale. These dispositions were not classified as discontinued operations since they did not meet the criteria for such classification under ASU 2014-08 guidance.

YEAR ENDED DECEMBER 31, 2016 COMPARED TO YEAR ENDED DECEMBER 31, 2015

We recorded rental revenues of $428.1 million for the year ended December 31, 2016, an increase of $89.7 million or 26.5% when compared to 2015 rental revenues of $338.4 million. Of the increase in rental revenue, $16.1 million resulted from a 5.0% increase in rental revenues at the 417 core properties considered in same store sales (those properties included in the consolidated results of operations since January 1, 2015, excluding the properties we sold in 2016 and 2015, three properties purchased prior to January 1, 2015 that have not yet stabilized and three properties significantly impacted by flooding in 2016). The increase in same store rental revenues was a result of a 50 basis point increase in average occupancy and a 4.3% increase in rental income per square foot. The remaining increase in rental revenue of $73.6 million resulted from the revenues from the acquisition of 145 properties completed since January 1, 2015 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool), slightly offset with the revenue decrease as a result of eight self-storage properties sold in 2016 and three self-storage properties sold in 2015. Other operating income, which includes merchandise sales, insurance administrative fees, truck rentals, management fees and acquisition fees, increased by $6.3 million for the year ended December 31, 2016 compared to 2015 primarily ~~as a result of~~due to increased administrative fees earned on customer insurance.

Property operations and maintenance expenses increased $21.4 million or 26.2% in 2016 compared to 2015. The 417 core properties considered in the same store pool experienced a $1.0 million or 1.3% increase in ~~operating~~such expenses ~~as a result of~~due to increases in payroll and internet marketing costs. The same store pool benefited from reduced utilities, snow removal costs, insurance and yellow page advertising expense. In addition to the same store ~~operating expense~~ increase, ~~operating~~property operations and maintenance expenses increased $20.4 million from the acquisition of 145 properties completed since January 1, 2015 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool), slightly offset with the operating expense decrease as a result of eight self-storage properties sold in 2016 and three self-storage properties sold in 2015. Real estate tax expense increased $11.3 million or 30.9% in 2016 compared to 2015. The 417 core properties considered in the same store pool experienced a $1.9 million or 5.3% increase which is reflective of a net increase in property tax levies on those properties. In addition to the same store real estate expense increase, real estate taxes increased $9.4 million from the acquisition of 145 properties completed since January 1, 2015 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool), slightly offset with the real estate tax expense decrease as a result of eight self-storage properties sold in 2016 and three self-storage properties sold in 2015.

Our 2016 same store results consist of only those properties that were included in our consolidated results since January 1, 2015, excluding the properties we sold in 2016 and 2015, three properties purchased prior to January 1, 2015 that have not yet stabilized and three properties significantly impacted by flooding in 2016. We believe that same store results is a meaningful measure to investors in evaluating our operating performance because, given the acquisitive nature of the industry, same store results provide information about the overall business after removing the results from those properties that were not consistent from year-to-year. Additionally, same store results are widely used in the real estate industry and the self-storage industry to measure performance. Same store results should be considered in addition to, but not as a substitute for, consolidated results in accordance with GAAP.

The following table sets forth operating data for our 417 same store properties. These results provide information relating to property operating changes without the effects of acquisition.

Same Store Summary


	Year ended December 31,				Percentage			Year ended December 31,				Percentage
(dollars in thousands)	2016		2015		Change			2016		2015		Change
Same store rental income	$	339,773	$	323,664		5.0	%	$	339,773	$	323,664		5.0	%
Same store other operating income		18,693		17,085		9.4	%		18,693		17,085		9.4	%

Total same store operating income		358,466		340,749		5.2	%		358,466		340,749		5.2	%
Payroll and benefits		29,754		28,843		3.2	%		29,754		28,843		3.2	%
Real estate taxes		36,707		34,847		5.3	%		36,707		34,847		5.3	%
Utilities		11,217		11,789		(4.9	%)		11,217		11,789		(4.9	)%
Repairs and maintenance		13,516		13,412		0.8	%		13,516		13,412		0.8	%
Office and other operating expenses		11,703		11,373		2.9	%		11,703		11,373		2.9	%
Insurance		4,035		4,414		(8.6	%)		4,035		4,414		(8.6	)%
Advertising and yellow pages		1,114		1,352		(17.6	%)		1,114		1,352		(17.6	)%
Internet marketing		6,409		5,557		15.3	%		6,409		5,557		15.3	%

Total same store operating expenses		114,455		111,587		2.6	%		114,455		111,587		2.6	%

Same store net operating income	$	244,011	$	229,162		6.5	%	$	244,011	$	229,162		6.5	%

Net operating income increased $63.2 million or 25.5% as a result of a 6.5% increase in our same store net operating income and the acquisitions completed since January 1, 2015 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool).

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 expense, depreciation and amortization expense, acquisition related costs, general and administrative expense, and deducting from net income: income from discontinued operations, interest income, gain on sale of real estate, and equity in income of joint ventures. We believe that NOI is a meaningful measure to investors in evaluating our operating performance because we utilize NOI in making decisions with respect to capital allocations, in determining current property values, and 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 the 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. There are material limitations to using a measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income.

The following table reconciles NOI generated by our self-storage facilities to our net income presented in the 2016 and 2015 consolidated financial statements.


	Year ended December 31,						Year ended December 31,
(dollars in thousands)	2016			2015			2016			2015
Net operating income
Same store	$	244,011		$	229,162
Other stores and management fee income		67,333			18,962

Total net operating income		311,344			248,124
Net income							$	84,956		$	113,077
General and administrative		(43,103	)		(38,659	)		43,103			38,659
Acquisition related costs		(29,542	)		(2,991	)		29,542			2,991
Write-off of acquired property deposits		(1,783	)		—			1,783			—
Operating leases of storage facilities		—			(683	)		—			683
Depreciation and amortization		(117,081	)		(58,506	)		117,081			58,506
Interest expense		(54,504	)		(37,124	)		54,504			37,124
Interest income		67			5			(67	)		(5	)
Gain (loss) on sale of storage facilities		15,270			(494	)
(Gain) loss on sale of storage facilities								(15,270	)		494
Gain on sale of real estate		623			—			(623	)		—
Equity in income of joint ventures		3,665			3,405			(3,665	)		(3,405	)

Net income	$	84,956		$	113,077

Net operating income							$	311,344		$	248,124
Net operating income
Same store								244,011			229,162
Other stores and management fee income								67,333			18,962
Total net operating income							$	311,344		$	248,124

General and administrative expenses increased $4.4 million or 11.5% from 2015 to 2016. The key drivers of the increase were $0.9 million in expenses recorded in 2016 related to the Company’s name change, and a $1.7 million increase in professional fees mainly stemming from an increase in accounting fees related to the acquisition of LifeStorage, LP and an increase in legal fees related to the lawsuit in New Jersey. The remaining $1.8 million increase is the result of various other administrative costs, including increased travel expenses and software charges, related to managing the increased number of stores in our portfolio as a result of the LifeStorage, LP acquisition and other smaller acquisitions in 2016.

Acquisition related costs were $29.5 million in 2016 ~~as a result of~~related to the acquisition of 122 stores, including the acquisition of LifeStorage, LP. Acquisition related costs for 2015 were $3.0 million ~~as a result of~~related to the acquisition of 27 stores.

The operating lease expense for storage facilities in 2015 relates to leases which commenced in November 2013 with respect to four self-storage facilities in New York (2) and Connecticut (2). Such leases had annual lease payments of $6 million with a provision for 4% annual increases, and an exclusive option to purchase the facilities for $120 million. We completed the purchase of these four facilities on February 2, 2015, thus eliminating the lease payments thereafter.

Depreciation and amortization expense increased to $117.1 million in 2016 from $58.5 million in 2015, primarily as a result of amortization and depreciation related to the properties acquired in 2015 and 2016 and accelerated depreciation on existing signage ~~that is being~~was replaced as a result of the change in name of the Company’s storage facilities ~~from Uncle Bob’s Self Storage~~^®in 2016 to Life Storage^®. ®.

Interest expense increased from $37.1 million in 2015 to $54.5 million in 2016. The increase was primarily due to interest on bridge loan financing entered into to facilitate the LifeStorage, LP acquisition as well as interest on the $600 million 3.5% senior notes issued in June 2016 and the $200 million 3.67% term loan entered into in July 2016, partially offset by reduced interest costs as a result of the payoff of the $150 million 6.38% term loan in April 2016 with a draw on our line of credit which carries a lower interest rate.

During 2016, we sold eight non-strategic storage facilities in Alabama (1), Georgia (1), Mississippi (1), Texas (1), and Virginia (4) for net proceeds of approximately $34.1 million, resulting in a $15.3 million gain on sale. During 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million. These dispositions were not classified as discontinued operations since they did not meet the criteria for such classification under ASU 2014-08 guidance.

~~YEAR ENDED DECEMBER 31, 2015 COMPARED TO YEAR ENDED DECEMBER 31, 2014~~

We recorded rental revenues of $338.4 million for the year ended December 31, 2015, an increase of $36.4 million or 12.0% when compared to 2014 rental revenues of $302.0 million. Of the increase in rental revenue, $16.9 million resulted from a 5.9% increase in rental revenues at the 399 core properties considered in same store sales (those properties included in the consolidated results of operations in 2014 and 2015, excluding the properties we sold in 2015 and 2014). The increase in same store rental revenues was a result of a 110 basis point increase in average occupancy and a 4.3% increase in rental income per square foot. The remaining increase in rental revenue of $19.5 million resulted from the revenues from the acquisition of 56 properties completed in 2014 and 2015 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool), slightly offset with a revenue decrease as a result of three self-storage properties sold in 2015. Other operating income, which includes merchandise sales, insurance administrative fees, truck rentals, management fees and acquisition fees, increased by $4.1 million for the year ended December 31, 2015 compared to 2014 primarily as a result of increased administrative fees earned on customer insurance and an increase in management fees.

Property operations and maintenance expenses increased $6.6 million or 8.7% in 2015 compared to 2014. The 399 core properties considered in the same store pool experienced a $1.3 million or 1.9% increase in operating expenses as a result of increases in payroll and maintenance costs. The same store pool benefited from reduced utilities, insurance and yellow page advertising expense. In addition to the same store operating expense increase, operating expenses increased $5.3 million from the acquisition of 56 properties completed since January 1, 2014 (excluding the four properties purchased in 2015 that had been leased since November 2013 and are included in the same store pool). Real estate tax expense increased $4.5 million as a result of a 5.2% increase in property taxes on the 399 same store pool and the inclusion of taxes on the properties acquired or leased in 2015 and 2014.

Our 2015 same store results consist of only those properties that were included in our consolidated results since January 1, 2014, excluding the properties we sold in 2015 and 2014. The following table sets forth operating data for our 399 same store properties. These results provide information relating to property operating changes without the effects of acquisition.

~~Same Store Summary~~

   Year ended December 31,    Percentage
(dollars in thousands)
   2015    2014    Change
Same store rental income
   $ 301,525    $ 284,613    5.9 %
Same store other operating income
   16,406    14,791    10.9 %






Total same store operating income
   317,931    299,404    6.2 %
Payroll and benefits
   27,469    26,518    3.6 %
Real estate taxes
   31,593    30,041    5.2 %
Utilities
   10,925    11,389    (4.1 %)
Repairs and maintenance
   12,400    11,256    10.2 %
Office and other operating expenses
   10,294    10,390    (0.9 %)
Insurance
   4,059    4,152    (2.2 %)
Advertising and yellow pages
   1,297    1,441    (10.0 %)
Internet marketing
   5,319    5,307    0.2 %






Total same store operating expenses
   103,356    100,494    2.8 %






Same store net operating income
   $ 214,575    $ 198,910    7.9 %

~~Net operating income increased $29.5 million or 13.5% as a result of a 7.9% increase in our same store net operating income and the acquisitions completed in 2014 and 2015.~~

~~Reclassification~~

Internet advertising expense, which had been included in the general and administrative expense line in the Company’s 2014 financial statements, was reclassified to property operations and maintenance expense in 2015 to conform to the then current year presentation. The Company believes the classification of internet advertising expenses as property operations and maintenance expense is more consistent with industry trends. As a result of this reclassification, for the year ended December 31, 2014, the Company’s financial statements show an increase in property operations and maintenance expense and a reduction of general and administrative expenses of $5,570 (dollars in thousands) as compared to the amounts originally reported in the Company’s 2014 financial statements for that period.

~~The following table reconciles NOI generated by our self-storage facilities to our net income presented in the 2015 and 2014 consolidated financial statements.~~

   Year ended December 31,
(dollars in thousands)
   2015    2014
Net operating income

Same store
   $ 214,575    $ 198,910
Other stores and management fee income
   33,549    19,740




Total net operating income
   248,124    218,650
General and administrative
   (38,659 )    (35,222 )
Acquisition related costs
   (2,991 )    (7,359 )
Operating leases of storage facilities
   (683 )    (7,987 )
Depreciation and amortization
   (58,506 )    (51,749 )
Interest expense
   (37,124 )    (34,578 )
Interest income
   5    40
(Loss) gain on sale of real estate
   (494 )    5,176
Equity in income of joint ventures
   3,405    2,086




Net income
   $ 113,077    $ 89,057

General and administrative expenses increased $3.4 million or 9.8% from 2014 to 2015. The key drivers of the increase were a $1.6 million increase in salaries and performance incentives, and a $1.0 million increase in professional fees mainly stemming from an increase in legal fees related to the lawsuit in New Jersey. The remaining $0.8 million increase is the result of various other administrative costs related to managing the increased number of stores in our portfolio as compared to 2014.

Acquisition related costs were $3.0 million in 2015 as a result of the acquisition of 27 stores. Acquisition related costs for 2014 were $7.4 million as a result of the acquisition of 33 stores in 2014, and included a $1.3 million loan defeasance cost paid by the Company.

The operating lease expense for storage facilities in the 2015 and 2014 periods relates to leases which commenced in November 2013 with respect to four self-storage facilities in New York (2) and Connecticut (2). Such leases had annual lease payments of $6 million with a provision for 4% annual increases, and an exclusive option to purchase the facilities for $120 million. We completed the purchase of these four facilities on February 2, 2015, which eliminated the lease payment at that time.

~~Depreciation and amortization expense increased to $58.5 million in 2015 from $51.8 million in 2014, primarily as a result of depreciation on the properties acquired in 2014 and 2015.~~

Interest expense increased from $34.6 million in 2014 to $37.1 million in 2015. The increase was due to the additional $175 million term note borrowings in April 2014 and additional line of credit borrowings in 2015 which were used to fund a portion of our acquisitions.

During 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million. During 2014, we sold two non-strategic facilities in Texas for net proceeds of approximately $11.0 million resulting in a gain on the sale of real estate of $5.2 million. Since the 2014 and 2015 sales occurred subsequent to the Company’s adoption of ASU 2014-08, these sales were not classified as discontinued operations since they did not meet the criteria for such classification under ASU 2014-08 guidance.

FUNDS FROM OPERATIONS

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.

FFO 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.

In October and November of 2011, NAREIT issued guidance for reporting FFO that reaffirmed NAREIT’s view that impairment write-downs of depreciable real estate should be excluded from the computation of FFO. This view is ~~based on the fact that~~because impairment write-downs are akin to and effectively reflect the early recognition of losses on prospective sales of depreciable property or represent adjustments of previously charged depreciation. Since depreciation of real estate and gains/losses from sales are excluded from FFO, it is NAREIT’s view that it is consistent and appropriate for write-downs of depreciable real estate to also be excluded. Our calculation of FFO excludes impairment write-downs of investments in storage facilities.

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.

Reconciliation of Net Income to Funds From Operations

   For Year Ended December 31,
(dollars in thousands)    2016 2015 2014 2013 2012
Net income attributable to common shareholders
   $ 85,225 $ 112,524 $ 88,531 $ 74,126 $ 55,128
Net income attributable to noncontrolling interests in the Operating Partnership
   398 553 526 469 513
Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs
   115,531 57,429 50,827 44,369 40,153
Depreciation of real estate included in discontinued operations
   —   —   —   313 1,137
Depreciation and amortization from unconsolidated joint ventures
   2,595 2,435 1,666 1,496 1,595
(Gain) loss on sale of real estate
   (15,270 ) 494 (5,176 ) (2,852 ) (5,185 )
Funds from operations allocable to noncontrolling interest in the Operating Partnership
   (857 ) (848 ) (806 ) (742 ) (881 )


Funds from operations available to common shareholders
   $ 187,622 $ 172,587 $ 135,568 $ 117,179 $ 92,460

	For Year Ended December 31,
(dollars in thousands)	2017			2016			2015			2014			2013
Net income attributable to common shareholders	$	96,365		$	85,225		$	112,524		$	88,531		$	74,126
Net income attributable to noncontrolling interests in the Operating Partnership		444			398			553			526			469
Depreciation of real estate and amortization of intangible assets exclusive of debt issuance costs		125,580			115,531			57,429			50,827			44,369
Depreciation of real estate included in discontinued operations		—			—			—			—			313
Depreciation and amortization from unconsolidated joint ventures		4,296			2,595			2,435			1,666			1,496
Loss (gain) on sale of real estate		3,503			(15,270	)		494			(5,176	)		(2,852	)
Funds from operations allocable to noncontrolling interest in the Operating Partnership		(1,045	)		(857	)		(848	)		(806	)		(742	)
Funds from operations available to common shareholders	$	229,143		$	187,622		$	172,587		$	135,568		$	117,179

LIQUIDITY AND CAPITAL RESOURCES

Our line of credit and term notes require us to meet certain financial covenants measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness, and limitations on dividend payouts. At December 31, ~~2016,~~2017, the Company was in compliance with all debt covenants. In the event that the Company violates its debt covenants in the future, the amounts due under the agreements could be callable by the lenders and could adversely affect our credit rating requiring us to pay higher interest and other debt-related costs. We believe that if operating results remain consistent with historical levels and levels of other debt and liabilities remain consistent with amounts outstanding at December 31, ~~2016,~~2017, the entire availability under our line of credit could be drawn without violating our debt covenants.

Our ability to retain cash flow is limited because we operate as a REIT. ~~In order to~~To maintain our REIT status, a substantial portion of our operating cash flow must be used to pay dividends to our shareholders. We believe that our internally generated net cash provided by operating activities and the availability on our line of credit will be sufficient to fund ongoing operations, capital improvements, dividends and debt service requirements.

Cash flows from operating activities were $248.6 million, $225.6 million, ~~$186.2 million,~~ and ~~$146.1~~$186.2 million for the years ended December 31, 2017, 2016, ~~2015,~~ and ~~2014,~~2015, respectively. The increases in operating cash flows from 2016 to 2017 and from 2015 to 2016 ~~and from 2014 to 2015~~ were primarily due to an increase in net income as adjusted for non-cash depreciation and amortization expenses and other non-cash items during these periods.

Cash used in investing activities was $156.5 million, $1,796.1 million, ~~$328.7 million,~~ and ~~$335.0~~$328.7 million for the years ended December 31, 2017, 2016, and 2015 respectively. The decrease in cash used from 2016 to 2017 was primarily a result of the acquisition of LifeStorage, LP and ~~2014 respectively.~~other acquisitions made in 2016, partially offset by an increase in the Company’s investment in unconsolidated joint ventures in 2017. The increase in cash used in investing activities from 2015 to 2016 was primarily a result of the acquisition of LifeStorage, LP and other acquisitions made in 2016, partially offset by increased proceeds on the sale of storage facilities in 2016. ~~The decrease in cash~~

Cash used in ~~investing~~financing activities ~~from 2014 to 2015~~ was ~~a result of lower investments~~$106.6 million in ~~unconsolidated joint ventures in 2015 as~~2017 compared to ~~2014.~~

cash provided by financing activities of $1,587.2 million in 2016. In 2017, the Company increased its dividends paid on its common stock from $156.2 million in 2016 to $183.7 million in 2017. On December 7, 2017, the Operating Partnership issued $450 million in senior notes, the proceeds of which were used primarily to repay $225 million of then outstanding term notes and to pay down the Company’s revolving line of credit. Also, during 2017, the Company repurchased 112,554 of the Company’s outstanding common shares for $8.2 million under the Company’s Buyback Program discussed further below. In 2016, the Company received net proceeds from the sale of common stock through public offerings of $935.1 million. The Company also received net proceeds from the issuance of term notes of $796.7 million and net proceeds from the Company’s revolving credit line of $174.0 million in 2016. Further, the Company settled pre-issuance interest rate swaps on the 2026 Notes (discussed further below) for $9.2 million in 2016. Cash provided by financing activities was $1,587.2 million in 2016 compared to $141.0 million in 2015. ~~On January 20,~~The increase from 2015 to 2016 was primarily a result of the ~~Company completed~~previously mentioned 2016 activity and a $43.2 million increase in dividends paid.

For the ~~public offering of 2,645,000 shares of its common stock at $105.75 per share. Net proceeds~~years 2015, 2016 and 2017, see Note 5 to the ~~Company after deducting underwriting discounts and commissions and offering expenses were approximately $269.7 million. The Company used the net proceeds from this offering to repay a portion~~consolidated financial statements for details of ~~the indebtedness then outstanding on~~ the Company’s unsecured line of credit which had been used to fund acquisitions in the first quarter of 2016. Also on May 25, 2016, the Company completed the public offering of 6,900,000 shares of its common stock at $100.00 per share. Net proceedsand term note activity, Note 6 to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $665.4 million. The Company initially used the net proceeds from this offering to repay the indebtedness then outstanding onconsolidated financial statements for the Company’s ~~unsecured line of credit. The remaining proceeds from~~mortgage activity and related details, and Note 12 to the ~~May offering, the proceeds from~~consolidated financial statements for the Company’s June 2016 unsecured senior notes offering, and draws on the Company’s revolving line of credit were used to fund the purchase of LifeStorage, LP in July 2016 for approximately $1.3 billion. Cash provided by financing activities was $141.0 million in 2015 compared to $187.9 million in 2014. The decrease from 2014 to 2015 was a result of a $23.0 million increase in dividends paid and a reduction in debt from 2014 to 2015. In 2015 we used $225.7 million in net proceeds from the sale of common stock and $30.0 million in net proceeds from draws on our line of credit to fund property acquisitions. In 2014 we used $112.7 million in net proceeds from the sale of common stock and $175.0 million in proceeds from the issuance of a term note to fund property acquisitions.

On March 3, 2015, the Company completed the public offering of 1,380,000 shares of its common stock at $90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $119.5 million. The Company used the net proceeds from the offering to repay a portion of the indebtedness outstanding on the Company’s unsecured line of credit.

~~On May 12, 2014, the Company entered into a continuous~~ equity offering program (“Equity Program”) with Wells Fargo Securities, LLC (“Wells Fargo”), Jefferies LLC (“Jefferies”), SunTrust Robinson Humphrey, Inc. (“SunTrust”), Piper Jaffray & Co. (“Piper”), HSBC Securities (USA) Inc. (“HSBC”), and BB&T Capital Markets, a division of BB&T Securities, LLC (“BB&T”), pursuant to which the Company may sell from time to time up to $225 million in aggregate offering price of shares of the Company’s common stock. Actual sales under the Equity Program will depend on a variety of factors and conditions, including, but not limited to, market conditions, the

trading price of the Company’s common stock, and determinations of the appropriate sources of funding for the Company. The Company expects to continue to offer, sell, and issue shares of common stock under the Equity Program from time to time based on various factors and conditions, although the Company is under no obligation to sell any shares under the Equity Program.

During 2016, the Company did not issue any shares of common stock under the equity program. During 2015, the Company issued 949,911 shares of common stock under the Equity Program at a weighted average issue price of $96.80 per share, generating net proceeds of $90.6 million. During 2014, we issued 924,403 shares under the Equity Program and 359,102 shares under our previous Equity Program for net proceeds of approximately $99.2 million. As of December 31, 2016, the Company has $59.3 million availability for issuance of shares under the current Equity Program which expires in May 2017.

~~We implemented a Dividend Reinvestment Plan in March 2013. We issued 133,666 and 151,246 shares under the plan in 2016 and 2015, respectively.~~

During 2016 and 2015, we did not acquire any shares of our common stock via the Share Repurchase Program authorized by the Board of Directors. From the inception of the Share Repurchase Program through December 31, 2016, we have reacquired a total of 1,171,886 shares pursuant to this program. From time to time, subject to market price and certain loan covenants, we may reacquire additional shares.

In January 2016, the Company exercised the expansion feature of its existing amended unsecured credit agreement and increased the revolving credit limit from $300 million to $500 million. The interest rate on the revolving credit facility bears interest at a variable rate equal to LIBOR plus a margin based on the Company’s credit rating (at December 31, 2016 the margin is 1.10%), and requires a 0.15% facility fee. The Company’s unsecured credit agreement also includes a $325 million unsecured term note maturing June 4, 2020, with the term note bearing interest at LIBOR plus a margin based on the Company’s credit rating (at December 31, 2016 the margin is 1.15%). The interest rate at December 31, 2016 on the Company’s line of credit was approximately 1.79% (1.72% at December 31, 2015). At December 31, 2016, there was $247 million available on the unsecured line of credit. The revolving line of credit has a maturity date of December 10, 2019.

On July 21, 2016, the Company entered into a $200 million term note maturing July 21, 2028 bearing interest at a fixed rate of 3.67%. The proceeds from this term note were used to repay a portion of the then outstanding balance on the Company’s line of credit.

The Company had maintained a $150 million unsecured term note that matured on April 26, 2016 bearing interest at 6.38%. The Company used a draw on the line of credit to pay off the balance of this note on April 26, 2016.

On June 20, 2016, the Company issued $600 million in aggregate principal amount of 3.50% unsecured senior notes due July 1, 2026 (the “2026 Senior Notes”). Net proceeds to the Company after original issue discount, underwriting discounts and commissions and offering expenses were approximately $591.2 million. On July 15, 2016, the proceeds from the 2026 Senior Notes, the proceeds from the Company’s common stock offering in May 2016, and draws on the Company’s line of credit were used to fund the acquisition of LifeStorage, LP. In conjunction with the issuance of the 2026 Senior Notes, the Company settled its $150 million notional forward starting swap agreements for cash of approximately $9.2 million.

On April 8, 2014, the Company entered into a $175 million term note maturing April 2024 bearing interest at a fixed rate of 4.533%. The interest rate on the term note increases to 6.283% if the Company is not rated by at least one rating agency or if the Company’s credit rating is downgraded. The proceeds from this term note were used to repay the $115 million outstanding on the Company’s line of credit at April 8, 2014, with the excess proceeds used for acquisitions.

In 2011, the Company entered into a $100 million term note maturing August 5, 2021 bearing interest at a fixed rate of 5.54%. The interest rate on the term note increases to 7.29% if the notes are not rated by at least one rating agency, the credit rating on the notes is downgraded or if the Company’s credit rating is downgraded. The proceeds from this term note were used to fund acquisitions and investments in unconsolidated joint ventures.

The line of credit and term notes require the Company to meet certain financial covenants, measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. At December 31, 2016, the Company was in compliance with its debt covenants.

We believe that if operating results remain consistent with historical levels and levels of other debt and liabilities remain consistent with amounts outstanding at December 31, 2016 the entire availability on the line of credit could be drawn without violating our debt covenants.

The Company’s fixed rate term notes contain a provision that allows for the noteholders to call the debt upon a change of control of the Company at an amount that includes a make whole premium based on rates in effect on the date of the change of control.activity.

Our line of credit facility and term notes have an investment grade rating from Standard and Poor’s (BBB) and Moody’s (Baa2).

In addition to the unsecured financing mentioned above, our consolidated financial statements also include $13.0 million of mortgages payable at December 31, 2016, that are secured by four storage facilities.

Future acquisitions, our expansion and enhancement program, and share repurchases are expected to be funded with future cash flows from operations, draws on our line of credit, issuance of common and preferred stock, the issuance of unsecured term notes, sale of properties, and private placement solicitation of joint venture equity. Should the capital markets deteriorate, we may have to curtail acquisitions, our expansion and enhancement program, and share repurchases.

CONTRACTUAL OBLIGATIONS

The following table summarizes our future contractual obligations:


	Payments due by period (in thousands)										Payments due by period (in thousands)
Contractual obligations	Total		2017		2018-2019		2020-2021		2022 and thereafter		Total		2018		2019-2020		2021-2022		2023 and thereafter
Line of credit	$	253,000	$	—	$	253,000	$	—	$	—	$	105,000	$	—	$	105,000	$	—	$	—
Term notes		1,400,000		—		—		425,000		975,000		1,625,000		—		100,000		100,000		1,425,000
Mortgages payable		13,027		353		765		3,534		8,375		12,674		372		806		3,516		7,980
Interest payments		407,534		53,970		107,442		84,928		161,194		514,859		65,912		126,483		111,481		210,983
Interest rate swap payments		13,015		4,033		7,785		1,197		—
Land leases		9,669		566		1,133		1,137		6,833		9,103		566		1,135		1,137		6,265
Expansion and enhancement contracts		11,552		11,552		—		—		—		32,807		32,807		—		—		—
Building leases		15,318		1,866		3,426		3,429		6,597		14,676		2,328		4,068		3,431		4,849
Self-storage facility acquisitions		67,025		67,025		—		—		—
Contribution to joint venture for acquisitions under contract		21,900		21,900		—		—		—

Total	$	2,212,040	$	161,265	$	373,551	$	519,225	$	1,157,999	$	2,314,119	$	101,985	$	337,492	$	219,565	$	1,655,077

Interest payments include actual interest on fixed rate debt and estimated interest for floating-rate debt based on December 31, ~~2016~~2017 rates. ~~Interest rate swap payments include estimated net settlements of swap liabilities based on forecasted variable rates.~~

At December 31, 2016, the Company was under contract to acquire five self-storage facilities for cash consideration of approximately $67.0 million (net of property deposits of $3.7 million). One of the properties was acquired in February 2017 from an unrelated party for $9.8 million. The purchase of the remaining facilities by the Company is subject to customary conditions to closing, and there is no assurance that these facilities will be acquired.

ACQUISITION OF PROPERTIES

In 2017, we acquired two self-storage facilities comprising 148,000 square feet in Illinois (1) and North Carolina (1) for a total purchase price of $22.6 million. As both of these acquisitions were of newly constructed facilities, the weighted average capitalization rate for each acquisition was 0%. In 2016, we acquired 122 self-storage facilities comprising 9.4 million square feet in Arizona (1), California (22), Colorado (6), Connecticut (2), Florida (11), Illinois (25), Massachusetts (1), Mississippi (1), New Hampshire (5), Nevada (17), New York (4), Pennsylvania (1), South Carolina (1), Texas (23), Utah (1), and Wisconsin (1) for a total purchase price of $1,783.9 million. Based on the trailing financial information of the entities from which the properties were acquired, the weighted average capitalization rate was 3.6% on these purchases and ranged from 0% on recently constructed facilities to 6.7% on mature facilities. In 2015, we acquired 27 self-storage facilities comprising 2.0 million square feet in Arizona (1), Connecticut (2), Florida (6), Illinois (2), Massachusetts (1), New York (6), North Carolina (1), Pennsylvania (1), South Carolina (6) and Texas (1) for a total purchase price of $281.2 million. Based on the trailing financial information of the entities from which the properties were acquired, the weighted average capitalization rate was 5.3% on these purchases and ranged from 0% on recently constructed facilities to 6.4% on mature facilities. Four facilities acquired in Connecticut and New York in 2015 had been leased by the Company since November 1, 2013 and the operating results of these four facilities have been included in the Company’s operations since that date. In 2014, we acquired 33 self-storage facilities comprising 2.4 million square feet in Florida (4), Georgia (1), Illinois (3), Louisiana (1), Maine (2), Missouri (7), New Jersey (6), New York (1), Texas (6), Tennessee (1), and Virginia (1) for a total purchase price of $291.9 million. Based on the trailing financial information of the entities from which the properties were acquired, the weighted average capitalization rate was 5.5% on these purchases and ranged from 0% on recently constructed facilities to 7.4% on mature facilities.

FUTURE ACQUISITION AND DEVELOPMENT PLANS

Our external growth strategy is to increase the number of facilities we own by acquiring suitable facilities in markets in which we already have operations, or to expand into new markets by acquiring several facilities at once in those new markets. ~~We are actively pursuing acquisitions in 2017 and at December 31, 2016 we had five properties under contract to be purchased for $67.0 million. One of the properties was acquired in February 2017.~~

In ~~2016,~~2017, we added ~~343,000~~382,000 square feet to existing Properties and converted ~~55,000~~122,000 square feet to premium storage for a total cost of approximately ~~$22.4~~$35.2 million. In ~~2016~~2017 we also installed solar panels on ~~six~~two buildings for a total cost of approximately ~~$2.7~~$0.4 million. Although we do not expect to construct any new facilities in ~~2017,~~2018, we do plan to complete ~~approximately $35.1~~$40 million to $50 million in expansions and enhancements to existing facilities of which ~~$12.6~~$12.1 million was paid prior to December 31, ~~2016.~~2017.

In ~~2016,~~2017, the Company spent approximately ~~$38.6~~$47.8 million for recurring capitalized expenditures including roofing, paving, office renovations, and new signs related to our rebranding. We expect to spend ~~$30.2~~$20 million to $25 million in ~~2017~~2018 on similar capital ~~expenditures.~~expenditures as we do not expect significant sign related expenditures in 2018.

DISPOSITION OF PROPERTIES

During 2017, we sold two non-strategic storage facilities in Utah (1) and Texas (1) for net proceeds of approximately $16.9 million, resulting in a $3.5 million loss on sale. The Company has subsequently leased one of these properties and has deferred the related gain until the termination of the lease which is scheduled in 2020. During 2016, we sold eight non-strategic storage facilities in Alabama (1), Georgia (1), Mississippi (1), Texas (1), and Virginia (4) for net proceeds of approximately $34.1 million, resulting in a $15.3 million gain on sale. During 2015, we sold three non-strategic storage facilities purchased during 2014 and 2015 in Missouri and South Carolina for net proceeds of approximately $4.6 million, resulting in a loss of approximately $0.5 million. ~~During 2014,~~

As part of our ongoing strategy to improve overall operating efficiencies and portfolio quality, we ~~sold two non-strategic storage facilities in Texas for net proceeds of approximately $11.0 million resulting in a gain of approximately $5.2 million.~~

We may seek to sell additional Properties to third parties or joint venture partners in ~~2017.~~

2018.

OFF-BALANCE SHEET ARRANGEMENTS

Our off-balance sheet arrangements consist of our investment in ~~six~~nine self-storage joint ventures in which we have anownership interests ranging from 5% to 85%, ~~20%, 15% or 5% ownership,~~ as well as our investment in the entity that owns the building that houses our corporate office in which we have a 49% ownership. We account for these real estate entities under the equity method. The debt held by the unconsolidated real estate entities is secured by the real estate owned by these entities and is non-recourse to us. See Note 11 to our consolidated financial statements ~~appearing elsewhere in this annual report on Form 10-K.~~for additional details.

REIT QUALIFICATION AND DISTRIBUTION REQUIREMENTS

As a REIT, we are not required to pay federal income tax on income that we distribute to our shareholders, provided that we satisfy certain requirements, including distributing at least 90% of our REIT taxable income for a taxable year. These distributions must be made in the year to which they relate, or in the following year if declared before we file our federal income tax return, and if they are paid not later than the date of the first regular dividend of the following year.

As a REIT, we must derive at least 95% of our total gross income from income related to real property, interest and dividends. In 2016, our percentage of revenue from such sources was approximately 97%, thereby passing the 95% test, and no special measures are expected to be required to enable us to maintain our REIT designation. Although we currently intend to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors to revoke our REIT election.

INTEREST RATE RISK

The primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control.

We have entered into an interest rate swap ~~agreements in order~~agreement to help mitigate the effects of fluctuations in interest rates on our variable rate debt. Upon renewal or replacement of the credit facility, our total interest may change dependent on the terms we negotiate with the lenders; however, the LIBOR base rates have been contractually fixed on ~~$325~~$100 million of our floating rate bank debt through the interest rate swap termination ~~dates.~~date. Forward starting interest rate swaps ~~are~~have also been used by the Company to hedge the risk of changes in the interest-related cash outflows associated with the potential issuance of long-term debt. See Note 87 to our consolidated financial statements ~~appearing elsewhere in this annual report on Form 10-K.~~for additional detail related to interest rate swaps.

Through September 2018, ~~$325~~$100 million of our ~~$578~~$205 million of floating rate unsecured debt is on a fixed rate basis after taking into account our interest rate swap agreements. Based on our outstanding unsecured floating rate debt of ~~$578~~$205 million at December 31, ~~2016,~~2017, a 100 basis point increase in interest rates would have a ~~$2.5~~$1.1 million effect on our interest expense. ~~These amounts were~~This amount was determined by considering the impact of the hypothetical interest rates on our borrowing cost and our interest rate hedge agreements in effect on December 31, ~~2016. These analyses do~~2017. This analysis does not consider the ~~effects~~impact of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we would consider taking actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

INFLATION

We do not believe that inflation has had or will have a direct effect on our operations. Substantially all of the leases at the facilities are on a month-to-month basis which provides us with the opportunity to increase rental rates as each lease matures.

SEASONALITY

Our revenues typically have been higher in the third and fourth quarters, primarily because self-storage facilities tend to experience greater occupancy during the late spring, summer and early fall months due to the greater incidence of residential moves and college student activity during these periods. However, we believe that our customer mix, diverse geographic locations, rental structure and expense structure provide adequate protection against undue fluctuations in cash flows and net revenues during off-peak seasons. Thus, we do not expect seasonality to materially affect distributions to shareholders.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The information required is incorporated by reference to the information appearing under the caption “Interest Rate Risk” in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” above.

Item 8.

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and the Board of Directors ~~and Shareholders~~ of Life Storage, Inc.

Opinion on the Financial Statement

We have audited the accompanying consolidated balance sheets of Life Storage, Inc. (the Parent Company) as of December 31, ~~2016~~2017 and ~~2015,~~2016, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). These financial statements and schedule are the responsibility of Life Storage, Inc.’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the ~~consolidated~~ financial position of ~~Life Storage, Inc.~~the Parent Company at December 31, 2017 and 2016, and ~~2015, and~~ the ~~consolidated~~ results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2016,~~2017, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), ~~Life Storage, Inc.’s~~the Parent Company’s internal control over financial reporting as of December 31, ~~2016,~~2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, ~~2017~~2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Parent Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Parent Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Parent Company’s auditor since 1994.

Buffalo, New York

February 27, ~~2017~~

2018

Report of Independent Registered Public Accounting Firm

~~The~~To the Partners and the Board of Directors ~~and Partners~~ of Life Storage LP

Opinion on the Financial Statement

We have audited the accompanying consolidated balance sheets of Life Storage LP (the Operating Partnership) as of December 31, ~~2016~~2017 and ~~2015,~~2016, and the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, ~~2016. Our audits also included~~2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). These financial statements and schedule are the responsibility of Life Storage LP’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

In our opinion, the consolidated financial statements ~~referred to above~~ present fairly, in all material respects, the ~~consolidated~~ financial position of ~~Life Storage LP~~the Operating Partnership at December 31, 2017 and 2016, and ~~2015, and~~ the ~~consolidated~~ results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2016,~~2017, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We have also ~~have~~ audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), ~~Life Storage LP’s~~the Operating Partnership’s internal control over financial reporting as of December 31, ~~2016,~~2017, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, ~~2017~~2018 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on the Operating Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ Ernst & Young LLP

We have served as the Operating Partnership’s auditor since 2016.

Buffalo, New York

February 27, ~~2017~~

2018

LIFE STORAGE, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,						December 31,
(dollars in thousands, except share data)	2016			2015			2017			2016
Assets
Investment in storage facilities:
Land	$	786,764		$	480,176		$	786,628		$	786,764
Building, equipment, and construction in progress		3,456,544			2,011,526			3,534,782			3,456,544
								4,321,410			4,243,308
		4,243,308			2,491,702
Less: accumulated depreciation		(535,704	)		(465,195	)		(624,314	)		(535,704	)

Investment in storage facilities, net		3,707,604			2,026,507			3,697,096			3,707,604
Cash and cash equivalents		23,685			7,020			9,167			23,685
Accounts receivable		5,469			6,805			7,331			5,469
Receivable from unconsolidated joint ventures		1,223			929			1,397			1,223
Investment in unconsolidated joint ventures		67,300			62,520			133,458			67,300
Prepaid expenses		6,649			5,431			6,757			6,649
Fair value of interest rate swap agreements		—			550			205			—
Trade name		16,500			—			16,500			16,500
Other assets		29,554			9,060			4,863			29,554

Total Assets	$	3,857,984		$	2,118,822		$	3,876,774		$	3,857,984

Liabilities
Line of credit	$	253,000		$	79,000		$	105,000		$	253,000
Term notes, net		1,387,525			746,650			1,609,089			1,387,525
Accounts payable and accrued liabilities		75,132			47,839			92,941			75,132
Deferred revenue		9,700			7,511			9,374			9,700
Fair value of interest rate swap agreements		13,015			15,343			—			13,015
Mortgages payable		13,027			1,993			12,674			13,027

Total Liabilities		1,751,399			898,336			1,829,078			1,751,399
Noncontrolling redeemable Operating Partnership Units at redemption value		18,091			18,171			19,373			18,091
Shareholders’ Equity
Common stock $.01 par value, 100,000,000 shares authorized, 46,454,606 shares outstanding at December 31, 2016 (36,710,673 at December 31, 2015)		464			367
Common stock $.01 par value, 100,000,000 shares authorized, 46,552,222 shares outstanding at December 31, 2017 (46,454,606 at December 31, 2016)								466			464
Additional paid-in capital		2,348,567			1,388,343			2,363,171			2,348,567
Dividends in excess of net income		(239,062	)		(171,980	)		(327,727	)		(239,062	)
Accumulated other comprehensive loss		(21,475	)		(14,415	)		(7,587	)		(21,475	)

Total Shareholders’ Equity		2,088,494			1,202,315			2,028,323			2,088,494
Noncontrolling interest in consolidated subsidiary		—			—			—			—

Total Equity		2,088,494			1,202,315			2,028,323			2,088,494

Total Liabilities and Shareholders’ Equity	$	3,857,984		$	2,118,822		$	3,876,774		$	3,857,984

See notes to consolidated financial statements.

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,									Year Ended December 31,
(dollars in thousands, except per share data)	2016			2015			2014			2017			2016			2015
Revenues
Rental income	$	428,121		$	338,435		$	302,044		$	485,303		$	428,121		$	338,435
Other operating income		34,487			28,167			24,036			44,447			34,487			28,167

Total operating revenues		462,608			366,602			326,080			529,750			462,608			366,602
Expenses
Property operations and maintenance		103,388			81,915			75,333			122,794			103,388			81,915
Real estate taxes		47,876			36,563			32,097			57,663			47,876			36,563
General and administrative		43,103			38,659			35,222			50,031			43,103			38,659
Acquisition costs		29,542			2,991			7,359			—			29,542			2,991
Write-off of acquired property deposits		1,783			—			—			—			1,783			—
Operating leases of storage facilities		—			683			7,987			424			—			683
Depreciation and amortization		117,081			58,506			51,749			127,485			117,081			58,506

Total operating expenses		342,773			219,317			209,747			358,397			342,773			219,317

Income from operations		119,835			147,285			116,333			171,353			119,835			147,285
Other income (expenses)
Interest expense		(47,175	)		(37,124	)		(34,578	)		(74,362	)		(47,175	)		(37,124	)
Interest expense – bridge financing commitment fee		(7,329	)		—			—			—			(7,329	)		—
Interest income		67			5			40			7			67			5
Gain (loss) on sale of storage facilities		15,270			(494	)		5,176
(Loss) gain on sale of storage facilities											(3,503	)		15,270			(494	)
Gain on sale of real estate		623			—			—			��			623			—
Equity in income of joint ventures		3,665			3,405			2,086			3,314			3,665			3,405

Net income		84,956			113,077			89,057			96,809			84,956			113,077
Net income attributable to noncontrolling interest in the Operating Partnership		(398	)		(553	)		(526	)		(444	)		(398	)		(553	)
Net loss attributable to noncontrolling interest in consolidated subsidiary		667			—			—			—			667			—

Net income attributable to common shareholders	$	85,225		$	112,524		$	88,531		$	96,365		$	85,225		$	112,524

Earnings per common share attributable to common shareholders - basic	$	1.97		$	3.18		$	2.68		$	2.08		$	1.97		$	3.18

Earnings per common share attributable to common shareholders - diluted	$	1.96		$	3.16		$	2.67		$	2.07		$	1.96		$	3.16

See notes to consolidated financial statements.

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Year Ended December 31,									Year Ended December 31,
(dollars in thousands)	2016			2015			2014			2017			2016			2015
Net income	$	84,956		$	113,077		$	89,057		$	96,809		$	84,956		$	113,077
Other comprehensive income:
Effective portion of loss on derivatives net of reclassification to interest expense		(7,060	)		(1,410	)		(6,603	)

Effective portion of gain (loss) on derivatives net of reclassification to interest expense											13,888			(7,060	)		(1,410	)
Total comprehensive income		77,896			111,667			82,454			110,697			77,896			111,667
Comprehensive income attributable to noncontrolling interest in the Operating Partnership		(365	)		(546	)		(487	)		(508	)		(365	)		(546	)
Comprehensive loss attributable to noncontrolling interest in consolidated subsidiary		667			—			—			—			667			—

Comprehensive income attributable to common shareholders	$	78,198		$	111,121		$	81,967		$	110,189		$	78,198		$	111,121

See notes to consolidated financial statements.

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


(dollars in thousands, except share data)	Common Stock Shares		Common Stock		Additional Paid-in Capital			Dividends in Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity			Common Stock Shares			Common Stock			Additional Paid-in Capital			Dividends in Excess of Net Income			Accumulated Other Comprehensive Income (loss)			Total Shareholders’ Equity
Balance January 1, 2014		32,532,991	$	325	$	1,039,236		$	(162,450	)	$	(6,402	)	$	870,709
Balance January 1, 2015																		34,105,955			341			1,156,225			(167,692	)		(13,005	)		975,869
Net proceeds from the issuance of common stock		1,283,505		13		98,968			—			—			98,981			2,329,911			23			210,119			—			—			210,142
Net proceeds from the issuance of common stock through Dividend Reinvestment Plan		171,854		2		12,447			—			—			12,449			151,246			1			13,925			—			—			13,926
Exercise of stock options		27,462		—		1,245			—			—			1,245			30,900			1			1,632			—			—			1,633
Issuance of non-vested stock		90,143		1		(1	)		—			—			—			64,244			1			(1	)		—			—			—
Earned portion of non-vested stock		—		—		4,556			—			—			4,556			—			—			6,254			—			—			6,254
Stock option expense		—		—		223			—			—			223			—			—			210			—			—			210
Deferred compensation outside directors		—		—		121			—			—			121			28,417			—			59			—			—			59
Carrying value less than redemption value on redeemed noncontrolling interest		—		—		(570	)		—			—			(570	)		—			—			(80	)		—			—			(80	)
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—		—		—			(3,738	)		—			(3,738	)		—			—			—			(3,328	)		—			(3,328	)
Net income attributable to common shareholders		—		—		—			88,531			—			88,531			—			—			—			112,524			—			112,524
Change in fair value of derivatives		—		—		—			—			(6,603	)		(6,603	)		—			—			—			—			(1,410	)		(1,410	)
Dividends		—		—		—			(90,035	)		—			(90,035	)		—			—			—			(113,484	)		—			(113,484	)

Balance December 31, 2014		34,105,955		341		1,156,225			(167,692	)		(13,005	)		975,869
Net proceeds from the issuance of common stock		2,329,911		23		210,119			—			—			210,142
Net proceeds from the issuance of common stock through Dividend Reinvestment Plan		151,246		1		13,925			—			—			13,926
Exercise of stock options		30,900		1		1,632			—			—			1,633
Issuance of non-vested stock		64,244		1		(1	)		—			—			—
Earned portion of non-vested stock		—		—		6,254			—			—			6,254
Stock option expense		—		—		210			—			—			210
Deferred compensation outside directors		28,417		—		59			—			—			59
Carrying value less than redemption value on redeemed noncontrolling interest		—		—		(80	)		—			—			(80	)
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—		—		—			(3,328	)		—			(3,328	)
Net income attributable to common shareholders		—		—		—			112,524			—			112,524
Change in fair value of derivatives		—		—		—			—			(1,410	)		(1,410	)
Dividends		—		—		—			(113,484	)		—			(113,484	)

Balance December 31, 2015		36,710,673		367		1,388,343			(171,980	)		(14,415	)		1,202,315			36,710,673			367			1,388,343			(171,980	)		(14,415	)		1,202,315
Net proceeds from the issuance of common stock		9,545,000		96		934,867			—			—			934,963			9,545,000			96			934,867			—			—			934,963
Net proceeds from the issuance of common stock through Dividend Reinvestment Plan		133,666		1		13,165			—			—			13,166			133,666			1			13,165			—			—			13,166
Conversion of operating partnership units to common shares		41,862		—		4,795			—			—			4,795			41,862			—			4,795			—			—			4,795
Issuance of non-vested stock		23,405		—		—			—			—			—			23,405			—			—			—			—			—
Earned portion of non-vested stock		—		—		7,216			—			—			7,216			—			—			7,216			—			—			7,216
Stock option expense		—		—		89			—			—			89			—			—			89			—			—			89
Deferred compensation outside directors		—		—		92			—			—			92			—			—			92			—			—			92
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—		—		—			4,457			—			4,457			—			—			—			4,457			—			4,457
Net income attributable to common shareholders		—		—		—			85,225			—			85,225			—			—			—			85,225			—			85,225
Amortization of terminated hedge included in AOCI		—		—		—			—			458			458			—			—			—			—			458			458
Change in fair value of derivatives		—		—		—			—			(7,518	)		(7,518	)		—			—			—			—			(7,518	)		(7,518	)
Dividends		—		—		—			(156,764	)		—			(156,764	)		—			—			—			(156,764	)		—			(156,764	)

Balance December 31, 2016		46,454,606	$	464	$	2,348,567		$	(239,062	)	$	(21,475	)	$	2,088,494			46,454,606			464			2,348,567			(239,062	)		(21,475	)		2,088,494

Net proceeds from the issuance of common stock through Dividend Reinvestment Plan																		199,809			2			15,632			—			—			15,634
Exercise of stock options																		1,100			—			43			—			—			43
Purchase of outstanding shares																		(112,554	)		(1	)		(8,233	)		—			—			(8,234	)
Issuance of non-vested stock																		51,276			1			(1	)		—			—			—
Forfeiture of non-vested stock																		(42,015	)		—			—			—			—			—
Earned portion of non-vested stock																		—			—			7,148			—			—			7,148
Stock option expense																		—			—			15			—			—			15
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units																		—			—			—			(1,697	)		—			(1,697	)
Net income attributable to common shareholders																		—			—			—			96,365			—			96,365
Amortization of terminated hedge included in AOCI																		—			—			—			—			917			917
Change in fair value of derivatives, net of reclassifications																		—			—			—			—			12,971			12,971
Dividends																		—			—			—			(183,333	)		—			(183,333	)
Balance December 31, 2017																		46,552,222		$	466		$	2,363,171		$	(327,727	)	$	(7,587	)	$	2,028,323

See notes to consolidated financial statements

LIFE STORAGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(dollars in thousands)	2017			2016			2015
Operating Activities
Net income	$	96,809		$	84,956		$	113,077
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		127,485			117,081			58,506
Amortization of debt issuance costs and bond discount		4,289			9,688			1,184
Loss (gain) on sale of storage facilities		3,503			(15,270	)		494
Gain on sale of real estate		—			(623	)		—
Write-off of acquired property deposits		—			1,783			—
Equity in income of joint ventures		(3,314	)		(3,665	)		(3,405	)
Distributions from unconsolidated joint venture		7,055			5,207			4,821
Non-vested stock earned		7,148			7,308			6,313
Stock option expense		15			89			210
Deferred income taxes		(2,578	)		—			—
Changes in assets and liabilities (excluding the effects of acquisitions):
Accounts receivable		(1,862	)		4,814			(1,038	)
Prepaid expenses		(162	)		(230	)		1,132
Advances to joint ventures		(174	)		(294	)		(346	)
Accounts payable and other liabilities		10,692			18,494			5,847
Deferred revenue		(326	)		(3,788	)		(597	)
Net cash provided by operating activities		248,580			225,550			186,198
Investing Activities
Acquisition of storage facilities, net of cash acquired		(21,880	)		(1,750,267	)		(280,010	)
Improvements, equipment additions, and construction in progress		(83,657	)		(72,852	)		(41,739	)
Net proceeds from the sale of real estate		18,872			34,697			4,646
Investment in unconsolidated joint ventures		(69,911	)		(6,438	)		(6,151	)
Property deposits		66			(1,209	)		(5,435	)
Net cash used in investing activities		(156,510	)		(1,796,069	)		(328,689	)
Financing Activities
Net proceeds from sale of common stock		15,677			948,129			225,701
Purchase of outstanding shares		(8,234	)		—			—
Proceeds from line of credit		276,000			1,102,000			330,000
Repayment of line of credit		(424,000	)		(928,000	)		(300,000	)
Proceeds from term notes, net of discount		447,853			796,682			—
Repayment of term notes		(225,000	)		(150,000	)		—
Debt issuance costs		(3,961	)		(15,273	)		—
Settlement of forward starting interest rate swaps		—			(9,166	)		—
Dividends paid - common stock		(183,711	)		(156,249	)		(113,039	)
Distributions to noncontrolling interest holders		(859	)		(742	)		(555	)
Redemption of operating partnership units		—			—			(1,005	)
Mortgage principal payments		(353	)		(197	)		(134	)
Net cash (used in) provided by financing activities		(106,588	)		1,587,184			140,968
Net (decrease) increase in cash		(14,518	)		16,665			(1,523	)
Cash at beginning of period		23,685			7,020			8,543
Cash at end of period	$	9,167		$	23,685		$	7,020
Supplemental cash flow information
Cash paid for interest, net of interest capitalized	$	70,924		$	39,856		$	35,926

Cash paid for income taxes, net of refunds	$	1,180		$	981		$	1,084

See notes to consolidated financial statements.

LIFE STORAGE LP

CONSOLIDATED BALANCE SHEETS

	December 31,
(dollars in thousands, except unit data)	2017			2016
Assets
Investment in storage facilities:
Land	$	786,628		$	786,764
Building, equipment, and construction in progress		3,534,782			3,456,544
		4,321,410			4,243,308
Less: accumulated depreciation		(624,314	)		(535,704	)
Investment in storage facilities, net		3,697,096			3,707,604
Cash and cash equivalents		9,167			23,685
Accounts receivable		7,331			5,469
Receivable from unconsolidated joint ventures		1,397			1,223
Investment in unconsolidated joint ventures		133,458			67,300
Prepaid expenses		6,757			6,649
Fair value of interest rate swap agreements		205			-
Trade name		16,500			16,500
Other assets		4,863			29,554
Total Assets	$	3,876,774		$	3,857,984
Liabilities
Line of credit	$	105,000		$	253,000
Term notes, net		1,609,089			1,387,525
Accounts payable and accrued liabilities		92,941			75,132
Deferred revenue		9,374			9,700
Fair value of interest rate swap agreements		-			13,015
Mortgages payable		12,674			13,027
Total Liabilities		1,829,078			1,751,399
Limited partners’ redeemable capital interest at redemption value (217,481 units outstanding at December 31, 2017 and December 31, 2016)		19,373			18,091
Partners’ Capital
General partner (467,697 and 466,721 units outstanding at December 31, 2017 and December 31, 2016, respectively)		20,478			21,065
Limited partners (46,084,525 and 45,987,885 units outstanding at December 31, 2017 and December 31, 2016, respectively)		2,015,432			2,088,904
Accumulated other comprehensive loss		(7,587	)		(21,475	)
Total Controlling Partners’ Capital		2,028,323			2,088,494
Noncontrolling interest in consolidated subsidiary		—			—
Total Partners’ Capital		2,028,323			2,088,494
Total Liabilities and Partners’ Capital	$	3,876,774		$	3,857,984

See notes to consolidated financial statements.

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
(dollars in thousands, except per unit data)	2017			2016			2015
Revenues
Rental income	$	485,303		$	428,121		$	338,435
Other operating income		44,447			34,487			28,167
Total operating revenues		529,750			462,608			366,602
Expenses
Property operations and maintenance		122,794			103,388			81,915
Real estate taxes		57,663			47,876			36,563
General and administrative		50,031			43,103			38,659
Acquisition costs		-			29,542			2,991
Write-off of acquired property deposits		-			1,783			-
Operating leases of storage facilities		424			-			683
Depreciation and amortization		127,485			117,081			58,506
Total operating expenses		358,397			342,773			219,317
Income from operations		171,353			119,835			147,285
Other income (expenses)
Interest expense		(74,362	)		(47,175	)		(37,124	)
Interest expense – bridge financing commitment fee		-			(7,329	)		-
Interest income		7			67			5
(Loss) gain on sale of storage facilities		(3,503	)		15,270			(494	)
Gain on sale of real estate		-			623			-
Equity in income of joint ventures		3,314			3,665			3,405
Net income		96,809			84,956			113,077
Net income attributable to noncontrolling interest in the Operating Partnership		(444	)		(398	)		(553	)
Net loss attributable to noncontrolling interest in consolidated subsidiary		-			667			-
Net income attributable to common unitholders	$	96,365		$	85,225		$	112,524
Earnings per common unit attributable to common unitholders - basic	$	2.08		$	1.97		$	3.18
Earnings per common unit attributable to common unitholders - diluted	$	2.07		$	1.96		$	3.16
Net income attributable to general partner	$	968		$	856		$	1,131
Net income attributable to limited partners		95,397			84,369			111,393

See notes to consolidated financial statements.

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
(dollars in thousands)	2017			2016			2015
Net income	$	96,809		$	84,956		$	113,077
Other comprehensive income:
Effective portion of gain (loss) on derivatives net of reclassification to interest expense		13,888			(7,060	)		(1,410	)
Total comprehensive income		110,697			77,896			111,667
Comprehensive income attributable to noncontrolling interest in the Operating Partnership		(508	)		(365	)		(546	)
Comprehensive loss attributable to noncontrolling interest in consolidated subsidiary		—			667			—
Comprehensive income attributable to common unitholders	$	110,189		$	78,198		$	111,121

See notes to consolidated financial statements.

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(dollars in thousands)	Life Storage Holdings, Inc. General Partner			Life Storage, Inc. Limited Partner			Accumulated Other Comprehensive Income (loss)			Total Controlling Partners’ Capital
Balance January 1, 2015		9,895			978,979			(13,005	)		975,869
Net proceeds from the issuance of Partnership Units		2,123			208,019			—			210,142
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan		139			13,787			—			13,926
Exercise of stock options		16			1,617			—			1,633
Earned portion of non-vested stock		63			6,191			—			6,254
Stock option expense		2			208			—			210
Deferred compensation outside directors		—			59			—			59
Carrying value less than redemption value on redeemed noncontrolling interest		(10	)		(70	)		—			(80	)
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—			(3,328	)		—			(3,328	)
Net income attributable to common unitholders		1,131			111,393			—			112,524
Change in fair value of derivatives		(14	)		14			(1,410	)		(1,410	)
Distributions		(1,140	)		(112,344	)		—			(113,484	)
Balance December 31, 2015		12,205			1,204,525			(14,415	)		1,202,315
Net proceeds from the issuance of Partnership Units		9,349			925,614			—			934,963
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan		132			13,034			—			13,166
Conversion of operating partnership units to common shares		—			4,795			—			4,795
Issuance of operating partnership units		95			(95	)		—			—
Earned portion of non-vested stock		72			7,144			—			7,216
Stock option expense		1			88			—			89
Deferred compensation outside directors		1			91			—			92
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—			4,457			—			4,457
Net income attributable to common unitholders		856			84,369			—			85,225
Amortization of terminated hedge included in AOCI		4			(4	)		458			458
Change in fair value of derivatives		(75	)		75			(7,518	)		(7,518	)
Distributions		(1,575	)		(155,189	)		—			(156,764	)
Balance December 31, 2016		21,065			2,088,904			(21,475	)		2,088,494
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan		157			15,477			—			15,634
Exercise of stock options		1			42						43
Purchase of outstanding units		(82	)		(8,152	)		—			(8,234	)
Issuance of non-vested stock		1			(1	)		—			—
Forfeiture of non-vested stock		—			—			—			—
Earned portion of non-vested stock		71			7,077			—			7,148
Stock option expense		—			15			—			15
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units		—			(1,697	)		—			(1,697	)
Net income attributable to common unitholders		968			95,397			—			96,365
Amortization of terminated hedge included in AOCI		9			(9	)		917			917
Change in fair value of derivatives, net of reclassifications		130			(130	)		12,971			12,971
Distributions		(1,842	)		(181,491	)		—			(183,333	)
Balance December 31, 2017	$	20,478		$	2,015,432		$	(7,587	)	$	2,028,323

See notes to consolidated financial statements

LIFE STORAGE LP

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,									Year Ended December 31,
(dollars in thousands)	2016			2015			2014			2017			2016			2015
Operating Activities
Net income	$	84,956		$	113,077		$	89,057		$	96,809		$	84,956		$	113,077
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		117,081			58,506			51,749			127,485			117,081			58,506
Amortization of debt issuance costs and bond discount		9,688			1,184			942			4,289			9,688			1,184
(Gain) loss on sale of storage facilities		(15,270	)		494			(5,176	)
Loss (gain) on sale of storage facilities											3,503			(15,270	)		494
Gain on sale of real estate		(623	)		—			—			-			(623	)		—
Write-off of acquired property deposits		1,783			—			—			-			1,783			—
Equity in income of joint ventures		(3,665	)		(3,405	)		(2,086	)		(3,314	)		(3,665	)		(3,405	)
Distributions from unconsolidated joint venture		5,207			4,821			3,123			7,055			5,207			4,821
Non-vested stock earned		7,308			6,313			4,677			7,148			7,308			6,313
Stock option expense		89			210			223			15			89			210
Deferred income taxes											(2,578	)		—			—
Changes in assets and liabilities (excluding the effects of acquisitions):
Accounts receivable		4,814			(1,038	)		(606	)		(1,862	)		4,814			(1,038	)
Prepaid expenses		(230	)		1,132			(457	)		(162	)		(230	)		1,132
(Advances to) receipts from joint ventures		(294	)		(346	)		590
Advances to joint ventures											(174	)		(294	)		(346	)
Accounts payable and other liabilities		18,494			5,847			5,187			10,692			18,494			5,847
Deferred revenue		(3,788	)		(597	)		(1,155	)		(326	)		(3,788	)		(597	)

Net cash provided by operating activities		225,550			186,198			146,068			248,580			225,550			186,198
Investing Activities
Acquisition of storage facilities, net of cash acquired		(1,750,267	)		(280,010	)		(281,731	)		(21,880	)		(1,750,267	)		(280,010	)
Improvements, equipment additions, and construction in progress		(72,852	)		(41,739	)		(35,097	)		(83,657	)		(72,852	)		(41,739	)
Net proceeds from the sale of storage facilities		34,074			4,646			11,191
Net proceeds from the sale of real estate		623			—			—			18,872			34,697			4,646
Investment in unconsolidated joint ventures		(6,438	)		(6,151	)		(28,650	)		(69,911	)		(6,438	)		(6,151	)
Property deposits		(1,209	)		(5,435	)		(706	)		66			(1,209	)		(5,435	)

Net cash used in investing activities		(1,796,069	)		(328,689	)		(334,993	)		(156,510	)		(1,796,069	)		(328,689	)
Financing Activities
Net proceeds from sale of common stock		948,129			225,701			112,676
Net proceeds from sale of partnership units											15,677			948,129			225,701
Purchase of outstanding units											(8,234	)		—			—
Proceeds from line of credit		1,102,000			330,000			202,000			276,000			1,102,000			330,000
Repayment of line of credit		(928,000	)		(300,000	)		(202,000	)		(424,000	)		(928,000	)		(300,000	)
Proceeds from term notes, net of discount		796,682			—			175,000			447,853			796,682			—
Repayment of term note		(150,000	)		—			—
Repayment of term notes											(225,000	)		(150,000	)		—
Debt issuance costs		(15,273	)		—			(3,001	)		(3,961	)		(15,273	)		—
Settlement of forward starting interest rate swaps		(9,166	)		—			—			—			(9,166	)		—
Dividends paid - common stock		(156,249	)		(113,039	)		(90,035	)
Distributions to unitholders											(183,711	)		(156,249	)		(113,039	)
Distributions to noncontrolling interest holders		(742	)		(555	)		(541	)		(859	)		(742	)		(555	)
Redemption of operating partnership units		—			(1,005	)		(6,028	)		—			—			(1,005	)
Mortgage principal payments		(197	)		(134	)		(127	)		(353	)		(197	)		(134	)

Net cash provided by financing activities		1,587,184			140,968			187,944

Net increase (decrease) in cash		16,665			(1,523	)		(981	)
Net cash (used in) provided by financing activities											(106,588	)		1,587,184			140,968
Net (decrease) increase in cash											(14,518	)		16,665			(1,523	)
Cash at beginning of period		7,020			8,543			9,524			23,685			7,020			8,543

Cash at end of period	$	23,685		$	7,020		$	8,543		$	9,167		$	23,685		$	7,020

Supplemental cash flow information
Cash paid for interest, net of interest capitalized	$	39,856		$	35,926		$	31,764		$	70,924		$	39,856		$	35,926
Cash paid for income taxes, net of refunds	$	981		$	1,084		$	665		$	1,180		$	981		$	1,084

See notes to consolidated financial statements.

~~LIFE STORAGE LP~~

~~CONSOLIDATED BALANCE SHEETS~~

   December 31,
(dollars in thousands, except unit data)    2016 2015
Assets

Investment in storage facilities:

Land
   $ 786,764 $ 480,176
Building, equipment, and construction in progress
   3,456,544 2,011,526


   4,243,308 2,491,702
Less: accumulated depreciation
   (535,704 ) (465,195 )


Investment in storage facilities, net
   3,707,604 2,026,507
Cash and cash equivalents
   23,685 7,020
Accounts receivable
   5,469 6,805
Receivable from unconsolidated joint ventures
   1,223 929
Investment in unconsolidated joint ventures
   67,300 62,520
Prepaid expenses
   6,649 5,431
Fair value of interest rate swap agreements
   —   550
Trade name
   16,500 —
Other assets
   29,554 9,060


Total Assets
   $ 3,857,984 $ 2,118,822


Liabilities

Line of credit
   $ 253,000 $ 79,000
Term notes, net
   1,387,525 746,650
Accounts payable and accrued liabilities
   75,132 47,839
Deferred revenue
   9,700 7,511
Fair value of interest rate swap agreements
   13,015 15,343
Mortgages payable
   13,027 1,993


Total Liabilities
   1,751,399 898,336
Limited partners’ redeemable capital interest at redemption value (217,481 and 168,866 units outstanding at December 31, 2016 and December 31, 2015, respectively)
   18,091 18,171
Partners’ Capital

General partner (466,721 and 368,795 units outstanding at December 31, 2016 and December 31, 2015, respectively)
   21,065 12,205
Limited partners (45,987,885 and 36,341,878 units outstanding at December 31, 2016 and December 31, 2015, respectively)
   2,088,904 1,204,525
Accumulated other comprehensive loss
   (21,475 ) (14,415 )


Total Controlling Partners’ Capital
   2,088,494 1,202,315
Noncontrolling interest in consolidated subsidiary
   —   —


Total Partners’ Capital
   2,088,494 1,202,315


Total Liabilities and Partners’ Capital
   $ 3,857,984 $ 2,118,822

~~See notes to consolidated financial statements.~~

~~LIFE STORAGE LP~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

   Year Ended December 31,
(dollars in thousands, except per unit data)    2016 2015 2014
Revenues

Rental income
   $ 428,121 $ 338,435 $ 302,044
Other operating income
   34,487 28,167 24,036


Total operating revenues
   462,608 366,602 326,080
Expenses

Property operations and maintenance
   103,388 81,915 75,333
Real estate taxes
   47,876 36,563 32,097
General and administrative
   43,103 38,659 35,222
Acquisition costs
   29,542 2,991 7,359
Write-off of acquired property deposits
   1,783 —   —
Operating leases of storage facilities
   —   683 7,987
Depreciation and amortization
   117,081 58,506 51,749


Total operating expenses
   342,773 219,317 209,747


Income from operations
   119,835 147,285 116,333
Other income (expenses)

Interest expense
   (47,175 ) (37,124 ) (34,578 )
Interest expense – bridge financing commitment fee
   (7,329 ) —   —
Interest income
   67 5 40
Gain (loss) on sale of storage facilities
   15,270 (494 ) 5,176
Gain on sale of real estate
   623 —   —
Equity in income of joint ventures
   3,665 3,405 2,086


Net income
   84,956 113,077 89,057
Net income attributable to noncontrolling interest in the Operating Partnership
   (398 ) (553 ) (526 )
Net loss attributable to noncontrolling interest in consolidated subsidiary
   667 —   —


Net income attributable to common unitholders
   $ 85,225 $ 112,524 $ 88,531


Earnings per common unit attributable to common unitholders - basic
   $ 1.97 $ 3.18 $ 2.68


Earnings per common unit attributable to common unitholders - diluted
   $ 1.96 $ 3.16 $ 2.67


Net income attributable to general partner
   $ 856 $ 1,131 $ 891
Net income attributable to limited partners
   84,369 111,393 87,640

~~See notes to consolidated financial statements.~~

~~LIFE STORAGE LP~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

   Year Ended December 31,
(dollars in thousands)    2016 2015 2014
Net income
   $ 84,956 $ 113,077 $ 89,057
Other comprehensive income:

Effective portion of loss on derivatives net of reclassification to interest expense
   (7,060 ) (1,410 ) (6,603 )


Total comprehensive income
   77,896 111,667 82,454
Comprehensive income attributable to noncontrolling interest in the Operating Partnership
   (365 ) (546 ) (487 )
Comprehensive loss attributable to noncontrolling interest in consolidated subsidiary
   667 —      —


Comprehensive income attributable to common unitholders
   $ 78,198 $ 111,121 $ 81,967

~~See notes to consolidated financial statements.~~

~~LIFE STORAGE LP~~

~~CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL~~

(dollars in thousands)
   Life Storage
Holdings, Inc.
General
Partner Life Storage,
Inc. Limited
Partner Accumulated
Other
Comprehensive
Income (loss) Total
Controlling
Partners’
Capital
Balance January 1, 2014
   $ 8,836 $ 868,275    $ (6,402 ) $ 870,709
Net proceeds from the issuance of Partnership Units
   1,014 97,967 —   98,981
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan
   124 12,325 —   12,449
Exercise of stock options
   13 1,232 —   1,245
Earned portion of non-vested stock
   46 4,510 —   4,556
Stock option expense
   2 221 —   223
Deferred compensation outside directors
   1 120 —   121
Carrying value less than redemption value on redeemed noncontrolling interest
   (60 ) (510 ) —   (570 )
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units
   —   (3,738 ) —   (3,738 )
Net income attributable to common unitholders
   891 87,640 —   88,531
Change in fair value of derivatives
   (66 ) 66 (6,603 ) (6,603 )
Distributions
   (906 ) (89,129 ) —   (90,035 )


Balance December 31, 2014
   9,895 978,979 (13,005 ) 975,869
Net proceeds from the issuance of Partnership Units
   2,123 208,019 —   210,142
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan
   139 13,787 —   13,926
Exercise of stock options
   16 1,617 —   1,633
Earned portion of non-vested stock
   63 6,191 —   6,254
Stock option expense
   2 208 —   210
Deferred compensation outside directors
   —   59 —   59
Carrying value less than redemption value on redeemed noncontrolling interest
   (10 ) (70 ) —   (80 )
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units
   —   (3,328 ) —   (3,328 )
Net income attributable to common unitholders
   1,131 111,393 —   112,524
Change in fair value of derivatives
   (14 ) 14 (1,410 ) (1,410 )
Distributions
   (1,140 ) (112,344 ) —   (113,484 )


Balance December 31, 2015
   12,205 1,204,525 (14,415 ) 1,202,315
Net proceeds from the issuance of Partnership Units
   9,349 925,614 —   934,963
Net proceeds from the issuance of Partnership Units through Dividend Reinvestment Plan
   132 13,034 —   13,166
Conversion of operating partnership units to common shares
   —   4,795 —   4,795
Issuance of operating partnership units
   95 (95 ) —   —
Earned portion of non-vested stock
   72 7,144 —   7,216
Stock option expense
   1 88 —   89
Deferred compensation outside directors
   1 91 —   92
Adjustment to redemption value of noncontrolling redeemable Operating Partnership Units
   —   4,457 —   4,457
Net income attributable to common unitholders
   856 84,369 —   85,225
Amortization of terminated hedge included in AOCI
   4 (4 ) 458 458
Change in fair value of derivatives
   (75 ) 75 (7,518 ) (7,518 )
Dividends
   (1,575 ) (155,189 ) —   (156,764 )


Balance December 31, 2016
   $ 21,065 $ 2,088,904 $ (21,475 ) $ 2,088,494

~~See notes to consolidated financial statements~~

~~LIFE STORAGE LP~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

   Year Ended December 31,
(dollars in thousands)    2016 2015 2014
Operating Activities

Net income
   $ 84,956 $ 113,077 $ 89,057
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
   117,081 58,506 51,749
Amortization of debt issuance costs and bond discount
   9,688 1,184 942
(Gain) loss on sale of storage facilities
   (15,270 ) 494 (5,176 )
Gain on sale of real estate
   (623 ) —   —
Write-off of acquired property deposits
   1,783 —   —
Equity in income of joint ventures
   (3,665 ) (3,405 ) (2,086 )
Distributions from unconsolidated joint venture
   5,207 4,821 3,123
Non-vested stock earned
   7,308 6,313 4,677
Stock option expense
   89 210 223
Changes in assets and liabilities (excluding the effects of acquisitions):

Accounts receivable
   4,814 (1,038 ) (606 )
Prepaid expenses
   (230 ) 1,132 (457 )
(Advances to) receipts from joint ventures
   (294 ) (346 ) 590
Accounts payable and other liabilities
   18,494 5,847 5,187
Deferred revenue
   (3,788 ) (597 ) (1,155 )


Net cash provided by operating activities
   225,550 186,198 146,068
Investing Activities

Acquisition of storage facilities, net of cash acquired
   (1,750,267 ) (280,010 ) (281,731 )
Improvements, equipment additions, and construction in progress
   (72,852 ) (41,739 ) (35,097 )
Net proceeds from the sale of storage facilities
   34,074 4,646 11,191
Net proceeds from the sale of real estate
   623 —   —
Investment in unconsolidated joint ventures
   (6,438 ) (6,151 ) (28,650 )
Property deposits
   (1,209 ) (5,435 ) (706 )


Net cash used in investing activities
   (1,796,069 ) (328,689 ) (334,993 )
Financing Activities

Net proceeds from sale of partnership units
   948,129 225,701 112,676
Proceeds from line of credit
   1,102,000 330,000 202,000
Repayment of line of credit
   (928,000 ) (300,000 ) (202,000 )
Proceeds from term notes, net of discount
   796,682 —   175,000
Repayment of term note
   (150,000 ) —   —
Debt issuance costs
   (15,273 ) —   (3,001 )
Settlement of forward starting interest rate swaps
   (9,166 ) —   —
Distributions to unitholders
   (156,249 ) (113,039 ) (90,035 )
Distributions to noncontrolling interest holders
   (742 ) (555 ) (541 )
Redemption of operating partnership units
   —   (1,005 ) (6,028 )
Mortgage principal payments
   (197 ) (134 ) (127 )


Net cash provided by financing activities
   1,587,184 140,968 187,944


Net increase (decrease) in cash
   16,665 (1,523 ) (981 )
Cash at beginning of period
   7,020 8,543 9,524


Cash at end of period
   $ 23,685 $ 7,020 $ 8,543


Supplemental cash flow information

Cash paid for interest, net of interest capitalized
   $ 39,856 $ 35,926 $ 31,764
Cash paid for income taxes, net of refunds
   $ 981 $ 1,084 $ 665

~~See notes to consolidated financial statements.~~

LIFE STORAGE, INC. AND LIFE STORAGE LP

DECEMBER 31, ~~2016~~2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

The Parent Company, which operates as a self-administered and self-managed real estate investment trust (a “REIT”), was formed on April 19, 1995 to own and operate self-storage facilities throughout the United States. On June 26, 1995, the Parent Company commenced operations effective with the completion of its initial public offering. 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.

At December 31, ~~2016,~~2017, we had an ownership interest in, and/or managed ~~659~~706 self-storage properties in 2928 states under the ~~names~~name Life Storage^® ~~and Uncle Bob’s Self Storage~~^®. ®. Among our ~~659~~706 self-storage properties are 3998 properties that we manage for an unconsolidated joint venture (Sovran HHF Storage Holdings LLC) of which we are a 20% owner, 30 properties that we manage for an unconsolidated joint venture (Sovran HHF Storage Holdings II LLC) of which we are a 15% owner, and 26ventures (See Note 11), 42 properties that we manage and have no ownership ~~interest. Approximately 38%~~interest, and two properties that we lease. During 2017, approximately 23% and 13% of the Company’s revenue iswas derived from stores in the states of Texas and ~~Florida.~~Florida, respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: All of the Company’s assets are owned by, and all its operations are conducted through 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 99.5% ownership interest therein as of December 31, ~~2016.~~2017. The remaining ownership interests in the Operating Partnership (the “Units”) are held by certain former owners of assets acquired by the Operating Partnership.

We consolidate all wholly owned subsidiaries. Partially owned subsidiaries and joint ventures are consolidated when we control the entity. Our consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, ~~and~~ Life Storage Solutions, ~~LLC.~~LLC (the Parent Company’s taxable REIT subsidiary), Warehouse Anywhere LLC (an entity owned 60% by Life Storage Solutions, LLC), and all other wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. Investments in joint ventures that we do not control but for which we have significant influence over are accounted for using the equity method.

Included in the Parent Company’s consolidated balance sheets are noncontrolling redeemable ~~operating partnership units~~Operating Partnership Units and included in the Operating Partnership’s consolidated balance sheets are limited partners’ redeemable capital interest at redemption value. These interests are presented in the “mezzanine” section of the consolidated balance sheets because they do not meet the functional definition of a liability or equity under current accounting literature. These represent the outside ownership interests of the limited partners in the Operating Partnership. At December 31, 2017 and December 31, 2016, there were 217,481 noncontrolling redeemable ~~operating partnership~~Operating Partnership Units ~~outstanding (168,866 at December 31, 2015).~~outstanding. These unitholders are entitled to receive distributions per unit equivalent to the dividends declared per share on the Parent Company’s common stock. The Operating Partnership is obligated to redeem each of these limited partnership Units in the Operating Partnership at the request of the holder thereof for cash equal to the fair market value of a share of the Parent Company’s common stock based on a 10-day average of the daily market price, at the time of such redemption, provided that the Company at its option may elect to acquire any such Unit presented for redemption for one common share or cash. The Company accounts for these noncontrolling redeemable Operating Partnership

Units under the provisions of ~~EITF D-98, “~~~~Classification and Measurement of Redeemable Securities~~~~” which was codified in FASB ASC~~Accounting Standards Codification (ASC) Topic 480-10-S99. The application of the ~~FASB~~ ASC Topic 480-10-S99 accounting model requires the noncontrolling interest to follow normal noncontrolling interest accounting and then be marked to redemption value at the end of each reporting period if higher (but never adjusted below that normal noncontrolling interest accounting amount). The offset to the adjustment to the carrying amount of the noncontrolling ~~redeemable Operating Partnership Units~~interests is reflected in the Parent Company’s dividends in excess of net income and in the Operating Partnership’s general partner and limited partners capital balances. Accordingly, in the accompanying consolidated balance sheets, noncontrolling interests are reflected at redemption value at December 31, ~~2016~~2017 and ~~2015,~~2016, equal to the number of noncontrolling interest units outstanding multiplied by the fair market value of the Parent Company’s common stock at that date. Redemption value exceeded the value determined under the Company’s historical basis of accounting at those dates.

The following is a reconciliation of the Parent Company’s noncontrolling redeemable Operating Partnership ~~Units:~~

(Dollars in thousands)
   2016    2015
Beginning balance noncontrolling redeemable Operating Partnership Units
   $ 18,171    $ 13,622
Redemption of Operating Partnership Units
   (4,795 )    (1,005 )
Redemption value in excess of carrying value
   —         80
Issuance of Operating Partnership Units
   9,516       2,148
Net income attributable to noncontrolling interests in Operating Partnership
   398    553
Distributions
   (742 )    (555 )
Adjustment to redemption value
   (4,457 )    3,328




Ending balance noncontrolling redeemable Operating Partnership Units
   $ 18,091    $ 18,171

~~The following is a reconciliation of~~Units and the Operating ~~Partnership’s~~Parnership’s limited partners’ redeemable capital ~~interest:~~interest for the year ending December 31:

(Dollars in thousands)
   2016    2015
Beginning balance Limited Partners’ Redeemable Capital Interest
   $ 18,171    $ 13,622
Redemption of Limited Partners’ Redeemable Capital Interest Units
   (4,795 )    (1,005 )
Redemption value in excess of carrying value
   —         80
Issuance of Limited Partners’ Redeemable Capital Interest Units
   9,516       2,148
Net income attributable to Limited Partners’ Redeemable Capital Interest
   398    553
Distributions
   (742 )    (555 )
Adjustment to redemption value
   (4,457 )    3,328




Ending balance Limited Partners’ Redeemable Capital Interest
   $ 18,091    $ 18,171

(Dollars in thousands)	2017			2016
Beginning balance	$	18,091		$	18,171
Redemption of units		—			(4,795	)
Issuance of units		—			9,516
Net income attributable to noncontrolling interests in Operating Partnership		444			398
Distributions		(859	)		(742	)
Adjustment to redemption value		1,697			(4,457	)
Ending balance	$	19,373		$	18,091

In 2016 the Operating Partnership issued 90,477 Units with a fair value of $9.5 million to acquire self-storage properties. ~~In 2015 the Company issued 23,382 Units with a fair value of $2.1 million to acquire one self-storage property.~~ The fair value of the Units on the dates of issuance was determined based upon the fair market value of the Company’s common stock on those dates.

Operating Partnership Units redeemed in 2016 were redeemed for a total of 41,862 shares of the Parent Company.

Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents.

Accounts Receivable: Accounts receivable are composed of trade and other receivables recorded at billed amounts and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable uncollectible amounts in the Company’s existing accounts receivable. The Company determines the allowance based on a number of factors, including experience, credit worthiness of customers, and current market and economic conditions. The Company reviews the allowance for doubtful accounts on a regular basis. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts is recorded as a reduction of accounts receivable and amounted to ~~$1.0~~$0.7 million and ~~$0.4~~$1.0 million at December 31, 2017 and 2016, ~~and 2015,~~ respectively.

Revenue and Expense Recognition: Rental income is recognized when earned pursuant to month-to-month leases for storage space. Promotional discounts are recognized as a reduction to rental income over the promotional period, which is generally during the first month of occupancy. Rental income received prior to the start of the rental period is included in deferred revenue. Equity in earnings of real estate joint ventures that we have significant influence over is recognized based on our ownership interest in the earnings of these entities.

Cost of operations, general and administrative expense, interest expense and advertising costs are expensed as incurred. For the years ended December 31, 2017, 2016, ~~2015,~~ and ~~2014,~~2015, advertising costs were $12.3 million, $9.5 million, ~~$7.3 million,~~ and ~~$6.2~~$7.3 million, respectively. The Company accrues property taxes based on estimates and historical trends. If these estimates are incorrect, the timing and amount of expense recognition would be affected.

Other Operating Income: ~~Consists~~ Other operating income consists primarily of sales of storage-related merchandise (locks and packing supplies), insurance administrative fees, incidental truck rentals, and management and acquisition fees from unconsolidated joint ventures.

Investment in Storage Facilities: Storage facilities are recorded at cost. The purchase price of acquired facilities is allocated to land, land improvements, building, equipment, and in-place customer leases based on the relative fair value of each ~~component.~~component or based on the fair value of each component if accounted for as a business combination. The fair values of land are determined based upon comparable market sales information. The fair values of buildings are determined based upon estimates of current replacement costs adjusted for depreciation on the properties. For the years ended December 31, 2016 ~~2015,~~ and ~~2014,~~2015, $29.5 million ~~$3.0 million,~~ and ~~$7.4~~$3.0 million of acquisition related costs were incurred and expensed, respectively. There were no acquisition related costs expensed in 2017.

Depreciation is computed using the straight-line method over estimated useful lives of forty years for buildings and improvements, and five to twenty years for furniture, fixtures and equipment. Estimated useful lives are reevaluated when facts and circumstances indicate that the economic lives of assets do not extend to their currently assigned useful lives. Expenditures for significant renovations or improvements that extend the useful life of assets are capitalized. Depreciation expense was $102.7 million, $87.2 million ~~$55.1 million~~ and ~~$47.7~~$55.1 million for the years ending December 31, ~~206,~~2017, 2016, and 2015, ~~and 2014,~~ respectively. Interest and other costs incurred during the construction period of major expansions are capitalized. Capitalized interest during the years ended December 31, 2017, 2016, and 2015 ~~and 2014~~ was $0.3 million, $0.1 million ~~annually.~~and $0.1 million, respectively. Repair and maintenance costs are expensed as incurred.

Whenever events or changes in circumstances indicate that the ~~basis~~carrying value of the Company’s property may not be recoverable, the Company’s policy is to complete an assessment of impairment. Impairment is evaluated based upon comparing the sum of the property’s expected undiscounted future cash flows to the carrying value of the property. If the sum of the undiscounted cash flows is less than the carrying amount of the property, an impairment loss is recognized for ~~the~~any amount by which the carrying amount of the asset exceeds the fair value of the asset. For the years ended December 31, 2017, 2016, ~~2015~~ and ~~2014,~~2015, no assets have been determined to be impaired under this policy.

In general, sales of real estate and related profits / losses are recognized when all consideration has changed hands and risks and rewards of ownership have been transferred.

Trade Name: The Company’s trade name, which was acquired in 2016, has an indefinite life and is not amortized but is reviewed for impairment annually or more frequently when facts and circumstances indicate that the carrying value of the Company’s trade name may not be recoverable. We may elect to perform a qualitative assessment that considers economic, industry and company-specific factors as part of our annual test. If, after completing this assessment, it is determined that it is more likely than not that the fair value of the trade name is less than its carrying value, we proceed to a quantitative test. We did not elect to perform a qualitative assessment in ~~2016.~~2017.

Quantitative testing requires a comparison of the fair value of the trade name to its carrying value. We use a discounted cash flow analysis under the relief-from-royalty method to estimate the fair value of the trade name. This method incorporates various assumptions, including projected revenue growth rates, the terminal growth rate, the royalty rate to be applied, and the discount rate utilized. If the carrying value exceeds the fair value, the trade name is considered impaired to the extent that the carrying value exceeds the fair value. We did not record any impairment in ~~2016, the year in which the trade name was acquired.~~

2017.

Other Assets: Included in other assets are cash balances held in escrow for encumbered properties, property deposits and the value placed on in-place customer leases at the time of acquisition. Cash held in escrow for encumbered properties at December 31, 2017 and 2016, totaled $292,000 and ~~2015, totaled~~ $238,000, ~~and $12,000,~~ respectively. Property deposits at December 31, 2017 and 2016 ~~and 2015~~ were ~~$2.4~~$0.9 million and ~~$5.9~~$2.4 million, respectively. In 2016, a decision was made to not proceed with the acquisition of two properties on which the Company had previously made property deposits totaling $1.8 million. As a result, these property deposits were abandoned and are included in write-off of acquired property deposits on the accompanying consolidated statements of operations. No such expenses were incurred in ~~2015~~2017 or ~~2014.~~2015.

The Company allocates a portion of the purchase price of acquisitions to in-place customer leases. The methodology used to determine the fair value of in-place customer leases is ~~disclosed~~described in Note 8. The Company amortizes in-place customer leases on a straight-line basis over 12 months (the estimated future benefit period).

Investment in Unconsolidated Joint Ventures: The Company’s investment in unconsolidated joint ventures where the Company has significant influence but not control, and joint ventures which are variable interest entities in which the Company is not the primary beneficiary, are recorded under the equity method of accounting in the accompanying consolidated financial statements. Under the equity method, the Company’s investment in unconsolidated joint ventures is stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings of unconsolidated joint ventures is generally recognized based on the Company’s ownership interest in the earnings of each of the unconsolidated joint ventures. For the purposes of presentation in the statement of cash flows, the Company follows the “look through” approach for classification of distributions from joint ventures. Under this approach, distributions are reported under operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating dividend or distribution of the proceeds from the joint venture’s sale of assets), in which case it is reported as an investing activity.

Accounts Payable and Accrued Liabilities: Accounts payable and accrued liabilities consists primarily of trade payables, accrued interest, and property tax accruals.

Income Taxes: The Company qualifies as a REIT under the Internal Revenue Code of 1986, as amended, and will generally not be subject to corporate income taxes to the extent it distributes its taxable income to its shareholders and complies with certain other requirements.

The Company has elected to treat one of its subsidiaries as a taxable REIT subsidiary. In general, the Company’s taxable REIT subsidiary may perform additional services for tenants and generally may engage in certain real estate or non-real estate related business. A taxable REIT subsidiary is subject to corporate federal and state income taxes. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities.

~~For~~The Company recorded federal and state income tax benefit of $1.0 million in the ~~years~~year ended December 31, ~~2016, 2015~~2017 and ~~2014, the Company recorded~~ federal and state income tax expense of $0.4 million and $1.3 million during the years ended December 31, 2016 and ~~$0.9 million, respectively.~~2015, respectively, which are included in general and administrative expenses in the consolidated statements of operations. The ~~2016~~2017 income tax ~~expense~~benefit includes current tax expense of ~~$0.1~~$1.5 million and deferred tax ~~expense~~benefit of ~~$0.3~~$2.5 million. At December 31, ~~2016~~2017 and ~~2015,~~2016, there were no material unrecognized tax benefits. Interest and penalties relating to uncertain tax positions will be recognized in income tax expense when incurred. As of December 31, ~~2016~~2017 and ~~2015,~~2016, the Company had no interest or penalties related to uncertain tax provisions. ~~Net income~~Income taxes payable at December 31, 2017 and 2016 and the net deferred tax liability of our taxable REIT subsidiary at December 31, 2016 are classified within accounts payable and accrued liabilities in the consolidated balance sheets. Prepaid income taxes at December 31, 2017 and ~~prepaid taxes~~2016 are classified within prepaid expenses, while the net deferred tax asset of our taxable REIT subsidiary at December 31, 2017 is classified within other assets in the consolidated balance sheets. As of December 31, 2017, the Company’s taxable REIT subsidiary has prepaid taxes of $0.1 million, deferred tax assets of $3.6 million and a deferred tax liability of $1.7 million. As of December 31, 2016, the Company’s taxable REIT subsidiary has prepaid taxes of $0.4 million, deferred tax assets of $1.5 million and a deferred tax liability of $2.2 million. As

The Tax Cuts and Jobs Act (the “TCJA”) was passed by Congress on December 20, 2017 and signed into law by President Trump on December 22, 2017. The TCJA significantly changed the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their shareholders. Under the TCJA, the corporate income tax rate is reduced from a maximum rate of 35% to a flat 21% rate. The reduced corporate income tax rate, which is effective for taxable years beginning after December 31, ~~2015,~~2017, will apply to income earned by our taxable REIT subsidiary. As a result, the ~~Company’s~~deferred tax assets and deferred tax liabilities of our taxable REIT subsidiary ~~had prepaid taxes~~are remeasured at December 31, 2017 using the 21% corporate income tax rate. The impact of ~~$0.2 million and a deferred tax liability of $1.2 million.~~the remeasurement is not material to the Company.

Derivative Financial Instruments: The Company accounts for derivatives in accordance with ASC Topic 815 “Derivatives and Hedging”, which requires companies to carry all derivatives on the balance sheet at fair value. The Company determines the fair value of derivatives using an income approach. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. The Company’s use of derivative instruments is limited to cash flow hedges of certain interest rate risks.

Recent Accounting Pronouncements: In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires an entity to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company has the option to apply the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the new guidance recognized at the date of initial ~~application. We are currently evaluating~~application (the modified retrospective transition method). The Company has adopted the ~~alternative methods~~standard using the retrospective transition method as of adoption and the effect of adopting ASU 2014-09 on our financial statements and related disclosures. We are also in the process of assessing which of our operating revenue streams will be impacted by the adoption of the new standard.January 1, 2018. Leases are specifically excluded from the scope of ASU 2014-09, therefore, upon analysis, the Company ~~does not anticipate~~concluded that the adoption of the new standard ~~will~~did not have any impact on the timing or amounts of the Company’s rental revenue from customers which ~~is a substantial portion~~represents over 90% of the Company’s total operating revenues. ~~The~~We have evaluated the other revenue streams material to the Company ~~intends to make a decision on which method of~~and have concluded that the adoption ~~will be elected by the end~~ of the ~~second quarter~~new standard did not have any material impact on the timing or amounts of ~~2017.~~

~~In June 2014,~~ the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period,” which requires a reporting entity to treat a performance target that affects vestingCompany’s material revenue streams and ~~that could be achieved after the requisite service period as a performance condition. ASU 2014-12~~no cumulative effect adjustment is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. ASU 2014-12 may be adopted either prospectively for share-based payment awards granted or modified on or after the effective date, or retrospectively, using a modified retrospective approach. The modified retrospective approach would apply to share-based payment awards outstandingrequired as of the ~~beginning~~date of initial application. Also, as part of the ~~earliest annual period presented in the financial statements on adoption, and to all new or modified awards thereafter. The~~Company’s adoption of ASU ~~2014-12 by~~2014-09, the Company ~~did~~has elected to apply the guidance only to contracts that are not ~~have~~completed contracts at the date of initial application. Further, related to the Company’s management fee revenue stream, the Company has elected to apply a ~~material impact on its consolidated financial statements.~~

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 310-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” which is effective for annual periods ending after December 15, 2016 and annual and interim periods thereafter. This ASU requires management to make an assessment for each annual and interim reporting period as to whether there are conditions or events, consideredpractical expedient provided in the ~~aggregate,~~new standard which allows the Company to recognize revenue in the amount of management fees to which the Company has a right to invoice as that ~~raise substantial doubt about~~amount corresponds directly with the value to the customer of the entity’s ~~ability~~performance completed to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. If management identifies conditions or events that raise substantial doubt about about the Company’s ability to continue as a going concern, certain additional considerations and disclosures are required to be made. The adoption of ASU 2014-15 by the Company did not have a material impact on its consolidated financial statements.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. This ASU is effective for annual reporting periods beginning after December 15, 2015 including interim periods within that reporting period. ASU 2015-02 amends the current consolidation model specifically as it relates to variable interest entities (“VIE’s”) and provides reporting entities with a revised consolidation analysis procedure. The adoption of ASU 2015-02 by the Company did not have a material impact on its consolidated financial statements.

During April 2015, the FASB issued ASU No. 2015-03, “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, which amends the requirements for the presentation of debt issuance costs and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU No. 2015-03 is effective for fiscal years, beginning after December 15, 2015 and interim periods within those fiscal years, with retrospective application required. Consistent with the guidance in ASU No. 2015-03 there are $3.4 million of debt issuance costs that have been presented as a reduction of term notes in our accompanying consolidated balance sheets at December 31, 2015 that were previously classified in other assets prior to the adoption of ASU No. 2015-03. The implementation of this accounting standards update had no effect on our results of operations or cash flows.

In August 2015, the FASB issued Accounting Standards Update 2015-15, “Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements” (“ASU 2015-15”). ASU 2015-15 codifies an SEC staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets. ASU No. 2015-15 is effective for fiscal years, beginning after December 15, 2015 and interim periods within those fiscal years. The implementation of this update did not result in any changes to our consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments”. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2015-16 by the Company did not have a material impact on its consolidated financial statements.date.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This guidance revises existing practice related to accounting for leases under ~~Accounting Standards Codification Topic~~ASC 840Leases~~(ASC 840)~~ for both lessees and lessors. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. ASU 2016-02 is effective for fiscal years and interim periods, within those years, beginning after December 15, 2018. Early adoption is permitted for all ~~entities. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after,~~entities, thought the ~~date of initial application, with an option~~Company does not expect to ~~use certain transition relief.~~adopt ASU 2016-02 early. The Company is currently evaluating the impact of adopting the new leases standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments”. ASU 2016-06 simplifies the embedded derivative analysis for debt instruments containing contingent call or put options by removing the requirement to assess whether a contingent event is related to interest rates or credit risks. ~~The new standard will be~~ASU 2016-06 is effective for ~~us on January 1, 2017.~~fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2016. The ~~Company has determined that the adoption~~implementation of ~~ASU 2016-06 will~~this update did not ~~have a material impact on its~~result in any changes to our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, “Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting”. ASU 2016-07 eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an adjustment must be made to the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. ~~The new standard will be~~ASU 2016-07 is effective for ~~us on January 1, 2017.~~fiscal years, and interim reporting periods within those fiscal years, beginning after December 15, 2016. The ~~Company has determined that the adoption~~implementation of ~~ASU 2016-07 will~~this update did not ~~have a material impact on its~~result in any changes to our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting” as part of its simplification initiative, which involves several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ~~The amendments in this update are~~ASU 2016-09 is effective for ~~annual periods beginning after December 15, 2016,~~fiscal years, and interim periods within those ~~annual periods.~~fiscal years, beginning after December 15, 2016. The Company ~~has determined that~~adopted the ~~adoption of~~guidance in ASU 2016-09 ~~will~~effective January 1, 2017 and has elected to recognize forfeitures of share-based payments as they occur beginning in 2017. The implementation of this update did not ~~have a~~result in any material ~~impact on its~~changes to our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a Consensus of the Emerging Issues Task Force)” in an effort to reduce existing diversity in practice related to the classification of certain cash receipts and cash payments on the statements of cash flows. The guidance addresses the classification of cash flows related to, among other things, distributions received from equity method investees. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The ~~Company has~~implementation of this update as of January 1, 2018 did not ~~yet completed its assessment of~~have a material impact on the ~~impact that the adoption of ASU 2016-15 will have on its consolidated~~Company’s financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash (a Consensus of the Emerging Issues Task Force)” which requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption of this update is permitted. Other than modifications to the statement of cash flows, the adoption of ASU 2016-18 is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” which is intended to assist entities with evaluating whether a set of transferred assets and activities is a business. The amendments in this update are effective for annual periods beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption of this update is ~~permitted.~~permitted and the Company adopted this update effective January 1, 2017. The adoption of ASU 2017-01 ~~is expected to have~~has potential impact on the accounting treatment of properties acquired subsequent to the ~~adoption date.~~date of adoption. Property acquisitions treated as business combinations under ~~current~~previous guidance may no longer be treated as business combinations subsequent to the adoption of ASU 2017-01. ~~We are in~~To the ~~process of evaluating whether the~~extent that properties that we acquire ~~will~~do not meet the definition of a “business” under ASU ~~2017-01. To the extent they do not meet such definition,~~2017-01, future acquisitions of properties may be accounted for as asset acquisitions resulting in the capitalization of acquisition costs incurred in connection with these transactions and the allocation of the purchase price and related acquisition costs to the assets acquired based on their relative fair values. There were no properties acquired in 2017 that would have been accounted for as business combinations prior to the adoption of ASU 2017-01.

In February 2017, the FASB issued ASU 2017-05, “Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets” which clarifies the scope and application of ASC 610-20 on the sale or transfer of nonfinancial assets, including real estate, and in substance nonfinancial assets to noncustomers, including partial sales. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The implementation of this update as of January 1, 2018 could potentially impact the accounting treatment of future real estate sales of the Company if such sales are to parties who are also customers of the Company.

In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The implementation of this update as of January 1, 2018 did not have a material impact on the Company’s financial statements, however, all future changes to the terms or conditions of any of the Company’s share-based payment awards are subject to the guidance in ASU 2017-09 and could potentially be accounted for differently than under the previous guidance concerning such changes.

Stock-Based Compensation: The Company accounts for stock-based compensation under the provisions of ASC Topic 718, “Compensation - Stock Compensation”. ”. The Company recognizes compensation cost in its financial statements for all share based payments granted, modified, or settled during the period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the related vesting period.

The Company recorded compensation expense (included in general and administrative expense) of $15,000, $89,000, ~~$210,000,~~ and ~~$223,000,~~$210,000, respectively, related to stock options and $7.1 million, $7.2 million, ~~$6.3 million,~~ and ~~$4.6~~$6.3 million, respectively, related to amortization of non-vested stock grants for the years ended December 31, 2017, 2016, ~~2015~~ and ~~2014.~~2015. The Company uses the Black-Scholes Merton option pricing model to estimate the fair value of stock options granted subsequent to the adoption of ASC Topic 718. The application of this pricing model involves assumptions that are judgmental and sensitive in the determination of compensation expense. The weighted-average fair value of options granted during the ~~years~~year ended December 31, 2015 ~~and 2014, were $9.90 and $10.04, respectively.~~was $9.90. There were no options granted during the ~~year~~years ended December 31, 2017 and 2016.

To determine expected volatility, the Company uses historical volatility based on daily closing prices of its Common Stock over periods that correlate with the expected terms of the options granted. The risk-free rate is based on the United States Treasury yield curve at the time of grant for the expected life of the options granted. Expected dividends are based on the Company’s history and expectation of dividend payouts. The expected life of stock options is based on the midpoint between the vesting date and the end of the contractual term. The Company recognizes any forfeitures as they occur.

During 2017, 2016, ~~2015~~ and ~~2014,~~2015, the Company issued performance based non-vested stock awards to certain executives. The fair value for the performance based awards in 2017, 2016 ~~2015~~ and ~~2014~~2015 was estimated at the time the awards were granted using a Monte Carlo pricing model applying the following weighted-average assumptions:


	2016			2015			2014			2017			2016			2015
Expected life (years)		3.0			3.0			3.0			3.0			3.0			3.0
Risk free interest rate		1.53	%		1.33	%		1.18	%		1.79	%		1.53	%		1.33	%
Expected volatility		19.37	%		18.88	%		18.42	%		19.92	%		19.37	%		18.88	%
Fair value	$	80.24		$	101.43		$	46.95		$	82.06		$	80.24		$	101.43

The Monte Carlo pricing model was not used to value any other 2017, 2016, ~~2015~~ and ~~2014~~2015 non-vested shares granted as no market conditions were present in these awards. The value of these other non-vested shares was equal to the stock price on the date of grant.

~~Reclassification:~~ ~~As noted below, certain amounts in the 2014 financial statements have been reclassified to conform with the 2015 and 2016 presentation.~~

Internet advertising expense, which had been included in the general and administrative expense line in financial statements filed in 2014 and prior years, has been reclassified to property operations and maintenance expense to conform with the current presentation which we implemented in the first quarter of 2015. The Company believes the classification of internet advertising expenses as property operations and maintenance expense is more consistent with industry trends. The amount of internet advertising expense that was reclassified for the year ended December 31, 2014 was $5.6 million.

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

3. EARNINGS PER SHARE AND EARNINGS PER UNIT

The Company reports earnings per share and earnings per unit data in accordance with ASC Topic 260, “Earnings Per Share~~.” Effective January 1, 2009, FASB~~ .” Under ASC Topic ~~260 was updated for the issuance of FASB Staff Position (“FSP”) EITF 03-6-1, “~~~~Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities”~~~~, or FSP EITF 03-6-1, with transition guidance included in FASB ASC Topic 260-10-65-2. Under FSP EITF 03-6-1,~~260-10, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. The Parent Company and the Operating Partnership have calculated their basic and diluted earnings per share/unit using the two-class method.

The following table sets forth the computation of basic and diluted earnings per common share utilizing the two-class method.


	Year Ended December 31,						Year Ended December 31,
(Amounts in thousands, except per share data)	2016		2015		2014		2017		2016		2015
Numerator:
Numerator:
Net income attributable to common shareholders	$	85,225	$	112,524	$	88,531	$	96,365	$	85,225	$	112,524
Denominator:
Denominator:
Denominator for basic earnings per share - weighted average shares		43,184		35,379		33,019		46,373		43,184		35,379
Effect of Dilutive Securities:
Stock options and non-vested stock		223		222		172		117		223		222

Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversion		43,407		35,601		33,191		46,490		43,407		35,601
Basic Earnings per common share attributable to common shareholders	$	1.97	$	3.18	$	2.68	$	2.08	$	1.97	$	3.18
Diluted Earnings per common share attributable to common shareholders	$	1.96	$	3.16	$	2.67	$	2.07	$	1.96	$	3.16

The following table sets forth the computation of basic and diluted earnings per common unit utilizing the two-class method.


	Year Ended December 31,						Year Ended December 31,
(Amounts in thousands, except per unit data)	2016		2015		2014		2017		2016		2015
Numerator:
Numerator:
Net income attributable to common unitholders	$	85,225	$	112,524	$	88,531	$	96,365	$	85,225	$	112,524
Denominator:
Denominator:
Denominator for basic earnings per unit - weighted average units		43,184		35,379		33,019		46,373		43,184		35,379
Effect of Dilutive Securities:
Stock options and non-vested stock		223		222		172		117		223		222

Denominator for diluted earnings per share - adjusted weighted average units and assumed conversion		43,407		35,601		33,191
Denominator for diluted earnings per unit - adjusted weighted average units and assumed conversion								46,490		43,407		35,601
Basic Earnings per common unit attributable to common unitholders	$	1.97	$	3.18	$	2.68	$	2.08	$	1.97	$	3.18
Diluted Earnings per common unit attributable to common unitholders	$	1.96	$	3.16	$	2.67	$	2.07	$	1.96	$	3.16

Not included in the effect of dilutive securities above are 13,750 stock options and 133,512 unvested restricted shares for the year ended December 31, 2017; 107,283 unvested restricted shares for the year ended December 31, 2016; and 5,500 stock options and 152,835 unvested restricted shares for the year ended December 31, ~~2015; and 5,000 stock options and 151,474 unvested restricted shares for the year ended December 31, 2014, because their effect~~2015. The effects of including these securities would ~~be antidilutive.~~have been anti-dilutive.

4. INVESTMENT IN STORAGE FACILITIES AND INTANGIBLE ASSETS

The following summarizes activity in storage facilities during the years ended December 31, ~~2016~~2017 and December 31, ~~2015.~~2016.


(Dollars in thousands)	2016			2015			2017			2016
Cost:
Beginning balance	$	2,491,702		$	2,177,983		$	4,243,308		$	2,491,702
Acquisition of storage facilities		1,714,029			278,572			22,638			1,714,029
Improvements and equipment additions		65,860			39,807			84,332			65,860
Net increase in construction in progress		7,525			2,239
Net (decrease) increase in construction in progress								(141	)		7,525
Dispositions		(35,808	)		(6,899	)		(28,727	)		(35,808	)

Ending balance	$	4,243,308		$	2,491,702		$	4,321,410		$	4,243,308

Accumulated Depreciation:
Beginning balance	$	465,195		$	411,701		$	535,704		$	465,195
Additions during the year		87,219			55,101			102,674			87,219
Dispositions		(16,710	)		(1,607	)		(14,064	)		(16,710	)

Ending balance	$	535,704		$	465,195		$	624,314		$	535,704

The Company acquired two self-storage facilities during 2017. The acquisition of these facilities were accounted for as asset acquisitions (See Note 2 for further discussion of the Company’s adoption of the accounting guidance under ASU 2017-01 as of January 1, 2017). The cost of these facilities, including closing costs, were assigned to land, buildings, equipment and improvements based upon their relative fair values.

On July 15, 2016, the Company acquired all of the outstanding partnership interests in LifeStorage, LP, a Delaware limited partnership (“LS”). Pursuant to the acquisition, the Company acquired 83 self-storage properties throughout the country, including the following markets: Chicago, Illinois; Las Vegas, Nevada; Sacramento, California; Austin, Texas; and Los Angeles, California. Pursuant to the terms of the Agreement and Plan of Merger dated as of May 18, 2016 by and among LS, the Operating Partnership, Solar Lunar Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Operating Partnership, and Fortis Advisors LLC, a Delaware limited liability company, as Sellers’ Representative, the Company paid aggregate consideration of approximately $1.3 billion, of which $482 million was paid to discharge existing indebtedness of LS (including prepayment penalties and defeasance costs totaling $15.5 million). The merger was funded with the existing cash that was generated primarily from the proceeds from the Company’s May 2016 common stock offering and the 2026 Senior Notes offering, and draws on the Company’s line of credit totaling $482 million.

Including the LS acquisition, the Company acquired 122 facilities during 2016. The acquisition of three stores that were acquired at certificate of occupancy were accounted for as asset acquisitions. The cost of these stores, including closing costs, was assigned to land, building, equipment and improvements components based upon their relative fair values. The assets and liabilities of the other 119 storage facilities acquired in 2016, which primarily consist of tangible and intangible assets, ~~are~~were measured at fair value on the date of acquisition in accordance with the principles of FASB ASC Topic 820, “Fair Value Measurements and Disclosures” and were accounted for as business combinations in accordance with the principles of FASB ASC Topic 805 “Business Combinations.”

The ~~Company acquired 27 facilities during 2015. The four~~purchase price of the two facilities acquired in ~~Connecticut~~2017 and New York on February 2, 2015 had been leased by the Company since November 1, 2013. The acquisitions of these four stores and three additional stores that were acquired at certificate of occupancy were accounted for as asset acquisitions. The cost of these seven stores, including closing costs, was assigned to their land, building, equipment and improvements components based upon their relative fair values. The assets and liabilities of the other 20 storage facilities acquired in 2015, which primarily consist of tangible and intangible assets, are measured at fair value on the date of acquisition in accordance with the principles of FASB ASC Topic 820, “~~Fair Value Measurements and Disclosures”~~ ~~and were accounted for as business combinations in accordance with the principles of FASB ASC Topic 805 “Business Combinations.”~~

~~The purchase price of~~ the 122 facilities acquired in 2016 ~~and the 27 facilities acquired in 2015~~ has been assigned as ~~follows (as of December 31, 2016 the purchase price assignments relating to the facilities acquired during the second half of 2016 are preliminary):~~follows:

(dollars in thousands)						Consideration paid					Acquisition Date Fair Value
State	Number of Properties		Date of Acquisition	Purchase Price		Cash Paid		Net Other Liabilities Assumed (Assets Acquired)			Land		Building, Equipment, and Improvements		Closing Costs Expensed
2017
IL		1	2/23/2017	$	10,089	$	10,076	$	13		$	771	$	9,318	$	—
NC		1	12/14/2017		12,549		12,550		(1	)		1,110		11,439		—
Total acquired 2017		2		$	22,638	$	22,626	$	12		$	1,881	$	20,757	$	—

(dollars in thousands)						Consideration paid									Acquisition Date Fair Value
States	Number of Properties		Date of Acquisition	Purchase Price		Cash Paid		Value of Operating Partnership Units Issued		Mortgage Assumed		Net Other Liabilities Assumed (Assets Acquired)			Land		Building, Equipment, and Improvements		In-Place Customer Leases		Trade Name		Closing Costs Expensed
2016
FL		4	1/6/2016	$	20,350	$	20,246	$	—	$	—	$	104		$	6,646	$	13,339	$	365	$	—	$	437
CA		4	1/21/2016		80,603		80,415		—		—		188			28,420		51,145		1,038		—		397
NH		5	1/21/2016		55,435		55,151		—		—		284			13,281		41,237		917		—		657
MA		1	1/21/2016		11,387		11,362		—		—		25			4,880		6,341		166		—		81
TX		3	1/21/2016		38,975		38,819		—		—		156			19,796		18,598		581		—		299
AZ		1	2/1/2016		9,275		9,261		—		—		14			988		8,224		63		—		136
FL		1	2/12/2016		11,274		11,270		—		—		4			2,294		8,980		—		—		—
PA		1	2/17/2016		5,750		5,732		—		—		18			1,768		3,879		103		—		164
CO		1	2/29/2016		12,600		12,549		—		—		51			4,528		7,915		157		—		188
CA		3	3/16/2016		68,832		63,965		4,472		—		395			22,647		45,371		814		—		313
CA		1	3/17/2016		17,320		17,278		—		—		42			6,728		10,339		253		—		132
CA		1	4/11/2016		36,750		33,346		3,294		—		110			17,445		18,840		465		—		141
CT		2	4/14/2016		17,313		17,152		—		—		161			6,142		10,904		267		—		204
NY		2	4/26/2016		24,312		20,143		—		4,249		(80	)		5,710		18,201		401		—		372
FL		1	5/2/2016		8,100		4,006		—		4,036		58			3,018		4,922		160		—		161
TX		1	5/5/2016		10,800		10,708		—		—		92			2,333		8,302		165		—		133
NY		2	5/19/2016		8,400		8,366		—		—		34			714		7,521		165		—		213
CA, CO, FL, IL, MS, NV, TX, UT, WI		83	7/15/2016		1,299,740		1,335,274		—		—		(35,534	)		150,660		1,085,750		46,830		16,500		25,398
SC		1	7/29/2016		8,620		8,617		—		—		3			920		7,700		—		—		—
CO		1	8/4/2016		8,900		8,831		—		—		69			5,062		3,679		159		—		119
FL		1	9/27/2016		10,500		10,407		—		—		93			2,809		7,523		168		—		244
IL		1	11/17/2016		8,884		7,125		1,750		—		9			371		8,513		—		—		—
FL		1	12/20/2016		9,800		6,900		—		2,966		(66	)		3,268		6,378		154		—		98
Total acquired 2016		122		$	1,783,920	$	1,796,923	$	9,516	$	11,251	$	(33,770	)	$	310,428	$	1,403,601	$	53,391	$	16,500	$	29,887

(dollars in thousands)
Consideration paid Acquisition Date Fair Value
State
Number of
Properties Date of
Acquisition Purchase
Price Cash Paid Value of
Operating
Partnership
Units
Issued Net Other
Liabilities
Assumed
(Assets
Acquired) Land Building,
Equipment,
and
Improvements In-Place
Customer
Leases Closing
Costs
Expensed
2015

CT
2    2/2/2015    $ 61,116    $ 62,377    $ —      $ (1,261 ) $ 19,389    $ 41,727    $ —      $ —
NY
2    2/2/2015    57,900    59,103    —      (1,203 ) 10,084    47,816    —      —
IL
1    2/5/2015    6,800    6,652    —      148    2,579    4,066    155    146
IL
1    3/9/2015    8,690    6,466    2,148    76    1,719    6,971    —      —
FL
1    4/1/2015    6,290    6,236    —      54    1,793    4,382    115    359
TX
1    4/16/2015    8,800    8,713    —      87    3,864    4,777    159    140
FL
1    4/21/2015    8,750    8,687    —      63    2,118    6,501    131    122
FL
4    5/1/2015    32,465    32,279    —      186    12,184    19,672    609    516
AZ
1    6/16/2015    7,904    7,904    —      —      852    7,052    —      —
MA
1    6/19/2015    10,291    10,286    —      5    2,110    8,181    —      —
NY
4    8/25/2015    17,900    17,690    —      210    4,685    12,826    389    409
NC
1    9/1/2015    3,775    3,762    —      13    718    2,977    80    80
SC
6    9/1/2015    44,000    43,564    —      436    17,461    25,644    895    684
PA
1    12/30/2015    6,550    6,541    —      9    1,926    4,498    126    190

Total acquired 2015
27    $ 281,231    $ 280,260    $ 2,148    $ (1,177 ) $ 81,482    $ 197,090    $ 2,659    $ 2,646

All ~~of the~~ properties acquired were purchased from unrelated third parties. The operating results of the ~~four facilities which had been leased since November 1, 2013 have been included in the Company’s operations since that date. The operating results of the other~~ facilities acquired have been included in the Company’s operations since the respective acquisition dates. The $22.6 million of cash paid for the facilities acquired in 2017 includes $0.5 million of deposits that were paid in 2015 and $0.6 million of deposits that were paid in 2016, when these facilities originally went under contract. The $1,796.9 million of cash paid for the properties acquired during 2016 includes payment for cash acquired of $40.9 million and $5.3 million of deposits that were paid in 2015 when certain of these properties originally went under contract. ~~Of the $280.3 million paid at closing for the properties acquired during 2015, $250,000 represented deposits that were paid in 2014 when certain of these properties originally went under contract.~~ Closing costs totaling $345,000 were incurred and expensed in 2015 related to facilities acquired in 2016 and are reflected in totals for the respective 2016 acquisitions in the ~~charts~~chart above.

Non-cash investing activities during 2017 include the assumption of net other liabilities totaling $12,000. Non-cash investing activities during 2016 include the issuance of $9.5 million in Operating Partnership Units valued based on the market price of the Company’s common stock at the date of acquisition, the assumption of three mortgages with acquisition-date fair values of $11.3 million, and the assumption of net other liabilities of $7.2 million. Non-cash investing activities during 2015 include the issuance of $2.1 million in Operating Partnership Units, the assumption of $1.3 million of other net liabilities and $2.5 million for the settlement of a straight-line rent liability in connection with the acquisition of self-storage facilities.

The Company measures the fair value of in-place customer lease intangible assets based on the Company’s experience with customer turnover and the estimated cost to replace the in-place leases. The Company amortizes in-place customer leases on a straight-line basis over 12 months (the estimated future benefit period). The Company measures the value of trade names, which have an indefinite life and are not amortized, by calculating discounted cash flows utilizing the relief from royalty method.

In-place customer leases are included in other assets on the Company’s consolidated balance sheets at December 31 as follows:


(dollars in thousands)	2016			2015			2017			2016
In-place customer leases	$	75,611		$	22,320		$	75,241		$	75,611
Accumulated amortization		(50,782	)		(21,017	)		(75,241	)		(50,782	)

Net carrying value at December 31,	$	24,829		$	1,303

Net carrying value at the end of period							$	-		$	24,829

Amortization expense related to in-place customer leases was $24.8 million, $29.9 million, ~~$3.4 million,~~ and ~~$4.1~~$3.4 million, for the years ended December 31, 2017, 2016, and 2015, ~~and 2014,~~ respectively. ~~Amortization~~No amortization expense ~~on 2016 acquisitions~~ is expected ~~to be $24.8 million~~ in ~~2017.~~2018.

~~As noted above, during 2016,~~Property Dispositions

During 2017 the Company ~~acquired 122~~sold two non-strategic properties ~~119~~and received net cash proceeds of ~~which were accounted for as business combinations.~~$16.9 million. The ~~following unaudited pro forma information is based~~Company has subsequently leased one of the properties sold during 2017 and will continue to operate the property through March 2020. Due to the Company’s continuing involvement in this property, the related gain on the ~~combined historical financial statements~~sale of this property has been deferred and will be recognized by the Company ~~and the 119 properties acquired during 2016, and accounted for as business acquisitions, as if the acquisitions had occurred as~~upon termination of ~~January 1, 2015:~~

(dollars in thousands)    2016    2015
Total revenues
   $ 513,565    $ 465,614
Net income attributable to common shareholders
   $ 154,522    $ 54,144
Earnings per common share

Basic
   $ 3.34    $ 1.17
Diluted
   $ 3.33    $ 1.17

The above pro forma information includes the results of eight stores acquired by LS in 2016 and 17 stores acquired by LS in 2015. These stores therefore were not owned by LS for the entire pro forma periods and results prior to LS ownership are not included in the above pro forma information. The above pro forma information also includes increases in amortization of in-place customer leases totaling $53.4 million in 2015. As noted above, in-place customer leases are amortized over their estimated future benefit period of 12 months. Material, nonrecurring pro forma adjustments directly attributable to the business combinations and included in the above pro forma financial information include reductions to interest expense related to acquisition bridge financing totaling $7.3 million in 2016, reductions to acquisition costs totaling $29.5 million in 2016, and reductions to write-off of acquired property deposits totaling $1.8 million in 2016.

The following table summarizes the revenues and earnings since the acquisition dates that are included in the Company’s 2016 consolidated statement of operations related to the 119 properties acquired and accounted for as business combinations during 2016.

(dollars in thousands)
Total revenues
   $ 68,526
Net loss attributable to common shareholders
   $ (52,814 )

The above net loss attributable to common shareholders was primarily due to amortization of in-place customer leases acquired and the acquisition costs incurred in connection with the 2016 acquisitions.

~~Property Dispositions~~

this lease. During 2016 the Company sold eight non-strategic properties ~~with a carrying value of $18.8 million~~ and received net cash proceeds of $34.1 ~~million, resulting in a $15.3 million gain on sale.~~million. During 2015 the Company sold three non-strategic properties ~~purchased in 2014 and 2015 with a carrying value of $5.1 million~~ and received cash proceeds of $4.6 million, resulting in a $0.5 million loss on sale. During 2014 the Company sold two properties with a carrying value of $5.8 million and received cash proceeds of $11.0 million, resulting in a $5.2 million gain on sale.

The following table summarizes the revenues and expenses up to the dates of sale of the 13 properties sold in 2016, 2015 and 2014 that are included in the Company’s consolidated statements of operations for 2016, 2015 and 2014.million.

(dollars in thousands)    2016    2015    2014
Total revenues
   $ 2,324    $ 4,801    $ 5,782
Property operations and maintenance expense
   (614 )    (1,401 )    (1,477 )
Real estate tax expense
   (98 )    (295 )    (424 )
Depreciation and amortization expense
   (359 )    (780 )    (820 )
Gain (loss) on sale of storage facilities
   15,270    (494 )    5,176






   $ 16,523    $ 1,831    $ 8,237

Change in ~~Signage~~ Useful Life Estimates

The change in name of the Company’s storage facilities from Uncle Bob’s Self Storage^® to Life Storage^® ~~as discussed in Note 1 requires~~ required replacement of signage at all existing storage facilities which are currently included in investment in storage facilities, net on the consolidated balance sheets. The replacement of this signage ~~is being~~has been completed ~~at various times based on market, and is expected to be completed in~~as of December 31, 2017. As a result of this replacement of signage, the ~~first half of 2017. The~~ Company ~~has~~ reassessed the estimated useful lives of the then existing signage ~~which~~in 2016. This useful life reassessment resulted in an increase in depreciation expense of approximately $0.5 million in 2017 and $8.2 million in 2016 as depreciation was accelerated over the new remaining useful lives. The Company ~~estimates that this change will result in~~does not estimate any further impact on depreciation expense ~~of approximately $1 million in 2017~~ as a result of the replacement of ~~this existing~~the Uncle Bob’s Self Storage^® ~~signage.~~ signage which is now fully depreciated.

As part of the Company’s capital improvement efforts during 2017, buildings at certain self-storage facilities were identified for replacement. As a result of the decision to replace these buildings, the Company reassessed the estimated useful lives of the then existing buildings. This useful life reassessment resulted in an increase in depreciation expense of approximately $3.9 million in 2017. The Company estimates that the change in estimated useful lives of buildings identified for replacement as of December 31, 2017 will result in an increase in depreciation expense of approximately $0.3 million in 2018.

The accelerated depreciation resulting from the events discussed above reduced ~~2016~~both basic and diluted earnings per share/unit by approximately $0.09 and approximately $0.19 per share/~~unit.~~unit in 2017 and 2016, respectively.

5. UNSECURED LINE OF CREDIT AND TERM NOTES

Borrowings outstanding on our unsecured line of credit and term notes are as follows:


(Dollars in thousands)	Dec. 31, 2016			Dec. 31, 2015			Dec. 31, 2017			Dec. 31, 2016
Revolving line of credit borrowings	$	253,000		$	79,000		$	105,000		$	253,000
Term note due April 26, 2016		—			150,000

Term note due June 4, 2020		325,000			325,000			100,000			325,000
Term note due August 5, 2021		100,000			100,000			100,000			100,000
Term note due April 8, 2024		175,000			175,000			175,000			175,000
Senior term note due July 1, 2026		600,000			—			600,000			600,000
Senior term note due December 15, 2027								450,000			—
Term note due July 21, 2028		200,000			—			200,000			200,000

Total term note principal balance outstanding	$	1,400,000		$	750,000		$	1,625,000		$	1,400,000
Less: unamortized debt issuance costs		(9,323	)		(3,350	)		(10,962	)		(9,323	)
Less: unamortized senior term note discount		(3,152	)		—			(4,949	)		(3,152	)

Term notes payable	$	1,387,525		$	746,650		$	1,609,089		$	1,387,525

In January 2016, the Company exercised the expansion feature on its existing amended unsecured credit agreement and increased the revolving credit limit from $300 million to $500 million. The interest rate on the revolving credit facility bears interest at a variable annual rate equal to LIBOR plus a margin based on the Company’s credit rating (at December 31, ~~2016~~2017 the margin is 1.10%), and requires an annual 0.15% facility fee. The Company’s unsecured credit agreement also includes a $325 million unsecured term note maturing June 4, ~~2020,~~2020. In 2017, the Company repaid $225 million under this term note, resulting in $100 million outstanding at December 31, 2017, with the term note bearing interest at LIBOR plus a margin based on the Company’s credit rating (at December 31, ~~2016~~2017 the margin is 1.15%). The interest rate at December 31, ~~2016~~2017 on the Company’s line of credit was approximately ~~1.79% (1.72%~~2.63% (1.79% at December 31, ~~2015)~~2016). At December 31, ~~2016,~~2017, there was ~~$247~~$395 million available on the unsecured line of credit. The revolving line of credit has a maturity date of December 10, 2019.

On ~~May 17, 2016,~~December 7, 2017, the ~~Company entered into two~~Operating Partnership issued $450 million in aggregate principal amount of 3.875% unsecured senior ~~unsecured acquisition bridge facilities~~notes due December 15, 2027 (the ~~“Bridge Facilities”~~“2027 Senior Notes”) ~~totaling $1,675 million with~~. The 2027 Senior Notes were issued at a 0.477% discount to par value. Interest on the Company’s third-party advisors to the LS acquisition (see Note 4). In consideration for the bridge financing commitments, the Company paid fees totaling $7.3 million which are included as interest expense – bridge financing commitment fee in the 2016 consolidated statement of operations. The Bridge Facilities commitments were not drawn upon and were terminated2027 Senior Notes is payable semi-annually on June ~~29, 2016.~~15 and December 15, beginning on June 15, 2018. The 2027 Senior Notes are fully and unconditionally guaranteed by the Parent Company. Proceeds received upon issuance, net of discount to par of $2.1 million and underwriting discount and other offering expenses totaling $4.0 million, totaled $443.9 million.

On June 20, 2016, the Operating Partnership issued $600 million in aggregate principal amount of 3.50% unsecured senior notes due July 1, 2026 (the “2026 Senior Notes”). The 2026 Senior Notes were issued at a 0.553% discount to par value. Interest on the 2026 Senior Notes is payable semi-annually in arrears on January 1 and July ~~1, beginning on January 1, 2017.~~1. The 2026 Senior Notes are fully and unconditionally guaranteed by the Parent Company. Proceeds received upon issuance, net of discount to par of $3.3 million and underwriting discount and other offering expenses of $5.5 million, totaled $591.2 million.

The indenture under which the 2027 Senior Notes and the 2026 Senior Notes were issued restricts the ability of the Company and its subsidiaries to incur debt unless the Company and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1 on all outstanding debt, after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Company and its subsidiaries to incur secured debt unless the Company and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Company and its consolidated subsidiaries. ~~As of~~At December 31, ~~2016,~~2017, the Company was in compliance with ~~all~~such covenants.

On May 17, 2016, the Company entered into two senior unsecured acquisition bridge facilities (the “Bridge Facilities”) totaling $1,675 million with the Company’s third-party advisors to the LS acquisition (see Note 4). In consideration for the bridge financing commitments, the Company paid fees totaling $7.3 million which are included as interest expense – bridge financing commitment fee in the 2016 consolidated statement of ~~the financial covenants under the 2026 Senior Notes.~~operations. The Bridge Facilities commitments were not drawn upon and were terminated on June 29, 2016.

On July 21, 2016, the Company entered into a $200 million term note maturing July 21, 2028 bearing interest at a fixed rate of 3.67%. ~~The proceeds from this term note were used to repay a portion of the then outstanding balance on the Company’s line of credit.~~

On April 8, 2014, the Company entered into a $175 million term note maturing April 2024 bearing interest at a fixed rate of 4.533%. The interest rate on the term note increases to 6.283% if the Company is not rated by at least one rating agency or if the Company’s credit rating is downgraded. ~~The proceeds from this term note were used to repay the $115 million outstanding on the Company’s line of credit at April 8, 2014, with the excess proceeds used for acquisitions.~~

In 2011, the Company entered into a $100 million term note maturing August 5, 2021 bearing interest at a fixed rate of 5.54%. The interest rate on the term note increases to 7.29% if the notes are not rated by at least one rating agency, the credit rating on the notes is downgraded or if the Company’s credit rating is downgraded. ~~The proceeds from this term note were used to fund acquisitions and investments in unconsolidated joint ventures.~~

The Company had maintained a $150 million unsecured term note maturing April 26, 2016 bearing interest at 6.38%. The Company used a draw on the line of credit to pay off the balance of this note on April 26, 2016.

The line of credit and term notes require the Company to meet certain financial covenants, measured on a quarterly basis, including prescribed leverage, fixed charge coverage, minimum net worth, limitations on additional indebtedness and limitations on dividend payouts. At December 31, ~~2016,~~2017, the Company was in compliance with ~~its debt~~such covenants.

We believe that if operating results remain consistent with historical levels and levels of other debt and liabilities remain consistent with amounts outstanding at December 31, ~~2016~~2017, the entire availability on the line of credit could be drawn without violating our debt covenants.

~~Subsequent to the adoption of ASU 2015-03, deferred~~Deferred debt issuance costs and the discount on the ~~2026 Senior Notes~~outstanding term notes are both presented as reductions of term notes in the accompanying consolidated balance sheets at December 31, ~~2016~~2017 and December 31, ~~2015.~~2016. Amortization expense related to these deferred debt issuance costs, which exclude costs related to the Bridge Facilities, was $3.0 million, $1.7 million ~~$1.2 million~~ and ~~$0.9~~$1.2 million for the periods ended December 31, 2017, 2016 ~~2015~~ and ~~2014,~~2015, respectively, and is included in interest expense in the consolidated statements of operations.

6. MORTGAGES PAYABLE AND DEBT MATURITIES

Mortgages payable at December 31, ~~2016~~2017 and ~~2015~~2016 consist of the following:

(dollars in thousands)
   December 31,
2016    December 31,
2015
4.98% mortgage note due January 1, 2021 secured by one self-storage facility with an aggregate net book value of $9.8 million, principal and interest paid monthly (effective interest rate 4.98%)
   $ 2,966       $ —
4.065% mortgage note due April 1, 2023, secured by one self-storage facility with an aggregate net book value of $7.6 million, principal and interest paid monthly (effective interest rate 4.23%)
   4,207       —
5.26% mortgage note due November 1, 2023, secured by one self-storage facility with an aggregate net book value of $8.1 million, principal and interest paid monthly (effective interest rate 5.48%)
   4,002       —
5.99% mortgage note due May 1, 2026, secured by one self-storage facility with an aggregate net book value of $4.2 million, principal and interest paid monthly (effective interest rate 6.21%)
   1,852       1,993




Total mortgages payable
   $ 13,027       $ 1,993

(dollars in thousands)	December 31, 2017		December 31, 2016
4.98% mortgage note due January 1, 2021 secured by one self- storage facility with an aggregate net book value of $9.6 million, principal and interest paid monthly (effective interest rate 5.22%)	$	2,916	$	2,966
4.065% mortgage note due April 1, 2023, secured by one self- storage facility with an aggregate net book value of $7.6 million, principal and interest paid monthly (effective interest rate 4.30%)		4,119		4,207
5.26% mortgage note due November 1, 2023, secured by one self- storage facility with an aggregate net book value of $8.0 million, principal and interest paid monthly (effective interest rate 5.56%)		3,939		4,002
5.99% mortgage note due May 1, 2026, secured by one self- storage facility with an aggregate net book value of $6.6 million, principal and interest paid monthly (effective interest rate 6.23%)		1,700		1,852
Total mortgages payable	$	12,674	$	13,027

The table below summarizes the Company’s debt obligations and interest rate derivatives at December 31, ~~2016.~~2017. The estimated fair value of financial instruments is subjective in nature and is dependent on a number of important assumptions, including discount rates and relevant comparable market information associated with each financial instrument. The fair value of the fixed rate term notes and mortgage notes were estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. These assumptions are considered Level 2 inputs within the fair value hierarchy as described in Note 8. The carrying values of our variable rate debt instruments approximate their fair values as these debt instruments bear interest at current market rates that approximate market participant rates. This is considered a Level 2 input within the fair value hierarchy. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company would realize in a current market exchange.


			Expected Maturity Date Including Discount																Expected Maturity Date Including Discount
(dollars in thousands)	2017		2018		2019		2020		2021		Thereafter		Total		Fair Value		2018		2019		2020		2021		2022		Thereafter		Total		Fair Value
Line of credit—variable rate LIBOR + 1.10% (1.79% at December 31, 2016)		—		—	$	253,000		—		—		—	$	253,000	$	253,000
Line of credit—variable rate LIBOR + 1.10% (2.63% at December 31, 2017)																		—	$	105,000		—		—		—		—	$	105,000	$	105,000
Notes Payable:
Term note—variable rate LIBOR+1.15% (1.92% at December 31, 2016)		—		—		—	$	325,000		—		—	$	325,000	$	325,000
Term note—variable rate LIBOR+1.15% (2.53% at December 31, 2017)																		—		—	$	100,000		—		—		—	$	100,000	$	100,000
Term note—fixed rate 5.54%		—		—		—		—	$	100,000		—	$	100,000	$	109,379		—		—		—	$	100,000		—		—	$	100,000	$	109,192
Term note—fixed rate 4.533%		—		—		—		—		—	$	175,000	$	175,000	$	181,567		—		—		—		—		—	$	175,000	$	175,000	$	181,510
Term note—fixed rate 3.50%		—		—		—		—		—	$	600,000	$	600,000	$	574,126		—		—		—		—		—	$	600,000	$	600,000	$	585,092
Term note—fixed rate 3.875%																		—		—		—		—		—	$	450,000	$	450,000	$	449,076
Term note—fixed rate 3.67%		—		—		—		—		—	$	200,000	$	200,000	$	188,284		—		—		—		—		—	$	200,000	$	200,000	$	192,447
Mortgage note—fixed rate 4.98%	$	51	$	53	$	56	$	58	$	2,748		—	$	2,966	$	2,966	$	53	$	56	$	59	$	2,748		—		—	$	2,916	$	3,007
Mortgage note—fixed rate 4.065%	$	88	$	92	$	96	$	99	$	104	$	3,728	$	4,207	$	4,210	$	92	$	96	$	99	$	104	$	108	$	3,620	$	4,119	$	4,112
Mortgage note—fixed rate 5.26%	$	63	$	67	$	71	$	74	$	78	$	3,649	$	4,002	$	4,281	$	67	$	71	$	74	$	78	$	83	$	3,566	$	3,939	$	4,169
Mortgage note—fixed rate 5.99%	$	151	$	160	$	170	$	181	$	192	$	998	$	1,852	$	1,997	$	160	$	170	$	181	$	192	$	203	$	794	$	1,700	$	1,822
Interest rate derivatives – liability		—		—		—		—		—		—		—	$	13,015
Total																	$	372	$	105,393	$	100,413	$	103,122	$	394	$	1,432,980	$	1,742,674

7. DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate swaps are used to adjust the proportion of total debt that is subject to variable interest rates. The interest rate swaps require the Company to pay an amount equal to a specific fixed rate of interest times a notional principal amount and to receive in return an amount equal to a variable rate of interest times the same notional amount. The notional amounts are not exchanged. Forward starting interest rate swaps ~~are~~have also been used by the Company to hedge the risk of changes in the interest-related cash outflows associated with the potential issuance of long-term debt. No other cash payments are made unless the contract is terminated prior to its maturity, in which case the contract would likely be settled for an amount equal to its fair value. The Company enters into interest rate swaps with a number of major financial institutions to minimize counterparty credit risk.

~~The interest~~Interest rate swaps qualify and are designated as hedges of the amount of future cash flows related to interest payments on variable rate debt. Therefore, ~~the~~ interest rate swaps are recorded in the consolidated balance sheets at fair value and the related gains or losses are deferred in shareholders’ equity or partners’ capital as Accumulated Other Comprehensive Loss (“AOCL”). These deferred gains and losses are recognized in interest expense during the period or periods in which the related interest payments affect earnings. However, to the extent that the interest rate swaps are not perfectly effective in offsetting the change in value of the interest payments being hedged, the ineffective portion of these contracts is recognized in earnings immediately. Ineffectiveness was de minimis in 2017, 2016, ~~2015,~~ and ~~2014.~~2015.

The Company has one interest rate swap ~~agreements~~agreement in effect at December 31, ~~2016~~2017 as detailed below to effectively convert ~~a total of $325~~$100 million of variable-rate debt to fixed-rate debt.

Notional Amount

Effective Date

Expiration Date

Fixed

Rate Paid

Floating Rate

Received

~~$125 Million~~

~~9/1/2011~~

~~8/1/18~~

~~2.3700~~

~~1 month LIBOR~~

$100 Million

9/4/13

~~12/30/11~~

9/4/18

~~12/29/17~~

1.3710

~~1.6125~~

1 month LIBOR

~~$100 Million~~

~~9/4/13~~

~~9/4/18~~

~~1.3710~~

~~1 month LIBOR~~

~~$100 Million~~

~~12/29/17~~

~~11/29/19~~

~~3.9680~~

~~1 month LIBOR~~

~~$125 Million~~

~~8/1/18~~

~~6/1/20~~

~~4.1930~~

~~1 month LIBOR~~

In the fourth quarter of 2017, the Company terminated hedges and settled the interest rate swap agreements on $225 million of the Company’s variable rate debt in connection with repayment of the related variable rate term notes. The Company settled these interest rate swap agreements for a total of $9.6 million which is included in interest expense in the 2017 consolidated statement of operations. As a result of the termination, no gains or losses related to the terminated interest rate swaps are included in AOCL at December 31, 2017.

In the fourth quarter of 2015, the Company entered into forward starting interest rate swap agreements with a total notional value of $50 million. In the first quarter of 2016, the Company entered into additional forward starting interest rate swap agreements with a total notional value of $100 million. These forward starting interest rate swap agreements were entered into to hedge the risk of changes in the interest-related cash flows associated with the potential issuance of fixed rate long-term debt. In conjunction with the issuance of the 2026 Senior Notes (see Note 5), the Company terminated these hedges and settled the forward starting swap agreements for approximately $9.2 million. The $9.2 million has been deferred in ~~accumulated other comprehensive loss~~AOCL and is being amortized as additional interest expense over the ten-year term of the 2026 Senior Notes or until such time as interest payments on the 2026 Senior Notes are no longer probable. ~~Approximately $0.5 million of interest expense was recorded in 2016 as a result of this amortization.~~ Consistent with the Company’s accounting policy, the cash outflow related to the settlement of the forward starting swap agreements is reflected as a financing activity in the 2016 consolidated ~~statements~~statement of cash flows.

The remaining interest rate swap ~~agreements are~~agreement is the only derivative ~~instruments,~~instrument, as defined by FASB ASC Topic 815 “Derivatives and Hedging”, ”, held by the ~~Company.~~Company at December 31, 2017. During 2017, 2016, ~~2015,~~ and ~~2014,~~2015, the net reclassification from AOCL to interest expense was $12.3 million, $4.6 million, ~~$5.2 million,~~ and ~~$5.5~~$5.2 million, respectively, based on payments made under the swap agreements. Based on current interest rates, the Company estimates that payments received under the interest rate swaps ~~will~~in 2018 would be ~~approximately $4.0 million in 2017.~~de minimis. Payments made or received under the interest rate swap agreements will be reclassified to interest expense as settlements occur. The fair value of the swap agreements, including accrued interest, was an asset of $0.2 million at December 31, 2017 and a liability of $13.0 million at December 31, ~~2016 and an asset of $550,000 and a liability of $15.3 million at December 31, 2015.~~2016.

The Company’s ~~agreements~~agreement with its interest rate swap ~~counterparties contain~~counterparty contains provisions pursuant to which the Company could be declared in default of its derivative ~~obligations~~obligation, if any, if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender. The interest rate swap ~~agreements~~agreement also ~~incorporate~~incorporates other loan covenants of the Company. Failure to comply with the

loan covenant provisions would result in the Company being in default on the interest rate swap ~~agreements.~~agreement. As of December 31, ~~2016,~~2017, the Company had not posted any collateral related to the interest rate swap agreements. If the Company had breached any of these provisions as of December 31, 2016, it could have been required to settle its obligations under the agreements at their net termination value of $13.0 million.

The changes in AOCL for the years ended December 31, 2017, 2016, ~~2015~~ and ~~2014~~2015 are summarized as follows:


(dollars in thousands)	Jan. 1, 2016 to Dec. 31, 2016			Jan. 1, 2015 to Dec. 31, 2015			Jan. 1, 2014 to Dec. 31, 2014			Jan. 1, 2017 to Dec. 31, 2017			Jan. 1, 2016 to Dec. 31, 2016			Jan. 1, 2015 to Dec. 31, 2015
Accumulated other comprehensive loss beginning of period	$	(14,415	)	$	(13,005	)	$	(6,402	)	$	(21,475	)	$	(14,415	)	$	(13,005	)
Realized loss reclassified from accumulated other comprehensive loss to interest expense		5,044			5,229			5,506			13,185			5,044			5,229
Unrealized loss from changes in the fair value of the effective portion of the interest rate swaps		(12,104	)		(6,639	)		(12,109	)

Loss included in other comprehensive loss		(7,060	)		(1,410	)		(6,603	)

Unrealized gain (loss) from changes in the fair value of the effective portion of the interest rate swaps											703			(12,104	)		(6,639	)
Gain (loss) included in other comprehensive loss											13,888			(7,060	)		(1,410	)
Accumulated other comprehensive loss end of period	$	(21,475	)	$	(14,415	)	$	(13,005	)	$	(7,587	)	$	(21,475	)	$	(14,415	)

8. FAIR VALUE MEASUREMENTS

The Company applies the provisions of ASC Topic 820 “Fair Value Measurements and Disclosures” in determining the fair value of its financial and nonfinancial assets and liabilities. ASC Topic 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Refer to Note 6 for presentation of the fair values of debt obligations which are disclosed at fair value on a recurring basis.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, ~~2016~~2017 and December 31, ~~2015~~2016 (dollars in thousands):

											Asset (Liability)			Level 1		Level 2			Level 3
	Asset (Liability)			Level 1		Level 2			Level 3
December 31, 2017
Interest rate swaps											$	205			—	$	205			—
December 31, 2016
Interest rate swaps	$	(13,015	)		—	$	(13,015	)		—	$	(13,015	)		—	$	(13,015	)		—
December 31, 2015
Interest rate swaps		550			—		550			—
Interest rate swaps		(15,343	)		—		(15,343	)		—

Interest rate swaps are over the counter securities with no quoted readily available Level 1 inputs, and therefore are measured at fair value using inputs that are directly observable in active markets and are classified within Level 2 of the valuation hierarchy, using the income approach.

During 2016, assets and liabilities measured at fair value on a non-recurring basis included the assets acquired and liabilities assumed in connection with the acquisition of ~~122~~ storage facilities accounted for as business combinations (see note 4), including the LS acquisition. To determine the fair value of land, the Company used prices per acre derived from observed transactions involving comparable land in similar locations, which is considered a Level 2 input. To determine the fair value of buildings, equipment and improvements, the Company used current replacement cost based on information derived from construction industry data by geographic region which is considered a Level 2 input. The

replacement cost is then adjusted for the age, condition, and economic obsolescence associated with these assets, which are considered Level 3 inputs. The fair value of in-place customer leases is based on the rent lost due to the amount of time required to replace existing customers and the cost to replace in-place tenants which are based on the Company’s historical experience with turnover at its facilities and on market rental rates and estimated downtime required to replace the in-place leases, all of which are Level 3 inputs. The average downtime is based upon estimated demand information including the number of potential customers exhibited in historical property interest data. The fair value of trade names is based on royalty payments avoided had the trade name been owned by a third party which is determined using market royalty rates. Other assets acquired and liabilities assumed in the acquisitions consist primarily of prepaid or accrued real estate taxes and deferred revenues from advance monthly rentals paid by customers. The fair values of these assets and liabilities are based on their carrying values as they typically turn over within one year from the acquisition date and these are Level 3 inputs. There were no acquisitions made in 2017 that were accounted for as business combinations.

9. STOCK BASED COMPENSATION

The Company established the 2015 Award and Option Plan (the “2015 Plan”) which replaced the expired 2005 Award and Option Plan for the purpose of attracting and retaining the Company’s executive officers and other key employees, such plans being the “Plans”. There were 561,000 shares authorized for issuance under the 2015 Plan. Options granted under the Plans vest ratably over four and eight years, and must be exercised within ten years from the date of grant. The exercise price for qualified incentive stock options must be at least equal to the fair market value of the common shares at the date of grant. As of December 31, ~~2016,~~2017, options for ~~77,206~~76,106 shares were outstanding under the Plans and options for ~~435,570~~345,383 shares of common stock were available for future issuance. The Company may also grant other stock-based awards under the 2015 Plan, including restricted stock and performance-based awards.

The Company also established the 2009 Outside Directors’ Stock Option and Award Plan (the “Non-employee Plan”) which replaced the 1995 Outside Directors’ Stock Option Plan for the purpose of attracting and retaining the services of experienced and knowledgeable outside directors. Prior to 2016, the Non-employee Plan provided for the initial granting of options to purchase 3,500 shares of common stock and for the annual granting of options to purchase 2,000 shares of common stock to each eligible director. Such options vest over a one-year period for initial awards and immediately upon subsequent grants. The issuance of stock options to directors was discontinued in 2016. In addition, each outside director receives non-vested shares annually equal to 80% of the annual fees paid to them. During the restriction period, the non-vested shares may not be sold, transferred, or otherwise encumbered. The holder of the non-vested shares has all rights of a holder of common shares, including the right to vote and receive dividends. During ~~2016, 1,864~~2017, 3,145 non-vested shares were issued to outside directors. Such non-vested shares vest over a one-year period. The total shares reserved under the Non-employee Plan is 150,000. The exercise price for options granted under the Non-employee Plan is equal to the fair market value at the date of grant. As of December 31, ~~2016,~~2017, options for 18,500 common shares and ~~16,984~~3,145 of non-vested shares were outstanding under the Non-employee Plans. As of December 31, ~~2016~~2017 options for ~~71,016~~67,871 shares of common stock were available for future issuance.

A summary of the Company’s stock option activity and related information for the years ended December 31 follows:


	2016				2015					2014					2017					2016				2015
	Options		Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price		Options			Weighted average exercise price		Options		Weighted average exercise price		Options			Weighted average exercise price
Outstanding at beginning of year:		95,706	$	52.08		115,606		$	48.54		130,568		$	44.82		95,706		$	52.08		95,706	$	52.08		115,606		$	48.54
Granted		—		—		11,000			91.58		14,000			76.01		—			—		—		—		11,000			91.58
Exercised		—		—		(30,900	)		52.87		(27,462	)		45.34		(1,100	)		39.00		—		—		(30,900	)		52.87
Adjusted / (forfeited)		—		—		—			—		(1,500	)		40.07		—			—		—		—		—			—

Outstanding at end of year		95,706	$	52.08		95,706		$	52.08		115,606		$	48.54		94,606		$	52.24		95,706	$	52.08		95,706		$	52.08
Exercisable at end of year		92,706	$	51.31		63,815		$	48.73		67,316		$	49.18		93,106		$	51.85		92,706	$	51.31		63,815		$	48.73

A summary of the Company’s stock options outstanding at December 31, ~~2016~~2017 follows:


	Outstanding				Exercisable				Outstanding				Exercisable
Exercise Price Range	Options		Weighted average exercise price		Options		Weighted average exercise price		Options		Weighted average exercise price		Options		Weighted average exercise price
$30.00 – 39.99		1,100	$	35.73		1,100	$	35.73		500	$	35.73		500	$	35.73
$40.00 – 69.99		77,106	$	44.67		77,106	$	44.67		76,606	$	44.68		76,606	$	44.68
$70.00 – 91.58		17,500	$	85.78		14,500	$	87.82		17,500	$	85.78		16,000	$	86.71

Total		95,706	$	52.08		92,706	$	51.31		94,606	$	52.24		93,106	$	51.85
Intrinsic value of outstanding stock options at December 31, 2016							$	3,244,663
Intrinsic value of exercisable stock options at December 31, 2016							$	3,216,643
Intrinsic value of outstanding stock options at December 31, 2017															$	3,512,314
Intrinsic value of exercisable stock options at December 31, 2017															$	3,492,589

The intrinsic value of stock options exercised during the years ended December 31, 2017, 2016, and 2015 was $0.1 million, $0, and ~~2014 was $0,~~ $1.4 ~~million, and $0.9~~ million, respectively.

Proceeds from stock options exercised during the years ended December 31, 2017, 2016, ~~2015,~~ and ~~2014~~2015 amounted to $0.1 million, $0, ~~$1.6 million,~~ and ~~$1.2~~$1.6 million, respectively.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock at December 31, ~~2016,~~2017, or the price on the date of exercise for those exercised during the year. As of December 31, ~~2016,~~2017, there was approximately ~~$22,000~~$7,000 of total unrecognized compensation cost related to stock option compensation arrangements granted under our stock award plans. That cost is expected to be recognized over a weighted-average period of approximately ~~1.5~~0.5 years. The weighted average remaining contractual life of all options is ~~2.9~~1.9 years, and for exercisable options is ~~2.8~~1.8 years.

Non-vested stock

The Company has also issued shares of non-vested stock to employees which vest over one to nine year periods. During the restriction period, the non-vested shares may not be sold, transferred, or otherwise encumbered. The holder of the non-vested shares has all rights of a holder of common shares, including the right to vote and receive dividends. For issuances of non-vested stock during the year ended December 31, ~~2016,~~2017, the fair market value of the non-vested stock on the date of grant ranged from ~~$82.52~~$74.36 to ~~$117.27.~~$89.07. During ~~2016, 23,405~~2017, 51,276 shares of non-vested stock were issued to employees and directors with an aggregate fair value of ~~$2.1~~$4.4 million. The Company charges the fair value ratably to expense over the vesting period. The Company uses the average of the high and low price of its common stock on the date the award is granted as the fair value for non-vested stock awards that do not have a market condition.

A summary of the status of unvested shares of stock issued to employees and directors as of and during the years ended December 31 follows:


	2016					2015					2014					2017					2016					2015
	Non-vested Shares			Weighted average grant date fair value		Non-vested Shares			Weighted average grant date fair value		Non- vested Shares			Weighted average grant date fair value		Non-vested Shares			Weighted average grant date fair value		Non-vested Shares			Weighted average grant date fair value		Non-vested Shares			Weighted average grant date fair value
Unvested at beginning of year:		305,520		$	59.09		310,463		$	51.93		293,196		$	49.20		258,163		$	58.89		305,520		$	59.09		310,463		$	51.93
Granted		23,405			89.30		64,665			94.74		92,665			60.87		51,276			85.17		23,405			89.30		64,665			94.74
Vested		(70,762	)		69.82		(69,187	)		60.28		(72,876	)		53.11		(96,615	)		58.95		(70,762	)		69.82		(69,187	)		60.28
Forfeited		—			—		(421	)		76.07		(2,522	)		28.66		(42,015	)		38.53		—			—		(421	)		76.07

Unvested at end of year		258,163		$	58.89		305,520		$	59.09		310,463		$	51.93		170,809		$	71.75		258,163		$	58.89		305,520		$	59.09

Compensation expense of $7.1 million, $7.2 million, ~~$6.3 million,~~ and ~~$4.6~~$6.3 million was recognized for the vested portion of non-vested stock grants in 2017, 2016, ~~2015,~~ and ~~2014,~~2015, respectively. The fair value of non-vested stock that vested during 2017, 2016, and 2015 ~~and 2014~~ was $5.7 million, $4.9 million, ~~$4.2 million,~~ and ~~$3.9~~$4.2 million, respectively. The total unrecognized compensation cost related to non-vested stock was ~~$9.6~~$8.2 million at December 31, ~~2016,~~2017, and the remaining weighted-average period over which this expense will be recognized was ~~3.4~~4.2 years.

Performance-based awards

During 2017, 2016 and 2015, the Company granted performance-based awards that entitle the recipients to earn up to 48,762, 37,082 and 42,538 shares, respectively, if certain performance criteria are achieved over a ~~three year~~three-year period. The actual number of shares to be issued will be determined at the end of a three year period, and no performance-based shares were issued in 2017, 2016 or 2015. ~~The Company granted and issued a total of 60,654 performance shares under the Plan during 2014 which are included in the table above.~~ The performance-based awards granted are based upon the Company’s performance over a ~~three year~~three-year period depending on the Company’s total shareholder return relative to a group of peer companies. Performance based awards are recognized as compensation expense based on the fair value on the date of grant, the number of shares ultimately expected to vest and the vesting period. For accounting purposes, the performance shares are considered to have a market condition. The effect of the market condition is reflected in the grant date fair value of the award and thus, compensation expense is recognized on this type of award provided that the requisite service is rendered (regardless of whether the market condition is achieved). The Company estimated the fair value of each performance-based award granted under the Plans on the date of grant using a Monte Carlo simulation that uses the assumptions noted in Note 2.

During ~~2016,~~2017, compensation expense of $2.6 million (included in the ~~$7.2~~$7.1 million discussed above) was recognized for performance awards granted in ~~2014~~2017 and prior. The total unrecognized compensation cost related to non-vested performance awards was ~~$3.9~~$3.0 million at December 31, ~~2016~~2017 and the weighted-average period over which this expense will be recognized is ~~1.6~~1.9 years.

Deferred compensation plan for directors

Under the Deferred Compensation Plan for Directors, non-employee Directors may defer all or part of their Directors’ fees that are otherwise payable in cash. Directors’ fees that are deferred under this plan are credited to each Directors’ account under the plan in the form of Units. The number of Units credited is determined by dividing the amount of Directors’ fees deferred by the closing price of the Company’s Common Stock on the New York Stock Exchange on the day immediately preceding the day upon which Directors’ fees otherwise would be paid by the Company. A Director is credited with additional Units for dividends on the shares of Common Stock represented by Units in such Directors’ Account. A Director may elect to receive the shares in a lump sum on a date specified by the Director or in quarterly or annual installments over a specified period and commencing on a specified date. The Directors may not elect to receive cash in lieu of shares. Under this plan there were a total of ~~20,513~~21,540 units outstanding at December 31, ~~2016.~~2017. Fees that were earned and credited to Directors’ accounts are recorded as compensation expense ~~which~~and totaled $0.1 million annually in each of 2016 ~~2015,~~ and ~~2014.~~2015. No fees were elected to be deferred by any non-employee Directors in 2017.

10. RETIREMENT PLAN

Employees of the Company qualifying under certain age and service requirements are eligible to be a participant in a 401(k) Plan. In 2015, ~~and 2014,~~ the Company contributed to the Plan at the rate of 25% of the first 4% of gross wages that the employee contributes. Beginning on January 1, 2016, the Company contributes to the Plan at the rate of 33% of the first 5% of gross wages that the employee contributes. Total expense to the Company was approximately $703,000, $505,000, ~~$276,000,~~ and ~~$192,000~~$276,000 for the years ended December 31, 2017, 2016, and 2015, ~~and 2014,~~ respectively.

11. INVESTMENT IN JOINT VENTURES

A summary of the Company’s unconsolidated joint ventures is as follows:

Venture	Number of Properties		Company common ownership interest	Carrying value of investment at Dec. 31, 2017	Carrying value of investment at Dec. 31, 2016
Sovran HHF Storage Holdings LLC (“Sovran HHF”)¹		57	20%	$85.1 million	$43.8 million
Sovran HHF Storage Holdings II LLC (“Sovran HHF II”)²		30	15%	$13.3 million	$13.5 million
191 III Holdings LLC (“191 III”)³		6	20%	$9.4 million	$0.7 million
Life Storage-SERS Storage LLC (“SERS”)⁴		3	20%	$3.6 million	N/A
Iskalo Office Holdings, LLC (“Iskalo”)⁵	N/A		49%	($0.4 million)	($0.4 million)
Urban Box Coralway Storage, LLC (“Urban Box”)⁶		1	85%	$4.1 million	$4.1 million
SNL/Orix 1200 McDonald Ave., LLC (“McDonald”)⁷		1	5%	$2.7 million	$2.7 million
SNL Orix Merrick, LLC (“Merrick”)⁸		1	5%	$2.5 million	$2.5 million
Review Avenue Partners, LLC (“RAP”)⁹		1	40%	$11.5 million	N/A
N 32nd Street Self Storage, LLC (“N32”)¹⁰		1	46%	$1.3 million	N/A

Sovran HHF owns self-storage facilities in Arizona (11), Colorado (4), Florida (3), Georgia (1), Kentucky (2), Nevada (5), New Jersey (2), Ohio (6), Pennsylvania (1), Tennessee (2) and Texas (20). In June 2017, Sovran HHF acquired 18 self-storage facilities for $330 million in Arizona, Nevada and Tennessee. In connection with this acquisition, Sovran HHF entered into $135 million of mortgage debt which is secured by 16 of the self-storage facilities acquired. During the year ended December 31, 2017, the Company contributed $39.6 million as its share of capital to fund the acquisition, $3.6 million to fund the repayment of certain mortgages held by the joint venture, and an additional $0.1 million to fund capital projects. During the year ended December 31, 2017, the Company received $4.5 million of distributions from Sovran HHF. As of December 31, 2017, the carrying value of the Company’s investment in Sovran HHF exceeds its share of the underlying equity in net assets of Sovran HHF by approximately $1.7 million as a result of the capitalization of certain acquisition related costs in 2008. This difference is included in the carrying value of the investment.

²	Sovran HHF II owns self-storage facilities in New Jersey (17), Pennsylvania (3), and Texas (10). During the year ended December 31, 2017, the Company received $1.7 million of distributions from Sovran HHF II.

191 III owns six self-storage facilities in California. During 2017, 191 III acquired these six self-storage facilities for a total of $104.1 million. In connection with the acquisition of these self-storage facilities, 191 III entered into $57.2 million of mortgage debt which is secured by the self-storage facilities acquired. During 2017 and 2016, the Company contributed $9.3 million and $0.7 million, respectively, as its share of capital to fund these acquisitions. During the year ended December 31, 2017, the Company received $0.5 million of distributions from 191 III.

⁴

In May 2017, the Company executed a joint venture agreement, Life Storage-SERS Storage LLC (“SERS”), with an unrelated third party with the purpose of acquiring and operating self-storage facilities. SERS owns three self-storage facilities in Georgia. During 2017, SERS acquired these three self-storage facilities for a total of $39.1 million. In connection with the acquisition of these self-storage facilities, SERS entered into $22.0 million of mortgage debt which is secured by the self-storage facilities acquired. During 2017, the Company contributed $3.6 million as its share of capital to fund these acquisitions.

⁵

Iskalo owns the building that houses the Company’s headquarters and other tenants. The Company paid rent to Iskalo of $1.2 million, $1.2 million and $1.1 million during the years ended December 31, 2017, 2016, and 2015, respectively. During the year ended December 31, 2017, the Company received $0.2 million of distributions from Iskalo.

⁶	Urban Box is currently developing a self-storage facility in Florida.

⁷

McDonald is currently developing a self-storage facility in New York. During 2016, the Company contributed $0.4 million of common capital and $2.3 million of preferred capital to McDonald as its share of capital to develop the property. McDonald entered into a non-recourse mortgage loan in order to finance the future development costs, with $6.4 million of principal outstanding at December 31, 2017.

⁸

Merrick owns a self-storage facility in New York. During 2016, the Company contributed $0.4 million of common capital and $2.1 million of preferred capital to Merrick as its share of capital to develop the property. Merrick has entered into a non-recourse mortgage loan with $9.3 million of principal outstanding at December 31, 2017.

⁹

In January 2017, the Company executed a joint venture agreement, Review Avenue Partners, LLC (“RAP”), with an unrelated third party. The Company contributed $12.5 million of common capital to RAP during the year ended December 31, 2017. RAP is currently operating a self-storage property in New York.

¹⁰

In April 2017, the Company executed a joint venture agreement, N 32^nd Street Self Storage, LLC (“N32”), with an unrelated third party. The Company contributed $1.3 million of common capital to N32 during the year ended December 31, 2017. N32 is currently developing a self-storage property in Arizona.

Based on the facts and circumstances of each of the Company’s joint ventures, the Company has determined that none of the joint ventures are a ~~20% ownership~~variable interest entity (VIE) in ~~Sovran HHF Storage Holdings LLC (“Sovran HHF”),~~accordance with ASC 810, Consolidation. As a result, the Company used the voting model under ASC 810 to determine whether or not to consolidate the joint ventures. Based upon each member’s substantive participation rights over the activities as stipulated in the joint venture ~~that owns 39 self-storage properties that~~agreements, none of the joint ventures are ~~managed~~consolidated by the Company. Due to the Company’s significant influence over the operations of each of the joint ventures, all joint ventures are accounted for under the equity method of accounting.

The carrying ~~value~~values of the Company’s ~~investment at December 31, 2016 and 2015 was $43.8 million and $44.6 million, respectively. In 2014, the Company contributed $28.6 million~~investments in ~~cash to the~~ joint venture as its share of capital required to fund property acquisitions. In 2015 the Company contributed an additional $0.4 million in cash to the joint venture as its share of capital required to fund certain capital expenditures and property taxes related to 2014 acquisitions. As of

December 31, 2016, the carrying value of the Company’s investment in Sovran HHF exceeds its share of the underlying equity in net assets of Sovran HHF by approximately $1.7 million as a result of the capitalization of certain acquisition related costs in 2008. This difference is included in the carrying value of the investment, which is assessed for other-than-temporary impairment on a periodic basis. No other-than-temporary impairments have been recorded on this investment.

~~The Company has a 15% ownership interest in Sovran HHF Storage Holdings II LLC (“Sovran HHF II”), a joint venture that owns 30 self-storage properties that~~ventures are managed by the Company. The carrying value of the Company’s investment at December 31, 2016 and 2015 was $13.5 million and $13.9 million, respectively. In 2015 the Company contributed $1.7 million in cash to the joint venture as its share of capital required to fund the payoff of a mortgage note. The carrying value of this investment is assessed for other-than-temporary impairment on a periodic basis and no such impairments have been recorded on ~~this investment.~~any of the Company’s investments in joint ventures.

AsThe Company earns management and/or call center fees ranging from 6% to 7% of joint venture gross revenues as manager of ~~Sovran~~ HHF, ~~and Sovran~~ HHF II, 191 III, SERS, RAP and Merrick. These fees, which are included in other operating income in the ~~Company earns a management and call center fee~~consolidated statements of ~~7% of gross revenues which~~operations, totaled ~~$4.9~~$6.6 million, $4.9 million and ~~$3.9~~$4.9 million ~~for~~in 2017, 2016 ~~2015,~~ and ~~2014,~~2015 respectively. The Company will also ~~received an acquisition fee~~earn management fees upon commencement of ~~$0.4 million for securing purchases for Sovran HHF~~the operation of storage facilities owned by Urban Box, McDonald, and ~~Sovran HHF II in 2014.~~ N32.

The Company’s share of ~~Sovran HHF and Sovran HHF II’s~~the unconsolidated joint ventures’ income ~~for 2016, 2015, and 2014 was $3.4 million, $3.2 million, and $1.9 million, respectively.~~(loss) is as follows:

The Company has a 49% ownership interest in Iskalo Office Holdings, LLC, which owns the building that houses the Company’s headquarters and other tenants. The carrying value of the Company’s investment is a liability of $0.4 million and $0.5 million at December 31, 2016 and 2015, respectively, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets. For the years ended December 31, 2016, 2015, and 2014, the Company’s share of Iskalo Office Holdings, LLC’s income was $214,000, $189,000, and $107,000, respectively. The Company paid rent to Iskalo Office Holdings, LLC of $1.2 million, $1.1 million, and $1.0 million in 2016, 2015, and 2014, respectively.

(dollars in thousands) Venture	Year Ended December 31, 2017			Year Ended December 31, 2016		Year Ended December 31, 2015
Sovran HHF	$	2,517		$	2,033	$	1,953
Sovran HHF II		1,530			1,403		1,263
191 III		13			—		—
SERS		(12	)		—		—
Urban Box		—			15		—
RAP		(967	)		—		—
Iskalo		233			214		189
	$	3,314		$	3,665	$	3,405

The Company holds an 85% equity interest in Urban Box Coralway Storage, LLC (Urban Box), a joint venture with an unrelated third party. Urban Box was formed in 2015 and is currently developing a self-storage property in Florida. During 2015, the Company contributed $4.0 million to Urban Box as its share of capital to develop the property, which primarily consists of the acquisition of land in 2015. In 2016, Urban Box entered into a non-recourse mortgage loan in order to finance future development costs. The Company and the other joint venture member have participation rights which require the agreement of both members in order to implement the activities of Urban Box which are most significant to its economic performance. Accordingly, the investment is accounted for by the Company using the equity method.

~~The Company will perform property management services for Urban Box in exchange for a management fee based on 6% of property revenues. There were no management fees in 2016 or 2015.~~

The Company holds a 5% equity interest in SNL/Orix 1200 McDonald Ave., LLC (“McDonald”), a joint venture with an unrelated third party. The joint venture for McDonald was executed in 2016 and is currently developing a self-storage property in New York. During 2016, the Company contributed $0.4 million of common capital and $2.3 million of preferred capital to McDonald as its share of capital to develop the property. McDonald entered into a non-recourse mortgage loan in order to finance the future development costs. In accordance with the terms of the McDonald joint venture agreement, the Company has the ability to assert influence over certain business matters. Accordingly, the investment is accounted for by the Company using the equity method.

~~The Company will perform property management services for McDonald in exchange for a management fee based on property revenues. There were no management fees in 2016.~~

The Company holds a 5% equity interest in SNL Orix Merrick, LLC (“Merrick”), a joint venture with an unrelated third party. The joint venture for Merrick was executed in 2016 and is currently developing a self-storage property in New York. During 2016, the Company contributed $0.4 million of common capital and $2.1 million of preferred capital to Merrick as its share of capital to develop the property. Merrick will enter into a non-recourse mortgage loan in order to finance the future development costs. In accordance with the terms of the Merrick joint venture agreement, the Company has the ability to assert influence over certain business matters. Accordingly, the investment is accounted for by the Company using the equity method.

~~The Company will perform property management services for Merrick in exchange for a management fee based on property revenues. There were no management fees in 2016.~~

The Company holds a 20% ownership interest in 191 III Holdings LLC (“191 III”), a joint venture that was formed in 2016 to acquire self-storage properties that are managed by the Company. During 2016, the Company contributed $0.7 million to 191 III as its share of capital to fund future acquisitions. In accordance with the terms of the 191 III joint venture agreement, the Company has the ability to assert influence over certain business matters. Accordingly, the investment is accounted for by the Company using the equity method.

The Company will perform property management and call center services for 191 III in exchange for an aggregate fee based on 7% of the gross revenues of the joint venture. There were no management fees in 2016.

A summary of the combined unconsolidated joint ventures’ financial statements as of and for the year ended December 31, ~~2016~~2017 is as follows:


(dollars in thousands)
Balance Sheet Data:
Investment in storage facilities, net	$	534,719		$	1,075,101
Investment in office building		5,008
Investment in office building, net					4,810
Other assets		17,440			16,622

Total Assets	$	557,167		$	1,096,533

Due to the Company	$	1,223		$	1,397
Mortgages payable		220,456			459,028
Other liabilities		7,394			10,721

Total Liabilities		229,073		$	471,146
Unaffiliated partners’ equity		262,944			492,332
Company equity		65,150			133,055

Total Partners’ Equity		328,094			625,387

Total Liabilities and Partners’ Equity	$	557,167		$	1,096,533

Income Statement Data:
Income Statement Data:
Total revenues	$	74,034		$	96,301
Property operating expenses		(23,879	)		(31,008	)
Administrative, management and call center fees		(5,389	)		(7,668	)
Depreciation and amortization of customer list		(13,946	)		(21,165	)
Amortization of financing fees		(354	)		(810	)
Income tax expense		(232	)		(252	)
Interest expense		(10,258	)		(14,571	)

Net income	$	19,976		$	20,827

The Company does not guarantee the debt of ~~Sovran HHF, Sovran HHF II, Iskalo Office Holdings, LLC, Urban Box, McDonald, Merrick, or 191 III.~~any of its equity method investees.

We do not expect to have material future cash outlays relating to these joint ventures outside our share of capital for future acquisitions of properties. A summary of our revenues, expenses and cash flows arising from the off-balance sheet arrangements with ~~Sovran HHF, Sovran HHF II, Iskalo Office Holdings, LLC, Urban Box, McDonald, Merrick, and 191 III~~unconsolidated joint ventures for the three years ended December 31, ~~2016~~2017 are as follows:


	Year ended December 31,									Year ended December 31,
(dollars in thousands)	2016			2015			2014			2017			2016			2015
Statement of Operations
Operating activities
Other operating income (management fees and acquisition fee income)	$	4,891		$	4,889		$	4,231		$	8,090		$	4,891		$	4,889
General and administrative expenses (corporate office rent)		1,214			1,053			1,023			1,192			1,214			1,053
Equity in income of joint ventures		3,665			3,405			2,086			3,314			3,665			3,405
Distributions from unconsolidated joint ventures		5,207			4,821			3,123			7,055			5,207			4,821
(Advances to) receipts from joint ventures		(294	)		(346	)		590
Advances to joint ventures											(174	)		(294	)		(346	)
Investing activities
Investment in unconsolidated joint ventures		(6,438	)		(6,151	)		(28,650	)		(69,911	)		(6,438	)		(6,151	)

12. SHAREHOLDERS’ EQUITY

On March 3, 2015, the Company completed the public offering of 1,380,000 shares of its common stock at $90.40 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $119.5 million. ~~The Company used the net proceeds from the offering to repay a portion of the indebtedness then outstanding on the Company’s unsecured line of credit.~~

On January 20, 2016, the Company completed the public offering of 2,645,000 shares of its common stock at $105.75 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $269.7 million. ~~The Company used the net proceeds from the offering to repay a portion of the indebtedness then outstanding on the Company’s unsecured line of credit.~~

On May 25, 2016, the Company completed the public offering of 6,900,000 shares of its common stock at $100.00 per share. Net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $665.4 million. The Company initially used the net proceeds from the offering to repay the indebtedness then outstanding on the Company’s unsecured line of credit. The proceeds from this offering and the proceeds from the 2026 Senior Notes (see Note 5) were used, along with draws on the Company’s revolving line of credit, to fund the purchase of LS on July 15, 2016 (see Note 4).

OnUntil May ~~12, 2014,~~2017, the Company ~~entered into~~had maintained a continuous equity offering program (“Equity Program”) with Wells Fargo Securities, LLC, ~~(“Wells Fargo”),~~ Jefferies LLC (“~~Jefferies”~~Jeffries”), SunTrust Robinson Humphrey, Inc. ~~(“SunTrust”)~~, Piper Jaffray & Co. (“Piper”), HSBC Securities (USA) Inc. (“HSBC”), and BB&T Capital Markets, a division of BB&T Securities, LLC, ~~(“BB&T”),~~ pursuant to which the Company ~~may~~could sell ~~from time to time~~ up to $225 million in aggregate offering price of shares of the Company’s common stock. ~~Actual sales under the~~The Equity Program will depend on a variety of factors and conditions, including, but not limited to, market conditions, the trading price of the Company’s common stock, and determinations of the appropriate sources of funding for the Company. The Company expects to continue to offer, sell, and issue shares of common stock under the Equity Program from time to time based on various factors and conditions, although the Company is under no obligation to sell any shares under the Equity Program.expired in May 2017.

During 2017 and 2016, the Company did not issue any shares of common stock under the Equity Program. ~~As of December 31, 2016, the Company had $59.3 million available for issuance under the Equity Program which expires in May 2017.~~

During 2015, the Company issued 949,911 shares of common stock under the Equity Program at a weighted average issue price of $96.80 per share, generating net proceeds of $90.6 million after deducting $1.1 million of sales commissions paid to Jefferies, Piper, and HSBC, as well as other expenses of $0.2 million. ~~The Company used~~

On August 2, 2017, the ~~proceeds from~~Company’s Board of Directors authorized the ~~equity programs~~repurchase of up to ~~fund a portion~~$200 million of the ~~acquisition of 27 storage facilities.~~

~~During 2014,~~Company’s outstanding common shares (“Buyback Program”). The Buyback Program allows the Company ~~issued 924,403~~to purchase shares of its common stock in accordance with applicable securities laws on the open market, through privately negotiated transactions, or through other methods of acquiring shares. The Buyback Program may be suspended or discontinued at any time. During 2017, the Company repurchased 112,554 of the Company’s outstanding common shares for $8.2 million under the ~~Equity~~Buyback Program, atresulting in a weighted average ~~issue~~purchase price of ~~$79.77~~$73.16 per share, generating net proceeds of $72.8 million after deducting $0.9 million of sales commissions paid to Piper, HSBC and BB&T. During the three months ended March 31, 2014, the Company issued 359,102 shares of common stock under a previous equity program at a weighted average issue price of $74.32 per share, generating net proceeds of $26.4 million after deducting $0.3 million of sales commissions payable to SunTrust. In addition to sales commissions, the Company incurred expenses of $0.2 million in connection with these equity programs during 2014. The Company used the proceeds from the equity programs to fund a portion of the acquisition of 33 storage facilities.share.

In 2013, the Company implemented a Dividend Reinvestment Plan. The Company issued 199,809, 133,666 and 151,246 shares under the plan in 2017, 2016, and 2015, respectively. On August 2, 2017, the Company’s Board of Directors suspended the Dividend Reinvestment Plan.

13. SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of quarterly results of Life Storage, Inc. operations for the years ended December 31, ~~2016~~2017 and ~~2015~~2016 (dollars in thousands, except per share data):


	2016 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31
Operating revenue	$	99,124	$	107,005	$	127,801		$	128,678
Net income (loss)		28,230		43,504		(4,969	)		18,191
Net income (loss) attributable to common shareholders		28,339		43,456		(4,738	)		18,168
Net income (loss) per share attributable to common shareholders
Basic	$	0.74	$	1.04	$	(0.10	)	$	0.39
Diluted	$	0.73	$	1.03	$	(0.10	)	$	0.39

	2015 Quarter Ended									2017 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31		Mar. 31		Jun. 30		Sept. 30		Dec. 31
Operating revenue	$	85,408	$	90,726	$	95,428		$	95,040	$	128,320	$	132,784	$	135,568	$	133,078
Net income		22,557		28,676		31,661			30,183		20,525		19,432		35,667		21,185
Net income attributable to common shareholders		22,451		28,532		31,504			30,037		20,429		19,355		35,496		21,085
Net income per share attributable to common shareholders
Basic	$	0.65	$	0.81	$	0.88		$	0.83	$	0.44	$	0.42	$	0.76	$	0.45
Diluted	$	0.65	$	0.80	$	0.88		$	0.83	$	0.44	$	0.42	$	0.76	$	0.45

	2016 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31
Operating revenue	$	99,124	$	107,005	$	127,801		$	128,678
Net income (loss)		28,230		43,504		(4,969	)		18,191
Net income (loss) attributable to common shareholders		28,339		43,456		(4,738	)		18,168
Net income (loss) per share attributable to common shareholders
Basic	$	0.74	$	1.04	$	(0.10	)	$	0.39
Diluted	$	0.73	$	1.03	$	(0.10	)	$	0.39

The following is a summary of quarterly results of Life Storage LP operations for the years ended December 31, ~~2016~~2017 and ~~2015~~2016 (dollars in thousands, except per ~~share~~unit data):


	2016 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31
Operating revenue	$	99,124	$	107,005	$	127,801		$	128,678
Net income (loss)		28,230		43,504		(4,969	)		18,191
Net income (loss) attributable to common unitholders		28,339		43,456		(4,738	)		18,168
Net income (loss) per unit attributable to common unitholders
Basic	$	0.74	$	1.04	$	(0.10	)	$	0.39
Diluted	$	0.73	$	1.03	$	(0.10	)	$	0.39

	2015 Quarter Ended									2017 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31		Mar. 31		Jun. 30		Sept. 30		Dec. 31
Operating revenue	$	85,408	$	90,726	$	95,428		$	95,040	$	128,320	$	132,784	$	135,568	$	133,078
Net income		22,557		28,676		31,661			30,183		20,525		19,432		35,667		21,185
Net income attributable to common unitholders		22,451		28,532		31,504			30,037		20,429		19,355		35,496		21,085
Net income per unit attributable to common unitholders
Basic	$	0.65	$	0.81	$	0.88		$	0.83	$	0.44	$	0.42	$	0.76	$	0.45
Diluted	$	0.65	$	0.80	$	0.88		$	0.83	$	0.44	$	0.42	$	0.76	$	0.45

	2016 Quarter Ended
	Mar. 31		Jun. 30		Sept. 30			Dec. 31
Operating revenue	$	99,124	$	107,005	$	127,801		$	128,678
Net income		28,230		43,504		(4,969	)		18,191
Net income attributable to common unitholders		28,339		43,456		(4,738	)		18,168
Net income per unit attributable to common unitholders
Basic	$	0.74	$	1.04	$	(0.10	)	$	0.39
Diluted	$	0.73	$	1.03	$	(0.10	)	$	0.39

See note 4 for a discussion of property acquisitions made during 2016 and the depreciation resulting from the change in estimated useful lives of Uncle Bob’s Self Storage^® ~~signage.~~ signage and buildings identified for replacement at certain of the Company’s self-storage facilities. See note 65 for financing transactions entered into in 2017 and 2016.

14. COMMITMENTS AND CONTINGENCIES

The Company’s current practice is to conduct environmental investigations in connection with property acquisitions. At this time, the Company is not aware of any environmental contamination of any of its facilities that individually or in the aggregate would be material to the Company’s overall business, financial condition, or results of operations.

Future minimum lease payments on a building lease, ~~and~~ the lease of the Company’s headquarters and the lease of a self-storage facility are as follows (dollars in thousands):

Year ending December 31:

2017
   $ 2,432
2018
   2,332
2019
   2,227
2020
   2,278
2021
   2,288
Thereafter
   13,431


Total
   $ 24,988

At December 31, 2016, the Company was under contract to acquire five self-storage facilities for cash consideration of approximately $67.0 million. One of the properties was acquired in February 2017 from an unrelated party for $9.8 million. The Company has not yet determined the assignment of the purchase price of this facility to the individual assets acquired. This acquisition was funded with a draw on the Company’s revolving line of credit. The following is a summary of the properties under contract at December 31, 2016 (dollars in thousands).

Year ending December 31:
2018	$	2,894
2019		2,788
2020		2,415
2021		2,284
2022		2,284
Thereafter		11,114
Total	$	23,779

State
   No. of
Properties    Contract
Amount    Acquisition
Date
Illinois*
   1    $ 9,800    Feb. 2017
North Carolina*
   1    12,425
Texas*
   3    44,800



   5    $ 67,025

*	~~Properties purchased or expected to be purchased upon completion of construction.~~

~~The purchase of the remaining facilities by the Company is subject to customary conditions to closing, and there is no assurance that these facilities will be acquired.~~

At December 31, 2016, 191 III was under contract to acquire five self-storage facilities for cash consideration of $109.5 million. Four of these facilities were acquired by 191 III in January 2017. The Company’s cash contribution to 191 III for the purchase of the four facilities was approximately $15.0 million. 191 III is under contract to purchase the remaining facility for $32.3 million of which the company is committed to contribute $6.5 million. The purchase of this remaining facility by 191 III is subject to customary conditions to closing, and there is no assurance that this facility will be acquired.

~~At December 31, 2016,~~2017, the Company has signed contracts in place with third party contractors for expansion and enhancements at its existing facilities. The Company expects to pay ~~$11.6~~$32.8 million under these contracts in ~~2017.~~2018.

On or about August 25, 2014, a putative class action was filed against the Company in the Superior Court of New Jersey Law Division Burlington County. The action seeks to obtain declaratory, injunctive and monetary relief for a class of consumers based upon alleged violations by the Company of ~~the New Jersey Truth in Customer Contract, Warranty and Notice Act, the New Jersey Consumer Fraud Act and the New Jersey Insurance Producer Licensing Act.~~various statutory laws. On October 17, 2014, the action was removed from the Superior Court of New Jersey Law Division Burlington County to the United States District Court for the District of New Jersey. The Company brought a motion to partially dismiss the complaint for failure to state a claim, and on July 16, 2015, the Company’s motion was granted in part and denied in part. On October 20, 2016, the complaint was amended to add additional claims. The parties have entered into a ~~claim that~~memorandum of understanding to settle all claims for an aggregate amount of $8.0 million. In February 2018, the motion for the preliminary approval of the proposed class action settlement was granted. The aggregate settlement amount of $8.0 million ($6.0 million after considering income tax impact) has been recorded as a liability in the Company’s ~~insurance program violates New Jersey consumer protection laws.~~consolidated balance sheet. A portion of the settlement expense relates to self-storage facilities that are managed by the Company through its taxable REIT subsidiary. There is an income tax impact to the Company on that portion of the settlement expense as a result. The ~~Company intends~~settlement is subject to ~~vigorously defend~~final approval by the ~~action, and the possibility of any adverse outcome cannot be determined at this time.~~court, a decision which is expected in 2018.

15. SUBSEQUENT EVENTS

On January ~~4, 2017,~~3, 2018, the Company declared a quarterly dividend of ~~$0.95~~$1.00 per common share. The dividend was paid on January 26, ~~2017~~2018 to shareholders of record on January ~~17, 2017.~~16, 2018. The total dividend paid amounted to ~~$44.1~~$46.5 million.

In January 2017, the Company executed a joint venture agreement, Review Avenue Partners, LLC (“RAP”), with an unrelated third party. The Company holds a 40% interest in RAP and contributed $12.4 million of common capital to RAP on January 4, 2017. RAP is currently operating a self-storage property in New York and has entered into a non-recourse mortgage loan to finance a portion of the cost of the facility. The Company will perform property management services for RAP in exchange for a management fee based on property revenues.

Item 9.

Changes in and Disagreements With ~~Accountants~~Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

Controls and Procedures (Parent Company)

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Parent Company’s management conducted an evaluation of the effectiveness of the design and operation of the Parent Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of the Parent Company’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Parent Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Parent Company’s disclosure controls and procedures were effective at December 31, ~~2016.~~2017. There have not been changes in the Parent Company’s internal controls or in other factors that could significantly affect these controls during the quarter ended December 31, ~~2016.~~2017.

Management’s Report on Life Storage, Inc. Internal Control Over Financial Reporting

Management of Life Storage, Inc. (the ~~“REIT”~~“Parent Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, ~~2016.~~2017. The ~~REIT’s~~Parent Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The ~~REIT’s~~Parent Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the ~~REIT;~~Parent Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the ~~REIT~~Parent Company are being made only in accordance with authorizations of management and directors of the ~~REIT;~~Parent Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~REIT’s~~Parent Company’s assets that could have a material effect on the financial statements.

The ~~REIT’s~~Parent Company’s management performed an assessment of the effectiveness of the ~~REIT’s~~Parent Company’s internal control over financial reporting as of December 31, ~~2016~~2017 based upon criteria in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (“COSO”). Based on our assessment, management determined that the ~~REIT’s~~Parent Company’s internal control over financial reporting was effective as of December 31, ~~2016~~2017 based on the criteria in Internal Control-Integrated Framework issued by COSO.

The effectiveness of the ~~REIT’s~~Parent Company’s internal control over financial reporting as of December 31, ~~2016~~2017 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in Item 9A herein.


/S/ David L. Rogers		/S/ Andrew J. Gregoire
Chief Executive Officer		Chief Financial Officer

Report of Independent Registered Public Accounting Firm

~~The~~To the Shareholders and the Board of Directors ~~and Shareholders~~ of Life Storage, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Life Storage, Inc.’s internal control over financial reporting as of December 31, ~~2016,~~2017, based on criteria established in Internal ~~Control—~~Control��Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Life Storage, Inc.’s (the Parent Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Parent Company as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedule and our report dated February 27, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Parent Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Life Storage, Inc. Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the ~~company’s~~Parent Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Parent Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~In our opinion, Life Storage, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria~~.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Life Storage, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2016 of Life Storage, Inc. and our report dated February 27, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Buffalo, New York

February 27, ~~2017~~2018

Controls and Procedures (Operating Partnership)

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Operating Partnership’s management conducted an evaluation of the effectiveness of the design and operation of the Operating Partnership’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Operating Partnership’s disclosure controls and procedures were effective at December 31, ~~2016.~~2017. There have not been changes in the Operating Partnership’s internal controls or in other factors that could significantly affect these controls during the quarter ended December 31, ~~2016.~~2017.

Management’s Report on Life Storage LP Internal Control Over Financial Reporting

Management of Life Storage LP (the ~~“Partnership”~~“Operating Partnership”) is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, ~~2016.~~2017. The Operating Partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Operating Partnership’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Operating Partnership; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Operating Partnership are being made only in accordance with authorizations of management and directors of the Operating Partnership; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Operating Partnership’s assets that could have a material effect on the financial statements.

The Operating Partnership’s management performed an assessment of the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, ~~2016~~2017 based upon criteria in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (“COSO”). Based on our assessment, management determined that the Operating Partnership’s internal control over financial reporting was effective as of December 31, ~~2016~~2017 based on the criteria in Internal Control-Integrated Framework issued by COSO.

The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, ~~2016~~2017 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in Item 9A herein.


/S/ David L. Rogers		/S/ Andrew J. Gregoire
Chief Executive Officer		~~Officer~~ Chief Financial Officer

Report of Independent Registered Public Accounting Firm

~~The~~To the Partners and the Board of Directors ~~and Partners~~ of Life Storage LP

Opinion on Internal Control over Financial Reporting

We have audited Life Storage LP’s internal control over financial reporting as of December 31, ~~2016,~~2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Life Storage ~~LP’s~~LP (the Operating Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Operating Partnership as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedule and our report dated February 27, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

The Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Life Storage LP Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the ~~company’s~~Operating Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control Over Financial Reporting

~~In our opinion, Life Storage LP maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria~~.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Life Storage LP as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, partners’ capital and cash flows for each of the three years in the period ended December 31, 2016 of Life Storage LP and our report dated February 27, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Buffalo, New York

February 27, ~~2017~~2018

Item 9B.

~~Other~~

Other Information

None.

Part III

Item 10.

Directors, Executive Officers and Corporate Governance

The information contained in the Parent Company’s Proxy Statement for the ~~2017~~2018 Annual Meeting of Shareholders to be filed with the SEC within 120 days of the fiscal year ended December 31, ~~2016~~2017 (“~~2017~~2018 Proxy Statement”), with respect to directors, executive officers, audit committee, and audit committee financial experts of the Company and Section 16(a) beneficial ownership reporting compliance, is incorporated herein by reference in response to this item.

The Company has adopted a code of ethics that applies to all of its directors, officers, and employees. The Company has made the Code of Ethics available on its website at http://www.lifestorage.com.

Item 11.

Executive Compensation

The information required is incorporated by reference to “Executive Compensation” and “Director Compensation” in the ~~2017~~2018 Proxy Statement and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required herein is incorporated by reference to “Stock Ownership By Directors and Executive Officers” and “Security Ownership of Certain Beneficial Owners” in the ~~2017~~2018 Proxy Statement and is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

The information required herein is incorporated by reference to “Certain Transactions” and “Election of Directors—Director Independence” in the ~~2017~~2018 Proxy Statement and is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

The information required herein is incorporated by reference to “Appointment of Independent Registered Public Accounting Firm” in the ~~2017~~2018 Proxy Statement and is incorporated herein by reference.

Part IV

Item 15.

Exhibits, Financial Statement Schedules

(a)

Documents filed as part of this Annual Report on Form 10-K:

1.
1.		The following consolidated financial statements of Life Storage, Inc. are included in Item 8.

	(i)
		~~(i)~~		Consolidated Balance Sheets as of December 31, ~~2016~~2017 and ~~2015.~~2016;

	(ii)
		~~(ii)~~		Consolidated Statements of Operations for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;

	(iii)
		~~(iii)~~		Consolidated Statements of Comprehensive Income for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;

	(iv)
		~~(iv)~~		Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;

	(v)
		~~(v)~~		Consolidated Statements of Cash Flows for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014~~2015; and

	(vi)
		~~(vi)~~		Notes to Consolidated Financial Statements.

The following consolidated financial statements of Life Storage LP are included in Item 8.

(i)

	~~The following consolidated financial statements of Life Storage LP are included in Item 8.~~

	~~(i)~~	Consolidated Balance Sheets as of December 31, ~~2016~~2017 and ~~2015.~~2016;

	(ii)
		~~(ii)~~		Consolidated Statements of Operations for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;

	(iii)
		~~(iii)~~		Consolidated Statements of Comprehensive Income for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;

	(iv)
		~~(iv)~~		Consolidated Statements of Partners’ Capital for the Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~2015;.

	(v)
		~~(v)~~		Consolidated Statements of Cash Flows for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014~~2015; and

	(vi)
		~~(vi)~~		Notes to Consolidated Financial Statements.

The following financial statement Schedule as of the period ended December 31, ~~2016~~2017 is included in this Annual Report on Form 10-K.

~~Schedule III Real Estate and Accumulated Depreciation at December 31, 2016.~~

Schedule III Real Estate and Accumulated Depreciation at December 31, 2017.

All other Consolidated financial schedules are omitted because they are inapplicable, not required, or the information is included elsewhere in the consolidated financial statements or the notes thereto.

3.Exhibits

3.	~~Exhibits~~

The exhibits required to be filed as part of this Annual Report on Form 10-K have been included as follows:

3.1*
~~3.1~~		Amended and Restated Articles of Incorporation of the Parent ~~Company (incorporated by reference to Exhibit 3.1 (a) to the Parent Company’s Registration Statement on Form S-11 (File No. 33-91422) filed June 19, 1995).~~Company.

3.2		Articles Supplementary to the Amended and Restated Articles of Incorporation of the Parent Company classifying and designating the Series A Junior Participating Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 to the Parent Company’s Form 8-A filed December 3, 1996).

3.3		Articles Supplementary to the Amended and Restated Articles of Incorporation of the Parent Company classifying and designating the 9.85% Series B Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 1.6 to the Parent Company’s Form 8-A filed July 29, 1999).

3.4		Articles Supplementary to the Amended and Restated Articles of Incorporation of the Parent Company classifying and designating the 8.375% Series C Convertible Cumulative Preferred Stock (incorporated by reference to Exhibit 4.1 to the Parent Company’s Current Report on Form 8-K filed July 12, 2002).

3.5		Articles Supplementary to the Amended and Restated Articles of Incorporation of the Parent Company reclassifying shares of Series B Cumulative Redeemable Preferred Stock into Preferred Stock. (incorporated by reference to Exhibit 3.1 to the Parent Company’s Current Report on Form 8-K filed May 31, 2011).

3.6		Articles of Amendment of the Parent Company (incorporated by reference to Exhibit 3.1 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed August 11, 2016).

3.7		Bylaws, as amended, of the Parent Company (incorporated by reference to Exhibit 3.2 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed August 11, 2016).

3.8		Amendment to Bylaws (incorporated by reference to Exhibit 3.1 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed May 19, 2017).

3.9		Amended and Restated Certificate of Limited Partnership (incorporated by reference to Exhibit 3.3 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed August 11, 2016).

~~3.9~~
3.10		Agreement of Limited Partnership of the Operating Partnership (incorporated by reference to Exhibit 3.1 on Form 10 filed April 22, 1998).


10.3+
~~10.3+~~		Employment Agreement between the Parent Company, the Operating Partnership, and Robert J. Attea (incorporated by reference to Exhibit 10.3 to the Parent Company’s Annual Report on Form 10-K filed February 27, 2009).

10.4+		Amendment to Employment Agreement between the Parent Company, the Operating Partnership and Robert J. Attea (incorporated by reference to Exhibit 10.1 to the Parent Company’s Current Report on Form 8-K filed January 21, 2015).

~~10.5*+~~ 10.5+		Amendment to Employment Agreement between the Parent Company, the Operating Partnership and Robert J ~~Attea.~~Attea (incorporated by reference to Exhibit 10.5 to the Parent Company and the Operating Partnership’s Annual Report on Form 10-K filed February 27, 2017).

10.6+		Employment Agreement between the Parent Company, the Operating Partnership, and Kenneth F. Myszka (incorporated by reference to Exhibit 10.4 to the Parent Company’s Annual Report on Form 10-K filed February 27, 2009).

10.7+		Amendment to Employment Agreement between the Parent Company, the Operating Partnership, and Kenneth F. Myszka (incorporated by reference to Exhibit 10.2 to the Parent Company’s Current Report on Form 8-K filed January 21, 2015).

~~10.8*+~~ 10.8+		Amendment to Employment Agreement between the Parent Company, the Operating Partnership and Kenneth J. ~~Myszka.~~Myszka (incorporated by reference to Exhibit 10.8 to the Parent Company and the Operating Partnership’s Annual Report on Form 10-K filed February 27, 2017).

10.9+		Employment Agreement between the Parent Company, the Operating Partnership, and David L. Rogers (incorporated by reference to Exhibit 10.5 to the Parent Company’s Annual Report on Form 10-K filed February 27, 2009).

10.10+		Amendment to Employment Agreement between the Parent Company, the Operating Partnership and David L. Rogers (incorporated by reference to Exhibit 10.3 to the Parent Company’s Current Report on Form 8-K filed January 21, 2015).

10.23		Amendment No. 2 to Note Purchase Agreement (2014) dated June 29, 2016 by and among the Parent Company and the Operating Partnership and the Required Holders (incorporated by reference to Exhibit 10.2 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed July 6, 2016).

~~10.24~~
10.24*		Amendments to Note Purchase Agreement (2011).

10.25*		Amendments to Note Purchase Agreement (2014).

10.26		Note Purchase Agreement dated as of July 21, 2016 among the Parent Company and the Operating Partnership and the institutions named in Schedule A thereto as purchasers (incorporated by reference to Exhibit 10.1 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed July 26, 2016).

~~10.25~~ 10.27*		~~Equity Distribution~~ Amendment to Note Purchase Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.) and Wells Fargo Securities, LLC, as agent (incorporated by reference to Exhibit 1.1 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014)(2016).

~~10.26~~ 10.28+		Equity Distribution Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.), and Jefferies LLC, as agent (incorporated by reference to Exhibit 1.2 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014).

~~10.27~~		Equity Distribution Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.), and SunTrust Robinson Humphrey, as agent (incorporated by reference to Exhibit 1.3 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014).

~~10.28~~		Equity Distribution Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.), and Piper Jaffray & Co., as agent (incorporated by reference to Exhibit 1.4 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014).

~~10.29~~		Equity Distribution Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.), and HSBC Securities (USA) Inc., as agent (incorporated by reference to Exhibit 1.5 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014).

~~10.30~~		Equity Distribution Agreement dated as of May 12, 2014 by and among the Parent Company, the Operating Partnership, Sovran Holdings, Inc. (n/k/a Life Storage Holdings, Inc.), and BB&T Capital Markets, a division of BB&T Securities, LLC, as agent (incorporated by reference to Exhibit 1.6 to the Parent Company’s Current Report on Form 8-K filed May 12, 2014).

~~10.31+~~		2009 Outside Directors Stock Option and Award Plan, as amended (incorporated by reference to Exhibit 10.2 to the Parent Company’s Current Report on Form 8-K filed April 6, 2016).

~~10.32+~~ 10.29+		Outside Director Fee Schedule (incorporated by reference to Exhibit 10.1 to the Parent Company’s Current Report on Form 8-K filed April 6, 2016).

~~10.33+~~ 10.30+		Annual Incentive Compensation Plan for Executive Officers (incorporated by reference to Exhibit 10.1 to the Parent Company’s Current Report on Form 8-K filed February 21, 2012).

~~10.34+~~ 10.31+		Amended and Restated Employment Agreement between the Parent Company, the Operating Partnership and Andrew J. Gregoire ~~amended and restated effective January~~dated November 1, ~~2009~~2017 (incorporated by reference to Exhibit ~~10.1~~10.5 to the Parent ~~Company’s Current~~Company and the Operating Partnership’s Quarterly Report on Form ~~8-K~~10-Q filed ~~February 14, 2012)~~November 3, 2017).

~~10.44~~ 10.45+		Form of Long Term Incentive Restricted Stock Award Notice (incorporated by reference to Exhibit 10.1 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed December 28, 2016).

~~10.45~~ 10.46+		Form of Performance-Based Award Notice (incorporated by reference to Exhibit 10.2 to the Parent Company and the Operating Partnership’s Current Report on Form 8-K filed December 28, 2016).

~~10.46~~ 10.47		Agreement and Plan of Merger, by and among ~~Life Storage, L.P.,~~LifeStorage, LP, the Operating Partnership, Solar Lunar Sub, LLC, and Fortis Advisors LLC, as Sellers’ Representative dated as of May 18, 2016 (incorporated by reference to Exhibit 2.1 to the Parent Company’s Current Report on Form 8-K filed May 19, 2016).
10.48+		Form of Long Term Incentive Restricted Stock Award Notice (incorporated by reference to Exhibit 10.1 to the Parent Company and Operating Partnership’s Current Report on Form 8-K filed February 27, 2017).
12.1* 10.49+		Form of Performance-Based Award Notice (incorporated by reference to Exhibit 10.2 to the Parent Company and Operating Partnership’s Current Report on Form 8-K filed February 27, 2017).
10.50+		Form of Long Term Incentive Restricted Stock Award Notice (incorporated by reference to Exhibit 10.1 to the Parent Company and Operating Partnership’s Current Report on Form 8-K filed January 4, 2018).
10.51+		Form of Performance-Based Award Notice (incorporated by reference to Exhibit 10.2 to the Parent Company and Operating Partnership’s Current Report on Form 8-K filed January 4, 2018).

12.1*		Statement Re: Computation of Earnings to Fixed Charges of Life Storage, Inc. and Life Storage LP

21.1*		Subsidiaries of the Company.

23.1*		Consent of Independent Registered Public Accounting Firm

23.2*		Consent of Independent Registered Public Accounting Firm

24.1*		Powers of Attorney (included on signature pages).

31.1*		Certification of Chief Executive Officer of Life Storage, Inc. pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2*
31.2*
Certification of Chief Financial Officer of Life Storage, Inc. pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.3*
Certification of Chief Executive Officer of Life Storage LP pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.4*
Certification of Chief Financial Officer of Life Storage LP pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.3*
32.1*
~~Certification of Chief Executive Officer of Life Storage LP pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.~~
31.4* ~~Certification of Chief Financial Officer of Life Storage LP pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.~~
32.1*
Certification of Chief Executive Officer and Chief Financial Officer of Life Storage, Inc. Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Chief Executive Officer and Chief Financial Officer of Life Storage ~~Inc.~~LP Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*
The following financial statements from the Life Storage, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, formatted in XBRL, as follows:
(i)     Consolidated Balance Sheets at December 31, ~~2016~~2017 and ~~2015;~~
2016;
(ii)    Consolidated Statements of Operations for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~
2015;
(iii)  Consolidated Statements of Comprehensive Income for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~
2015;
(iv)   Consolidated Statements of Shareholders’ Equity for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~
2015;
(v)    Consolidated Statements of Cash Flows for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~2015; and
(vi)   Notes to Consolidated Financial Statements
The following financial statements from the Life Storage ~~LP.’s~~LP’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, formatted in XBRL, as follows:
(i)     Consolidated Balance Sheets at December 31, ~~2016~~2017 and ~~2015;~~
2016;
(ii)    Consolidated Statements of Operations for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~
2015;
(iii)  Consolidated Statements of Comprehensive Income for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014.~~
2015;
(iv)   Consolidated Statements of Partners’ Capital for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~
2015;
(v)    Consolidated Statements of Cash Flows for Years Ended December 31, 2017, 2016 ~~2015,~~ and ~~2014;~~2015; and

		(vi) Notes to Consolidated Financial Statements

*		Filed herewith.

+		Management contract or compensatory plan or arrangement.

Item 16.	Form 10-K Summary

		~~Not applicable.~~

Not applicable.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


February 27, ~~2017~~2018	LIFE STORAGE, INC.

	By:	/s/ Andrew J. Gregoire
		Andrew J. Gregoire Chief Financial Officer (Principal Accounting Officer)

February 27, ~~2017~~2018		LIFE STORAGE LP

	By:	/s/ Andrew J. Gregoire
		Andrew J. Gregoire Chief Financial Officer (Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature		Title	Date

/s/ Robert J. Attea	Chairman of Board and Director of Life Storage, Inc.	February 27, 2018
Robert J. Attea		~~Executive Chairman~~and Life Storage Holdings, Inc., general partner of Life Storage LP

/s/ Kenneth F. Myszka	President and Director of Life Storage, Inc. and Life Storage	February 27, 2018
Kenneth F. Myszka	Holdings, Inc., general partner of Life Storage LP

/s/ David L. Rogers	Chief Executive Officer (Principal Executive Officer) of Life	February 27, 2018
David L. Rogers	Storage, Inc. and Life Storage Holdings, Inc., general partner of Life Storage LP

/s/ Andrew J. Gregoire	Chief Financial Officer (Principal Financial and Accounting	February 27, 2018
Andrew J. Gregoire	Officer) of Life Storage, Inc. and Life Storage Holdings, Inc., general partner of Life Storage LP	~~February 27, 2017~~


/s/ ~~Kenneth F. Myszka~~ ~~Kenneth F. Myszka~~Charles E. Lannon		~~President and~~ Director of Life Storage, Inc. ~~and Life Storage Holdings, Inc., general partner of Life Storage LP~~	February 27, ~~2017~~2018

~~/s/ David L. Rogers~~ ~~David L. Rogers~~		~~Chief Executive Officer (Principal Executive Officer) of Life Storage, Inc. and Life Storage Holdings, Inc., general partner of Life Storage LP~~	~~February 27, 2017~~

~~/s/ Andrew J. Gregoire~~ ~~Andrew J. Gregoire~~		~~Chief Financial Officer (Principal Financial and Accounting Officer) of Life Storage, Inc. and Life Storage Holdings, Inc., general partner of Life Storage LP~~	~~February 27, 2017~~

~~/s/ Charles E. Lannon~~ Charles E. Lannon

/s/ Stephen R. Rusmisel	Director of Life Storage, Inc.	February 27, ~~2017~~2018

~~/s/ Stephen R. Rusmisel~~ Stephen R. Rusmisel		~~Director of Life Storage, Inc.~~	~~February 27, 2017~~


/s/ Arthur L. Havener, Jr.	Director of Life Storage, Inc.	February 27, 2018
Arthur L. Havener, Jr.

/s/ Mark G. Barberio	Director of Life Storage, Inc.	February 27, ~~2017~~2018

~~/s/ Mark. G. Barberio~~ Mark G. Barberio
/s/ Carol Hansell	Director of Life Storage, Inc.	February 27, ~~2017~~2018

Carol Hansell

Life Storage, Inc.

Schedule III

Combined Real Estate and Accumulated Depreciation

(in thousands)

December 31, ~~2016~~2017

																								Initial Cost to Company				Cost Capitalized Subsequent to Acquisition			Gross Amount at Which Carried at Close of Period										Life on which depreciation
			Initial Cost to Company				Cost Capitalized Subsequent to Acquisition		Gross Amount at Which Carried at Close of Period											Life on which depreciation						Building,		Building,					Building,								in latest
		Encum			Building, Equipment and		Building, Equipment and				Building, Equipment and				Accum.		Date of	Date		in latest income statement						Equipment		Equipment					Equipment								income
New																							Encum			and		and					and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired		is completed		ST	brance	Land		Impvmts.		Impvmts.			Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Charleston	SC		$	416	$	1,516	$	2,350	$	416	$	3,866	$	4,282	$	1,585	1985		6/26/1995		5 to 40 years	SC		$	416	$	1,516	$	2,370		$	416	$	3,886	$	4,302	$	1,683	1985	6/26/1995	5 to 40 years
Lakeland	FL			397		1,424		1,696		397		3,120		3,517		1,293	1985		6/26/1995		5 to 40 years	FL			397		1,424		1,704			397		3,128		3,525		1,375	1985	6/26/1995	5 to 40 years
Charlotte	NC			308		1,102		3,508		747		4,171		4,918		1,256	1986		6/26/1995		5 to 40 years	NC			308		1,102		3,534			747		4,197		4,944		1,357	1986	6/26/1995	5 to 40 years
Youngstown	OH			239		1,110		2,531		239		3,641		3,880		1,329	1980		6/26/1995		5 to 40 years	OH			239		1,110		2,582			239		3,692		3,931		1,379	1980	6/26/1995	5 to 40 years
Cleveland	OH			701		1,659		3,808		1,036		5,132		6,168		1,403	1987		6/26/1995		5 to 40 years	OH			701		1,659		3,825			1,036		5,149		6,185		1,538	1987/15	6/26/1995	5 to 40 years
Pt. St. Lucie	FL			395		1,501		1,063		779		2,180		2,959		1,211	1985		6/26/1995		5 to 40 years	FL			395		1,501		1,054			779		2,171		2,950		1,259	1985	6/26/1995	5 to 40 years
Orlando - Deltona	FL			483		1,752		2,287		483		4,039		4,522		1,799	1984		6/26/1995		5 to 40 years	FL			483		1,752		2,324			483		4,076		4,559		1,875	1984	6/26/1995	5 to 40 years
NY Metro-Middletown	NY			224		808		1,080		224		1,888		2,112		940	1988		6/26/1995		5 to 40 years	NY			224		808		4,442			224		5,250		5,474		996	1988/17	6/26/1995	5 to 40 years
Buffalo	NY			423		1,531		3,477		497		4,934		5,431		1,946	1981		6/26/1995		5 to 40 years	NY			423		1,531		3,620			497		5,077		5,574		2,080	1981	6/26/1995	5 to 40 years
Rochester	NY			395		1,404		661		395		2,065		2,460		1,120	1981		6/26/1995		5 to 40 years	NY			395		1,404		(141	)		395		1,263		1,658		731	1981	6/26/1995	5 to 40 years
Jacksonville	FL			152		728		3,898		687		4,091		4,778		1,119	1985		6/26/1995		5 to 40 years	FL			152		728		3,883			687		4,076		4,763		1,189	1985	6/26/1995	5 to 40 years
Columbia	SC			268		1,248		777		268		2,025		2,293		1,020	1985		6/26/1995		5 to 40 years	SC			268		1,248		775			268		2,023		2,291		1,051	1985	6/26/1995	5 to 40 years
Boston	MA			363		1,679		854		363		2,533		2,896		1,282	1980		6/26/1995		5 to 40 years	MA			363		1,679		885			363		2,564		2,927		1,341	1980	6/26/1995	5 to 40 years
Rochester	NY			230		847		2,323		234		3,166		3,400		862	1980		6/26/1995		5 to 40 years	NY			230		847		2,322			234		3,165		3,399		939	1980	6/26/1995	5 to 40 years
Boston	MA			680		1,616		874		680		2,490		3,170		1,199	1986		6/26/1995		5 to 40 years	MA			680		1,616		878			680		2,494		3,174		1,262	1986	6/26/1995	5 to 40 years
Savannah	GA			463		1,684		4,937		1,445		5,639		7,084		2,298	1981		6/26/1995		5 to 40 years	GA			463		1,684		4,925			1,445		5,627		7,072		2,433	1981	6/26/1995	5 to 40 years
Greensboro	NC			444		1,613		3,209		444		4,822		5,266		1,719	1986		6/26/1995		5 to 40 years	NC			444		1,613		3,444			444		5,057		5,501		1,822	1986	6/26/1995	5 to 40 years
Raleigh-Durham	NC			649		2,329		1,446		649		3,775		4,424		1,806	1985		6/26/1995		5 to 40 years	NC			649		2,329		1,487			649		3,816		4,465		1,892	1985	6/26/1995	5 to 40 years
Hartford-New Haven	CT			387		1,402		3,971		387		5,373		5,760		1,452	1985		6/26/1995		5 to 40 years	CT			387		1,402		4,020			387		5,422		5,809		1,594	1985	6/26/1995	5 to 40 years
Atlanta	GA			844		2,021		972		844		2,993		3,837		1,515	1988		6/26/1995		5 to 40 years	GA			844		2,021		1,009			844		3,030		3,874		1,588	1988	6/26/1995	5 to 40 years
Atlanta	GA			302		1,103		684		303		1,786		2,089		899	1988		6/26/1995		5 to 40 years	GA			302		1,103		698			303		1,800		2,103		950	1988	6/26/1995	5 to 40 years
Buffalo	NY			315		745		4,039		517		4,582		5,099		1,307	1984		6/26/1995		5 to 40 years	NY			315		745		4,040			517		4,583		5,100		1,433	1984	6/26/1995	5 to 40 years
Raleigh-Durham	NC			321		1,150		861		321		2,011		2,332		1,029	1985		6/26/1995		5 to 40 years	NC			321		1,150		3,468			321		4,618		4,939		1,110	1985	6/26/1995	5 to 40 years
Columbia	SC			361		1,331		924		374		2,242		2,616		1,168	1987		6/26/1995		5 to 40 years	SC			361		1,331		917			374		2,235		2,609		1,203	1987	6/26/1995	5 to 40 years
Columbia	SC			189		719		1,192		189		1,911		2,100		975	1989		6/26/1995		5 to 40 years	SC			189		719		1,200			189		1,919		2,108		1,408	1989	6/26/1995	5 to 40 years
Columbia	SC			488		1,188		2,097		488		3,285		3,773		1,169	1986		6/26/1995		5 to 40 years	SC			488		1,188		2,081			488		3,269		3,757		1,228	1986	6/26/1995	5 to 40 years
Atlanta	GA			430		1,579		2,323		602		3,730		4,332		1,511	1988		6/26/1995		5 to 40 years	GA			430		1,579		2,343			602		3,750		4,352		1,605	1988	6/26/1995	5 to 40 years
Orlando	FL			513		1,930		813		513		2,743		3,256		1,483	1988		6/26/1995		5 to 40 years	FL			513		1,930		856			513		2,786		3,299		1,536	1988	6/26/1995	5 to 40 years
Sharon	PA			194		912		572		194		1,484		1,678		776	1975		6/26/1995		5 to 40 years	PA			194		912		586			194		1,498		1,692		818	1975	6/26/1995	5 to 40 years
Ft. Lauderdale	FL			1,503		3,619		1,233		1,503		4,852		6,355		2,253	1985		6/26/1995		5 to 40 years	FL			1,503		3,619		1,302			1,503		4,921		6,424		2,387	1985	6/26/1995	5 to 40 years
West Palm	FL			398		1,035		502		398		1,537		1,935		851	1985		6/26/1995		5 to 40 years	FL			398		1,035		500			398		1,535		1,933		875	1985	6/26/1995	5 to 40 years
Atlanta	GA			423		1,015		574		424		1,588		2,012		861	1989		6/26/1995		5 to 40 years	GA			423		1,015		606			424		1,620		2,044		776	1989	6/26/1995	5 to 40 years
Atlanta	GA			483		1,166		1,253		483		2,419		2,902		1,102	1988		6/26/1995		5 to 40 years	GA			483		1,166		1,271			483		2,437		2,920		1,140	1988	6/26/1995	5 to 40 years
Atlanta	GA			308		1,116		794		308		1,910		2,218		1,022	1986		6/26/1995		5 to 40 years	GA			308		1,116		833			308		1,949		2,257		1,075	1986	6/26/1995	5 to 40 years
Atlanta	GA			170		786		856		174		1,638		1,812		824	1981		6/26/1995		5 to 40 years	GA			170		786		906			174		1,688		1,862		860	1981	6/26/1995	5 to 40 years
Atlanta	GA			413		999		808		413		1,807		2,220		1,032	1975		6/26/1995		5 to 40 years	GA			413		999		853			413		1,852		2,265		1,077	1975	6/26/1995	5 to 40 years
Baltimore	MD			154		555		1,473		306		1,876		2,182		840	1984		6/26/1995		5 to 40 years	MD			154		555		1,492			306		1,895		2,201		874	1984	6/26/1995	5 to 40 years
Baltimore	MD			479		1,742		2,978		479		4,720		5,199		1,904	1988		6/26/1995		5 to 40 years	MD			479		1,742		3,018			479		4,760		5,239		2,007	1988	6/26/1995	5 to 40 years
Melbourne	FL			883		2,104		2,026		883		4,130		5,013		2,007	1986		6/26/1995		5 to 40 years	FL			883		2,104		1,932			883		4,036		4,919		2,181	1986	6/26/1995	5 to 40 years
Newport News	VA			316		1,471		1,016		316		2,487		2,803		1,293	1988		6/26/1995		5 to 40 years	VA			316		1,471		1,045			316		2,516		2,832		1,346	1988	6/26/1995	5 to 40 years
Pensacola	FL			632		2,962		1,649		651		4,592		5,243		2,472	1983		6/26/1995		5 to 40 years	FL			632		2,962		1,669			651		4,612		5,263		2,560	1983	6/26/1995	5 to 40 years
Hartford	CT			715		1,695		1,383		715		3,078		3,793		1,461	1988		6/26/1995		5 to 40 years	CT			715		1,695		1,420			715		3,115		3,830		1,541	1988	6/26/1995	5 to 40 years
Atlanta	GA			304		1,118		2,820		619		3,623		4,242		1,526	1988		6/26/1995		5 to 40 years	GA			304		1,118		2,906			619		3,709		4,328		1,607	1988	6/26/1995	5 to 40 years
Alexandria	VA			1,375		3,220		2,836		1,376		6,055		7,431		2,919	1984		6/26/1995		5 to 40 years	VA			1,375		3,220		2,894			1,376		6,113		7,489		3,083	1984	6/26/1995	5 to 40 years
Pensacola	FL			244		901		658		244		1,559		1,803		871	1986		6/26/1995		5 to 40 years	FL			244		901		692			244		1,593		1,837		860	1986	6/26/1995	5 to 40 years
Melbourne	FL			834		2,066		3,483		1,591		4,792		6,383		1,518	1986		6/26/1995		5 to 40 years	FL			834		2,066		3,528			1,591		4,837		6,428		1,626	1986/15	6/26/1995	5 to 40 years
Hartford	CT			234		861		3,486		612		3,969		4,581		1,205	1992		6/26/1995		5 to 40 years
Atlanta	GA			256		1,244		2,231		256		3,475		3,731		1,501	1988		6/26/1995		5 to 40 years
Norfolk	VA			313		1,462		2,657		313		4,119		4,432		1,485	1984		6/26/1995		5 to 40 years
Norfolk - Virginia Beach	VA			1,142		4,998		3,411		1,142		8,409		9,551		3,218	1989/93/95		6/26/1995		5 to 40 years
Birmingham	AL			307		1,415		1,922		385		3,259		3,644		1,430	1990		6/26/1995		5 to 40 years
Birmingham	AL			730		1,725		2,981		730		4,706		5,436		1,544	1990		6/26/1995		5 to 40 years
Montgomery	AL			863		2,041		1,415		863		3,456		4,319		1,630	1982		6/26/1995		5 to 40 years
Jacksonville	FL			326		1,515		1,368		326		2,883		3,209		1,182	1987		6/26/1995		5 to 40 years
Pensacola	FL			369		1,358		3,194		369		4,552		4,921		1,901	1986		6/26/1995		5 to 40 years
Pensacola	FL			244		1,128		2,819		720		3,471		4,191		1,205	1990		6/26/1995		5 to 40 years

Life Storage, Inc.

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Pensacola
   FL 226    1,046    784    226    1,830    2,056    996    1990 6/26/1995    5 to 40 years
Tampa
   FL 1,088    2,597    1,160    1,088    3,757    4,845    2,121    1989 6/26/1995    5 to 40 years
Clearwater
   FL 526    1,958    1,545    526    3,503    4,029    1,660    1985 6/26/1995    5 to 40 years
Clearwater-Largo
   FL 672    2,439    900    672    3,339    4,011    1,757    1988 6/26/1995    5 to 40 years
Jackson
   MS 343    1,580    2,612    796    3,739    4,535    1,475    1990 6/26/1995    5 to 40 years
Jackson
   MS 209    964    870    209    1,834    2,043    978    1990 6/26/1995    5 to 40 years
Providence
   RI 345    1,268    2,081    486    3,208    3,694    1,185    1984 6/26/1995    5 to 40 years
Richmond
   VA 443    1,602    1,104    443    2,706    3,149    1,383    1987 8/25/1995    5 to 40 years
Orlando
   FL 1,161    2,755    2,155    1,162    4,909    6,071    2,173    1986 9/29/1995    5 to 40 years
Syracuse
   NY 470    1,712    1,512    472    3,222    3,694    1,534    1987 12/27/1995    5 to 40 years
Ft. Myers
   FL 205    912    553    206    1,464    1,670    813    1988 12/28/1995    5 to 40 years
Ft. Myers
   FL 412    1,703    763    413    2,465    2,878    1,420    1991/94 12/28/1995    5 to 40 years
Harrisburg
   PA 360    1,641    711    360    2,352    2,712    1,308    1983 12/29/1995    5 to 40 years
Harrisburg
   PA 627    2,224    3,872    692    6,031    6,723    2,068    1985 12/29/1995    5 to 40 years
Newport News
   VA 442    1,592    1,422    442    3,014    3,456    1,408    1988/93 1/5/1996    5 to 40 years
Montgomery
   AL 353    1,299    1,094    353    2,393    2,746    1,042    1984 1/23/1996    5 to 40 years
Charleston
   SC 237    858    983    245    1,833    2,078    893    1985 3/1/1996    5 to 40 years
Tampa
   FL 766    1,800    772    766    2,572    3,338    1,324    1985 3/28/1996    5 to 40 years
Dallas-Ft.Worth
   TX 442    1,767    454    442    2,221    2,663    1,146    1987 3/29/1996    5 to 40 years
Dallas-Ft.Worth
   TX 408    1,662    1,284    408    2,946    3,354    1,416    1986 3/29/1996    5 to 40 years
Dallas-Ft.Worth
   TX 328    1,324    431    328    1,755    2,083    922    1986 3/29/1996    5 to 40 years
San Antonio
   TX 436    1,759    1,518    436    3,277    3,713    1,499    1986 3/29/1996    5 to 40 years
San Antonio
   TX 289    1,161    2,453    289    3,614    3,903    362    2012 3/29/1996    5 to 40 years
Montgomery
   AL 279    1,014    1,476    433    2,336    2,769    1,001    1988 5/21/1996    5 to 40 years
West Palm
   FL 345    1,262    667    345    1,929    2,274    891    1986 5/29/1996    5 to 40 years
Ft. Myers
   FL 229    884    2,864    383    3,594    3,977    875    1986 5/29/1996    5 to 40 years
Syracuse
   NY 481    1,559    2,643    671    4,012    4,683    1,771    1983 6/5/1996    5 to 40 years
Lakeland
   FL 359    1,287    1,291    359    2,578    2,937    1,318    1988 6/26/1996    5 to 40 years
Boston—Springfield
   MA 251    917    2,530    297    3,401    3,698    1,567    1986 6/28/1996    5 to 40 years
Ft. Myers
   FL 344    1,254    654    310    1,942    2,252    996    1987 6/28/1996    5 to 40 years
Cincinnati
   OH 557    1,988    977    688    2,834    3,522    894    1988 7/23/1996    5 to 40 years
Baltimore
   MD 777    2,770    798    777    3,568    4,345    1,758    1990 7/26/1996    5 to 40 years
Jacksonville
   FL 568    2,028    1,366    568    3,394    3,962    1,713    1987 8/23/1996    5 to 40 years
Jacksonville
   FL 436    1,635    920    436    2,555    2,991    1,255    1985 8/26/1996    5 to 40 years
Jacksonville
   FL 535    2,033    603    538    2,633    3,171    1,422    1987/92 8/30/1996    5 to 40 years
Charlotte
   NC 487    1,754    683    487    2,437    2,924    1,198    1995 9/16/1996    5 to 40 years
Charlotte
   NC 315    1,131    508    315    1,639    1,954    845    1995 9/16/1996    5 to 40 years
Orlando
   FL 314    1,113    1,296    314    2,409    2,723    1,155    1975 10/30/1996    5 to 40 years
Rochester
   NY 704    2,496    2,851    707    5,344    6,051    1,987    1990 12/20/1996    5 to 40 years
Youngstown
   OH 600    2,142    2,574    693    4,623    5,316    1,745    1988 1/10/1997    5 to 40 years
Cleveland
   OH 751    2,676    4,405    751    7,081    7,832    2,404    1986 1/10/1997    5 to 40 years
Cleveland
   OH 725    2,586    2,332    725    4,918    5,643    2,152    1978 1/10/1997    5 to 40 years
Cleveland
   OH 637    2,918    2,052    701    4,906    5,607    2,610    1979 1/10/1997    5 to 40 years
Cleveland
   OH 495    1,781    1,386    495    3,167    3,662    1,480    1979 1/10/1997    5 to 40 years
Cleveland
   OH 761    2,714    1,734    761    4,448    5,209    2,201    1977 1/10/1997    5 to 40 years
Cleveland
   OH 418    1,921    2,934    418    4,855    5,273    1,959    1970 1/10/1997    5 to 40 years
Cleveland
   OH 606    2,164    1,523    606    3,687    4,293    1,614    1982 1/10/1997    5 to 40 years
San Antonio
   TX 474    1,686    688    504    2,344    2,848    1,049    1981 1/30/1997    5 to 40 years
San Antonio
   TX 346    1,236    576    346    1,812    2,158    865    1985 1/30/1997    5 to 40 years
San Antonio
   TX 432    1,560    2,101    432    3,661    4,093    1,632    1995 1/30/1997    5 to 40 years
Houston-Beaumont
   TX 634    2,565    4,380    634    6,945    7,579    1,940    1993/95 3/26/1997    5 to 40 years
Houston-Beaumont
   TX 566    2,279    570    566    2,849    3,415    1,400    1995 3/26/1997    5 to 40 years
Houston-Beaumont
   TX 293    1,357    707    293    2,064    2,357    947    1995 3/26/1997    5 to 40 years
Chesapeake
   VA 260    1,043    4,720    260    5,763    6,023    1,491    1988/95 3/31/1997    5 to 40 years
Orlando-W 25th St
   FL 289    1,160    2,467    616    3,300    3,916    948    1984 3/31/1997    5 to 40 years
Delray
   FL 491    1,756    778    491    2,534    3,025    1,321    1969 4/11/1997    5 to 40 years
Savannah
   GA 296    1,196    590    296    1,786    2,082    875    1988 5/8/1997    5 to 40 years
Delray
   FL 921    3,282    795    921    4,077    4,998    2,021    1980 5/21/1997    5 to 40 years
Cleveland-Avon
   OH 301    1,214    2,302    304    3,513    3,817    1,438    1989 6/4/1997    5 to 40 years
Dallas-Fort Worth
   TX 965    3,864    1,728    943    5,614    6,557    2,652    1977 6/30/1997    5 to 40 years
Atlanta-Alpharetta
   GA 1,033    3,753    720    1,033    4,473    5,506    2,186    1994 7/24/1997    5 to 40 years
Atlanta-Marietta
   GA 769    2,788    642    825    3,374    4,199    1,641    1996 7/24/1997    5 to 40 years
Atlanta-Doraville
   GA 735    3,429    496    735    3,925    4,660    1,962    1995 8/21/1997    5 to 40 years
Schedule III

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Greensboro-Hilltop
   NC 268    1,097    859    231    1,993    2,224    814    1995 9/25/1997    5 to 40 years
Greensboro-StgCch
   NC 89    376    1,854    89    2,230    2,319    941    1997 9/25/1997    5 to 40 years
Baton Rouge-Airline
   LA 396    1,831    1,161    421    2,967    3,388    1,382    1982 10/9/1997    5 to 40 years
Baton Rouge-Airline2
   LA 282    1,303    504    282    1,807    2,089    894    1985 11/21/1997    5 to 40 years
Harrisburg-Peiffers
   PA 635    2,550    731    637    3,279    3,916    1,626    1984 12/3/1997    5 to 40 years
Tampa-E. Hillsborough
   FL 709    3,235    979    709    4,214    4,923    2,041    1985 2/4/1998    5 to 40 years
NY Metro-Middletown
   NY 843    3,394    1,038    843    4,432    5,275    2,047    1989/95 2/4/1998    5 to 40 years
Chesapeake-Military
   VA 542    2,210    527    542    2,737    3,279    1,304    1996 2/5/1998    5 to 40 years
Chesapeake-Volvo
   VA 620    2,532    1,289    620    3,821    4,441    1,727    1995 2/5/1998    5 to 40 years
Virginia Beach-Shell
   VA 540    2,211    508    540    2,719    3,259    1,300    1991 2/5/1998    5 to 40 years
Norfolk-Naval Base
   VA 1,243    5,019    990    1,243    6,009    7,252    2,862    1975 2/5/1998    5 to 40 years
Boston-Northbridge
   MA 441    1,788    1,120    694    2,655    3,349    813    1988 2/9/1998    5 to 40 years
Greensboro-High Point
   NC 397    1,834    964    397    2,798    3,195    1,241    1993 2/10/1998    5 to 40 years
Titusville
   FL 492    1,990    1,282    688    3,076    3,764    953    1986/90 2/25/1998    5 to 40 years
Boston-Salem
   MA 733    2,941    1,676    733    4,617    5,350    2,186    1979 3/3/1998    5 to 40 years
Providence
   RI 702    2,821    4,243    702    7,064    7,766    2,310    1984/88 3/26/1998    5 to 40 years
Chattanooga-Lee Hwy
   TN 384    1,371    623    384    1,994    2,378    1,018    1987 3/27/1998    5 to 40 years
Chattanooga-Hwy 58
   TN 296    1,198    2,358    414    3,438    3,852    1,293    1985 3/27/1998    5 to 40 years
Ft. Oglethorpe
   GA 349    1,250    1,834    464    2,969    3,433    1,061    1989 3/27/1998    5 to 40 years
Birmingham-Walt
   AL 544    1,942    1,311    544    3,253    3,797    1,555    1984 3/27/1998    5 to 40 years
Salem-Policy
   NH 742    2,977    649    742    3,626    4,368    1,679    1980 4/7/1998    5 to 40 years
Raleigh-Durham
   NC 775    3,103    940    775    4,043    4,818    1,904    1988/91 4/9/1998    5 to 40 years
Raleigh-Durham
   NC 940    3,763    979    940    4,742    5,682    2,235    1990/96 4/9/1998    5 to 40 years
Youngstown-Warren
   OH 522    1,864    1,393    569    3,210    3,779    1,454    1986 4/22/1998    5 to 40 years
Youngstown-Warren
   OH 512    1,829    2,765    633    4,473    5,106    1,561    1986 4/22/1998    5 to 40 years
Jackson
   MS 744    3,021    288    744    3,309    4,053    1,575    1995 5/13/1998    5 to 40 years
Houston-Katy
   TX 419    1,524    4,064    419    5,588    6,007    1,613    1994 5/20/1998    5 to 40 years
Melbourne
   FL 662    2,654    3,704    662    6,358    7,020    1,558    1985 6/2/1998    5 to 40 years
Vero Beach
   FL 489    1,813    1,768    584    3,486    4,070    1,136    1997 6/12/1998    5 to 40 years
Houston-Humble
   TX 447 �� 1,790    2,587    740    4,084    4,824    1,523    1986 6/16/1998    5 to 40 years
Houston-Webster
   TX 635    2,302    371    635    2,673    3,308    1,200    1997 6/19/1998    5 to 40 years
Dallas-Fort Worth
   TX 548    1,988    423    548    2,411    2,959    1,097    1997 6/19/1998    5 to 40 years
San Marcos
   TX 324    1,493    2,204    324    3,697    4,021    1,345    1994 6/30/1998    5 to 40 years
Austin-McNeil
   TX 492    1,995    2,631    510    4,608    5,118    1,509    1994 6/30/1998    5 to 40 years
Austin-FM
   TX 484    1,951    724    481    2,678    3,159    1,184    1996 6/30/1998    5 to 40 years
Hollywood-Sheridan
   FL 1,208    4,854    700    1,208    5,554    6,762    2,620    1988 7/1/1998    5 to 40 years
Pompano Beach-Atlantic
   FL 944    3,803    795    944    4,598    5,542    2,182    1985 7/1/1998    5 to 40 years
Pompano Beach-Sample
   FL 903    3,643    592    903    4,235    5,138    1,978    1988 7/1/1998    5 to 40 years
Boca Raton-18th St
   FL 1,503    6,059    -1,853    851    4,858    5,709    2,298    1991 7/1/1998    5 to 40 years
Hollywood-N.21st
   FL 840    3,373    642    840    4,015    4,855    1,913    1987 8/3/1998    5 to 40 years
Dallas-Fort Worth
   TX 550    1,998    850    550    2,848    3,398    1,199    1996 9/29/1998    5 to 40 years
Dallas-Fort Worth
   TX 670    2,407    1,761    670    4,168    4,838    1,690    1996 10/9/1998    5 to 40 years
Cincinnati-Batavia
   OH 390    1,570    1,462    390    3,032    3,422    1,136    1988 11/19/1998    5 to 40 years
Jackson-N.West
   MS 460    1,642    765    460    2,407    2,867    1,151    1984 12/1/1998    5 to 40 years
Houston-Katy
   TX 507    2,058    1,812    507    3,870    4,377    1,455    1993 12/15/1998    5 to 40 years
Providence
   RI 447    1,776    1,023    447    2,799    3,246    1,268    1986/94 2/2/1999    5 to 40 years
Lafayette-Pinhook 1
   LA 556    1,951    1,288    556    3,239    3,795    1,606    1980 2/17/1999    5 to 40 years
Lafayette-Pinhook2
   LA 708    2,860    1,320    708    4,180    4,888    1,591    1992/94 2/17/1999    5 to 40 years
Lafayette-Ambassador
   LA 314    1,095    954    314    2,049    2,363    1,055    1975 2/17/1999    5 to 40 years
Lafayette-Evangeline
   LA 188    652    1,674    188    2,326    2,514    1,073    1977 2/17/1999    5 to 40 years
Lafayette-Guilbeau
   LA 963    3,896    1,136    963    5,032    5,995    2,108    1994 2/17/1999    5 to 40 years
Phoenix-Gilbert
   AZ 651    2,600    1,313    772    3,792    4,564    1,600    1995 5/18/1999    5 to 40 years
Phoenix-Glendale
   AZ 565    2,596    769    565    3,365    3,930    1,472    1997 5/18/1999    5 to 40 years
Phoenix-Mesa
   AZ 330    1,309    2,586    733    3,492    4,225    1,173    1986 5/18/1999    5 to 40 years
Phoenix-Mesa
   AZ 339    1,346    740    339    2,086    2,425    882    1986 5/18/1999    5 to 40 years
Phoenix-Mesa
   AZ 291    1,026    1,143    291    2,169    2,460    835    1976 5/18/1999    5 to 40 years
Phoenix-Mesa
   AZ 354    1,405    594    354    1,999    2,353    911    1986 5/18/1999    5 to 40 years
Phoenix-Camelback
   AZ 453    1,610    1,095    453    2,705    3,158    1,211    1984 5/18/1999    5 to 40 years
Phoenix-Bell
   AZ 872    3,476    3,618    872    7,094    7,966    2,354    1984 5/18/1999    5 to 40 years
Phoenix-35th Ave
   AZ 849    3,401    955    849    4,356    5,205    1,932    1996 5/21/1999    5 to 40 years
Portland
   ME 410    1,626    2,024    410    3,650    4,060    1,435    1988 8/2/1999    5 to 40 years
Space Coast-Cocoa
   FL 667    2,373    1,014    667    3,387    4,054    1,514    1982 9/29/1999    5 to 40 years
Dallas-Fort Worth
   TX 335    1,521    853    335    2,374    2,709    921    1985 11/9/1999    5 to 40 years

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
NY Metro-Middletown
   NY 276    1,312    1,314    276    2,626    2,902    1,010    1998 2/2/2000    5 to 40 years
Boston-N. Andover
   MA 633    2,573    1,055    633    3,628    4,261    1,458    1989 2/15/2000    5 to 40 years
Houston-Seabrook
   TX 633    2,617    476    633    3,093    3,726    1,351    1996 3/1/2000    5 to 40 years
Ft. Lauderdale
   FL 384    1,422    842    384    2,264    2,648    897    1994 5/2/2000    5 to 40 years
Birmingham-Bessemer
   AL 254    1,059    2,066    332    3,047    3,379    906    1998 11/15/2000    5 to 40 years
NY Metro-Brewster
   NY 1,716    6,920    1,754    1,981    8,409    10,390    2,108    1991/97 12/27/2000    5 to 40 years
Austin-Lamar
   TX 837    2,977    3,579    966    6,427    7,393    1,271    1996/99 2/22/2001    5 to 40 years
Houston
   TX 733    3,392    900    841    4,184    5,025    1,300    1993/97 3/2/2001    5 to 40 years
Ft.Myers
   FL 787    3,249    750    902    3,884    4,786    1,254    1997 3/13/2001    5 to 40 years
Boston-Dracut
   MA 1,035    3,737    743    1,104    4,411    5,515    1,743    1986 12/1/2001    5 to 40 years
Boston-Methuen
   MA 1,024    3,649    827    1,091    4,409    5,500    1,675    1984 12/1/2001    5 to 40 years
Columbia
   SC 883    3,139    1,473    942    4,553    5,495    1,624    1985 12/1/2001    5 to 40 years
Myrtle Beach
   SC 552    1,970    1,155    589    3,088    3,677    1,192    1984 12/1/2001    5 to 40 years
Maine-Saco
   ME 534    1,914    511    570    2,389    2,959    908    1988 12/3/2001    5 to 40 years
Boston-Plymouth
   MA 1,004    4,584    2,370    1,004    6,954    7,958    2,292    1996 12/19/2001    5 to 40 years
Boston-Sandwich
   MA 670    3,060    611    714    3,627    4,341    1,363    1984 12/19/2001    5 to 40 years
Syracuse
   NY 294    1,203    1,194    327    2,364    2,691    774    1987 2/5/2002    5 to 40 years
Dallas-Fort Worth
   TX 734    2,956    822    784    3,728    4,512    1,379    1984 2/13/2002    5 to 40 years
Dallas-Fort Worth
   TX 394    1,595    499    421    2,067    2,488    763    1985 2/13/2002    5 to 40 years
San Antonio-Hunt
   TX 381    1,545    3,979    618    5,287    5,905    1,185    1980 2/13/2002    5 to 40 years
Houston-Humble
   TX 919    3,696    702    919    4,398    5,317    1,562    1998/02 6/19/2002    5 to 40 years
Houston-Pasadena
   TX 612    2,468    463    612    2,931    3,543    1,053    1999 6/19/2002    5 to 40 years
Houston-League City
   TX 689    3,159    795    689    3,954    4,643    1,336    1994/97 6/19/2002    5 to 40 years
Houston-Montgomery
   TX 817    3,286    2,190    1,119    5,174    6,293    1,696    1998 6/19/2002    5 to 40 years
Houston-S. Hwy 6
   TX 407    1,650    327    407    1,977    2,384    723    1997 6/19/2002    5 to 40 years
Houston-Beaumont
   TX 817    3,287    499    817    3,786    4,603    1,418    1996 6/19/2002    5 to 40 years
The Hamptons
   NY 2,207    8,866    830    2,207    9,696    11,903    3,497    1989/95 12/16/2002    5 to 40 years
The Hamptons
   NY 1,131    4,564    608    1,131    5,172    6,303    1,823    1998 12/16/2002    5 to 40 years
The Hamptons
   NY 635    2,918    447    635    3,365    4,000    1,193    1997 12/16/2002    5 to 40 years
The Hamptons
   NY 1,251    5,744    543    1,251    6,287    7,538    2,198    1994/98 12/16/2002    5 to 40 years
Dallas-Fort Worth
   TX 1,039    4,201    258    1,039    4,459    5,498    1,517    1995/99 8/26/2003    5 to 40 years
Dallas-Fort Worth
   TX 827    3,776    509    827    4,285    5,112    1,422    1998/01 10/1/2003    5 to 40 years
Stamford
   CT 2,713    11,013    595    2,713    11,608    14,321    3,920    1998 3/17/2004    5 to 40 years
Houston-Tomball
   TX 773    3,170    1,876    773    5,046    5,819    1,590    2000 5/19/2004    5 to 40 years
Houston-Conroe
   TX 1,195    4,877    435    1,195    5,312    6,507    1,664    2001 5/19/2004    5 to 40 years
Houston-Spring
   TX 1,103    4,550    512    1,103    5,062    6,165    1,684    2001 5/19/2004    5 to 40 years
Houston-Bissonnet
   TX 1,061    4,427    2,910    1,061    7,337    8,398    2,191    2003 5/19/2004    5 to 40 years
Houston-Alvin
   TX 388    1,640    1,046    388    2,686    3,074    801    2003 5/19/2004    5 to 40 years
Clearwater
   FL 1,720    6,986    315    1,720    7,301    9,021    2,366    2001 6/3/2004    5 to 40 years
Houston-Missouri City
   TX 1,167    4,744    3,576    1,566    7,921    9,487    2,176    1998 6/23/2004    5 to 40 years
Chattanooga-Hixson
   TN 1,365    5,569    1,845    1,365    7,414    8,779    2,388    1998/02 8/4/2004    5 to 40 years
Austin-Round Rock
   TX 2,047    5,857    880    1,976    6,808    8,784    2,181    2000 8/5/2004    5 to 40 years
Long Island-Bayshore
   NY 1,131    4,609    252    1,131    4,861    5,992    1,492    2003 3/15/2005    5 to 40 years
Syracuse - Cicero
   NY 527    2,121    3,273    527    5,394    5,921    1,014    1988/02 3/16/2005    5 to 40 years
Boston-Springfield
   MA 612    2,501    368    612    2,869    3,481    859    1965/75 4/12/2005    5 to 40 years
Stamford
   CT 1,612    6,585    289    1,612    6,874    8,486    2,166    2002 4/14/2005    5 to 40 years
Montgomery-Richard
   AL 1,906    7,726    389    1,906    8,115    10,021    2,450    1997 6/1/2005    5 to 40 years
Houston-Jones
   TX 1,214    4,949    363    1,215    5,311    6,526    1,592    1997/99 6/6/2005    5 to 40 years
Boston-Oxford
   MA 470    1,902    1,668    470    3,570    4,040    1,008    2002 6/23/2005    5 to 40 years
Austin-290E
   TX 537    2,183    -320    491    1,909    2,400    638    2003 7/12/2005    5 to 40 years
San Antonio-Marbach
   TX 556    2,265    549    556    2,814    3,370    866    2003 7/12/2005    5 to 40 years
Austin-South 1st
   TX 754    3,065    259    754    3,324    4,078    1,028    2003 7/12/2005    5 to 40 years
Houston-Pinehurst
   TX 484    1,977    1,544    484    3,521    4,005    957    2002/04 7/12/2005    5 to 40 years
Atlanta-Marietta
   GA 811    3,397    580    811    3,977    4,788    1,224    2003 9/15/2005    5 to 40 years
Baton Rouge
   LA 719    2,927    2,568    719    5,495    6,214    1,291    1984/94 11/15/2005    5 to 40 years
SanMarcos-Hwy 35S
   TX 628    2,532    3,288    982    5,466    6,448    773    2001 1/10/2006    5 to 40 years
Houston-Baytown
   TX 596    2,411    287    596    2,698    3,294    735    2002 1/10/2006    5 to 40 years
Houston-Cypress
   TX 721    2,994    2,318    721    5,312    6,033    1,303    2003 1/13/2006    5 to 40 years
Rochester
   NY 937    3,779    228    937    4,007    4,944    1,151    2002/06 2/1/2006    5 to 40 years
Houston-Jones Rd 2
   TX 707    2,933    2,831    707    5,764    6,471    1,506    2000 3/9/2006    5 to 40 years
Lafayette
   LA 411    1,621    281    411    1,902    2,313    592    1997 4/13/2006    5 to 40 years
Lafayette
   LA 463    1,831    208    463    2,039    2,502    616    2001/04 4/13/2006    5 to 40 years
Lafayette
   LA 601    2,406    1,442    601    3,848    4,449    1,071    2002 4/13/2006    5 to 40 years

			Initial Cost to Company				Cost Capitalized Subsequent to Acquisition		Gross Amount at Which Carried at Close of Period										Life on which depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Hartford	CT			234		861		3,561		612		4,044		4,656		1,311	1992	6/26/1995	5 to 40 years
Atlanta	GA			256		1,244		2,325		256		3,569		3,825		1,584	1988	6/26/1995	5 to 40 years
Norfolk	VA			313		1,462		2,718		313		4,180		4,493		1,573	1984	6/26/1995	5 to 40 years
Birmingham	AL			307		1,415		1,918		385		3,255		3,640		1,496	1990	6/26/1995	5 to 40 years
Birmingham	AL			730		1,725		2,992		730		4,717		5,447		1,639	1990	6/26/1995	5 to 40 years
Montgomery	AL			863		2,041		1,491		863		3,532		4,395		1,694	1982	6/26/1995	5 to 40 years
Jacksonville	FL			326		1,515		1,432		326		2,947		3,273		1,253	1987	6/26/1995	5 to 40 years
Pensacola	FL			369		1,358		3,249		369		4,607		4,976		2,014	1986	6/26/1995	5 to 40 years
Pensacola	FL			244		1,128		2,828		720		3,480		4,200		1,282	1990	6/26/1995	5 to 40 years
Pensacola	FL			226		1,046		896		226		1,942		2,168		1,007	1990	6/26/1995	5 to 40 years
Tampa	FL			1,088		2,597		1,038		1,088		3,635		4,723		2,100	1989	6/26/1995	5 to 40 years
Clearwater	FL			526		1,958		1,581		526		3,539		4,065		1,729	1985	6/26/1995	5 to 40 years
Clearwater-Largo	FL			672		2,439		1,218		672		3,657		4,329		1,824	1988	6/26/1995	5 to 40 years
Jackson	MS			343		1,580		2,643		796		3,770		4,566		1,553	1990	6/26/1995	5 to 40 years
Jackson	MS			209		964		1,070		209		2,034		2,243		1,009	1990	6/26/1995	5 to 40 years
Providence	RI			345		1,268		2,078		486		3,205		3,691		1,265	1984	6/26/1995	5 to 40 years
Norfolk - Virginia Beach	VA			1,142		4,998		3,585		1,142		8,583		9,725		3,428	1989/93/95/16	6/26/1995	5 to 40 years
Richmond	VA			443		1,602		1,111		443		2,713		3,156		1,434	1987	8/25/1995	5 to 40 years
Orlando	FL			1,161		2,755		2,311		1,162		5,065		6,227		2,296	1986/15	9/29/1995	5 to 40 years
Syracuse	NY			470		1,712		1,685		472		3,395		3,867		1,604	1987	12/27/1995	5 to 40 years
Ft. Myers	FL			205		912		567		206		1,478		1,684		837	1988	12/28/1995	5 to 40 years
Ft. Myers	FL			412		1,703		767		412		2,470		2,882		1,455	1991/94	12/28/1995	5 to 40 years
Harrisburg	PA			360		1,641		133		360		1,774		2,134		1,027	1983	12/29/1995	5 to 40 years
Harrisburg	PA			627		2,224		4,080		692		6,239		6,931		2,213	1985	12/29/1995	5 to 40 years
Newport News	VA			442		1,592		1,434		442		3,026		3,468		1,454	1988/93	1/5/1996	5 to 40 years
Montgomery	AL			353		1,299		1,138		353		2,437		2,790		1,086	1984	1/23/1996	5 to 40 years
Charleston	SC			237		858		1,062		245		1,912		2,157		936	1985	3/1/1996	5 to 40 years
Tampa	FL			766		1,800		1,060		766		2,860		3,626		1,392	1985	3/28/1996	5 to 40 years
Dallas-Ft.Worth	TX			442		1,767		471		442		2,238		2,680		1,209	1987	3/29/1996	5 to 40 years
Dallas-Ft.Worth	TX			408		1,662		1,312		408		2,974		3,382		1,499	1986	3/29/1996	5 to 40 years
Dallas-Ft.Worth	TX			328		1,324		448		328		1,772		2,100		1,739	1986	3/29/1996	5 to 40 years
San Antonio	TX			436		1,759		1,548		436		3,307		3,743		1,598	1986	3/29/1996	5 to 40 years
San Antonio	TX			289		1,161		2,484		289		3,645		3,934		457	2012	3/29/1996	5 to 40 years
Montgomery	AL			279		1,014		1,515		433		2,375		2,808		1,053	1988	5/21/1996	5 to 40 years
West Palm	FL			345		1,262		653		345		1,915		2,260		931	1986	5/29/1996	5 to 40 years
Ft. Myers	FL			229		884		2,855		383		3,585		3,968		939	1986	5/29/1996	5 to 40 years
Syracuse	NY			481		1,559		2,656		671		4,025		4,696		1,871	1983	6/5/1996	5 to 40 years
Lakeland	FL			359		1,287		1,335		359		2,622		2,981		1,370	1988	6/26/1996	5 to 40 years
Boston - Springfield	MA			251		917		2,554		297		3,425		3,722		1,638	1986	6/28/1996	5 to 40 years
Ft. Myers	FL			344		1,254		657		310		1,945		2,255		1,011	1987	6/28/1996	5 to 40 years
Cincinnati	OH			557		1,988		996		688		2,853		3,541		976	1988	7/23/1996	5 to 40 years
Baltimore	MD			777		2,770		791		777		3,561		4,338		1,847	1990	7/26/1996	5 to 40 years
Jacksonville	FL			568		2,028		1,903		568		3,931		4,499		1,800	1987	8/23/1996	5 to 40 years
Jacksonville	FL			436		1,635		1,191		436		2,826		3,262		1,316	1985	8/26/1996	5 to 40 years
Jacksonville	FL			535		2,033		638		538		2,668		3,206		1,477	1987/92	8/30/1996	5 to 40 years
Charlotte	NC			487		1,754		701		487		2,455		2,942		1,248	1995	9/16/1996	5 to 40 years

Life Storage, Inc.

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Lafayette
   LA 542 1,319 2,210 542 3,529 4,071 920 1997/99 4/13/2006 5 to 40 years
Manchester
   NH 832 3,268 185 832 3,453 4,285 977 2000 4/26/2006 5 to 40 years
Clearwater-Largo
   FL 1,270 5,037 376 1,270 5,413 6,683 1,502 1998 6/22/2006 5 to 40 years
Clearwater-Pinellas Park
   FL 929 3,676 339 929 4,015 4,944 1,078 2000 6/22/2006 5 to 40 years
Clearwater-Tarpon Spring
   FL 696 2,739 240 696 2,979 3,675 836 1999 6/22/2006 5 to 40 years
New Orleans
   LA 1,220 4,805 316 1,220 5,121 6,341 1,432 2000 6/22/2006 5 to 40 years
St Louis-Meramec
   MO 1,113 4,359 378 1,113 4,737 5,850 1,322 1999 6/22/2006 5 to 40 years
St Louis-Charles Rock
   MO 766 3,040 1,504 766 4,544 5,310 1,009 1999 6/22/2006 5 to 40 years
St Louis-Shackelford
   MO 828 3,290 206 828 3,496 4,324 979 1999 6/22/2006 5 to 40 years
St Louis-W.Washington
   MO 734 2,867 2,503 734 5,370 6,104 1,139 1980/01 6/22/2006 5 to 40 years
St Louis-Howdershell
   MO 899 3,596 324 899 3,920 4,819 1,078 2000 6/22/2006 5 to 40 years
St Louis-Lemay Ferry
   MO 890 3,552 473 890 4,025 4,915 1,091 1999 6/22/2006 5 to 40 years
St Louis-Manchester
   MO 697 2,711 225 697 2,936 3,633 809 2000 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 1,256 4,946 475 1,256 5,421 6,677 1,446 1998/03 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 605 2,434 197 605 2,631 3,236 698 2004 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 607 2,428 219 607 2,647 3,254 716 2004 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 1,073 4,276 98 1,073 4,374 5,447 1,184 2003 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 549 2,180 1,148 549 3,328 3,877 793 1998 6/22/2006 5 to 40 years
Dallas-Fort Worth
   TX 644 2,542 136 644 2,678 3,322 734 1999 6/22/2006 5 to 40 years
San Antonio-Blanco
   TX 963 3,836 222 963 4,058 5,021 1,122 2004 6/22/2006 5 to 40 years
San Antonio-Broadway
   TX 773 3,060 2,012 773 5,072 5,845 1,118 2000 6/22/2006 5 to 40 years
San Antonio-Huebner
   TX 1,175 4,624 365 1,175 4,989 6,164 1,318 1998 6/22/2006 5 to 40 years
Nashua
   NH 617 2,422 587 617 3,009 3,626 835 1989 6/29/2006 5 to 40 years
Lafayette
   LA 699 2,784 3,809 699 6,593 7,292 1,276 1995/99 8/1/2006 5 to 40 years
Chattanooga-Lee Hwy II
   TN 619 2,471 169 619 2,640 3,259 726 2002 8/7/2006 5 to 40 years
Montgomery-E.S.Blvd
   AL 1,158 4,639 1,032 1,158 5,671 6,829 1,541 1996/97 9/28/2006 5 to 40 years
Auburn-Pepperell Pkwy
   AL 590 2,361 599 590 2,960 3,550 776 1998 9/28/2006 5 to 40 years
Auburn-Gatewood Dr
   AL 694 2,758 344 694 3,102 3,796 809 2002/03 9/28/2006 5 to 40 years
Columbus-Williams Rd
   GA 736 2,905 330 736 3,235 3,971 871 2002/04/06 9/28/2006 5 to 40 years
Columbus-Miller Rd
   GA 975 3,854 1,383 975 5,237 6,212 1,113 1995 9/28/2006 5 to 40 years
Columbus-Armour Rd
   GA 0 3,680 324 0 4,004 4,004 1,056 2004/05 9/28/2006 5 to 40 years
Columbus-Amber Dr
   GA 439 1,745 321 439 2,066 2,505 575 1998 9/28/2006 5 to 40 years
Concord
   NH 813 3,213 2,041 813 5,254 6,067 1,283 2000 10/31/2006 5 to 40 years
Houston-Beaumont
   TX 929 3,647 233 930 3,879 4,809 1,016 2002/04 3/8/2007 5 to 40 years
Houston-Beaumont
   TX 1,537 6,018 611 1,537 6,629 8,166 1,694 2003/06 3/8/2007 5 to 40 years
Buffalo-Langner Rd
   NY 532 2,119 3,492 532 5,611 6,143 908 1993/07 3/30/2007 5 to 40 years
Buffalo-Transit Rd
   NY 437 1,794 702 437 2,496 2,933 600 1998 3/30/2007 5 to 40 years
Buffalo-Lake Ave
   NY 638 2,531 2,939 638 5,470 6,108 853 1997 3/30/2007 5 to 40 years
Buffalo-Union Rd
   NY 348 1,344 474 348 1,818 2,166 435 1998 3/30/2007 5 to 40 years
Buffalo-NF Blvd
   NY 323 1,331 249 323 1,580 1,903 409 1998 3/30/2007 5 to 40 years
Buffalo-Young St
   NY 315 2,185 1,143 316 3,327 3,643 774 1999/00 3/30/2007 5 to 40 years
Buffalo-Sheridan Dr
   NY 961 3,827 2,637 961 6,464 7,425 1,288 1999 3/30/2007 5 to 40 years
Buffalo-Transit Rd
   NY 375 1,498 649 375 2,147 2,522 505 1990/95 3/30/2007 5 to 40 years
Rochester-Phillips Rd
   NY 1,003 4,002 144 1,003 4,146 5,149 1,051 1999 3/30/2007 5 to 40 years
San Antonio-Foster
   TX 676 2,685 431 676 3,116 3,792 814 2003/06 5/21/2007 5 to 40 years
Huntsville-Memorial Pkwy
   AL 1,607 6,338 1,085 1,677 7,353 9,030 1,771 1989/06 6/1/2007 5 to 40 years
Huntsville-Madison 1
   AL 1,016 4,013 454 1,017 4,466 5,483 1,130 1993/07 6/1/2007 5 to 40 years
Biloxi-Gulfport
   MS 1,423 5,624 197 1,423 5,821 7,244 1,469 1998/05 6/1/2007 5 to 40 years
Huntsville-Hwy 72
   AL 1,206 4,775 365 1,206 5,140 6,346 1,266 1998/06 6/1/2007 5 to 40 years
Mobile-Airport Blvd
   AL 1,216 4,819 359 1,216 5,178 6,394 1,331 2000/07 6/1/2007 5 to 40 years
Biloxi-Gulfport
   MS 1,345 5,325 120 1,301 5,489 6,790 1,360 2002/04 6/1/2007 5 to 40 years
Huntsville-Madison 2
   AL 1,164 4,624 297 1,164 4,921 6,085 1,233 2002/06 6/1/2007 5 to 40 years
Foley-Hwy 59
   AL 1,346 5,474 1,575 1,346 7,049 8,395 1,512 2003/06 6/1/2007 5 to 40 years
Pensacola6-Nine Mile
   FL 1,029 4,180 194 1,029 4,374 5,403 1,178 2003/06 6/1/2007 5 to 40 years
Auburn-College St
   AL 686 2,732 242 686 2,974 3,660 775 2003 6/1/2007 5 to 40 years
Biloxi-Gulfport
   MS 1,811 7,152 140 1,811 7,292 9,103 1,782 2004/06 6/1/2007 5 to 40 years
Pensacola7-Hwy 98
   FL 732 3,015 82 732 3,097 3,829 822 2006 6/1/2007 5 to 40 years
Montgomery-Arrowhead
   AL 1,075 4,333 302 1,075 4,635 5,710 1,166 2006 6/1/2007 5 to 40 years
Montgomery-McLemore
   AL 885 3,586 253 885 3,839 4,724 945 2006 6/1/2007 5 to 40 years
Houston-Beaumont
   TX 742 3,024 246 742 3,270 4,012 855 2002/05 11/14/2007 5 to 40 years
Hattiesburg-Classic
   MS 444 1,799 228 444 2,027 2,471 521 1998 12/19/2007 5 to 40 years
Biloxi-Ginger
   MS 384 1,548 139 384 1,687 2,071 405 2000 12/19/2007 5 to 40 years
Foley-7905 St Hwy 59
   AL 437 1,757 207 437 1,964 2,401 461 2000 12/19/2007 5 to 40 years
Schedule III

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Jackson-Ridgeland
   MS 1,479 5,965 546 1,479 6,511 7,990 1,529 1997/00 1/17/2008 5 to 40 years
Jackson-5111
   MS 1,337 5,377 240 1,337 5,617 6,954 1,308 2003 1/17/2008 5 to 40 years
Cincinnati-Robertson
   OH 852 3,409 274 852 3,683 4,535 772 2003/04 12/31/2008 5 to 40 years
Richmond-Bridge Rd
   VA 1,047 5,981 2,729 1,047 8,710 9,757 1,334 2009 10/1/2009 5 to 40 years
Raleigh-Durham
   NC 846 4,095 194 846 4,289 5,135 691 2000 12/28/2010 5 to 40 years
Charlotte-Wallace
   NC 961 3,702 1,216 961 4,918 5,879 667 2008 12/29/2010 5 to 40 years
Raleigh-Durham
   NC 574 3,975 244 574 4,219 4,793 661 2008 12/29/2010 5 to 40 years
Charlotte-Westmoreland
   NC 513 5,317 40 513 5,357 5,870 849 2009 12/29/2010 5 to 40 years
Charlotte-Matthews
   NC 1,129 4,767 125 1,129 4,892 6,021 794 2009 12/29/2010 5 to 40 years
Raleigh-Durham
   NC 381 3,575 92 381 3,667 4,048 585 2008 12/29/2010 5 to 40 years
Charlotte-Zeb Morris
   NC 965 3,355 103 965 3,458 4,423 555 2007 12/29/2010 5 to 40 years
Fair Lawn
   NJ 796 9,467 312 796 9,779 10,575 1,388 1999 7/14/2011 5 to 40 years
Elizabeth
   NJ 885 3,073 652 885 3,725 4,610 498 1988 7/14/2011 5 to 40 years
Saint Louis-High Ridge
   MO 197 2,132 63 197 2,195 2,392 392 2007 7/28/2011 5 to 40 years
Atlanta-Decatur
   GA 1,043 8,252 84 1,043 8,336 9,379 1,145 2006 8/17/2011 5 to 40 years
Houston-Humble
   TX 825 4,201 325 825 4,526 5,351 679 1993 9/22/2011 5 to 40 years
Dallas-Fort Worth
   TX 693 3,552 121 693 3,673 4,366 545 2001 9/22/2011 5 to 40 years
Houston-Hwy 6N
   TX 1,243 3,106 128 1,243 3,234 4,477 499 2000 9/22/2011 5 to 40 years
Austin-Cedar Park
   TX 1,559 2,727 91 1,559 2,818 4,377 440 1998 9/22/2011 5 to 40 years
Houston-Katy
   TX 691 4,435 2,478 691 6,913 7,604 801 2000 9/22/2011 5 to 40 years
Houston-Deer Park
   TX 1,012 3,312 222 1,012 3,534 4,546 512 1998 9/22/2011 5 to 40 years
Houston-W. Little York
   TX 575 3,557 185 575 3,742 4,317 586 1998 9/22/2011 5 to 40 years
Houston-Pasadena
   TX 705 4,223 206 705 4,429 5,134 651 2000 9/22/2011 5 to 40 years
Houston-Friendswood
   TX 1,168 2,315 215 1,168 2,530 3,698 391 1994 9/22/2011 5 to 40 years
Houston-Spring
   TX 2,152 3,027 330 2,152 3,357 5,509 528 1993 9/22/2011 5 to 40 years
Houston-W. Sam Houston
   TX 402 3,602 259 402 3,861 4,263 542 1999 9/22/2011 5 to 40 years
Austin-Pond Springs Rd
   TX 1,653 4,947 409 1,653 5,356 7,009 741 1984 9/22/2011 5 to 40 years
Houston-Spring
   TX 1,474 4,500 31 1,456 4,549 6,005 678 2006 9/22/2011 5 to 40 years
Austin-Round Rock
   TX 177 3,223 143 177 3,366 3,543 493 1999 9/22/2011 5 to 40 years
Houston-Silverado Dr
   TX 1,438 4,583 128 1,438 4,711 6,149 680 2000 9/22/2011 5 to 40 years
Houston-Sugarland
   TX 272 3,236 196 272 3,432 3,704 526 2001 9/22/2011 5 to 40 years
Houston-Westheimer Rd
   TX 536 2,687 167 536 2,854 3,390 430 1997 9/22/2011 5 to 40 years
Houston-Wilcrest Dr
   TX 1,478 4,145 173 1,478 4,318 5,796 606 1999 9/22/2011 5 to 40 years
Houston-Woodlands
   TX 1,315 6,142 222 1,315 6,364 7,679 880 1997 9/22/2011 5 to 40 years
Houston-Woodlands
   TX 3,189 3,974 177 3,189 4,151 7,340 581 2000 9/22/2011 5 to 40 years
Houston-Katy Freeway
   TX 1,049 5,175 517 1,049 5,692 6,741 805 1999 9/22/2011 5 to 40 years
Houston-Webster
   TX 1,852 2,054 2,138 365 2,054 2,503 4,557 376 1982 9/22/2011 5 to 40 years
Newport News-Brick Kiln
   VA 2,848 5,892 95 2,848 5,987 8,835 861 2004 9/29/2011 5 to 40 years
Pensacola-Palafox
   FL 197 4,281 600 197 4,881 5,078 648 1996 11/15/2011 5 to 40 years
Miami
   FL 2,960 12,077 123 2,960 12,200 15,160 1,446 2005 5/16/2012 5 to 40 years
Chicago - Lake Forest
   IL 1,932 11,606 167 1,932 11,773 13,705 1,372 1996/2004 6/6/2012 5 to 40 years
Chicago - Schaumburg
   IL 1,940 4,880 292 1,940 5,172 7,112 621 1998 6/6/2012 5 to 40 years
Norfolk - E. Little Creek
   VA 911 5,862 73 911 5,935 6,846 723 2007 6/20/2012 5 to 40 years
Atlanta-14th St.
   GA 1,560 6,766 27 1,560 6,793 8,353 798 2009 7/18/2012 5 to 40 years
Jacksonville - Middleburg
   FL 644 5,719 78 644 5,797 6,441 676 2008 9/18/2012 5 to 40 years
Jacksonville - Orange Park
   FL 772 3,882 76 772 3,958 4,730 490 2007 9/18/2012 5 to 40 years
Jacksonville - St. Augustine
   FL 739 3,858 63 739 3,921 4,660 475 2007 9/18/2012 5 to 40 years
Atlanta - NE Expressway
   GA 1,384 9,266 77 1,384 9,343 10,727 1,058 2009 9/18/2012 5 to 40 years
Atlanta - Kennesaw
   GA 856 4,315 67 856 4,382 5,238 491 2008 9/18/2012 5 to 40 years
Atlanta - Lawrenceville
   GA 855 3,838 122 855 3,960 4,815 482 2007 9/18/2012 5 to 40 years
Atlanta - Woodstock
   GA 1,342 4,692 96 1,342 4,788 6,130 578 2009 9/18/2012 5 to 40 years
Raleigh-Durham
   NC 2,337 4,901 219 2,337 5,120 7,457 608 2002 9/19/2012 5 to 40 years
Chicago - Lindenhurst
   IL 1,213 3,129 207 1,213 3,336 4,549 382 1999/2006 9/27/2012 5 to 40 years
Chicago - Orland Park
   IL 1,050 5,894 160 1,050 6,054 7,104 650 2007 12/10/2012 5 to 40 years
Phoenix-83rd
   AZ 910 3,656 162 910 3,818 4,728 418 2008 12/18/2012 5 to 40 years
Chicago-North Austin
   IL 2,593 5,029 240 2,593 5,269 7,862 548 2005 12/20/2012 5 to 40 years
Chicago-North Western
   IL 1,718 6,466 643 1,798 7,029 8,827 695 2005 12/20/2012 5 to 40 years
Chicago-West Pershing
   IL 395 3,226 105 395 3,331 3,726 340 2008 12/20/2012 5 to 40 years
Chicago - North Broadway
   IL 2,373 9,869 126 2,373 9,995 12,368 1,010 2011 12/20/2012 5 to 40 years
Brandenton
   FL 1,501 3,775 186 1,501 3,961 5,462 422 1997 12/21/2012 5 to 40 years
Ft. Myers-Cleveland
   FL 515 2,280 138 515 2,418 2,933 275 1998 12/21/2012 5 to 40 years
Clearwater-Drew St.
   FL 1,234 4,018 126 1,234 4,144 5,378 458 2000 12/21/2012 5 to 40 years
Clearwater-N. Myrtle
   FL 1,555 5,978 141 1,555 6,119 7,674 654 2000 12/21/2012 5 to 40 years

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Austin-Cedar Park
   TX 1,246    5,740    155    1,246    5,895    7,141    615    2006 12/27/2012    5 to 40 years
Austin-Round Rock
   TX 774    3,327    146    774    3,473    4,247    363    2004 12/27/2012    5 to 40 years
Austin-Round Rock
   TX 632    1,985    88    632    2,073    2,705    244    2007 12/27/2012    5 to 40 years
Chicago-Aurora
   IL 269    3,126    320    269    3,446    3,715    336    2010 12/31/2012    5 to 40 years
San Antonio - Marbach
   TX 337    2,005    191    337    2,196    2,533    238    2005 2/11/2013    5 to 40 years
Long Island - Lindenhurst
   NY 2,122    8,735    517    2,122    9,252    11,374    857    2002 3/22/2013    5 to 40 years
Boston - Somerville
   MA 1,553    7,186    21    1,506    7,254    8,760    727    2008 3/22/2013    5 to 40 years
Long Island - Deer Park
   NY 1,096    8,276    89    1,096    8,365    9,461    731    2009 8/29/2013    5 to 40 years
Long Island - Amityville
   NY 2,224    10,102    46    2,224    10,148    12,372    879    2009 8/29/2013    5 to 40 years
Colorado Springs - Scarlet
   CO 629    5,201    184    629    5,385    6,014    442    2006 9/30/2013    5 to 40 years
Toms River - Route 37 W
   NJ 1,843    6,544    99    1,843    6,643    8,486    575    2007 11/26/2013    5 to 40 years
Lake Worth - S Military
   FL 868    5,306    709    868    6,015    6,883    490    2000 12/4/2013    5 to 40 years
Austin-Round Rock
   TX 1,547    5,226    153    1,547    5,379    6,926    449    2008 12/27/2013    5 to 40 years
Hartford-Bristol
   CT 1,174    8,816    81    1,174    8,897    10,071    674    2004 12/30/2013    5 to 40 years
Piscataway–New Brunswick
   NJ 1,639    10,946    83    1,639    11,029    12,668    862    2006 12/30/2013    5 to 40 years
Fort Lauderdale - 3rd Ave
   FL 7,629    11,918    199    7,629    12,117    19,746    949    1998 1/9/2014    5 to 40 years
West Palm - Mercer
   FL 15,680    17,520    504    15,680    18,024    33,704    1,437    2000 1/9/2014    5 to 40 years
Austin - Manchaca
   TX 3,999    4,297    665    3,999    4,962    8,961    409    1998/2002 1/17/2014    5 to 40 years
San Antonio
   TX 2,235    6,269    328    2,235    6,597    8,832    514    2012 2/10/2014    5 to 40 years
Portland
   ME 2,146    6,418    235    2,146    6,653    8,799    525    2000 2/11/2014    5 to 40 years
Portland-Topsham
   ME 493    5,234    98    493    5,332    5,825    411    2006 2/11/2014    5 to 40 years
Chicago - St. Charles
   IL 1,837    6,301    538    1,837    6,839    8,676    506    2004/2013 3/31/2014    5 to 40 years
Chicago - Ashland
   IL 598    4,789    178    598    4,967    5,565    355    2014 5/5/2014    5 to 40 years
San Antonio - Walzem
   TX 2,000    3,749    495    2,000    4,244    6,244    316    1997 5/13/2014    5 to 40 years
St. Louis - Woodson
   MO 2,444    5,966    1,587    2,444    7,553    9,997    549    1998 5/22/2014    5 to 40 years
St. Louis - Mexico
   MO 638    3,518    1,778    638    5,296    5,934    336    1998 5/22/2014    5 to 40 years
St. Louis - Vogel
   MO 2,010    3,544    232    2,010    3,776    5,786    303    2000 5/22/2014    5 to 40 years
St. Louis - Manchester
   MO 508    2,042    396    508    2,438    2,946    201    1996 5/22/2014    5 to 40 years
St. Louis - North Highway
   MO 1,989    4,045    567    1,989    4,612    6,601    365    1997 5/22/2014    5 to 40 years
St. Louis - Dunn
   MO 1,538    4,510    386    1,538    4,896    6,434    390    2000 5/22/2014    5 to 40 years
Trenton-Hamilton Twnship
   NJ 5,161    7,063    841    5,161    7,904    13,065    522    1980 6/5/2014    5 to 40 years
NY Metro-Fishkill
   NY 1,741    6,006    309    1,741    6,315    8,056    424    2005 6/11/2014    5 to 40 years
Atlanta-Peachtree City
   GA 2,263    4,931    440    2,263    5,371    7,634    392    2007 6/12/2014    5 to 40 years
Wayne - Willowbrook
   NJ 0    2,292    196    0    2,488    2,488    411    2000 6/12/2014    5 to 40 years
Asbury Park - 1st Ave
   NJ 819    4,734    548    819    5,282    6,101    368    2003 6/18/2014    5 to 40 years
Farmingdale - Tinton Falls
   NJ 1,097    5,618    320    1,097    5,938    7,035    425    2004 6/18/2014    5 to 40 years
Lakewood - Route 70
   NJ 626    4,549    188    626    4,737    5,363    316    2003 6/18/2014    5 to 40 years
Matawan - Highway 34
   NJ 1,512    9,707    724    1,512    10,431    11,943    668    2005 7/10/2014    5 to 40 years
St. Petersburg - Gandy
   FL 2,958    6,904    217    2,958    7,121    10,079    446    2007 8/28/2014    5 to 40 years
Chesapeake - Campostella
   VA 2,349    3,875    282    2,349    4,157    6,506    272    2000 9/5/2014    5 to 40 years
San Antonio-Castle Hills
   TX 2,658    8,190    415    4,544    6,719    11,263    424    2002 9/10/2014    5 to 40 years
Chattanooga - Broad St
   TN 759    5,608    181    759    5,789    6,548    366    2014 9/18/2014    5 to 40 years
New Orleans-Kenner
   LA 5,771    10,375    427    5,771    10,802    16,573    652    2008 10/10/2014    5 to 40 years
Orlando-Celebration
   FL 6,091    4,641    356    6,091    4,997    11,088    297    2006 10/21/2014    5 to 40 years
Austin-Cedar Park
   TX 4,196    8,374    547    4,196    8,921    13,117    510    2003 10/28/2014    5 to 40 years
Chicago - Pulaski
   IL 889    4,700    624    889    5,324    6,213    293    2014 11/14/2014    5 to 40 years
Houston - Gessner
   TX 1,599    5,813    508    1,599    6,321    7,920    343    2006 12/18/2014    5 to 40 years
New England - Danbury
   CT 9,747    18,374    80    9,747    18,454    28,201    892    1999 2/2/2015    5 to 40 years
New England - Milford
   CT 9,642    23,352    117    9,642    23,469    33,111    1,139    1999 2/2/2015    5 to 40 years
Long Island - Hicksville
   NY 5,153    27,401    158    5,153    27,559    32,712    1,392    2002 2/2/2015    5 to 40 years
Long Island - Farmingdale
   NY 4,931    20,415    94    4,931    20,509    25,440    994    2000 2/2/2015    5 to 40 years
Chicago - Alsip
   IL 2,579    4,066    84    2,579    4,150    6,729    204    1986 2/5/2015    5 to 40 years
Chicago - N. Pulaski
   IL 1,719    6,971    372    1,719    7,343    9,062    344    2015 3/9/2015    5 to 40 years
Fort Myers - Tamiami Trail
   FL 1,793    4,382    158    1,793    4,540    6,333    234    2004 4/1/2015    5 to 40 years
Dallas - Allen
   TX 3,864    4,777    224    3,864    5,001    8,865    226    2002 4/16/2015    5 to 40 years
Jacksonville - Beach Blvd.
   FL 2,118    6,501    67    2,118    6,568    8,686    312    2013 4/21/2015    5 to 40 years
Space Coast - Vero Beach
   FL 1,169    4,409    324    1,169    4,733    5,902    204    1997 5/1/2015    5 to 40 years
Port St. Lucie - Federal Hwy
   FL 4,957    6,045    201    4,957    6,246    11,203    293    2001 5/1/2015    5 to 40 years
West Palm - N. Military
   FL 3,372    4,206    134    3,372    4,340    7,712    216    1985 5/1/2015    5 to 40 years
Ft. Myers - Bonita Springs
   FL 2,687    5,012    212    2,687    5,224    7,911    250    2000 5/1/2015    5 to 40 years
Phoenix - Tatum Blvd.
   AZ 852    7,052    159    852    7,211    8,063    302    2015 6/16/2015    5 to 40 years
Boston - Lynn
   MA 2,110    8,182    79    2,110    8,261    10,371    379    2015 6/16/2015    5 to 40 years
Syracuse - Ainsely Dr.
   NY 2,711    3,795    109    2,711    3,904    6,615    171    2000 8/25/2015    5 to 40 years

			Initial Cost to Company				Cost Capitalized Subsequent to Acquisition		Gross Amount at Which Carried at Close of Period										Life on which depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Charlotte	NC			315		1,131		524		315		1,655		1,970		890	1995	9/16/1996	5 to 40 years
Orlando	FL			314		1,113		1,417		314		2,530		2,844		1,223	1975	10/30/1996	5 to 40 years
Rochester	NY			704		2,496		2,975		707		5,468		6,175		2,118	1990	12/20/1996	5 to 40 years
Youngstown	OH			600		2,142		2,773		693		4,822		5,515		1,874	1988	1/10/1997	5 to 40 years
Cleveland	OH			751		2,676		4,465		751		7,141		7,892		2,578	1986	1/10/1997	5 to 40 years
Cleveland	OH			725		2,586		2,524		725		5,110		5,835		2,268	1978	1/10/1997	5 to 40 years
Cleveland	OH			637		2,918		2,082		701		4,936		5,637		2,765	1979	1/10/1997	5 to 40 years
Cleveland	OH			495		1,781		4,140		495		5,921		6,416		1,571	1979/17	1/10/1997	5 to 40 years
Cleveland	OH			761		2,714		1,829		761		4,543		5,304		2,315	1977	1/10/1997	5 to 40 years
Cleveland	OH			418		1,921		2,944		418		4,865		5,283		2,071	1970	1/10/1997	5 to 40 years
Cleveland	OH			606		2,164		1,533		606		3,697		4,303		1,691	1982	1/10/1997	5 to 40 years
San Antonio	TX			474		1,686		814		504		2,470		2,974		1,119	1981	1/30/1997	5 to 40 years
San Antonio	TX			346		1,236		652		346		1,888		2,234		918	1985	1/30/1997	5 to 40 years
San Antonio	TX			432		1,560		2,134		432		3,694		4,126		1,739	1995	1/30/1997	5 to 40 years
Houston-Beaumont	TX			634		2,565		4,625		634		7,190		7,824		2,081	1993/95/16	3/26/1997	5 to 40 years
Houston-Beaumont	TX			566		2,279		577		566		2,856		3,422		1,423	1995	3/26/1997	5 to 40 years
Houston-Beaumont	TX			293		1,357		702		293		2,059		2,352		960	1995	3/26/1997	5 to 40 years
Chesapeake	VA			260		1,043		4,760		260		5,803		6,063		1,650	1988/95	3/31/1997	5 to 40 years
Orlando-W 25th St	FL			289		1,160		2,486		616		3,319		3,935		1,024	1984	3/31/1997	5 to 40 years
Delray	FL			491		1,756		805		491		2,561		3,052		1,371	1969	4/11/1997	5 to 40 years
Savannah	GA			296		1,196		586		296		1,782		2,078		912	1988	5/8/1997	5 to 40 years
Delray	FL			921		3,282		940		921		4,222		5,143		2,118	1980	5/21/1997	5 to 40 years
Cleveland-Avon	OH			301		1,214		2,344		304		3,555		3,859		1,534	1989	6/4/1997	5 to 40 years
Dallas-Fort Worth	TX			965		3,864		1,773		943		5,659		6,602		2,806	1977	6/30/1997	5 to 40 years
Atlanta-Alpharetta	GA			1,033		3,753		797		1,033		4,550		5,583		2,303	1994	7/24/1997	5 to 40 years
Atlanta-Marietta	GA			769		2,788		724		825		3,456		4,281		1,733	1996	7/24/1997	5 to 40 years
Atlanta-Doraville	GA			735		3,429		517		735		3,946		4,681		2,039	1995	8/21/1997	5 to 40 years
Greensboro-Hilltop	NC			268		1,097		911		231		2,045		2,276		863	1995	9/25/1997	5 to 40 years
Greensboro-StgCch	NC			89		376		1,947		89		2,323		2,412		988	1997	9/25/1997	5 to 40 years
Baton Rouge-Airline	LA			396		1,831		1,234		421		3,040		3,461		1,425	1982	10/9/1997	5 to 40 years
Baton Rouge-Airline2	LA			282		1,303		564		282		1,867		2,149		923	1985	11/21/1997	5 to 40 years
Harrisburg-Peiffers	PA			635		2,550		777		637		3,325		3,962		1,680	1984	12/3/1997	5 to 40 years
Tampa-E. Hillsborough	FL			709		3,235		1,030		709		4,265		4,974		2,145	1985	2/4/1998	5 to 40 years
NY Metro-Middletown	NY			843		3,394		1,113		843		4,507		5,350		2,168	1989/95	2/4/1998	5 to 40 years
Chesapeake-Military	VA			542		2,210		542		542		2,752		3,294		1,370	1996	2/5/1998	5 to 40 years
Chesapeake-Volvo	VA			620		2,532		1,561		620		4,093		4,713		1,839	1995	2/5/1998	5 to 40 years
Virginia Beach-Shell	VA			540		2,211		569		540		2,780		3,320		1,370	1991	2/5/1998	5 to 40 years
Norfolk-Naval Base	VA			1,243		5,019		1,039		1,243		6,058		7,301		2,993	1975	2/5/1998	5 to 40 years
Boston-Northbridge	MA			441		1,788		1,203		694		2,738		3,432		895	1988	2/9/1998	5 to 40 years
Greensboro-High Point	NC			397		1,834		1,109		397		2,943		3,340		1,313	1993	2/10/1998	5 to 40 years
Titusville	FL			492		1,990		1,282		688		3,076		3,764		1,047	1986/90	2/25/1998	5 to 40 years
Boston-Salem	MA			733		2,941		2,000		733		4,941		5,674		2,308	1979	3/3/1998	5 to 40 years
Providence	RI			702		2,821		4,269		702		7,090		7,792		2,310	1984/88	3/26/1998	5 to 40 years
Chattanooga-Lee Hwy	TN			384		1,371		652		384		2,023		2,407		1,063	1987	3/27/1998	5 to 40 years
Chattanooga-Hwy 58	TN			296		1,198		2,333		414		3,413		3,827		1,354	1985	3/27/1998	5 to 40 years
Ft. Oglethorpe	GA			349		1,250		1,871		464		3,006		3,470		1,137	1989	3/27/1998	5 to 40 years

Life Storage, Inc.

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Syracuse - Cicero
   NY 668    1,957    80    668    2,037    2,705    82    2002 8/25/2015    5 to 40 years
Syracuse - Camillus
   NY 473    5,368    85    473    5,453    5,926    210    2005/2011 8/25/2015    5 to 40 years
Syracuse - Manlius
   NY 834    1,705    45    834    1,750    2,584    64    2000 8/25/2015    5 to 40 years
Charlotte - Brookshire Blvd.
   NC 718    2,977    805    718    3,782    4,500    150    2000 9/1/2015    5 to 40 years
Charleston III
   SC 7,604    9,086    169    7,604    9,255    16,859    322    2005 9/1/2015    5 to 40 years
Myrtle Beach II
   SC 2,511    6,147    219    2,511    6,366    8,877    253    1999 9/1/2015    5 to 40 years
Columbia VI
   SC 3,640    3,452    64    3,640    3,516    7,156    153    2004/2008 9/1/2015    5 to 40 years
Hilton Head - Bluffton
   SC 3,084    3,192    89    3,084    3,281    6,365    127    1998 9/1/2015    5 to 40 years
Philadelphia - Eagleville
   PA 1,926    4,498    97    1,926    4,595    6,521    150    2010 12/30/2015    5 to 40 years
Orlando - University
   FL 882    5,756    241    882    5,997    6,879    150    2001 1/6/2016    5 to 40 years
Orlando - N. Powers
   FL 2,567    2,838    51    2,567    2,889    5,456    77    1997 1/6/2016    5 to 40 years
Sarasota - North Port
   FL 4,884    10,014    109    4,884    10,123    15,007    116    2001/2006 1/6/2016    5 to 40 years
Los Angeles – Commercial
   CA 6,512    12,352    327    6,512    12,679    19,191    319    2004 1/21/2016    5 to 40 years
Los Angeles - E. Slauson
   CA 3,998    13,547    220    3,998    13,767    17,765    323    2012 1/21/2016    5 to 40 years
Los Angeles - Westminster
   CA 4,636    14,826    107    4,636    14,933    19,569    347    2006 1/21/2016    5 to 40 years
Los Angeles - Calabasas
   CA 13,274    10,419    333    13,274    10,752    24,026    267    2004/2014 1/21/2016    5 to 40 years
Portsmouth - Kingston
   NH 1,713    2,709    29    1,713    2,738    4,451    67    2003 1/21/2016    5 to 40 years
Portsmouth - Danville
   NH 1,615    3,333    36    1,615    3,369    4,984    95    2003 1/21/2016    5 to 40 years
Portsmouth - Hampton Falls
   NH 2,445    6,295    23    2,445    6,318    8,763    160    2005 1/21/2016    5 to 40 years
Portsmouth - Lee
   NH 3,078    2,861    38    3,078    2,899    5,977    70    2000 1/21/2016    5 to 40 years
Portsmouth - Heritage
   NH 4,430    26,040    46    4,430    26,086    30,516    606    1985/1999 1/21/2016    5 to 40 years
Boston - Salisbury
   MA 4,880    6,342    71    4,880    6,413    11,293    182    2003 1/21/2016    5 to 40 years
Dallas - Frisco
   TX 6,191    5,088    140    6,191    5,228    11,419    128    2003 1/21/2016    5 to 40 years
Dallas - McKinney
   TX 8,097    7,047    62    8,097    7,109    15,206    174    2003 1/21/2016    5 to 40 years
Dallas - McKinney
   TX 5,508    6,462    61    5,508    6,523    12,031    156    2002 1/21/2016    5 to 40 years
Phoenix - 48th
   AZ 988    8,224    40    988    8,264    9,252    201    2015 2/1/2016    5 to 40 years
Miami
   FL 2,294    8,980    131    2,294    9,111    11,405    222    2016 2/12/2016    5 to 40 years
Philadelphia - Glenolden
   PA 1,768    3,879    78    1,768    3,957    5,725    98    1970 2/17/2016    5 to 40 years
Denver - Thornton
   CO 4,528    7,915    85    4,528    8,000    12,528    175    2011 2/29/2016    5 to 40 years
Los Angeles - Costa Mesa
   CA 17,976    25,145    372    17,976    25,517    43,493    491    2005 3/16/2016    5 to 40 years
Los Angeles - Irving
   CA 0    6,318    211    0    6,529    6,529    264    1985 3/16/2016    5 to 40 years
Los Angeles - Durante
   CA 4,671    13,908    80    4,671    13,988    18,659    269    2015 3/16/2016    5 to 40 years
Los Angeles - Wildomar
   CA 6,728    10,340    186    6,728    10,526    17,254    210    2005 3/17/2016    5 to 40 years
Los Angeles - Torrance
   CA 17,445    18,839    402    17,445    19,241    36,686    370    2003 4/11/2016    5 to 40 years
New Haven - Wallingford
   CT 3,618    5,286    181    3,618    5,467    9,085    104    2000 4/14/2016    5 to 40 years
New Haven - Waterbury
   CT 2,524    5,618    74    2,524    5,692    8,216    109    2001 4/14/2016    5 to 40 years
New York - Mahopac
   NY 4,207    2,373    5,089    161    2,373    5,250    7,623    87    1991/1944 4/26/2016    5 to 40 years
New York - Mount Vernon
   NY 3,337    13,112    75    3,337    13,187    16,524    226    2013 4/26/2016    5 to 40 years
Pt. St. Lucie
   FL 4,002    4,140    7,176    232    4,140    7,408    11,548    161    2002 5/2/2016    5 to 40 years
Dallas - Lewisville
   TX 2,333    8,302    122    2,333    8,424    10,757    149    2007 5/5/2016    5 to 40 years
Buffalo - Cayuga
   NY 499    5,198    106    499    5,304    5,803    80    2006 5/19/2016    5 to 40 years
Buffalo - Lackawanna
   NY 215    2,323    240    215    2,563    2,778    38    2006 5/19/2016    5 to 40 years
Austin - S. Congress
   TX 1,030    8,163    83    1,030    8,246    9,276    106    1984 7/15/2016    5 to 40 years
Austin - W Braker
   TX 1,210    14,833    53    1,210    14,886    16,096    189    2003 7/15/2016    5 to 40 years
Austin - Highway 290
   TX 930    12,269    46    930    12,315    13,245    159    1999 7/15/2016    5 to 40 years
Austin - Killeen
   TX 3,070    20,782    111    3,070    20,893    23,963    282    2005 7/15/2016    5 to 40 years
Austin - Round Rock
   TX 830    6,129    44    830    6,173    7,003    80    1986 7/15/2016    5 to 40 years
Austin - Georgetown
   TX 1,530    10,647    54    1,530    10,701    12,231    145    2001/2015 7/15/2016    5 to 40 years
Austin - Pflugerville
   TX 750    9,238    49    750    9,287    10,037    120    2005 7/15/2016    5 to 40 years
Chicago - Algonquin
   IL 1,430    14,958    26    1,430    14,984    16,414    193    2006 7/15/2016    5 to 40 years
Chicago - Carpentersville
   IL 350    4,710    14    350    4,724    5,074    61    2004 7/15/2016    5 to 40 years
Chicago - W. Addison
   IL 2,770    25,112    85    2,770    25,197    27,967    319    2007 7/15/2016    5 to 40 years
Chicago - State St.
   IL 1,190    19,159    40    1,190    19,199    20,389    241    2009 7/15/2016    5 to 40 years
Chicago-W. Grand
   IL 1,720    10,628    58    1,720    10,686    12,406    134    2007 7/15/2016    5 to 40 years
Chicago - Libertyville
   IL 3,670    26,660    126    3,670    26,786    30,456    338    2009 7/15/2016    5 to 40 years
Chicago - Aurora
   IL 1,090    20,033    49    1,090    20,082    21,172    257    2009 7/15/2016    5 to 40 years
Chicago - Morton Grove
   IL 1,610    14,914    40    1,610    14,954    16,564    189    2009 7/15/2016    5 to 40 years
Chicago - Bridgeview
   IL 3,770    19,990    74    3,770    20,064    23,834    262    2008 7/15/2016    5 to 40 years
Chicago - Addison
   IL 1,340    11,881    33    1,340    11,914    13,254    153    2008 7/15/2016    5 to 40 years
Chicago - W Diversey
   IL 1,670    10,811    24    1,670    10,835    12,505    136    2010 7/15/2016    5 to 40 years
Chicago - Elmhurst
   IL 670    18,729    20    670    18,749    19,419    236    2008 7/15/2016    5 to 40 years
Chicago - Elgin
   IL 1,130    12,584    71    1,130    12,655    13,785    162    2003 7/15/2016    5 to 40 years
Chicago - N. Paulina St.,
   IL 5,600    12,721    24    5,600    12,745    18,345    162    2006 7/15/2016    5 to 40 years
Schedule III

   Initial Cost to Company Cost
Capitalized
Subsequent
to
Acquisition Gross Amount at Which
Carried at Close of Period Life on
which
depreciation
   Encum Building,
Equipment
and Building,
Equipment
and Building,
Equipment
and Accum. Date of Date in latest
income
statement
Description
   ST brance Land Impvmts. Impvmts. Land Impvmts. Total Deprec. Const. Acquired is completed
Chicago - Matteson
   IL 1,590 12,053 32 1,590 12,085 13,675 161 2007 7/15/2016 5 to 40 years
Chicago - S. Heights
   IL 1,050 4,960 45 1,050 5,005 6,055 68 2006 7/15/2016 5 to 40 years
Chicago - W. Grand
   IL 1,780 8,928 80 1,780 9,008 10,788 113 2007 7/15/2016 5 to 40 years
Chicago - W 30th St
   IL 600 15,574 47 600 15,621 16,221 197 2008 7/15/2016 5 to 40 years
Chicago - Mokena
   IL 3,230 18,623 195 3,230 18,818 22,048 243 2008 7/15/2016 5 to 40 years
Chicago - Barrington
   IL 1,890 9,395 65 1,890 9,460 11,350 123 2015 7/15/2016 5 to 40 years
Chicago - Naperville
   IL 2,620 11,933 62 2,620 11,995 14,615 160 2015 7/15/2016 5 to 40 years
Chicago - Forest Park
   IL 1,100 10,087 35 1,100 10,122 11,222 130 2015 7/15/2016 5 to 40 years
Chicago - La Grange
   IL 960 13,019 28 960 13,047 14,007 167 2015 7/15/2016 5 to 40 years
Chicago - Glenview
   IL 3,210 8,519 35 3,210 8,554 11,764 114 2014/2015 7/15/2016 5 to 40 years
Dallas - Richardson
   TX 630 10,282 43 630 10,325 10,955 136 2001 7/15/2016 5 to 40 years
Dallas - Arlington
   TX 790 12,785 44 790 12,829 13,619 164 2007 7/15/2016 5 to 40 years
Dallas - Plano
   TX 1,370 10,166 34 1,370 10,200 11,570 130 1998 7/15/2016 5 to 40 years
Dallas - Mesquite
   TX 620 8,771 32 620 8,803 9,423 113 2016 7/15/2016 5 to 40 years
Dallas - S Good Latimer
   TX 4,030 8,029 64 4,030 8,093 12,123 104 2016 7/15/2016 5 to 40 years
Boulder - Arapahoe
   CO 3,690 12,074 28 3,690 12,102 15,792 158 1992 7/15/2016 5 to 40 years
Boulder - Odell
   CO 2,650 15,304 30 2,650 15,334 17,984 201 1998 7/15/2016 5 to 40 years
Boulder - Arapahoe
   CO 11,540 15,571 34 11,540 15,605 27,145 204 1984 7/15/2016 5 to 40 years
Boulder - Broadway
   CO 2,670 5,623 42 2,670 5,665 8,335 75 1992 7/15/2016 5 to 40 years
Houston - Westpark
   TX 2,760 8,288 96 2,760 8,384 11,144 110 1996 7/15/2016 5 to 40 years
Houston - C. Jester
   TX 8,080 10,114 96 8,080 10,210 18,290 132 2008 7/15/2016 5 to 40 years
Houston - Bay Pointe
   TX 1,960 9,585 65 1,960 9,650 11,610 125 1972 7/15/2016 5 to 40 years
Houston - FM 529
   TX 680 3,951 48 680 3,999 4,679 53 2005 7/15/2016 5 to 40 years
Houston - Jones
   TX 1,260 2,382 44 1,260 2,426 3,686 35 1994 7/15/2016 5 to 40 years
Jackson - Flowood
   MS 680 20,066 36 680 20,102 20,782 260 2000 7/15/2016 5 to 40 years
Las Vegas - Spencer
   NV 1,020 25,152 16 1,020 25,168 26,188 320 2000 7/15/2016 5 to 40 years
Las Vegas - Maule
   NV 2,510 11,822 15 2,510 11,837 14,347 151 2005 7/15/2016 5 to 40 years
Las Vegas - Wigwam
   NV 590 16,838 3 590 16,841 17,431 212 2008 7/15/2016 5 to 40 years
Las Vegas - Stufflebeam
   NV 350 6,977 86 350 7,063 7,413 91 1996 7/15/2016 5 to 40 years
Las Vegas - Ft. Apache
   NV 1,470 11,047 15 1,470 11,062 12,532 144 2004 7/15/2016 5 to 40 years
Las Vegas - North
   NV 390 7,042 20 390 7,062 7,452 91 2005 7/15/2016 5 to 40 years
Las Vegas - Warm Springs
   NV 1,340 5,141 51 1,340 5,192 6,532 83 2004 7/15/2016 5 to 40 years
Las Vegas - Conestoga
   NV 1,420 10,295 21 1,420 10,316 11,736 138 2007 7/15/2016 5 to 40 years
Las Vegas - Warm Springs
   NV 1,080 16,436 15 1,080 16,451 17,531 209 2007 7/15/2016 5 to 40 years
Las Vegas - Nellis
   NV 790 5,233 7 790 5,240 6,030 73 1995 7/15/2016 5 to 40 years
Las Vegas - Cheyenne
   NV 1,470 17,366 17 1,470 17,383 18,853 231 2004 7/15/2016 5 to 40 years
Las Vegas - Dean Martin
   NV 3,050 23,333 6 3,050 23,339 26,389 327 2005 7/15/2016 5 to 40 years
Las Vegas - Flamingo
   NV 980 13,451 23 980 13,474 14,454 171 2007 7/15/2016 5 to 40 years
Las Vegas - North
   NV 330 15,651 19 330 15,670 16,000 199 2007 7/15/2016 5 to 40 years
Las Vegas - Henderson
   NV 570 12,676 37 570 12,713 13,283 167 2005 7/15/2016 5 to 40 years
Las Vegas - North
   NV 520 10,105 6 520 10,111 10,631 132 2002 7/15/2016 5 to 40 years
Las Vegas - Farm
   NV 1,510 9,388 13 1,510 9,401 10,911 121 2008 7/15/2016 5 to 40 years
Los Angeles - Torrance
   CA 5,250 32,363 61 5,250 32,424 37,674 412 2004 7/15/2016 5 to 40 years
Los Angeles - Irvine
   CA 2,520 18,402 134 2,520 18,536 21,056 234 2002 7/15/2016 5 to 40 years
Los Angeles - Palm Desert
   CA 2,660 16,589 69 2,660 16,658 19,318 216 2002 7/15/2016 5 to 40 years
Milwaukee - Green Bay
   WI 750 14,720 3 750 14,723 15,473 189 2005 7/15/2016 5 to 40 years
Orlando - Winter Garden
   FL 640 6,688 38 640 6,726 7,366 87 2006 7/15/2016 5 to 40 years
Orlando - Longwood
   FL 1,230 9,586 27 1,230 9,613 10,843 123 2000 7/15/2016 5 to 40 years
Orlando - Overland
   FL 1,080 3,713 29 1,080 3,742 4,822 49 2000 7/15/2016 5 to 40 years
Sacramento - Calvine
   CA 2,280 17,069 20 2,280 17,089 19,369 220 2004 7/15/2016 5 to 40 years
Sacramento - Folsom
   CA 1,200 22,150 16 1,200 22,166 23,366 279 2005 7/15/2016 5 to 40 years
Sacramento - Pell
   CA 540 8,874 12 540 8,886 9,426 115 2004 7/15/2016 5 to 40 years
Sacramento - Goldenland
   CA 2,010 8,944 10 2,010 8,954 10,964 122 2005 7/15/2016 5 to 40 years
Sacramento - Woodland
   CA 860 10,569 18 860 10,587 11,447 135 2003 7/15/2016 5 to 40 years
Sacramento - El Camino
   CA 1,450 12,239 7 1,450 12,246 13,696 158 2002 7/15/2016 5 to 40 years
Sacramento - Bayou
   CA 1,640 21,603 10 1,640 21,613 23,253 277 2005 7/15/2016 5 to 40 years
Sacramento - Calvine
   CA 2,120 24,650 7 2,120 24,657 26,777 318 2003 7/15/2016 5 to 40 years
Sacramento - El Dorado
   CA 1,610 24,829 13 1,610 24,842 26,452 319 2007 7/15/2016 5 to 40 years
Sacramento - Fruitridge
   CA 1,480 15,695 126 1,480 15,821 17,301 207 2007 7/15/2016 5 to 40 years
Salt Lake City - W. Jordan
   UT 780 12,301 -88 780 12,213 12,993 154 2007 7/15/2016 5 to 40 years
San Antonio - US 281
   TX 1,380 8,457 57 1,380 8,514 9,894 108 2003 7/15/2016 5 to 40 years
Austin - San Marcos
   TX 990 7,323 48 990 7,371 8,361 96 2016 7/15/2016 5 to 40 years
Charleston
   SC 920 7,700 25 920 7,725 8,645 87 2016 7/29/2016 5 to 40 years

							Cost
							Capitalized
							Subsequent													Life on
							to			Gross Amount at Which										which
			Initial Cost to Company				Acquisition			Carried at Close of Period										depreciation
					Building,		Building,					Building,								in latest
					Equipment		Equipment					Equipment								income
New		Encum			and		and					and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.			Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Birmingham-Walt	AL			544		1,942		1,335			544		3,277		3,821		1,635	1984	3/27/1998	5 to 40 years
Salem-Policy	NH			742		2,977		655			742		3,632		4,374		1,766	1980	4/7/1998	5 to 40 years
Raleigh-Durham	NC			775		3,103		973			775		4,076		4,851		1,978	1988/91	4/9/1998	5 to 40 years
Raleigh-Durham	NC			940		3,763		1,087			940		4,850		5,790		2,353	1990/96	4/9/1998	5 to 40 years
Youngstown-Warren	OH			522		1,864		1,414			569		3,231		3,800		1,543	1986	4/22/1998	5 to 40 years
Youngstown-Warren	OH			512		1,829		2,831			633		4,539		5,172		1,662	1986/16	4/22/1998	5 to 40 years
Jackson	MS			744		3,021		280			744		3,301		4,045		1,632	1995	5/13/1998	5 to 40 years
Houston-Katy	TX			419		1,524		4,101			419		5,625		6,044		1,759	1994	5/20/1998	5 to 40 years
Melbourne	FL			662		2,654		3,705			662		6,359		7,021		1,687	1985/07/15	6/2/1998	5 to 40 years
Vero Beach	FL			489		1,813		1,783			584		3,501		4,085		1,186	1997	6/12/1998	5 to 40 years
Houston-Humble	TX			447		1,790		2,588			740		4,085		4,825		1,631	1986	6/16/1998	5 to 40 years
Houston-Webster	TX			635		2,302		634			635		2,936		3,571		1,284	1997	6/19/1998	5 to 40 years
Dallas-Fort Worth	TX			548		1,988		442			548		2,430		2,978		1,163	1997	6/19/1998	5 to 40 years
San Marcos	TX			324		1,493		2,233			324		3,726		4,050		1,451	1994	6/30/1998	5 to 40 years
Austin-McNeil	TX			492		1,995		2,646			510		4,623		5,133		1,633	1994	6/30/1998	5 to 40 years
Austin-FM	TX			484		1,951		1,044			481		2,998		3,479		1,269	1996	6/30/1998	5 to 40 years
Hollywood-Sheridan	FL			1,208		4,854		701			1,208		5,555		6,763		2,744	1988	7/1/1998	5 to 40 years
Pompano Beach-Atlantic	FL			944		3,803		876			944		4,679		5,623		2,277	1985	7/1/1998	5 to 40 years
Pompano Beach-Sample	FL			903		3,643		650			903		4,293		5,196		2,075	1988	7/1/1998	5 to 40 years
Boca Raton-18th St	FL			1,503		6,059		(1,767	)		851		4,944		5,795		2,414	1991	7/1/1998	5 to 40 years
Hollywood-N.21st	FL			840		3,373		651			840		4,024		4,864		2,003	1987	8/3/1998	5 to 40 years
Dallas-Fort Worth	TX			550		1,998		872			550		2,870		3,420		1,276	1996	9/29/1998	5 to 40 years
Dallas-Fort Worth	TX			670		2,407		1,865			670		4,272		4,942		1,813	1996	10/9/1998	5 to 40 years
Cincinnati-Batavia	OH			390		1,570		1,462			390		3,032		3,422		1,205	1988	11/19/1998	5 to 40 years
Jackson-N.West	MS			460		1,642		797			460		2,439		2,899		1,191	1984	12/1/1998	5 to 40 years
Houston-Katy	TX			507		2,058		1,843			507		3,901		4,408		1,564	1993	12/15/1998	5 to 40 years
Providence	RI			447		1,776		1,041			447		2,817		3,264		1,320	1986/94	2/2/1999	5 to 40 years
Lafayette-Pinhook 1	LA			556		1,951		1,465			556		3,416		3,972		1,674	1980	2/17/1999	5 to 40 years
Lafayette-Pinhook2	LA			708		2,860		1,331			708		4,191		4,899		1,675	1992/94	2/17/1999	5 to 40 years
Lafayette-Ambassador	LA			314		1,095		(1,091	)		314		4		318		97	1975	2/17/1999	5 to 40 years
Lafayette-Evangeline	LA			188		652		1,671			188		2,323		2,511		1,078	1977	2/17/1999	5 to 40 years
Lafayette-Guilbeau	LA			963		3,896		1,192			963		5,088		6,051		2,218	1994	2/17/1999	5 to 40 years
Phoenix-Gilbert	AZ			651		2,600		1,339			772		3,818		4,590		1,688	1995	5/18/1999	5 to 40 years
Phoenix-Glendale	AZ			565		2,596		783			565		3,379		3,944		1,571	1997	5/18/1999	5 to 40 years
Phoenix-Mesa	AZ			330		1,309		2,606			733		3,512		4,245		1,262	1986	5/18/1999	5 to 40 years
Phoenix-Mesa	AZ			339		1,346		816			339		2,162		2,501		940	1986	5/18/1999	5 to 40 years
Phoenix-Mesa	AZ			291		1,026		1,160			291		2,186		2,477		881	1976	5/18/1999	5 to 40 years
Phoenix-Mesa	AZ			354		1,405		723			354		2,128		2,482		948	1986	5/18/1999	5 to 40 years
Phoenix-Camelback	AZ			453		1,610		1,101			453		2,711		3,164		1,281	1984	5/18/1999	5 to 40 years
Phoenix-Bell	AZ			872		3,476		3,659			872		7,135		8,007		2,538	1984	5/18/1999	5 to 40 years
Phoenix-35th Ave	AZ			849		3,401		972			849		4,373		5,222		2,060	1996	5/21/1999	5 to 40 years
Portland	ME			410		1,626		2,031			410		3,657		4,067		1,517	1988	8/2/1999	5 to 40 years
Space Coast-Cocoa	FL			667		2,373		1,009			667		3,382		4,049		1,564	1982	9/29/1999	5 to 40 years
Dallas-Fort Worth	TX			335		1,521		946			335		2,467		2,802		987	1985	11/9/1999	5 to 40 years
NY Metro-Middletown	NY			276		1,312		1,333			276		2,645		2,921		1,076	1998	2/2/2000	5 to 40 years
Boston-N. Andover	MA			633		2,573		1,083			633		3,656		4,289		1,543	1989	2/15/2000	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent												Life on
							to		Gross Amount at Which										which
			Initial Cost to Company				Acquisition		Carried at Close of Period										depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Houston-Seabrook	TX			633		2,617		572		633		3,189		3,822		1,435	1996	3/1/2000	5 to 40 years
Ft. Lauderdale	FL			384		1,422		874		384		2,296		2,680		949	1994	5/2/2000	5 to 40 years
Birmingham-Bessemer	AL			254		1,059		2,165		332		3,146		3,478		990	1998	11/15/2000	5 to 40 years
NY Metro-Brewster	NY			1,716		6,920		1,805		1,981		8,460		10,441		2,358	1991/97	12/27/2000	5 to 40 years
Austin-Lamar	TX			837		2,977		3,643		966		6,491		7,457		1,450	1996/99	2/22/2001	5 to 40 years
Houston	TX			733		3,392		1,360		841		4,644		5,485		1,432	1993/97	3/2/2001	5 to 40 years
Ft.Myers	FL			787		3,249		762		902		3,896		4,798		1,339	1997	3/13/2001	5 to 40 years
Boston-Dracut	MA			1,035		3,737		772		1,104		4,440		5,544		1,821	1986	12/1/2001	5 to 40 years
Boston-Methuen	MA			1,024		3,649		849		1,091		4,431		5,522		1,770	1984	12/1/2001	5 to 40 years
Columbia	SC			883		3,139		1,496		942		4,576		5,518		1,726	1985	12/1/2001	5 to 40 years
Myrtle Beach	SC			552		1,970		1,181		589		3,114		3,703		1,258	1984	12/1/2001	5 to 40 years
Maine-Saco	ME			534		1,914		997		938		2,507		3,445		967	1988	12/3/2001	5 to 40 years
Boston-Plymouth	MA			1,004		4,584		2,401		1,004		6,985		7,989		2,465	1996	12/19/2001	5 to 40 years
Boston-Sandwich	MA			670		3,060		631		714		3,647		4,361		1,448	1984	12/19/2001	5 to 40 years
Syracuse	NY			294		1,203		1,217		327		2,387		2,714		819	1987	2/5/2002	5 to 40 years
Dallas-Fort Worth	TX			734		2,956		967		784		3,873		4,657		1,480	1984	2/13/2002	5 to 40 years
Dallas-Fort Worth	TX			394		1,595		562		421		2,130		2,551		823	1985	2/13/2002	5 to 40 years
San Antonio-Hunt	TX			381		1,545		6,688		618		7,996		8,614		1,369	1980/17	2/13/2002	5 to 40 years
Houston-Humble	TX			919		3,696		724		919		4,420		5,339		1,682	1998/02	6/19/2002	5 to 40 years
Houston-Pasadena	TX			612		2,468		478		612		2,946		3,558		1,136	1999	6/19/2002	5 to 40 years
Houston-League City	TX			689		3,159		824		688		3,984		4,672		1,444	1994/97	6/19/2002	5 to 40 years
Houston-Montgomery	TX			817		3,286		2,231		1,119		5,215		6,334		1,838	1998	6/19/2002	5 to 40 years
Houston-S. Hwy 6	TX			407		1,650		856		407		2,506		2,913		793	1997	6/19/2002	5 to 40 years
Houston-Beaumont	TX			817		3,287		3,517		817		6,804		7,621		1,495	1996/17	6/19/2002	5 to 40 years
The Hamptons	NY			2,207		8,866		914		2,207		9,780		11,987		3,718	1989/95	12/16/2002	5 to 40 years
The Hamptons	NY			1,131		4,564		629		1,131		5,193		6,324		1,953	1998	12/16/2002	5 to 40 years
The Hamptons	NY			635		2,918		442		635		3,360		3,995		1,270	1997	12/16/2002	5 to 40 years
The Hamptons	NY			1,251		5,744		789		1,252		6,532		7,784		2,361	1994/98	12/16/2002	5 to 40 years
Dallas-Fort Worth	TX			1,039		4,201		349		1,039		4,550		5,589		1,643	1995/99	8/26/2003	5 to 40 years
Dallas-Fort Worth	TX			827		3,776		551		827		4,327		5,154		1,537	1998/01	10/1/2003	5 to 40 years
Stamford	CT			2,713		11,013		764		2,713		11,777		14,490		4,200	1998	3/17/2004	5 to 40 years
Houston-Tomball	TX			773		3,170		1,876		773		5,046		5,819		1,727	2000	5/19/2004	5 to 40 years
Houston-Conroe	TX			1,195		4,877		463		1,195		5,340		6,535		1,817	2001	5/19/2004	5 to 40 years
Houston-Spring	TX			1,103		4,550		529		1,103		5,079		6,182		1,832	2001	5/19/2004	5 to 40 years
Houston-Bissonnet	TX			1,061		4,427		2,920		1,061		7,347		8,408		2,382	2003	5/19/2004	5 to 40 years
Houston-Alvin	TX			388		1,640		1,052		388		2,692		3,080		883	2003	5/19/2004	5 to 40 years
Clearwater	FL			1,720		6,986		323		1,720		7,309		9,029		2,563	2001	6/3/2004	5 to 40 years
Houston-Missouri City	TX			1,167		4,744		3,620		1,566		7,965		9,531		2,379	1998	6/23/2004	5 to 40 years
Chattanooga-Hixson	TN			1,365		5,569		1,882		1,365		7,451		8,816		2,519	1998/02	8/4/2004	5 to 40 years
Austin-Round Rock	TX			2,047		5,857		951		1,976		6,879		8,855		2,366	2000	8/5/2004	5 to 40 years
Long Island-Bayshore	NY			1,131		4,609		284		1,131		4,893		6,024		1,584	2003	3/15/2005	5 to 40 years
Syracuse - Cicero	NY			527		2,121		3,309		527		5,430		5,957		1,133	1988/02/16	3/16/2005	5 to 40 years
Boston-Springfield	MA			612		2,501		646		612		3,147		3,759		934	1965/75	4/12/2005	5 to 40 years
Stamford	CT			1,612		6,585		408		1,612		6,993		8,605		2,324	2002	4/14/2005	5 to 40 years
Montgomery-Richard	AL			1,906		7,726		499		1,906		8,225		10,131		2,646	1997	6/1/2005	5 to 40 years
Houston-Jones	TX			1,214		4,949		372		1,215		5,320		6,535		1,747	1997/99	6/6/2005	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent												Life on
							to		Gross Amount at Which										which
			Initial Cost to Company				Acquisition		Carried at Close of Period										depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Boston-Oxford	MA			470		1,902		1,521		470		3,423		3,893		1,046	2002	6/23/2005	5 to 40 years
Austin-290E	TX			537		2,183		6,061		491		8,290		8,781		744	2003/17	7/12/2005	5 to 40 years
San Antonio-Marbach	TX			556		2,265		591		556		2,856		3,412		959	2003	7/12/2005	5 to 40 years
Austin-South 1st	TX			754		3,065		330		754		3,395		4,149		1,114	2003	7/12/2005	5 to 40 years
Houston-Pinehurst	TX			484		1,977		1,565		484		3,542		4,026		1,056	2002/04	7/12/2005	5 to 40 years
Atlanta-Marietta	GA			811		3,397		578		811		3,975		4,786		1,297	2003	9/15/2005	5 to 40 years
Baton Rouge	LA			719		2,927		2,669		719		5,596		6,315		1,392	1984/94	11/15/2005	5 to 40 years
San Marcos-Hwy 35S	TX			628		2,532		3,431		982		5,609		6,591		922	2001/16	1/10/2006	5 to 40 years
Houston-Baytown	TX			596		2,411		329		596		2,740		3,336		814	2002	1/10/2006	5 to 40 years
Houston-Cypress	TX			721		2,994		2,340		721		5,334		6,055		1,455	2003	1/13/2006	5 to 40 years
Rochester	NY			937		3,779		230		937		4,009		4,946		1,246	2002/06	2/1/2006	5 to 40 years
Houston-Jones Rd 2	TX			707		2,933		2,884		707		5,817		6,524		1,666	2000	3/9/2006	5 to 40 years
Lafayette	LA			411		1,621		270		411		1,891		2,302		608	1997	4/13/2006	5 to 40 years
Lafayette	LA			463		1,831		198		463		2,029		2,492		644	2001/04	4/13/2006	5 to 40 years
Lafayette	LA			601		2,406		1,480		601		3,886		4,487		1,154	2002	4/13/2006	5 to 40 years
Lafayette	LA			542		1,319		2,229		542		3,548		4,090		986	1997/99	4/13/2006	5 to 40 years
Manchester	NH			832		3,268		184		832		3,452		4,284		1,055	2000	4/26/2006	5 to 40 years
Clearwater-Largo	FL			1,270		5,037		455		1,270		5,492		6,762		1,625	1998	6/22/2006	5 to 40 years
Clearwater-Pinellas Park	FL			929		3,676		344		929		4,020		4,949		1,166	2000	6/22/2006	5 to 40 years
Clearwater-Tarpon Spring	FL			696		2,739		267		696		3,006		3,702		889	1999	6/22/2006	5 to 40 years
New Orleans	LA			1,220		4,805		332		1,220		5,137		6,357		1,548	2000	6/22/2006	5 to 40 years
St Louis-Meramec	MO			1,113		4,359		479		1,113		4,838		5,951		1,427	1999	6/22/2006	5 to 40 years
St Louis-Charles Rock	MO			766		3,040		1,500		766		4,540		5,306		1,105	1999	6/22/2006	5 to 40 years
St Louis-Shackelford	MO			828		3,290		222		828		3,512		4,340		1,055	1999	6/22/2006	5 to 40 years
St Louis-W.Washington	MO			734		2,867		2,520		734		5,387		6,121		1,255	1980/01/15	6/22/2006	5 to 40 years
St Louis-Howdershell	MO			899		3,596		356		899		3,952		4,851		1,166	2000	6/22/2006	5 to 40 years
St Louis-Lemay Ferry	MO			890		3,552		475		890		4,027		4,917		1,186	1999	6/22/2006	5 to 40 years
St Louis-Manchester	MO			697		2,711		224		697		2,935		3,632		868	2000	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			1,256		4,946		572		1,256		5,518		6,774		1,601	1998/03	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			605		2,434		215		605		2,649		3,254		771	2004	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			607		2,428		241		607		2,669		3,276		793	2004	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			1,073		4,276		134		1,073		4,410		5,483		1,298	2003	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			549		2,180		1,184		549		3,364		3,913		889	1998	6/22/2006	5 to 40 years
Dallas-Fort Worth	TX			644		2,542		169		644		2,711		3,355		809	1999	6/22/2006	5 to 40 years
San Antonio-Blanco	TX			963		3,836		233		963		4,069		5,032		1,237	2004	6/22/2006	5 to 40 years
San Antonio-Broadway	TX			773		3,060		2,200		773		5,260		6,033		1,287	2000	6/22/2006	5 to 40 years
San Antonio-Huebner	TX			1,175		4,624		396		1,175		5,020		6,195		1,454	1998	6/22/2006	5 to 40 years
Nashua	NH			617		2,422		619		617		3,041		3,658		905	1989	6/29/2006	5 to 40 years
Lafayette	LA			699		2,784		3,836		699		6,620		7,319		1,435	1995/99/16	8/1/2006	5 to 40 years
Chattanooga-Lee Hwy II	TN			619		2,471		208		619		2,679		3,298		785	2002	8/7/2006	5 to 40 years
Montgomery-E.S.Blvd	AL			1,158		4,639		1,283		1,158		5,922		7,080		1,673	1996/97	9/28/2006	5 to 40 years
Auburn-Pepperell Pkwy	AL			590		2,361		600		590		2,961		3,551		858	1998	9/28/2006	5 to 40 years
Auburn-Gatewood Dr	AL			694		2,758		403		694		3,161		3,855		882	2002/03	9/28/2006	5 to 40 years
Columbus-Williams Rd	GA			736		2,905		406		736		3,311		4,047		947	2002/04/06	9/28/2006	5 to 40 years
Columbus-Miller Rd	GA			975		3,854		1,394		975		5,248		6,223		1,219	1995	9/28/2006	5 to 40 years
Columbus-Armour Rd	GA			-		3,680		337		-		4,017		4,017		1,153	2004/05	9/28/2006	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent												Life on
							to		Gross Amount at Which										which
			Initial Cost to Company				Acquisition		Carried at Close of Period										depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Columbus-Amber Dr	GA			439		1,745		394		439		2,139		2,578		637	1998	9/28/2006	5 to 40 years
Concord	NH			813		3,213		2,072		813		5,285		6,098		1,413	2000	10/31/2006	5 to 40 years
Houston-Beaumont	TX			929		3,647		453		930		4,099		5,029		1,098	2002/04	3/8/2007	5 to 40 years
Houston-Beaumont	TX			1,537		6,018		642		1,537		6,660		8,197		1,858	2003/06	3/8/2007	5 to 40 years
Buffalo-Langner Rd	NY			532		2,119		3,600		532		5,719		6,251		1,060	1993/07/15	3/30/2007	5 to 40 years
Buffalo-Transit Rd	NY			437		1,794		702		437		2,496		2,933		672	1998	3/30/2007	5 to 40 years
Buffalo-Lake Ave	NY			638		2,531		2,964		638		5,495		6,133		1,007	1997/06	3/30/2007	5 to 40 years
Buffalo-Union Rd	NY			348		1,344		529		348		1,873		2,221		502	1998	3/30/2007	5 to 40 years
Buffalo-NF Blvd	NY			323		1,331		249		323		1,580		1,903		464	1998	3/30/2007	5 to 40 years
Buffalo-Young St	NY			315		2,185		1,206		316		3,390		3,706		868	1999/00	3/30/2007	5 to 40 years
Buffalo-Sheridan Dr	NY			961		3,827		2,638		961		6,465		7,426		1,472	1999	3/30/2007	5 to 40 years
Bufrfalo-Transit Rd	NY			375		1,498		749		375		2,247		2,622		570	1990/95	3/30/2007	5 to 40 years
Rochester-Phillips Rd	NY			1,003		4,002		145		1,003		4,147		5,150		1,143	1999	3/30/2007	5 to 40 years
San Antonio-Foster	TX			676		2,685		466		676		3,151		3,827		915	2003/06	5/21/2007	5 to 40 years
Huntsville-Memorial Pkwy	AL			1,607		6,338		1,113		1,677		7,381		9,058		1,927	1989/06	6/1/2007	5 to 40 years
Huntsville-Madison 1	AL			1,016		4,013		467		1,017		4,479		5,496		1,241	1993/07	6/1/2007	5 to 40 years
Bilox-Gulfport	MS			1,423		5,624		222		1,423		5,846		7,269		1,615	1998/05	6/1/2007	5 to 40 years
Huntsville-Hwy 72	AL			1,206		4,775		401		1,206		5,176		6,382		1,408	1998/06	6/1/2007	5 to 40 years
Mobile-Airport Blvd	AL			1,216		4,819		391		1,216		5,210		6,426		1,454	2000/07	6/1/2007	5 to 40 years
Bilox-Gulfport	MS			1,345		5,325		159		1,301		5,528		6,829		1,493	2002/04	6/1/2007	5 to 40 years
Huntsville-Madison 2	AL			1,164		4,624		330		1,164		4,954		6,118		1,344	2002/06	6/1/2007	5 to 40 years
Foley-Hwy 59	AL			1,346		5,474		1,592		1,347		7,065		8,412		1,683	2003/06/15	6/1/2007	5 to 40 years
Pensacola 6-Nine Mile	FL			1,029		4,180		213		1,029		4,393		5,422		1,289	2003/06	6/1/2007	5 to 40 years
Auburn-College St	AL			686		2,732		245		686		2,977		3,663		838	2003	6/1/2007	5 to 40 years
Biloxi-Gulfport	MS			1,811		7,152		163		1,811		7,315		9,126		1,960	2004/06	6/1/2007	5 to 40 years
Pensacola 7-Hwy 98	FL			732		3,015		118		732		3,133		3,865		900	2006	6/1/2007	5 to 40 years
Montgomery-Arrowhead	AL			1,075		4,333		347		1,075		4,680		5,755		1,263	2006	6/1/2007	5 to 40 years
Montgomery-McLemore	AL			885		3,586		286		885		3,872		4,757		1,028	2006	6/1/2007	5 to 40 years
Houston-Beaumont	TX			742		3,024		373		742		3,397		4,139		876	2002/05	11/14/2007	5 to 40 years
Hattiesburg-Clasic	MS			444		1,799		212		444		2,011		2,455		526	1998	12/19/2007	5 to 40 years
Biloxi-Ginger	MS			384		1,548		159		384		1,707		2,091		423	2000	12/19/2007	5 to 40 years
Foley-7905 St Hwy 59	AL			437		1,757		198		437		1,955		2,392		495	2000	12/19/2007	5 to 40 years
Jackson-Ridgeland	MS			1,479		5,965		596		1,479		6,561		8,040		1,700	1997/00	1/17/2008	5 to 40 years
Jackson-5111	MS			1,337		5,377		279		1,337		5,656		6,993		1,425	2003	1/17/2008	5 to 40 years
Cincinnati-Robertson	OH			852		3,409		281		852		3,690		4,542		845	2003/04	12/31/2008	5 to 40 years
Richmond-Bridge Rd	VA			1,047		5,981		2,722		1,047		8,703		9,750		1,528	2009/16	10/1/2009	5 to 40 years
Raleigh-Durham	NC			846		4,095		229		846		4,324		5,170		809	2000	12/28/2010	5 to 40 years
Charlotte-Wallace	NC			961		3,702		1,272		961		4,974		5,935		788	2008/16	12/29/2010	5 to 40 years
Raleigh-Durham	NC			574		3,975		268		575		4,242		4,817		763	2008	12/29/2010	5 to 40 years
Charlotte-Westmoreland	NC			513		5,317		47		513		5,364		5,877		964	2009	12/29/2010	5 to 40 years
Charlotte-Matthews	NC			1,129		4,767		156		1,129		4,923		6,052		913	2009	12/29/2010	5 to 40 years
Raleigh-Durham	NC			381		3,575		107		381		3,682		4,063		672	2008	12/29/2010	5 to 40 years
Charlotte-Zeb Morris	NC			965		3,355		133		965		3,488		4,453		635	2007	12/29/2010	5 to 40 years
Fair Lawn	NJ			796		9,467		417		796		9,884		10,680		1,648	1999	7/14/2011	5 to 40 years
Elizabeth	NJ			885		3,073		755		885		3,828		4,713		575	1988	7/14/2011	5 to 40 years
Saint Louis-High Ridge	MO			197		2,132		90		197		2,222		2,419		444	2007	7/28/2011	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent												Life on
							to		Gross Amount at Which										which
			Initial Cost to Company				Acquisition		Carried at Close of Period										depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Atlanta-Decatur	GA			1,043		8,252		111		1,043		8,363		9,406		1,366	2006	8/17/2011	5 to 40 years
Houston-Humble	TX			825		4,201		567		825		4,768		5,593		810	1993	9/22/2011	5 to 40 years
Dallas-Fort Worth	TX			693		3,552		169		693		3,721		4,414		656	2001	9/22/2011	5 to 40 years
Houston-Hwy 6N	TX			1,243		3,106		175		1,243		3,281		4,524		603	2000	9/22/2011	5 to 40 years
Austin-Cedar Park	TX			1,559		2,727		100		1,559		2,827		4,386		527	1998	9/22/2011	5 to 40 years
Houston-Katy	TX			691		4,435		2,488		691		6,923		7,614		1,009	2000/15	9/22/2011	5 to 40 years
Houston-Deer Park	TX			1,012		3,312		257		1,012		3,569		4,581		617	1998	9/22/2011	5 to 40 years
Houston-W.Little York	TX			575		3,557		209		575		3,766		4,341		705	1998	9/22/2011	5 to 40 years
Houston-Pasadena	TX			705		4,223		234		705		4,457		5,162		784	2000	9/22/2011	5 to 40 years
Houston-Friendswood	TX			1,168		2,315		289		1,168		2,604		3,772		467	1994	9/22/2011	5 to 40 years
Houston-Spring	TX			2,152		3,027		339		2,152		3,366		5,518		638	1993	9/22/2011	5 to 40 years
Houston-W.Sam Houston	TX			402		3,602		271		402		3,873		4,275		660	1999	9/22/2011	5 to 40 years
Austin-Pond Springs Rd	TX			1,653		4,947		479		1,653		5,426		7,079		904	1984	9/22/2011	5 to 40 years
Houston-Spring	TX			1,474		4,500		138		1,456		4,656		6,112		813	2006	9/22/2011	5 to 40 years
Austin-Round Rock	TX			177		3,223		190		177		3,413		3,590		595	1999	9/22/2011	5 to 40 years
Houston-Silverado Dr	TX			1,438		4,583		178		1,438		4,761		6,199		814	2000	9/22/2011	5 to 40 years
Houston-Sugarland	TX			272		3,236		199		272		3,435		3,707		632	2001	9/22/2011	5 to 40 years
Houston-Westheimer Rd	TX			536		2,687		276		536		2,963		3,499		525	1997	9/22/2011	5 to 40 years
Houston-Wilcrest Dr	TX			1,478		4,145		219		1,478		4,364		5,842		733	1999	9/22/2011	5 to 40 years
Houston-Woodlands	TX			1,315		6,142		298		1,315		6,440		7,755		1,055	1997	9/22/2011	5 to 40 years
Houston-Woodlands	TX			3,189		3,974		216		3,189		4,190		7,379		702	2000	9/22/2011	5 to 40 years
Houston-Katy Freeway	TX			1,049		5,175		530		1,049		5,705		6,754		971	1999	9/22/2011	5 to 40 years
Houston-Webster	TX	1,700		2,054		2,138		2,895		2,054		5,033		7,087		508	1982/17	9/22/2011	5 to 40 years
Newport News-Brick Kiln	VA			2,848		5,892		108		2,848		6,000		8,848		1,021	2004	9/29/2011	5 to 40 years
Penasacola-Palafox	FL			197		4,281		696		197		4,977		5,174		754	1996	11/15/2011	5 to 40 years
Miami	FL			2,960		12,077		329		2,960		12,406		15,366		1,743	2005	5/16/2012	5 to 40 years
Chicago - Lake Forest	IL			1,932		11,606		203		1,932		11,809		13,741		1,679	1996/04	6/6/2012	5 to 40 years
Chicago - Schaumburg	IL			1,940		4,880		295		1,940		5,175		7,115		763	1998	6/6/2012	5 to 40 years
Norfolk - E. Little Creek	VA			911		5,862		75		911		5,937		6,848		871	2007	6/20/2012	5 to 40 years
Atlanta-14th St.	GA			1,560		6,766		77		1,560		6,843		8,403		982	2009	7/18/2012	5 to 40 years
Jacksonville - Middleburg	FL			644		5,719		92		644		5,811		6,455		800	2008	9/18/2012	5 to 40 years
Jacksonville - Orange Park	FL			772		3,882		84		772		3,966		4,738		556	2007	9/18/2012	5 to 40 years
Jacksonville - St. Augustine	FL			739		3,858		93		739		3,951		4,690		567	2007	9/18/2012	5 to 40 years
Atlanta - NE Expressway	GA			1,384		9,266		80		1,384		9,346		10,730		1,293	2009	9/18/2012	5 to 40 years
Atlanta - Kennesaw	GA			856		4,315		111		856		4,426		5,282		610	2008	9/18/2012	5 to 40 years
Atlanta - Lawrenceville	GA			855		3,838		123		855		3,961		4,816		553	2007	9/18/2012	5 to 40 years
Atlanta - Woodstock	GA			1,342		4,692		110		1,342		4,802		6,144		676	2009	9/18/2012	5 to 40 years
Raleigh-Durham	NC			2,337		4,901		256		2,337		5,157		7,494		731	2002	9/19/2012	5 to 40 years
Chicago - Lindenhurst	IL			1,213		3,129		219		1,213		3,348		4,561		481	1999/06	9/27/2012	5 to 40 years
Chicago - Orland Park	IL			1,050		5,894		174		1,050		6,068		7,118		818	2007	12/10/2012	5 to 40 years
Phoenix-83rd	AZ			910		3,656		224		910		3,880		4,790		535	2008	12/18/2012	5 to 40 years
Chicago-North Austin	IL			2,593		5,029		348		2,593		5,377		7,970		693	2005	12/20/2012	5 to 40 years
Chicago-North Western	IL			1,718		6,466		710		1,798		7,096		8,894		882	2005	12/20/2012	5 to 40 years
Chicago-West Pershing	IL			395		3,226		185		395		3,411		3,806		432	2008	12/20/2012	5 to 40 years
Chicago - North Broadway	IL			2,373		9,869		147		2,373		10,016		12,389		1,267	2011	12/20/2012	5 to 40 years
Brandenton	FL			1,501		3,775		187		1,501		3,962		5,463		530	1997	12/21/2012	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent												Life on
							to		Gross Amount at Which										which
			Initial Cost to Company				Acquisition		Carried at Close of Period										depreciation
					Building,		Building,				Building,								in latest
					Equipment		Equipment				Equipment								income
New		Encum			and		and				and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Ft. Myers-Cleveland	FL			515		2,280		154		515		2,434		2,949		330	1998	12/21/2012	5 to 40 years
Clearwater-Drew St.	FL			1,234		4,018		230		1,234		4,248		5,482		553	2000	12/21/2012	5 to 40 years
Clearwater-N. Myrtle	FL			1,555		5,978		172		1,555		6,150		7,705		806	2000	12/21/2012	5 to 40 years
Austin-Cedar Park	TX			1,246		5,740		227		1,246		5,967		7,213		777	2006	12/27/2012	5 to 40 years
Austin-Round Rock	TX			774		3,327		178		774		3,505		4,279		466	2004	12/27/2012	5 to 40 years
Austin-Round Rock	TX			632		1,985		127		632		2,112		2,744		310	2007	12/27/2012	5 to 40 years
Chicago-Aurora	IL			269		3,126		337		269		3,463		3,732		431	2010	12/31/2012	5 to 40 years
San Antonio - Marbach	TX			337		2,005		229		337		2,234		2,571		305	2005	2/11/2013	5 to 40 years
Long Island - Lindenhurst	NY			2,122		8,735		546		2,122		9,281		11,403		1,102	2002	3/22/2013	5 to 40 years
Boston - Somerville	MA			1,553		7,186		186		1,506		7,419		8,925		885	2008	3/22/2013	5 to 40 years
Long Island - Deer Park	NY			1,096		8,276		109		1,096		8,385		9,481		953	2009	8/29/2013	5 to 40 years
Long Island - Amityville	NY			2,224		10,102		107		2,224		10,209		12,433		1,145	2009	8/29/2013	5 to 40 years
Colorado Springs - Scarlet	CO			629		5,201		221		629		5,422		6,051		582	2006	9/30/2013	5 to 40 years
Toms River - Route 37 W	NJ			1,843		6,544		140		1,843		6,684		8,527		707	2007	11/26/2013	5 to 40 years
Lake Worth - S Military	FL			868		5,306		700		868		6,006		6,874		624	2000	12/4/2013	5 to 40 years
Austin-Round Rock	TX			1,547		5,226		183		1,547		5,409		6,956		610	2008	12/27/2013	5 to 40 years
Hartford-Bristol	CT			1,174		8,816		124		1,174		8,940		10,114		901	2004	12/30/2013	5 to 40 years
Piscataway - New Brunswick	NJ			1,639		10,946		113		1,639		11,059		12,698		1,112	2006	12/30/2013	5 to 40 years
Fort Lauderdale - 3rd Ave	FL			7,629		11,918		374		7,629		12,292		19,921		1,236	1998	1/9/2014	5 to 40 years
West Palm - Mercer	FL			15,680		17,520		825		15,680		18,345		34,025		1,864	2000	1/9/2014	5 to 40 years
Austin - Manchaca	TX			3,999		4,297		722		3,999		5,019		9,018		553	1998/02	1/17/2014	5 to 40 years
San Antonio	TX			2,235		6,269		358		2,235		6,627		8,862		691	2012	2/10/2014	5 to 40 years
Portland	ME			2,146		6,418		254		2,146		6,672		8,818		670	2000	2/11/2014	5 to 40 years
Portland-Topsham	ME			493		5,234		108		493		5,342		5,835		530	2006	2/11/2014	5 to 40 years
Chicago - St. Charles	IL			1,837		6,301		556		1,837		6,857		8,694		691	2004/13	3/31/2014	5 to 40 years
Chicago - Ashland	IL			598		4,789		231		598		5,020		5,618		494	2014	5/5/2014	5 to 40 years
San Antonio - Walzem	TX			2,000		3,749		512		2,000		4,261		6,261		444	1997	5/13/2014	5 to 40 years
St. Louis - Woodson	MO			2,444		5,966		1,593		2,444		7,559		10,003		711	1998	5/22/2014	5 to 40 years
St. Louis - Mexico	MO			638		3,518		1,800		638		5,318		5,956		451	1998/16	5/22/2014	5 to 40 years
St. Louis - Vogel	MO			2,010		3,544		306		2,010		3,850		5,860		373	2000	5/22/2014	5 to 40 years
St. Louis - Manchester	MO			508		2,042		393		508		2,435		2,943		246	1996	5/22/2014	5 to 40 years
St. Louis - North Highway	MO			1,989		4,045		2,429		1,989		6,474		8,463		484	1997	5/22/2014	5 to 40 years
St. Louis - Dunn	MO			1,538		4,510		2,803		1,538		7,313		8,851		508	2000	5/22/2014	5 to 40 years
Trenton-Hamilton Twnship	NJ			5,161		7,063		1,082		5,161		8,145		13,306		743	1980	6/5/2014	5 to 40 years
NY Metro-Fishkill	NY			1,741		6,006		388		1,741		6,394		8,135		599	2005	6/11/2014	5 to 40 years
Atlanta-Peachtree City	GA			2,263		4,931		501		2,263		5,432		7,695		547	2007	6/12/2014	5 to 40 years
Wayne - Willowbrook	NJ			-		2,292		269		-		2,561		2,561		576	2000	6/12/2014	5 to 40 years
Asbury Park - 1st Ave	NJ			819		4,734		655		819		5,389		6,208		490	2003	6/18/2014	5 to 40 years
Farmingdale - Tinton Falls	NJ			1,097		5,618		361		1,097		5,979		7,076		551	2004	6/18/2014	5 to 40 years
Lakewood - Route 70	NJ			626		4,549		243		626		4,792		5,418		445	2003	6/18/2014	5 to 40 years
Matawan - Highway 34	NJ			1,512		9,707		806		1,512		10,513		12,025		955	2005	7/10/2014	5 to 40 years
St. Petersburg - Gandy	FL			2,958		6,904		256		2,958		7,160		10,118		617	2007	8/28/2014	5 to 40 years
Chesapeake - Campostella	VA			2,349		3,875		295		2,349		4,170		6,519		363	2000	9/5/2014	5 to 40 years
San Antonio-Castle Hills	TX			2,658		8,190		444		4,544		6,748		11,292		608	2002	9/10/2014	5 to 40 years
Chattanooga - Broad St	TN			759		5,608		256		759		5,864		6,623		493	2014	9/18/2014	5 to 40 years
New Orleans-Kenner	LA			5,771		10,375		472		5,771		10,847		16,618		922	2008	10/10/2014	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent													Life on
							to			Gross Amount at Which										which
			Initial Cost to Company				Acquisition			Carried at Close of Period										depreciation
					Building,		Building,					Building,								in latest
					Equipment		Equipment					Equipment								income
New		Encum			and		and					and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.			Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Orlando-Celebration	FL			6,091		4,641		423			6,091		5,064		11,155		430	2006	10/21/2014	5 to 40 years
Austin-Cedar Park	TX			4,196		8,374		626			4,196		9,000		13,196		750	2003	10/28/2014	5 to 40 years
Chicago - Pulaski	IL			889		4,700		1,051			889		5,751		6,640		439	2014	11/14/2014	5 to 40 years
Houston - Gessner	TX			1,599		5,813		3,490			1,599		9,303		10,902		532	2006/17	12/18/2014	5 to 40 years
New England - Danbury	CT			9,747		18,374		201			9,747		18,575		28,322		1,367	1999	2/2/2015	5 to 40 years
New England - Milford	CT			9,642		23,352		147			9,642		23,499		33,141		1,737	1999	2/2/2015	5 to 40 years
Long Island - Hicksville	NY			5,153		27,401		121			5,153		27,522		32,675		2,032	2002	2/2/2015	5 to 40 years
Long Island - Farmingdale	NY			4,931		20,415		278			4,931		20,693		25,624		1,518	2000	2/2/2015	5 to 40 years
Chicago - Alsip	IL			2,579		4,066		3,331			2,579		7,397		9,976		336	1986/17	2/5/2015	5 to 40 years
Chicago - N. Pulaski	IL			1,719		6,971		396			1,719		7,367		9,086		540	2015	3/9/2015	5 to 40 years
Fort Myers - Tamiami Trail	FL			1,793		4,382		180			1,793		4,562		6,355		328	2004	4/1/2015	5 to 40 years
Dallas - Allen	TX			3,864		4,777		290			3,864		5,067		8,931		374	2002	4/16/2015	5 to 40 years
Jacksonville - Beach Blvd.	FL			2,118		6,501		65			2,118		6,566		8,684		456	2013	4/21/2015	5 to 40 years
Space Coast - Vero Beach	FL			1,169		4,409		319			1,169		4,728		5,897		328	1997	5/1/2015	5 to 40 years
Port St. Lucie - Federal Hwy.	FL			4,957		6,045		229			4,957		6,274		11,231		437	2001	5/1/2015	5 to 40 years
West Palm - N. Military	FL			3,372		4,206		143			3,372		4,349		7,721		300	1985	5/1/2015	5 to 40 years
Ft. Myers - Bonita Springs	FL			2,687		5,012		208			2,687		5,220		7,907		370	2000	5/1/2015	5 to 40 years
Phoenix - Tatum Blvd.	AZ			852		7,052		184			852		7,236		8,088		509	2015	6/16/2015	5 to 40 years
Boston - Lynn	MA			2,110		8,182		119			2,110		8,301		10,411		548	2015	6/16/2015	5 to 40 years
Syracuse - Ainsely Dr.	NY			2,711		3,795		125			2,711		3,920		6,631		250	2000	8/25/2015	5 to 40 years
Syracuse - Cicero	NY			668		1,957		91			668		2,048		2,716		135	2002	8/25/2015	5 to 40 years
Syracuse - Camillus	NY			473		5,368		95			473		5,463		5,936		333	2005/11	8/25/2015	5 to 40 years
Syracuse - Manlius	NY			834		1,705		1,038			834		2,743		3,577		120	2000/17	8/25/2015	5 to 40 years
Charlotte - Brookshire Blvd.	NC			718		2,977		890			718		3,867		4,585		232	2000	9/1/2015	5 to 40 years
Charleston III	SC			7,604		9,086		287			7,604		9,373		16,977		576	2005	9/1/2015	5 to 40 years
Myrtle Beach II	SC			2,511		6,147		298			2,511		6,445		8,956		410	1999	9/1/2015	5 to 40 years
Columbia VI	SC			3,640		3,452		127			3,640		3,579		7,219		228	2004/08	9/1/2015	5 to 40 years
Hilton Head - Bluffton	SC			3,084		3,192		158			3,084		3,350		6,434		213	1998	9/1/2015	5 to 40 years
Philadelphia - Eagleville	PA			1,926		4,498		1,250			1,926		5,748		7,674		258	2010	12/30/2015	5 to 40 years
Orlando - University	FL			882		5,756		290			882		6,046		6,928		308	2001	1/6/2016	5 to 40 years
Orlando - N. Powers	FL			2,567		2,838		83			2,567		2,921		5,488		157	1997	1/6/2016	5 to 40 years
Sarasota - North Port	FL			4,884		10,014		(344	)		4,278		10,276		14,554		386	2001/06	1/6/2016	5 to 40 years
Los Angeles - E. Commercial	CA			6,512		12,352		409			6,512		12,761		19,273		680	2004	1/21/2016	5 to 40 years
Los Angeles - E. Slauson	CA			3,998		13,547		254			3,998		13,801		17,799		681	2012	1/21/2016	5 to 40 years
Los Angeles - Westminster	CA			4,636		14,826		175			4,636		15,001		19,637		733	2006	1/21/2016	5 to 40 years
Los Angeles - Calabasas	CA			13,274		10,419		455			13,274		10,874		24,148		572	2004/14	1/21/2016	5 to 40 years
Portsmouth - Kingston	NH			1,713		2,709		47			1,713		2,756		4,469		141	2003	1/21/2016	5 to 40 years
Portsmouth - Danville	NH			1,615		3,333		70			1,615		3,403		5,018		171	2003	1/21/2016	5 to 40 years
Portsmouth - Hampton Falls	NH			2,445		6,295		107			2,445		6,402		8,847		309	2005	1/21/2016	5 to 40 years
Portsmouth - Lee	NH			3,078		2,861		76			3,078		2,937		6,015		148	2000	1/21/2016	5 to 40 years
Portsmouth - Heritage	NH			4,430		26,040		183			4,430		26,223		30,653		1,272	1985/99	1/21/2016	5 to 40 years
Boston - Salisbury	MA			4,880		6,342		163			4,880		6,505		11,385		320	2003	1/21/2016	5 to 40 years
Dallas - Frisco	TX			6,191		5,088		157			6,191		5,245		11,436		271	2003	1/21/2016	5 to 40 years
Dallas - McKinney	TX			8,097		7,047		100			8,097		7,147		15,244		367	2003	1/21/2016	5 to 40 years
Dallas - McKinney	TX			5,508		6,462		76			5,508		6,538		12,046		328	2002	1/21/2016	5 to 40 years
Phoenix - 48th	AZ			988		8,224		69			988		8,293		9,281		424	2015	2/1/2016	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent													Life on
							to			Gross Amount at Which										which
			Initial Cost to Company				Acquisition			Carried at Close of Period										depreciation
					Building,		Building,					Building,								in latest
					Equipment		Equipment					Equipment								income
New		Encum			and		and					and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.			Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Miami	FL			2,294		8,980		182			2,294		9,162		11,456		467	2016	2/12/2016	5 to 40 years
Philadelphia - Glenolden	PA			1,768		3,879		312			1,768		4,191		5,959		199	1970	2/17/2016	5 to 40 years
Denver - Thornton	CO			4,528		7,915		123			4,528		8,038		12,566		388	2011	2/29/2016	5 to 40 years
Los Angeles - Costa Mesa	CA			17,976		25,145		564			17,976		25,709		43,685		1,161	2005	3/16/2016	5 to 40 years
Los Angeles - Irving	CA			-		6,318		684			-		7,002		7,002		629	1985	3/16/2016	5 to 40 years
Los Angeles - Durante	CA			4,671		13,908		114			4,671		14,022		18,693		631	2015	3/16/2016	5 to 40 years
Los Angeles - Wildomar	CA			6,728		10,340		321			6,728		10,661		17,389		502	2005	3/17/2016	5 to 40 years
Los Angeles - Torrance	CA			17,445		18,839		444			17,445		19,283		36,728		885	2003	4/11/2016	5 to 40 years
New Haven - Wallingford	CT			3,618		5,286		258			3,618		5,544		9,162		251	2000	4/14/2016	5 to 40 years
New Haven - Waterbury	CT			2,524		5,618		154			2,524		5,772		8,296		261	2001	4/14/2016	5 to 40 years
New York - Mahopac	NY	4,119		2,373		5,089		339			2,373		5,428		7,801		227	1991/94	4/26/2016	5 to 40 years
New York - Mount Vernon	NY			3,337		13,112		128			3,337		13,240		16,577		568	2013	4/26/2016	5 to 40 years
Pt. St. Lucie	FL	3,939		4,140		7,176		284			4,140		7,460		11,600		370	2002	5/2/2016	5 to 40 years
Dallas - Lewisville	TX			2,333		8,302		219			2,333		8,521		10,854		378	2007	5/5/2016	5 to 40 years
Buffalo - Cayuga	NY			499		5,198		(796	)		499		4,402		4,901		183	2006	5/19/2016	5 to 40 years
Buffalo - Lackawanna	NY			215		2,323		268			215		2,591		2,806		109	2006	5/19/2016	5 to 40 years
Austin - S. Congress	TX			1,030		8,163		83			1,030		8,246		9,276		320	1984	7/15/2016	5 to 40 years
Austin - W Braker	TX			1,210		14,833		102			1,210		14,935		16,145		571	2003	7/15/2016	5 to 40 years
Austin - Highway 290	TX			930		12,269		73			930		12,342		13,272		478	1999	7/15/2016	5 to 40 years
Austin - Killeen	TX			3,070		20,782		181			3,070		20,963		24,033		862	2005	7/15/2016	5 to 40 years
Austin - Round Rock	TX			830		6,129		71			830		6,200		7,030		244	1986	7/15/2016	5 to 40 years
Austin - Georgetown	TX			1,530		10,647		92			1,530		10,739		12,269		437	2001/15	7/15/2016	5 to 40 years
Austin - Pflugerville	TX			750		9,238		110			750		9,348		10,098		362	2005	7/15/2016	5 to 40 years
Chicago - Algonquin	IL			1,430		14,958		46			1,430		15,004		16,434		580	2006	7/15/2016	5 to 40 years
Chicago - Carpentersville	IL			350		4,710		26			350		4,736		5,086		183	2004	7/15/2016	5 to 40 years
Chicago - W. Addison	IL			2,770		25,112		133			2,770		25,245		28,015		965	2007	7/15/2016	5 to 40 years
Chicago - State St.	IL			1,190		19,159		163			1,190		19,322		20,512		729	2009	7/15/2016	5 to 40 years
Chicago -W. Grand	IL			1,720		10,628		124			1,720		10,752		12,472		408	2007	7/15/2016	5 to 40 years
Chicago - Libertyville	IL			3,670		26,660		254			3,670		26,914		30,584		1,020	2009	7/15/2016	5 to 40 years
Chicago - Aurora	IL			1,090		20,033		97			1,090		20,130		21,220		775	2009	7/15/2016	5 to 40 years
Chicago - Morton Grove	IL			1,610		14,914		666			1,610		15,580		17,190		581	2009	7/15/2016	5 to 40 years
Chicago - Bridgeview	IL			3,770		19,990		152			3,770		20,142		23,912		792	2008	7/15/2016	5 to 40 years
Chicago - Addison	IL			1,340		11,881		386			1,340		12,267		13,607		466	2008	7/15/2016	5 to 40 years
Chicago - W Diversey	IL			1,670		10,811		54			1,670		10,865		12,535		412	2010	7/15/2016	5 to 40 years
Chicago - Elmhurst	IL			670		18,729		67			670		18,796		19,466		712	2008	7/15/2016	5 to 40 years
Chicago - Elgin	IL			1,130		12,584		152			1,130		12,736		13,866		492	2003	7/15/2016	5 to 40 years
Chicago - N. Paulina St.,	IL			5,600		12,721		74			5,600		12,795		18,395		491	2006	7/15/2016	5 to 40 years
Chicago - Matteson	IL			1,590		12,053		76			1,590		12,129		13,719		488	2007	7/15/2016	5 to 40 years
Chicago - S. Heights	IL			1,050		4,960		89			1,050		5,049		6,099		206	2006	7/15/2016	5 to 40 years
Chicago - W. Grand	IL			1,780		8,928		132			1,780		9,060		10,840		348	2007	7/15/2016	5 to 40 years
Chicago - W 30th St	IL			600		15,574		149			600		15,723		16,323		596	2008	7/15/2016	5 to 40 years
Chicago - Mokena	IL			3,230		18,623		215			3,230		18,838		22,068		737	2008	7/15/2016	5 to 40 years
Chicago - Barrington	IL			1,890		9,395		681			1,890		10,076		11,966		383	2015	7/15/2016	5 to 40 years
Chicago - Naperville	IL			2,620		11,933		101			2,620		12,034		14,654		484	2015	7/15/2016	5 to 40 years
Chicago - Forest Park	IL			1,100		10,087		707			1,100		10,794		11,894		407	2015	7/15/2016	5 to 40 years
Chicago - La Grange	IL			960		13,019		53			960		13,072		14,032		505	2015	7/15/2016	5 to 40 years

Life Storage, Inc.

Schedule III

							Cost
							Capitalized
							Subsequent													Life on
							to			Gross Amount at Which										which
			Initial Cost to Company				Acquisition			Carried at Close of Period										depreciation
					Building,		Building,					Building,								in latest
					Equipment		Equipment					Equipment								income
New		Encum			and		and					and				Accum.		Date of	Date	statement
Description	ST	brance	Land		Impvmts.		Impvmts.			Land		Impvmts.		Total		Deprec.		Const.	Acquired	is computed
Chicago - Glenview	IL			3,210		8,519		62			3,210		8,581		11,791		344	2014/15	7/15/2016	5 to 40 years
Dallas - Richardson	TX			630		10,282		57			630		10,339		10,969		410	2001	7/15/2016	5 to 40 years
Dallas - Arlington	TX			790		12,785		81			790		12,866		13,656		496	2007	7/15/2016	5 to 40 years
Dallas - Plano	TX			1,370		10,166		70			1,370		10,236		11,606		394	1998	7/15/2016	5 to 40 years
Dallas - Mesquite	TX			620		8,771		41			620		8,812		9,432		340	2016	7/15/2016	5 to 40 years
Dallas - S Good Latimer	TX			4,030		8,029		115			4,030		8,144		12,174		319	2016	7/15/2016	5 to 40 years
Boulder - Arapahoe	CO			3,690		12,074		72			3,690		12,146		15,836		474	1992	7/15/2016	5 to 40 years
Boulder - Odell	CO			2,650		15,304		39			2,650		15,343		17,993		603	1998	7/15/2016	5 to 40 years
Boulder - Arapahoe	CO			11,540		15,571		171			11,540		15,742		27,282		616	1984	7/15/2016	5 to 40 years
Boulder - Broadway	CO			2,670		5,623		64			2,670		5,687		8,357		229	1992	7/15/2016	5 to 40 years
Houston - Westpark	TX			2,760		8,288		158			2,760		8,446		11,206		342	1996	7/15/2016	5 to 40 years
Houston - C. Jester	TX			8,080		10,114		157			8,080		10,271		18,351		404	2008	7/15/2016	5 to 40 years
Houston - Bay Pointe	TX			1,960		9,585		100			1,960		9,685		11,645		380	1972	7/15/2016	5 to 40 years
Houston - FM 529	TX			680		3,951		126			680		4,077		4,757		163	2005	7/15/2016	5 to 40 years
Houston - Jones	TX			1,260		2,382		93			1,260		2,475		3,735		109	1994	7/15/2016	5 to 40 years
Jackson - Flowood	MS			680		20,066		115			680		20,181		20,861		786	2000	7/15/2016	5 to 40 years
Las Vegas - Spencer	NV			1,020		25,152		99			1,020		25,251		26,271		964	2000	7/15/2016	5 to 40 years
Las Vegas - Maule	NV			2,510		11,822		(864	)		1,510		11,958		13,468		457	2005	7/15/2016	5 to 40 years
Las Vegas - Wigwam	NV			590		16,838		96			590		16,934		17,524		642	2008	7/15/2016	5 to 40 years
Las Vegas - Stufflebeam	NV			350		6,977		229			350		7,206		7,556		280	1996	7/15/2016	5 to 40 years
Las Vegas - Ft. Apache	NV			1,470		11,047		162			1,470		11,209		12,679		437	2004	7/15/2016	5 to 40 years
Las Vegas - North	NV			390		7,042		121			390		7,163		7,553		278	2005	7/15/2016	5 to 40 years
Las Vegas - Warm Springs	NV			1,340		5,141		103			1,340		5,244		6,584		260	2004	7/15/2016	5 to 40 years
Las Vegas - Conestoga	NV			1,420		10,295		132			1,420		10,427		11,847		417	2007	7/15/2016	5 to 40 years
Las Vegas - Warm Springs	NV			1,080		16,436		112			1,080		16,548		17,628		631	2007	7/15/2016	5 to 40 years
Las Vegas - Nellis	NV			790		5,233		131			790		5,364		6,154		225	1995	7/15/2016	5 to 40 years
Las Vegas - Cheyenne	NV			1,470		17,366		87			1,470		17,453		18,923		698	2004	7/15/2016	5 to 40 years
Las Vegas - Dean Martin	NV			3,050		23,333		91			3,050		23,424		26,474		985	2005	7/15/2016	5 to 40 years
Las Vegas - Flamingo	NV			980		13,451		144			980		13,595		14,575		519	2007	7/15/2016	5 to 40 years
Las Vegas - North	NV			330		15,651		75			330		15,726		16,056		602	2007	7/15/2016	5 to 40 years
Las Vegas - Henderson	NV			570		12,676		128			570		12,804		13,374		505	2005	7/15/2016	5 to 40 years
Las Vegas - North	NV			520		10,105		81			520		10,186		10,706		399	2002	7/15/2016	5 to 40 years
Las Vegas - Farm	NV			1,510		9,388		79			1,510		9,467		10,977		365	2008	7/15/2016	5 to 40 years
Los Angeles - Torrance	CA			5,250		32,363		197			5,250		32,560		37,810		1,243	2004	7/15/2016	5 to 40 years
Los Angeles - Irvine	CA			2,520		18,402		252			2,520		18,654		21,174		721	2002	7/15/2016	5 to 40 years
Los Angeles - Palm Desert	CA			2,660		16,589		159			2,660		16,748		19,408		654	2002	7/15/2016	5 to 40 years
Milwaukee - Green Bay	WI			750		14,720		29			750		14,749		15,499		569	2005	7/15/2016	5 to 40 years
Orlando - Winter Garden	FL			640		6,688		58			640		6,746		7,386		265	2006	7/15/2016	5 to 40 years
Orlando - Longwood	FL			1,230		9,586		97			1,230		9,683		10,913		371	2000	7/15/2016	5 to 40 years
Orlando - Overland	FL			1,080		3,713		116			1,080		3,829		4,909		153	2000	7/15/2016	5 to 40 years
Sacramento - Calvine	CA			2,280		17,069		75			2,280		17,144		19,424		661	2004	7/15/2016	5 to 40 years
Sacramento - Folsom	CA			1,200		22,150		44			1,200		22,194		23,394		839	2005	7/15/2016	5 to 40 years
Sacremento - Pell	CA			540		8,874		51			540		8,925		9,465		347	2004	7/15/2016	5 to 40 years
Sacremento - Goldenland	CA			2,010		8,944		60			2,010		9,004		11,014		367	2005	7/15/2016	5 to 40 years
Sacremento - Woodland	CA			860		10,569		56			860		10,625		11,485		407	2003	7/15/2016	5 to 40 years
Sacremento - El Camino	CA			1,450		12,239		78			1,450		12,317		13,767		475	2002	7/15/2016	5 to 40 years

Life Storage, Inc.

Schedule III

								Cost
								Capitalized
								Subsequent													Life on
								to		Gross Amount at Which											which
				Initial Cost to Company				Acquisition		Carried at Close of Period											depreciation
						Building,		Building,				Building,						��			in latest
						Equipment		Equipment				Equipment									income
New		Encum				and		and				and				Accum.			Date of	Date	statement
Description	ST	brance		Land		Impvmts.		Impvmts.		Land		Impvmts.		Total		Deprec.			Const.	Acquired	is computed
Sacremento - Bayou	CA				1,640		21,603		88		1,640		21,691		23,331		833		2005	7/15/2016	5 to 40 years
Sacremento - Calvine	CA				2,120		24,650		59		2,120		24,709		26,829		957		2003	7/15/2016	5 to 40 years
Sacremento - El Dorado Hills	CA				1,610		24,829		48		1,610		24,877		26,487		958		2007	7/15/2016	5 to 40 years
Sacramento - Fruitridge	CA				1,480		15,695		176		1,480		15,871		17,351		623		2007	7/15/2016	5 to 40 years
San Antonio - US 281	TX				1,380		8,457		139		1,380		8,596		9,976		329		2003	7/15/2016	5 to 40 years
Austin - San Marcos	TX				990		7,323		56		990		7,379		8,369		292		2016	7/15/2016	5 to 40 years
Charleston	SC				920		7,700		57		920		7,757		8,677		296		2016	7/29/2016	5 to 40 years
Denver - Westminster	CO				5,062		3,679		307		5,062		3,986		9,048		141		2000	8/4/2016	5 to 40 years
Chicago - Arlington Hgts.	IL				370		8,513		104		370		8,617		8,987		242		2016	11/17/2016	5 to 40 years
Orlando - Curry Ford	FL		2,916		3,268		6,378		114		3,268		6,492		9,760		180		2016	12/20/2016	5 to 40 years
Chicago - Lombard	IL				771		9,318		0		771		9,318		10,089		199		2017	2/23/2017	5 to 40 years
Austin - Mary St.	TX				0		0		6		0		6		6		0		2017	4/3/2017	5 to 40 years
Charlotte - Morehead St..	NC				1,110		11,439		1		1,110		11,440		12,550		24		2017	12/14/2017	5 to 40 years
Construction in Progress					0		0		14,383		0		14,383		14,383		0		2017
Corporate Office	NY				0		68		38,947		1,633		37,382		39,015		20,892		2000	5/1/2000	5 to 40 years
		$	12,674	$	773,702	$	2,974,075	$	573,633	$	786,628	$	3,534,782	$	4,321,410	$	624,314

Life Storage, Inc.

Schedule III

(dollars in thousands)

										December 31,			December 31,			December 31,
	December 31, 2016			December 31, 2015			December 31, 2014			2017			2016			2015
Cost:
Balance at beginning of period	$	2,491,702		$	2,177,983		$	1,864,637		$	4,243,308		$	2,491,702		$	2,177,983
Additions during period:
Acquisitions through foreclosure		—			—			—		—			—			—
Other acquisitions		1,714,029			278,572			286,691			22,638			1,714,029			278,572
Improvements, etc.		73,385			42,046			35,097			84,191			73,385			42,046
											106,829			1,787,414			320,618
		1,787,414			320,618			321,788
Deductions during period:
Cost of assets disposed		(35,808	)		(6,899	)		(8,442	)		(28,727	)		(35,808	)		(6,899	)
Impairment write-down		—			—			—		—			—			—
Casualty loss		—			—			—		—			—			—
											(28,727	)		(35,808	)		(6,899	)
		(35,808	)		(6,899	)		(8,442	)

Balance at close of period	$	4,243,308		$	2,491,702		$	2,177,983		$	4,321,410		$	4,243,308		$	2,491,702

Accumulated Depreciation:
Balance at beginning of period	$	465,195		$	411,701		$	366,472		$	535,704		$	465,195		$	411,701
Additions during period:
Depreciation expense		87,219			55,101			47,656			102,674			87,219			55,101

		87,219			55,101			47,656			102,674			87,219			55,101
Deductions during period:
Accumulated depreciation of assets disposed		(16,710	)		(1,607	)		(2,427	)		(14,064	)		(16,710	)		(1,607	)
Accumulated depreciation on impaired asset		—			—			—		—			—			—
Accumulated depreciation on casualty loss		—			—			—		—			—			—
		(16,710	)		(1,607	)		(2,427	)		(14,064	)		(16,710	)		(1,607	)

Balance at close of period	$	535,704		$	465,195		$	411,701		$	624,314		$	535,704		$	465,195

The aggregate cost of real estate for U.S. federal income tax purposes is ~~$4,326,173.~~

$4,388,101 at December 31, 2017.

~~103~~


Title of Securities		Exchanges on which Registered
Common Stock, $.01 Par Value		New York Stock Exchange


Life Storage, Inc.		Yes ☒ No ☐
Life Storage LP		Yes ☒ No ☐


Life Storage, Inc.		Yes ☐ No ☒
Life Storage LP		Yes ☐ No ☒