Life Storage : Purchase Agreement (Form 8-K)

Other Events.

On August 6, 2021, Life Storage LP (the 'Operating Partnership'), the operating partnership of Life Storage, Inc. (the 'Parent Company'), entered into contribution and purchase agreements with certain third parties (the 'Contributors') to acquire 22 self-storage facilities (the 'Properties'). The Properties are located in Alabama (7), Colorado (1), Florida (2), Georgia (4), Kentucky (1), Ohio (1), Oklahoma (2), South Carolina (2) and Texas (2) and include approximately 1.267 million square feet of net rentable space. Certain of the Properties will be contributed to the Operating Partnership subject to third party mortgage indebtedness, which will be paid off ('Debt Payoff') immediately following the contribution of the Properties on the closing date. The aggregate consideration for the Properties is approximately $228.0 million. Approximately $86.5 million of the aggregate consideration will be paid in cash to be applied to the Debt Payoff. The remaining aggregate consideration of approximately $141.5 million will, at the option of the Contributors, be paid (A) in cash, (B) by the issuance of common units of the Operating Partnership ('Common Units') and/or (C) by the issuance of newly designated Series A Preferred Units of the Operating Partnership (the 'Series A Preferred Units'), provided that the aggregate consideration shall be comprised of no more than $110 million of Series A Preferred Units. The value of each Common Unit, if applicable, to be issued to the Contributors shall be equal to the average closing price as reported on the New York Stock Exchange of the Parent Company's common stock over the 30 consecutive trading days ending 2 trading days before the closing. Each Series A Preferred Unit, if applicable, to be issued to the Contributors has a stated/liquidation value of $25.00.

The terms of the Series A Preferred Units will be governed by the Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated as of June 4, 2021 and the Certificate of Designation of 4.5% Series A Preferred Limited Partnership Units (the 'Certificate of Designation'), which Certificate of Designation the Operating Partnership will adopt and approve upon the closing of the transaction. The Series A Preferred Units will rank senior to all other partnership interests with respect to distributions and liquidation. The Series A Preferred Units will have a fixed priority return of 4.5% and a stated/liquidation value of $25.00 per Series A Preferred Unit.

The Series A Preferred Units will be convertible at the option of the holders after the earlier of (i) the first anniversary of the date of issuance, (ii) the date of death of an initial holder who is a natural person or (iii) the sale, lease or conveyance of all or substantially all of the assets of the Operating Partnership, into Common Units. Upon any conversion, each Series A Preferred Unit being converted shall be convertible into a number of Common Units equal to the quotient of (i) the stated value of the Series A Preferred Units being converted plus any accrued and unpaid distributions, divided by (ii) the average closing price of Parent Company's common stock over the ninety (90) consecutive trading days ending the trading day preceding the date of conversion.

The Series A Preferred Units will be redeemable at the option of the holders after the earlier of (i) the first anniversary of the date of issuance or (ii) the date of death of an initial holder who is a natural person. The Operating Partnership will have the right to redeem the Series A Preferred Units after the tenth anniversary of the date of issuance. The redemption price will be equal to the stated value of a Series A Preferred Unit plus any accrued and unpaid distributions and shall be paid in cash.

The Common Units will be redeemable at the option of the holders after a period of one year following the closing for cash or, at the option of the Parent Company, an equivalent number of shares of its common stock.

The Series A Preferred Units and Common Units will be issued in private placements in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

The closing of the acquisition transaction is subject to the satisfaction of various customary closing conditions and the Operating Partnership expects to close the transaction in August, 2021; however, there can be no assurances that these conditions will be satisfied or that the acquisition will close on the terms described herein, or at all.