ANNUAL
REPORT
20
20
CANADA SELF STORAGE CENTRES
About StorageVault Canada Inc.
StorageVault Canada Inc. (TSXV: SVI) is Canada’s largest storage
company. SVI’s primary business is owning, managing and renting
self storage and portable storage space to individuals and
commercial customers in over 212 stores from coast to coast. SVI
also provides professional records management services, such as
document and media storage, imaging and shredding services.
To learn more about us, please visit www.storagevaultcanada.com.
Corporate Information
Email:
Phone:
ir@storagevaultcanada.com
1.877.622.0205
Address:
100 Canadian Road, Toronto, ON, M1R 4Z5
2
Annual Report 2020CANADA SELF STORAGE CENTRES
TABLE OF CONTENTS
4 LETTER TO OUR SHAREHOLDERS
5
6
OUR BOARD MEMBERS
HIGHLIGHTS
8 OUR NATIONAL FOOTPRINT
10 ENVIRONMENTAL, SOCIAL AND GOVERNANCE
13
49
FINANCIAL STATEMENTS
MANAGEMENT DISCUSSION AND ANALYSIS
3
Annual Report 2020CANADA SELF STORAGE CENTRES LETTER TO OUR SHAREHOLDERS
Dear Fellow Shareholders,
While 2020 was a year like no other, StorageVault continued
to our portfolio in 2021, further growing our lead as the most
to demonstrate the stability and resiliency of our portfolio and
dominant player in Canada.
industry. Our team responded quickly and adapted our entire
platform to safeguard our staff and clients, while ensuring our
continued growth.
Other accomplishments and accolades to share this year
include:
Operationally, in spite of a pause in rent increases and fees
and equality by receiving the 2020 Report on Business
for a portion of the year, we had an enormously successful
Magazine’s Women Lead Here award;
year, achieving 5% same store NOI growth and 17% AFFO
• adapting our continued support of more than 150
growth. These strong results are a testament to the strength
organizations in communities across Canada, partnering in
of our team and continual sound, strategic investments in our
initiatives related to health, education, sport, equality, and
• being recognized as a leader in gender diversification
platform.
quality of life, including becoming the Official Storage and
Moving Partner for the Canadian Olympic Committee;
Our investments in technology and innovation put us in an
• continuing to focus on our environmental responsibility
enviable position to address the unique challenges presented
with numerous eco-friendly initiatives such as roof top
by Covid-19. Prior to the pandemic, we invested substantial
solar, solar walls, motion-sensor LED lighting, low-flow
resources in our online platform that provided us the ability to
plumbing fixtures, in-floor radiant heating, LED
operate 15% of our stores virtually. Leveraging this investment,
replacement program in old stores, and many more.
over a ten-day period in March, we were able to transition our
entire portfolio to no-contact processes. As of December 31st,
As we transition through this pandemic and beyond, we
25% of our stores remain virtual locations and we expect this
remain focused on significantly growing cash flows and on
to increase in the years to come as customers’ expectations
increasing value for our shareholders by executing on our
evolve. When we combine this accelerated transition to
strategies and by being disciplined purchasers of great assets
virtual with our best-in-class revenue management systems,
from coast to coast.
lead generation platform, reservation centre and data
analytics, the results are enhanced revenue growth, lower
Thank you for your continued support,
customer acquisition costs, controlled expenses, a better
client experience and an engaged and industry leading team.
In 2020 we closed on over $230 million of high-quality self
storage assets, as our focus on acquiring strategic assets in
our existing markets continues to pay dividends. Now, with
212 total stores across Canada and more in the pipeline, we
are confident that this strategy will result in synergies for years
to come. We anticipate adding $100 million of accretive assets
Steven Scott
Chief Executive Officer
February 24, 2021
4
Annual Report 2020CANADA SELF STORAGE CENTRES OUR BOARD MEMBERS
JAY LYNNE FLEMING
BEN HARRIS
IQBAL KHAN - CFO
Ms. Fleming is the President and CEO
Mr. Harris has more than 20 years of
Mr. Khan, CPA, CA, MAcc, has been
of CVL Investments Ltd., and was
real estate investment and manage-
the Chief Financial Officer and Director
the founder of Storage for Your Life,
ment experience and is currently the
since 2015. He is also a Principal and
which she sold to StorageVault in 2015.
managing partner of a private invest-
Chief Financial Officer of The Access
Throughout her career, Ms. Fleming
ment vehicle based in the United
Group of Companies focusing on the
has been continuously active in private
States. He is a graduate of Dalhousie
ownership, acquisition and develop-
commercial real estate. Ms. Fleming
University and the University of Kings
ment of storage, multi-residential,
currently serves as Chair of the Corpo-
College in Canada where he received
industrial and commercial real estate
ration’s Governance, Nominating and
joint science degrees in Economics.
in Canada for more than 20 years.
Compensation Committee and also
Mr. Harris also serves on the board of
Mr. Khan serves as a director of Parkit
serves as a member of both the Audit
Rippowam Cisqua School in Bedford,
and also serves as the Chair of the
and Acquisition Committees.
New York. Mr. Harris currently serves
Canadian Self Storage Association
as Chair of the Audit Committee.
Tax Committee.
STEVEN SCOTT - CEO
AL SIMPSON
Steven Scott BCOM, CA, CPA, is the
Mr. Simpson is a co-founder and former
Chair and Chief Executive Officer of
president and CEO of the Corporation.
StorageVault Canada and of the Access
He currently serves as a director and
Group of Companies. Mr. Scott has
as Chair of the Acquisition Committee.
over 20 years of experience in the own-
Mr Simpson was vital in transitioning
ership, acquisition, development and
StorageVault to a publically traded
management of self storage, residential
company on the TSX Venture
and industrial real estate in Canada. Mr.
Exchange. Mr. Simpson holds a
Scott is the Chair of Parkit and sits on
PgD Business Administration from
the Boards of Park Lawn Corporation
Edinburgh Business School and a Post
(Audit Chair), Timbercreek Financial
Graduate Certificate in Accounting.
Corporation and the Canadian Self
Storage Association, (Treasurer).
“Our strong results
are a testament to
the strength of our
team and continual
sound, strategic
investments in our
platform.”
5
Annual Report 2020CANADA SELF STORAGE CENTRES HIGHLIGHTS
t
n
e
m
e
g
a
n
a
M
w
e
N
*
Q4/2015*
29 STORES
Q4/2017
90 STORES
Q4/2019
151 STORES
Q4/2014
10 STORES
Q4/2016
49 STORES
Q4/2018
105 STORES
Q4/2020
167 STORES
NOI
120 MM
100 MM
80 MM
60 MM
40 MM
20 MM
AFFO
50 MM
40 MM
30 MM
20 MM
10 MM
+15%
REVENUE
+16%
NOI
+17%
AFFO
6
Annual Report 2020CANADA SELF STORAGE CENTRES
WE GREW TO OVER
9 MILLION SQFT
OF RENTABLE SPACE
IN 82,000 STORAGE
UNITS
$232.7 MILLION IN
ACQUISITIONS
RESULTING IN
16 STORES BEING
ADDED IN 2020
REVENUE GROWTH
OF 15% TO $155.5
MILLION FROM
$135.O MILLION
NOI GROWTH OF
16% TO $104.2 MILLION
FROM $90.1 MILLION
EXPECTING $100
MILLION IN
ACQUISITIONS IN
2021
823% 5 YEAR
TOTAL SHAREHOLDER
RETURN
7
Annual Report 2020CANADA SELF STORAGE CENTRES OUR NATIONAL
FOOTPRINT
212+ locations owned and managed
across Canada and growing!
18
OUR BRANDS
41
9
12
5
26
101
8
9
Annual Report 2020CANADA SELF STORAGE CENTRESAnnual Report 2020CANADA SELF STORAGE CENTRES ENVIRONMENTAL, SOCIAL AND
GOVERNANCE
Environmental integrity, social responsibility and adherence to strong governance practices are core values at StorageVault and will
continue to remain focused on reducing the already extremely low environmental impact of our stores, improving our engagement
with colleagues and shareholders, supporting the communities in which we operate, and adopting sound corporate governance
practices.
ENVIRONMENTAL
We are a community-based business that believes it is our
required to heat or cool the space. Operationally, water usage
responsibility to implement sustainable operating practices
is very low and minimal daily client activity helps to limit the
to minimize our impact on the world and protect the
carbon footprint within our communities.
environment, while simultaneously improving the performance
of our portfolio. With this in mind, incorporating environmental
Ongoing and forward-thinking energy saving initiatives include
efficiencies into our building design and operations is core to our
rooftop solar panels, solar walls, motion activated systems to
company, our shareholders, our clients and our communities.
turn lights on and off automatically and replacing older fixtures
with modern energy saving fixtures and bulbs. In addition to
When compared to other types of commercial properties, the
this, we source and sell packing supplies made of recycled
storage industry has an inherently low environmental impact
materials and have significantly reduced paper use with our no-
given low daily activity levels. Strategically, we offer a mix of
contact rental process.
square footage that is non-climate controlled and climate
controlled, with non-climate controlled space having minimal
ecological affect. For our properties that provide climate
controlled storage, we hold inside temperatures at moderate
levels which safeguard contents while minimizing energy
10
Annual Report 2020CANADA SELF STORAGE CENTRES
SOCIAL
GOVERNANCE
As a team, we are a united nation of over 600 colleagues
StorageVault’s Management and Board are committed to
across 100 communities in Canada. Diversity is in our DNA and
ensuring strong corporate governance that protects the long-
is the foundation of our strength and stability. Our culture of
term interests of our stakeholders, strengthens management
continuous improvement, together with our ongoing training
accountability and fosters public trust in StorageVault. We
programs, promote diversity of thought, development of skills,
understand the importance of equality, diversity and good
personal wellness and safety. As such, we naturally foster
corporate governance and are dedicated to maintaining the
internal advancement opportunities and promotions within our
highest standards through the following practices:
organization.
• Independent Director led Audit, Acquisition and
Governance, Nominating and Compensation Committees
At StorageVault, we are aware that our services support people
• Acquisition Committee Mandate to review, approve and
in moments of transition, and we appreciate the importance
recommend transactions to the Board
of our role and the impact we have in our local communities.
• Diverse Management team and Board and Diversity Policy
Through the strength of our business, we support over 150
• Annual review and vote to approve executive compensation
local charities, grassroots initiatives and national organizations.
• Annual election by shareholders of Directors, CEO and CFO
We are passionate about supporting organizations across the
at AGM
country to support causes that are dear to our families and
• Whistleblower Policy
important within our communities, including those related to
• Insider Trading and Reporting Policy
health, education, sports, equality and quality of life.
• Disclosure and Confidentiality Policy
• Regular review and updates of all Corporate Governance
principles and policies
• Code of Business Conduct & Ethics which is signed by all
employees
A proud moment for us, and evidence of our ongoing
commitment to gender diversity, StorageVault was recognized
in the Report on Business Magazine’s Women Lead Here
inaugural list in 2020.
OFFICIAL STORAGE PARTNER OF
THE CANADIAN OLYMPIC COMMITTEE
11
Annual Report 2020CANADA SELF STORAGE CENTRES
Community Support
StorageVault continues to work with
more than 150 partners in various
relevant and unique ways, including
support for at risk children and youth,
retirement and long-term care homes,
small businesses and sports and
athleticism at all levels. In December,
SVI initiated a 12 Days of Giving
campaign with our partners in support
of community food security programs
and donated thousands of meals
across Canada.
Front Line and Hospital
Support
StorageVault donated thousands
of PPE items including masks, gowns
and sanitizers to various hospitals and
front-line workers across Canada,
including flowers as a gesture of
gratitude. Our participation in hospital
foundation support included the use
of our move-in vans and staff to assist
with deliveries for an at home virtual
event in support of Michael Garron
Hospital.
12
Annual Report 2020CANADA SELF STORAGE CENTRES StorageVault Canada Inc.
Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
13
Annual Report 2020CANADA SELF STORAGE CENTRES
Independent Auditor's Report
To the Shareholders of StorageVault Canada Inc.:
Opinion
We have audited the consolidated financial statements of StorageVault Canada Inc. and its subsidiary (the "Corporation"),
which comprise the consolidated statements of financial position as at December 31, 2020 and December 31, 2019, and
the consolidated statements of income (loss) and comprehensive income (loss), changes in equity and cash flows for the
years then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Corporation as at December 31, 2020 and December 31, 2019, and its consolidated financial
performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting
Standards.
Basis for Opinion
We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Corporation in accordance with the ethical requirements that
are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Other Information
Management is responsible for the other information. The other information comprises:
Management's Discussion and Analysis
The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual
Report.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have
performed on this other information, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the work we will
perform on this other information, we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
14
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
Corporation’s internal control.
related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions
may cause the Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audits and significant audit findings, including any significant deficiencies in internal control that we identify during our
audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Sean Du Plessis.
Calgary, Alberta
February 23, 2021
Chartered Professional Accountants
Annual Report 2020CANADA SELF STORAGE CENTRES In preparing the consolidated financial statements, management is responsible for assessing the Corporation’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions
may cause the Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audits and significant audit findings, including any significant deficiencies in internal control that we identify during our
audits.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor's report is Sean Du Plessis.
Calgary, Alberta
February 23, 2021
Chartered Professional Accountants
15
Annual Report 2020CANADA SELF STORAGE CENTRES StorageVault Canada Inc.
Consolidated Statements of Financial Position
As at December 31
Assets
Real estate and equipment, net (Note 5)
Goodwill and intangible assets, net (Note 6)
Cash and short term deposits
Prepaid expenses and other current assets
Accounts receivable
Liabilities and Shareholders' Equity
Debt (Note 7)
Hybrid debentures (Note 8)
Lease liability (Note 15)
Deferred tax liability (Note 11)
Accounts payable and accrued liabilities
Unearned revenue
Shareholders' Equity
Share capital (Note 9)
Dividends paid (Note 9)
Contributed surplus (Note 9)
Deficit
Commitments and Contingencies (Note 15)
Subsequent Events (Note 16)
The accompanying notes are an integral part of these consolidated financial statements.
2020
2019
$
1,439,920,819
$
1,246,187,751
113,925,773
25,527,533
3,446,585
4,559,229
113,827,924
24,460,186
2,985,805
5,404,296
$
1,587,379,939
$
1,392,865,962
$
1,179,739,132
$
1,053,079,602
71,765,725
44,035,050
53,200,017
18,635,766
9,829,082
-
25,491,060
64,063,076
12,458,892
7,025,354
1,377,204,772
1,162,117,984
365,886,912
(16,439,355)
15,130,383
(154,402,773)
210,175,167
355,585,663
(12,529,361)
8,812,227
(121,120,551)
230,747,978
$
1,587,379,939
$
1,392,865,962
Approved on behalf of the Board:
"signed" Steven Scott
"signed" Iqbal Khan
Director
Director
16
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Consolidated Statements of Changes in Equity
For the Years Ended December 31
Share Capital
Balance, beginning of the period
Common shares issued, net of issuance costs (Note 9)
Common shares repurchased (Note 9)
Balance, end of the period
Dividends Paid
Balance, beginning of the period
Dividends paid during the period (Note 9)
Balance, end of the period
Contributed Surplus
Balance, beginning of the period
Stock based compensation (Note 9)
Balance, end of the period
Deficit
Balance, beginning of the period
IFRS 16 equity adjustment (Note 3)
Deferred tax recognized on adoption of IFRS 16 (Note 11)
Net income (loss) and comprehensive income (loss)
Balance, end of the period
The accompanying notes are an integral part of these consolidated financial statements.
2020
2019
$
355,585,663
$
14,239,478
(3,938,229)
365,886,912
338,552,701
17,032,962
-
355,585,663
(12,529,361)
(3,909,994)
(16,439,355)
(8,726,868)
(3,802,493)
(12,529,361)
8,812,227
6,318,156
15,130,383
5,218,589
3,593,638
8,812,227
(121,120,551)
-
-
(74,117,865)
(1,207,122)
322,905
(33,282,222)
(46,118,469)
$
(154,402,773)
$
(121,120,551)
17
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Consolidated Statements of Income (Loss) & Comprehensive Income (Loss)
For the Years Ended December 31
Revenue
Storage and related services
Management fees
Expenses
Operating costs
Acquisition and integration costs
Selling, general and administrative
Stock based compensation (Note 9)
Depreciation and amortization (Note 5)
Interest
Unrealized (gain) loss on interest rate swap contracts (Note 7)
Net income (loss) and comprehensive income (loss) before tax
Deferred tax recovery (Note 11)
2020
2019
$
153,394,776
$
133,212,736
2,069,146
155,463,922
1,750,304
134,963,040
51,250,858
7,402,034
15,550,356
6,318,156
82,558,426
45,820,583
(9,291,210)
44,865,099
6,982,983
11,214,718
3,593,638
79,206,355
42,189,684
9,291,210
199,609,203
197,343,687
(44,145,281)
(62,380,647)
10,863,059
16,262,178
Net income (loss) and comprehensive income (loss) after tax
$
(33,282,222)
$
(46,118,469)
Net income (loss) per common share
Basic
Diluted
Weighted average number of common shares outstanding
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
$
(0.092)
$
(0.128)
$
(0.092)
$
(0.128)
363,469,712
363,469,712
360,468,060
360,468,060
18
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31
Cash provided by (used for) the following activities:
Operating activities
Net income (loss) and comprehensive income (loss) after tax
Adjustment for non-cash items:
Deferred tax recovery (Note 11)
Depreciation, amortization (Note 5)
Amortization of deferred financing costs
Accretion of lease liabilities (Note 15)
Stock based compensation (Note 9)
Unrealized loss (gain) on interest rate swap contracts (Note 7)
Loss on disposal of real estate and equipment
Cash flow from operations before non-cash working capital balances
Net change in non-cash working capital balances
Accounts receivable
Prepaid expenses and other current assets
Accounts payable and accrued liabilities
Unearned revenue
Financing activities
Common shares issued, net of issuance costs (Note 9)
Dividends paid (Note 9)
Payments of lease obligation (Note 15)
Debt issuance costs
Cash advances from long term debt (Note 7)
Cash repayments of long term debt (Note 7)
Proceeds from debenture issuance, net of issuance costs (Note 8)
Repurchase of common shares (Note 9)
Investing activities
Cash additions to real estate and equipment (Note 5)
Cash paid in business combinations (Note 4)
Proceeds on disposal of real estate and equipment
Increase in cash and short term deposits
Cash and short term deposits balance, beginning of period
2020
2019
$
(33,282,222)
$
(46,118,469)
(10,863,059)
82,558,426
1,647,618
1,418,221
6,318,156
(9,291,210)
9,726
38,515,656
(3,895,199)
(460,780)
6,176,874
2,803,728
43,140,279
876,498
(2,363,053)
(2,569,755)
(1,318,507)
226,104,998
(123,419,291)
71,475,823
(3,938,229)
164,848,484
(27,317,977)
(179,663,240)
59,801
(206,921,416)
(16,262,178)
79,206,355
1,142,637
1,106,704
3,593,638
9,291,210
4,436
31,964,333
(6,185,007)
2,205,996
5,064,278
1,992,275
35,041,875
285,684
(2,317,974)
(1,418,534)
(2,504,247)
536,106,032
(187,662,004)
-
-
342,488,957
(37,530,977)
(335,246,364)
10,822
(372,766,519)
1,067,347
4,764,313
24,460,186
19,695,873
Cash and short term deposits balance, end of period
$
25,527,533
$
24,460,186
The accompanying notes are an integral part of these consolidated financial statements.
19
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
1. Description of Business
The consolidated financial statements of StorageVault Canada Inc. and its subsidiaries (the “Corporation”)
as at and for the year ended December 31, 2020, were authorized for issuance by the Board of Directors of
the Corporation on February 23, 2021. The Corporation is incorporated under the Business Corporations
Act of Alberta and is domiciled in Canada. Its shares are publicly traded on the TSX Venture Exchange
(“Exchange”). The address of its registered office is 1000 – 250 2nd Street SW, Calgary, AB, T2P 0C1.
The Corporation’s primary business is owning, managing and renting self storage and portable storage
space to individual and commercial customers. The Corporation also stores, shreds, and manages
documents and records for individual and commercial customers.
2. Basis of Presentation
These consolidated financial statements and the notes thereto present the Corporation’s financial results of
operations and financial position under International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board (“IASB”) and effective as at January 1, 2020.
The consolidated financial statements have been prepared under the historical cost method, except for the
revaluation of certain financial assets and financial liabilities to fair value. The consolidated financial
statements were prepared on a going concern basis, and are presented in Canadian dollars, which is the
Corporation’s functional currency.
3. Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of StorageVault Canada Inc. and its wholly
owned subsidiary Spyhill Ltd., both of which are headquartered in Toronto, Ontario. On January 1, 2020,
the Corporation completed a vertical amalgamation with its wholly owned subsidiary, Sentinel Self-
Storage Corporation, to form StorageVault Canada Inc. The financial statements for the consolidated
entities are prepared for the same reporting period as StorageVault Canada Inc. using consistent accounting
policies. All intercompany transactions and balances have been eliminated in the preparation of these
consolidated financial statements.
Revenue Recognition
Revenue from the rendering of services and sale of goods are recognized at the fair value of consideration
received or receivable after the deduction of any trade discounts and excluding sales taxes.
The Corporation’s revenue comprises the renting of storage units to customers, information and records
management, managing storage facilities on behalf of third parties and sale of merchandise, including
locks, boxes, packing supplies and equipment.
Revenue earned from the renting of storage units is accounted for under IFRS 16 – Leases. Storage units are
rented to customers pursuant to rental agreements which provide for weekly or monthly rental terms with
non-refundable rental payments. The rental agreements may be terminated by the customer without
further obligation or cost upon vacating the storage unit. Revenue from rental agreements is recognized
Notes: 1
20
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
over the rental term pursuant to the rental agreement. Non-refundable customer deposits, which are
received to hold a unit for rent at a future date, are deferred and recognized as revenue upon
commencement of the rental agreement. Receipts of rental fees for future periods are deferred and
recognized as revenue when each respective monthly period commences.
The Corporation earns a management fee based on a percentage of gross revenues of the operations for
managing storage facilities for third parties. Revenue is recognized over time when the services are
rendered.
Revenue for other storage related services is recognized in the month the respective services are
provided. Receipts of fees for other storage related services for future periods are deferred and recognized
as revenue when each respective monthly period commences. A provision is made for expected
allowances as necessary.
Revenue from the sale of merchandise, including locks, boxes, packing supplies and equipment, is
recognized at the point in time when the merchandise is delivered to the customer.
Business Combinations
All business combinations are accounted for by applying the acquisition method. Upon acquisition, the
assets (including intangible assets), liabilities and contingent liabilities acquired are measured at their fair
value. The Corporation recognizes intangible assets as part of business combinations at fair value at the
date of acquisition. The determination of these fair values is based upon management’s judgment and
includes assumptions on the timing and amount of future cash flows generated by the assets acquired and
the selection of an appropriate discount rate. Acquisition and integration costs are recognized in profit or
loss as incurred.
Goodwill represents the excess of the identifiable cost of an acquisition over the fair value of the
Corporation's share of the net assets and net liabilities acquired at the date of acquisition. If the identifiable
cost of acquisition is less than the fair value of the Corporation's share of the net assets/net liabilities
acquired (i.e. a discount on acquisition), the difference is credited to the Consolidated Statements of Income
(Loss) and Comprehensive Income (Loss) in the period of acquisition. At the acquisition date, goodwill
acquired is recognized as an asset and allocated to each cash-generating unit (“CGU”) expected to benefit
from the business combination’s synergies, and to the lowest level at which management monitors the
goodwill.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Corporation reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement
period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognized as of that date. The measurement period is the period from the date of acquisition to the date
the Corporation obtains complete information about facts and circumstances that existed as of the
acquisition date up to a maximum of one year.
Notes: 2
21
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
Cash and Short Term Deposits
Cash and short term deposits on the Consolidated Statements of Financial Position are comprised of cash
at bank and on hand, and short term, highly liquid deposits with an original maturity of three months or
less. For the purpose of the Consolidated Statements of Cash Flows, cash and short term deposits are
defined as above, net of outstanding bank overdrafts, except where no right of set-off exists.
Real Estate and Equipment
Real estate and equipment are stated at historical cost less accumulated depreciation and any impairment
in value. Historical cost includes expenditures that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Corporation and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognized. All other repairs and maintenance are charged to the Consolidated Statements of
Income (Loss) and Comprehensive Income (Loss) during the financial period in which they are incurred.
Once an asset is available for use in the location and condition intended by management, it is depreciated
to its residual value using the appropriate depreciation rate set forth by management. Land is not
depreciated.
Depreciation is calculated using the declining balance method to depreciate the cost of real estate and
equipment to their residual values over their estimated useful lives, as follows:
Land, Yards, Buildings & Improvements -
4%
Buildings
Leasehold improvements
20%
Business operating equipment 10%
8%
Fences and parking lots
Storage Containers -
Storage containers
10%
Vehicles -
Vehicles
Truck decks and cranes
30% to 40%
20%
Office and Computer Equipment -
Furniture and equipment
Computer equipment
20%
45%
The residual value and useful lives of real estate and equipment are reviewed, and adjusted if appropriate,
at each Consolidated Statement of Financial Position date. An asset’s carrying value is written down to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. These
impairment losses are recognized in the Consolidated Statements of Income (Loss) and Comprehensive
Income (Loss). Following the recognition of an impairment loss, the depreciation charge applicable to the
asset is adjusted prospectively in order to systematically allocate the revised carrying amount, net of any
residual value, over the remaining useful life.
Notes: 3
22
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
Goodwill and Intangible Assets
Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable assets and
liabilities acquired at the date of acquisition. Goodwill is carried at cost less accumulated impairment losses.
Finite life intangible assets are carried at cost less accumulated amortization and accumulated impairment
losses. Amortization begins when an asset is available for use and is calculated on a straight-line basis to
allocate the cost of assets over their estimated useful lives as follows: Tenant Relationships - 22 to 180
months, Website - 3 years, Trademarks - 10 years.
Indefinite life intangible assets, consisting of management contracts, are carried at cost and are not
amortized. The useful lives of indefinite life intangible assets are reviewed at each Consolidated Statements
of Financial Position date.
Goodwill and indefinite life intangibles are reviewed for impairment annually by assessing the recoverable
amount of each CGU to which they relate. The recoverable amount is the higher of fair value less costs of
disposal, and value in use. When the recoverable amount of the CGU is less than the carrying amount, an
impairment loss is recognized. Any impairment is recognized immediately in the Consolidated Statements
of Income (Loss) and Comprehensive Income (Loss). Any impairment recognized on goodwill is not
subsequently reversed.
Income Taxes
Income tax is comprised of current tax and deferred tax. Income tax is recognized in the Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss) except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in equity.
Current tax is the tax expected to be payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a
transaction that is not a business combination. In addition, deferred tax is not recognized for taxable
temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax
rates that are expected to be applied to temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to
income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities,
but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will
be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Notes: 4
23
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
Stock Based Compensation
The fair value of stock options issued to directors, officers and consultants under the Corporation’s stock
option plan is estimated at the date of issue using the Black-Scholes option pricing model, and charged to
the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) and contributed surplus.
Each tranche in an award is considered a separate award with its own vesting period and grant date fair
value. On the exercise of options, the cash consideration received and the fair value of the option previously
credited to contributed surplus are credited to share capital.
The fair value of options issued to advisors in conjunction with financing transactions is estimated at the
date of issue using the fair value of the goods and services received first, if determinable, then by the Black-
Scholes option pricing model, and charged to share capital and contributed surplus over the vesting period.
On the exercise of agent options, the cash consideration received and the fair value of the option previously
credited to contributed surplus are credited to share capital.
When stock options are cancelled, it is treated as if the stock options had vested on the date of cancellation
and any expense not yet recognized for the award is recognized immediately. However, if a new option is
substituted for the cancelled option and is designated as a replacement option on the date that it is granted,
the cancelled and the new options are treated as if they were a modification of the original option.
Option pricing models require the input of highly subjective assumptions, including the expected price
volatility. Changes in these assumptions can materially affect the fair value estimate, therefore, the existing
models do not necessarily provide a reliable single measure of the fair value of the Corporation’s share
purchase options. Forfeitures are estimated for each reporting period and adjusted as required to reflect
actual forfeitures that have occurred in the period.
Income (Loss) per Share
Basic income (loss) per common share is computed by dividing the net income (loss) by the weighted
average number of common shares outstanding during the period. Diluted net income (loss) per share is
calculated by dividing the net earnings by the weighted average number of shares outstanding as adjusted
for the potential dilution that would occur if outstanding stock options, subordinated debentures, preferred
shares or other potentially dilutive financial instruments were exercised or converted to common shares.
The weighted average number of diluted shares is calculated in accordance with the treasury stock method.
The treasury stock method assumes that the proceeds received from the exercise of all potentially dilutive
instruments are used to repurchase common shares at the average market price.
Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of shares are
shown in equity as a deduction from the proceeds received.
Segment Reporting
An operating segment is a component of the Corporation that engages in business activities from which it
may earn revenues and incur expenses. All operating segments’ operating results are reviewed regularly
by the Corporation’s CEO and or CFO in order to make decisions regarding the allocation of resources to
Notes: 5
24
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
the segment. Segment results include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
Financial Instruments
a) Financial assets - Pursuant to IFRS 9, the classification of financial assets is based on the Corporation’s
assessment of its business model for holding financial assets. The classification categories are as
follows:
-
Financial assets measured at amortized cost: assets that are held within a business model
whose objective is to hold assets to collect contractual cash flows and its contractual terms give
rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding. The Corporation classifies the following financial assets as
measured at amortized cost: cash and short term deposits and accounts receivable.
Financial assets at fair value through other comprehensive income: assets that are held within
a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets and its contractual terms give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The
Corporation has no financial assets classified in this category.
Financial assets at fair value through profit or loss: assets that do not meet the criteria for
amortized cost or fair value through other comprehensive income. The Corporation has no
financial assets classified in this category.
-
-
Financial assets measured at amortized cost are measured at cost using the effective interest method.
When assessing impairment of financial assets measured at amortized cost, the Corporation applied the
simplified approach and has calculated expected credit losses based on lifetime expected credit losses.
Under the simplified method the Corporation uses a provision matrix to calculate expected credit losses
for accounts receivable which is based on the Corporation’s historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment. Loss allowances for
financial assets measured at amortized cost are deducted from the gross carrying amounts of the assets
and the loss is recognized in the Consolidated Statements of Income (Loss) and Comprehensive Income
(Loss). When a trade receivable is uncollectible, it is written off against the allowance for expected credit
losses.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset
expire or when the contractual rights to those assets are transferred.
b) Financial liabilities - The classification of financial liabilities is determined by the Corporation at initial
recognition. The classification categories are as follows:
-
Financial liabilities measured at amortized cost: financial liabilities initially measured at fair
value less directly attributable transaction costs are subsequently measured at amortized cost
using the effective interest method. Interest expense is recognized in the Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss). The Corporation classifies the
following financial liabilities as measured at amortized cost: certain debt facilities and accounts
payable and accrued liabilities.
Notes: 6
25
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
-
Financial liabilities measured at fair value through profit or loss: financial liabilities measured
at fair value with changes in fair value and interest expense recognized in the Consolidated
Statements of Income (Loss) and Comprehensive Income (Loss). The Corporation classifies the
following financial liabilities as measured at fair value: certain debt facilities and interest rate
swaps.
Financial liabilities are derecognized when the obligation is discharged, cancelled or expired.
Hybrid Debentures
When a contract contains an embedded derivative, the economic and risk characteristics of both the
embedded derivative and host contract are analyzed to understand whether or not they are closely related
and to decide whether the embedded derivative should be accounted for separately from the host contract.
The embedded features in the financial instrument issued by the Corporation are identified at inception.
Each feature is evaluated separately and classified either as part of the host liability, as a separate embedded
liability or as an equity instrument in accordance with the substance of the contractual arrangement.
Significant Accounting Estimates and Judgments
The preparation of the consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
-
Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year include, but are not necessarily limited to:
- Real estate and equipment - The Corporation determines the carrying value of its real estate and
equipment based on policies that incorporate estimates, assumptions and judgments relative to the
useful lives and residual values of the assets.
Impairment of non-financial assets - Impairment exists when the carrying value of an asset or CGU
exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value
in use. The fair value less costs of disposal calculation is based on available data from binding sales
transactions in an arm’s length transaction of similar assets or observable market prices less
incremental costs for the disposal of the asset. The value in use calculation is based on a discounted
cash flow model. The estimated future cash flows are derived from management estimates, budgets
and past performance and do not include activities to which the Corporation is not yet committed or
significant future investments that will enhance the asset’s performance in the CGU being tested. The
recoverable amount is sensitive to the discount rate used for the discounted cash flow model as well as
the expected future cash flows and the growth rate used for extrapolation purposes.
Notes: 7
26
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 3 – Continued
- Purchase price allocations - Estimates are made in determining the fair value of assets and liabilities,
including the valuation of separately identifiable intangibles acquired as part of a business
combination. These estimates may be further based on management’s best assessment of the related
inputs used in valuation models, such as future cash flows and discount rates.
Income taxes - Income taxes are subject to measurement uncertainty due to the possibility of changes
in tax legislation or changes in the characterization of income sources.
Stock based compensation - Compensation costs accrued for stock based compensation plans are
subject to the estimation of the ultimate payout using pricing models such as the Black-Scholes model
which is based on significant assumptions such as volatility, dividend yield and expected term.
-
-
Management judgments that may affect reported amounts of assets and liabilities, income and expenses
include but are not necessarily limited to:
-
For the purpose of assessing impairment of tangible and intangible assets, assets are grouped at the
lowest level of separately identified cash inflows which make up the CGU. Determination of what
constitutes a CGU is subject to management’s judgment. Management has identified each location as a
separate CGU. The asset composition of the CGU can directly impact the recoverability of the assets
included within the CGU.
- The determination of which entities require consolidation is subject to management’s judgment
regarding levels of control, assumptions of risk and other factors that may ultimately include or exclude
an entity from the classification of a subsidiary or other entity requiring consolidation.
For the purpose of recording asset acquisitions, management must exercise judgment to determine if
the acquisition meets the definition of a business. Such determinations may affect the recorded
amounts of specific assets and liabilities, goodwill and/or transaction costs.
-
- Management has applied judgment in assessing that the management contracts acquired have an
indefinite useful life because the Corporation purchased a complete system to operationally manage
its own business and that of other self storage businesses. The Corporation has acquired substantial
know-how and expertise in managing stores owned by third parties, including long term relationships,
of which the Corporation will have the benefit for an indefinite period of time. The management
contracts have therefore been deemed to have an indefinite useful life.
Notes: 8
27
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
4. Acquisitions
During the year ended December 31, 2020, the Corporation completed the below transactions that met the
definition of a business under IFRS 3 - Business Combinations. These acquisitions have been accounted for
using the acquisition method with the results of the operations being included in the consolidated financial
statements of the Corporation since the dates of acquisition. Details of the acquisitions are:
Second Quarter Acquisitions:
During the second quarter, the Corporation completed the acquisition of three self storage locations for
$11,545,000 (subjected to customary adjustments). These acquisitions consisted of both arm’s length and
non - arm’s length transactions. The purchases were paid for by advances from debt, issuance of common
shares, and cash on hand.
A summary of the acquisitions are as follows:
Acquisition date :
April 1, 2020
April 15, 2020
One Self Storage
Two Self Storage
Location
Locations
Total
Land, Yards, Buildings & Improve me nts
$
3,028,334
$
7,340,932
$
10,369,266
Te nant Re lationships
Ne t asse ts acquire d
671,666
3,700,000
504,068
7,845,000
1,175,734
11,545,000
Conside ration paid for the ne t asse ts acquire d was obtaine d from the following:
Issuance of common share s
-
3,845,000
Cash
De bt
1,295,000
2,405,000
3,700,000
-
4,000,000
7,845,000
Se le cte d information for the acquisitions, since the ir acquisition date s:
Re ve nue
Ope rating costs
Amortization
Inte re st
Ne t income (loss)
327,298
147,873
179,425
249,685
56,475
416,466
126,792
289,674
355,093
92,192
3,845,000
1,295,000
6,405,000
11,545,000
743,764
274,665
469,099
604,778
148,667
$
(126,735)
$
(157,611)
$
(284,346)
Notes: 9
28
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 4 – Continued
Fourth Quarter Acquisitions:
During the fourth quarter, the Corporation completed the acquisition of 13 self storage locations for
$217,900,000 (subjected to customary adjustments). These acquisitions consisted of both arm’s length and
non - arm’s length transactions. The purchases were paid for by advances from debt, issuance of common
shares, and cash on hand.
A summary of the acquisitions are as follows:
Acquisition date:
October 15, 2020
December 1, 2020
December 1, 2020
December 4, 2020
One Self Storage
Five Self Storage
One Self Storage
Six Self Storage
Location
Locations
Locations
Locations
Total
Land, Yards, Buildings & Improvements
Tenant Relationships
Mortgages Assumed
Net assets acquired
$
1,244,658
180,342
$
120,514,236
3,485,764
-
-
1,425,000
124,000,000
$
56,426,783
5,573,217
(29,270,018)
32,729,982
$
26,625,717
3,849,283
-
30,475,000
$
204,811,394
13,088,606
(29,270,018)
188,629,982
Consideration paid for the net assets acquired was obtained from the following:
Issuance of common shares
Cash
Debt
-
1,400,000
25,000
1,425,000
-
27,358,337
96,641,663
124,000,000
2,000,000
20,729,982
10,000,000
32,729,982
6,000,000
501,195
23,973,805
30,475,000
8,000,000
49,989,514
130,640,468
188,629,982
Selected information for the acquisitions, since their acquisition dates:
Revenue
Operating costs
Amortization
Interest
Net income (loss)
24,614
11,234
13,380
27,025
2,294
(15,939)
$
261,760
138,500
123,260
554,934
127,860
(559,534)
$
256,311
53,654
202,657
290,505
83,854
(171,702)
$
248,484
64,787
183,697
232,464
93,045
(141,812)
$
791,169
268,175
522,994
1,104,928
307,053
(888,987)
$
Notes: 10
29
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
5. Real Estate and Equipment
Land, Yards,
Buildings &
Improvements
Storage
Containers
COST
December 31, 2018
Additions
Disposals
Business acquisitions
December 31, 2019
Additions
Disposals
$
915,611,059
38,542,148
(46,200)
335,756,834
1,289,863,841
44,086,450
(66,205)
Business acquisitions
December 31, 2020
215,180,660
1,549,064,746
$
$
18,712,577
49,157
(5,000)
-
18,756,734
9,260
-
-
$
18,765,994
Intangible
Tenant
Relationships
$
97,861,998
-
-
34,224,218
132,086,216
-
-
14,264,340
146,350,556
$
Office &
Computer
Equipment
$
2,662,999
1,273,869
-
-
3,936,868
2,065,964
(19,065)
-
Vehicles
$
5,070,494
166,721
(275,627)
-
4,961,588
754,346
-
-
$
5,715,934
$
5,983,767
Total
$
1,039,919,127
40,031,895
(326,827)
369,981,052
1,449,605,247
46,916,020
(85,270)
229,445,000
1,725,880,997
$
ACCUMULATED DEPRECIATION
December 31, 2018
Depreciation
Disposals
$
December 31, 2019
Depreciation
Disposals
December 31, 2020
NET BOOK VALUE
December 31, 2019
December 31, 2020
68,580,856
49,445,309
(12,941)
118,013,224
53,055,758
(12,937)
171,056,045
$
5,376,759
1,315,008
(118)
6,691,649
1,184,273
-
$
45,852,008
27,435,403
-
73,287,411
27,036,038
-
$
3,622,525
441,761
(252,883)
3,811,403
401,605
-
$
7,875,922
$
100,323,449
$
4,213,008
$
1,044,935
568,874
-
1,613,809
880,752
(2,807)
2,491,754
$
$
$
$
124,477,083
79,206,355
(265,942)
203,417,496
82,558,426
(15,744)
285,960,178
1,171,850,617
1,378,008,701
12,065,085
10,890,072
58,798,805
46,027,107
1,150,185
1,502,926
2,323,059
3,492,013
1,246,187,751
1,439,920,819
Included in Land, Yards, Buildings & Improvements is Land at a value of $493,879,256 (December 31, 2019
- $412,304,800).
Included in Land, Yards, Buildings & Improvements is $29,840,095 (December 31, 2019 - $16,102,351) of
construction in process that is not being depreciated.
Included in Land, Yards, Buildings & Improvements are right-of-use assets at a value of $41,641,031
(December 31, 2019 - $23,772,865), net of accumulated depreciation of $2,557,224 (December 31, 2019 -
$910,371). The continuity of the right-of-use assets is as follows:
Self Storage Properties
Balance, January 1, 2019
Additions
$
18,174,269
6,508,967
Depreciation charge for the year
Balance, December 31, 2019
Additions
Depreciation charge for the year
Balance, December 31, 2020
(910,371)
23,772,865
19,515,019
(1,646,853)
41,641,031
$
$
Notes: 11
30
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
6. Goodwill and Intangible Assets
Management
Goodwill
Contracts
Trademarks
Website
Total
COST
December 31, 2018
$
61,226,826
$
16,300,000
$
-
$
-
$
77,526,826
Business acquisitions
36,301,098
-
December 31, 2019
97,527,924
16,300,000
-
-
-
-
36,301,098
113,827,924
Additions
-
-
31,478
66,371
97,849
December 31, 2020
$
97,527,924
$
16,300,000
$
31,478
$
66,371
$
113,925,773
ACCUMULATED AMORTIZATION
December 31, 2018
$
-
$
-
$
-
$
-
$
-
Amortization
December 31, 2019
Amortization
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31, 2020
$
-
$
-
$
-
$
-
$
-
NET BOOK VALUE
December 31, 2019
97,527,924
16,300,000
-
-
113,827,924
December 31, 2020
97,527,924
16,300,000
31,478
66,371
113,925,773
At December 31, 2020, the Corporation performed its annual impairment test on goodwill and its indefinite
life intangible assets. Goodwill is allocated to the group of CGU’s that benefited from the synergies of the
business combination on which the goodwill arose. The Corporation used the fair value less costs of
disposal method to determine the recoverable amount of the CGU’s. Based on the impairment test
performed, the Corporation concluded that no impairment exists on its goodwill and indefinite life
intangible assets.
Information regarding each impairment test is as follows:
Manitoba and Saskatchewan group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of the properties,
with a net operating income growth rate of 2% which is consistent with management’s knowledge
of the local market and is lower than the CGU’s recent historical growth rate.
- Cash flows were discounted at a pre-tax rate of 5.98% based on management’s judgement in this
geographic region.
Notes: 12
31
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 6 – Continued
Kamloops, BC group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of the properties,
with a net operating income growth rate of 4%. The Corporation has seven stores in the region and
is able to distribute costs and operate more efficiently.
- Cash flows were discounted at a pre-tax rate of 6.78% based on management’s experience in this
geographic region and the fact that the properties are on leased land.
London, ON group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of the property, with
an average net operating income growth rate of 2% which is consistent with management’s
knowledge of the local market.
- Cash flows were discounted at a pre-tax rate of 5.98% based on management’s experience in this
geographic region.
Sentinel Self-Storage group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of the properties,
with a net operating income growth rate of 3.75%. Given the location of the stores in this portfolio,
over 20 stores in major markets and highly desirable locations in Canada, management believes
that this growth rate is sustainable, and is consistent with the CGU’s historical growth rate.
- Cash flows were discounted at a pre-tax rate of 4.75% based on management’s experience and the
superior quality and location of these properties.
Portable Storage group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of storage containers,
with a net operating income growth rate of 7% based on management’s experience and the
exclusive marketing channels the Corporation has for this product type.
- Cash flows were discounted at a pre-tax rate of 6.64% based on management’s experience in these
markets.
Real Storage group of CGU’s
- The cash flow projection includes specific estimates based on the expected life of the properties,
with a net operating income growth rate of 5% during the first three years and 4% thereafter.
- Given the location of the stores in this portfolio and with the Corporation already operating in
many of the 27 markets in which these stores are located, management believes that this growth
rate is sustainable.
- Cash flows were discounted at a pre-tax rate of 4.94% based on management’s experience and
location of these properties.
Notes: 13
32
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 6 – Continued
Management Division CGU
- The cash flow projection includes specific estimates for five years with a terminal growth rate of
4%, which management feels would be representative of the future indefinite cash flows from this
asset.
- Cash flows were discounted at a pre-tax rate of 20% based on what management deemed
appropriate for the nature of this type of revenue stream.
RecordXpress Division CGU
- The cash flow projection includes specific estimates for five years with a growth rate of 4%, which
management feels would be representative of the future cash flows from these assets.
- Cash flows were discounted at a pre-tax rate of 6.9% based on management’s experience in the
records management business.
The most sensitive inputs to the value in use model used for these groups of CGU’s are the growth rate and
the discount rate:
- A 1% increase or decrease in the growth rate would not result in an impairment of these groups of
CGU’s.
- A 1% increase or decrease in the discount rate would not result in an impairment of these groups
of CGU’s.
Group of CGU's
Goodwill
Carrying Value
Manitoba and Saskatchewan
$
2,621,716
$
25,027,398
Kamloops, BC
London, ON
Sentinel Self-Storage
Portable Storage
Real Storage
Management Division
RecordXpress Division
76,470
142,807
52,442,159
2,578,968
33,622,150
3,364,706
2,678,948
6,488,583
2,051,728
385,512,531
13,418,541
248,962,861
19,364,705
7,948,404
$
97,527,924
$
708,774,751
Notes: 14
33
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
7. Debt
December 31, 2020
Weighted
Average
Rate
Range
Balance
December 31, 2019
Weighted
Average
Rate
Range
Balance
Mortgages
At amortized cost - Fixed/Variable
At FVTPL - Variable
- Interest rate swap
Lines of Credit and Promissory Notes
3.18% to 4.99% 4.19%
Maturity: Apr 2021 to Apr 2028
382,219,232
3.18% to 5.00% 4.25%
Maturity: Jul 2020 to Apr 2028
362,374,897
394,261,163
31,912,305
426,173,468
3.93%
299,958,291
8,478,824
308,437,115
4.17%
Maturity: Jan 2024 to Dec 2030
Maturity: May 2028 to Nov 2029
4.05%
808,392,700
4.21%
670,812,012
At amortized cost - Variable
3.54%
61,413,656
4.78%
72,413,656
Maturity: Dec 2022 to May 2024
Maturity: Aug 2020 to Dec 2022
At amortized cost - Fixed
4.25%
13,750,069
5.00%
12,898,053
Maturity: Jan 2021 to Dec 2023
Maturity: Feb 2020 to Oct 2021
At FVTPL - Variable
- Interest rate swap
280,244,148
19,755,852
300,000,000
3.97%
300,000,000
812,386
300,812,386
3.97%
Maturity: Apr 2022
Maturity: Apr 2022
Deferred financing costs, net of accretion
of $4,871,753 (Dec 31, 2019 - $3,656,956)
3.84%
375,163,725
4.12%
386,124,095
(3,817,293)
(3,856,505)
3.98%
1,179,739,132
4.18% 1,053,079,602
Reconciliation of Debt
The following table reconciles the changes in cash flows from financing activities for the
Corporation's debt:
December 31, 2020
December 31, 2019
Debt, beginning of period
$
1,053,079,602
$
702,411,156
Advances from debt
Repayment of debt
Amounts offset against accounts receivable
Change in fair value of debt measured at FVTPL
Change in fair value of interest rate swaps
Total cash flow from debt financing activities
Change in deferred financing costs
264,041,758
(123,419,291)
(4,710,939)
(51,668,157)
42,376,947
126,620,318
39,212
536,106,032
(187,662,004)
(5,715,583)
-
9,291,210
352,019,655
(1,351,209)
Debt, end of period
$
1,179,739,132
$
1,053,079,602
The bank prime rate at December 31, 2020 was 2.45% (December 31, 2019 – 3.95%).
Notes: 15
34
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 7 – Continued
Mortgages are secured by a first mortgage charge on the real estate and equipment of the Corporation,
general security agreements covering all assets of the Corporation, general assignment of rents and leases
and assignments of insurance coverage over all assets of the Corporation. The Corporation must maintain
certain financial ratios to comply with the facilities. These covenants include debt service coverage ratios,
a fixed charge coverage ratio, a tangible net worth ratio, and a loan to value ratio. As of December 31, 2020,
the Corporation is in compliance with all covenants.
The deferred financing costs consist of fees and costs incurred to obtain the related mortgage financing,
less accumulated amortization.
Principal repayments on mortgages and lines of credit in each of the next five years are estimated as follows:
Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
$
$
$
$
$
$
465,985,377 (includes lines of credit of $361.4 million)
191,270,632
58,520,159
111,172,658
23,523,953
333,083,646
The Corporation entered into interest rate swap contracts in order to fix the interest rate on $726 million of
debt at a weighted average rate of 3.94%. The swaps mature between April 2022 and December 2030.
8. Hybrid Debentures
On July 20, 2020, $75 million of unsecured senior hybrid debentures were issued at a price of $1,000 per
debenture with a term of sixty-six months, due January 31, 2026. These debentures bear a fixed interest rate
of 5.75% per annum, payable semi-annually in arrears on January 31 and July 31 of each year, commencing
January 31, 2021.
On and after January 31, 2024 and prior to January 31, 2025, the debentures will be redeemable in whole or
in part from time to time at the Corporation’s option at a redemption price equal to 102.875% of the
principal amount of the debentures redeemed plus accrued and unpaid interest, if any, up to but excluding
the date set for redemption. On and after January 31, 2025 and prior to the maturity date, the debentures
will be redeemable, in whole or in part, from time to time at the Corporation’s option at par plus accrued
and unpaid interest, if any, up to but excluding the date set for redemption.
On redemption or at maturity on January 31, 2026, the Corporation may elect to, in whole or part, convert
the debentures into freely tradable common shares. In such event, payment will be satisfied by delivering
for each $1,000 due, that number of freely tradable shares obtained by dividing $1,000 by 95% of the current
Notes: 16
35
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 8 – Continued
market price on the date fixed for redemption or maturity, as the case may be. Any accrued and unpaid
interest will be paid in cash.
Each embedded feature was evaluated separately and it was determined that the economic and risk
characteristics are closely related to the host contract and therefore were not accounted for as separate
financial instruments. The debentures were recorded at a fair value of $75 million net of deferred financing
costs of $3.2 million.
The debentures are subsequently measured at amortized cost using the effective interest method over the
life of the debenture. The balance of the hybrid debentures is:
December 31, 2020
Opening balance
$
-
Additions during period
75,000,000
Less:
Issuance costs
Accretion during period
3,524,177
(289,902)
Ending balance
$
71,765,725
9. Share Capital
Authorized: Unlimited number of common, voting shares of no par value.
Authorized: Unlimited number of preferred non-voting shares issuable in series at an issuance price of $1
per share.
Common shares issued:
Number of Shares
Amount
Balance, December 31, 2018
355,722,974
$
338,552,701
Issued on asset acquisitions
Dividend reinvestment plan
Share option and warrant redemption
Share issuance costs
5,464,286
537,795
1,080,000
-
15,300,000
1,447,278
350,350
(64,666)
Balance, December 31, 2019
362,805,055
355,585,663
Issued on acquisitions
Dividend reinvestment plan
Share option redemption
Share issuance costs
Common shares repurchased
3,419,287
481,306
782,800
-
11,845,000
1,518,011
901,588
(25,121)
(1,233,622)
(3,938,229)
Balance, December 31, 2020
366,254,826
$
365,886,912
Notes: 17
36
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 9 – Continued
Dividend Reinvestment Plan
Represents common shares issued under the Corporation’s dividend reinvestment plan (“DRIP") for
holders of common shares approved on April 18, 2016. Under the terms of the DRIP, eligible registered
holders of a minimum of 10,000 Common Shares (the "Shareholders") may elect to automatically reinvest
their cash dividends, payable in respect to the common shares, to acquire additional common shares, which
will be issued from treasury or purchased on the open market. The Corporation may initially issue up to
5,000,000 common shares under the DRIP, which may be increased upon Board of Directors approval,
acceptance of the increase by the Exchange, and upon public disclosure of the increase.
Contributed Surplus:
Opening balance
Stock based compensation
Ending balance
December 31, 2020
December 31, 2019
$
8,812,227
6,318,156
15,130,383
$
$
$
5,218,589
3,593,638
8,812,227
Stock Options
The Board of Directors of the Corporation may from time to time, at its discretion, and in accordance with
the Exchange requirements, grant to directors, officers, employees and technical consultants of the
Corporation, non-transferable options to purchase common shares provided that: i) the number of common
shares reserved for issuance will not exceed 10% of the issued and outstanding common shares; ii) the
options are exercisable for a period of up to 10 years from the date of grant; iii) the number of common
shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and
outstanding common shares; and iv) the number of common shares reserved for issuance to all technical
consultants, if any, will not exceed 2% of the issued and outstanding shares. The exercise price for
purchasing these shares cannot be less than the minimum exercise price as provided by Exchange rules.
The following table summarizes information about stock options outstanding and exercisable as at:
December 31, 2020
December 31, 2019
Weighted Average
Exercise Price
Options
Weighted Average
Exercise Price
Options
Opening
Exercised/Expired
Granted
Closing and Exercisable
18,442,450
(802,800)
6,000,000
23,639,650
$1.92
1.22
3.98
$2.47
13,537,450
(1,095,000)
6,000,000
18,442,450
$1.36
0.37
2.90
$1.92
Notes: 18
37
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 9 – Continued
The fair value of options granted in 2020 was estimated on the date of the grant, as determined by using
the Black-Scholes option pricing model with the following assumptions:
Dividend Yield
Risk-Free Interest Rate
Expected Life of Options
Expected Volatility of the Corporation's Common Shares
Stock options exercisable and outstanding are as follows:
0.01%
0.39%
4 Years
30.90%
Exercise Price
Vesting Date
Expiry Date
December 31, 2020 December 31, 2019
$
0.33
Jun. 19, 2014
Jun. 19, 2024
$
0.41
Apr. 28, 2015
Apr. 28, 2025
$
0.50
Sep. 14, 2015
Sep. 14, 2025
$
1.36
Dec. 21, 2016
Dec. 21, 2026
$
1.78
Mar. 16, 2017
Mar. 16, 2027
$
2.52
May 4, 2018
May 4, 2028
$
2.90
May 28, 2019
May 28, 2029
$
3.98
Dec. 15, 2020
Dec. 15, 2030
140,000
1,660,650
1,550,000
2,785,000
2,810,000
2,825,000
5,869,000
6,000,000
140,000
2,122,450
1,570,000
2,810,000
2,850,000
3,000,000
5,950,000
-
Options exercisable and outstanding
23,639,650
18,442,450
Equity Incentive Plan
Under the Corporation’s Equity Incentive Plan passed on May 30, 2018 (the “Plan”), directors, employees
and consultants are eligible to receive awards, in the form of Restricted Share Units (“RSU’s”), Deferred
Share Units (“DSU’s”) and Named Executive Officer Restricted Share Units (“Neo RSU’s”), as and when
granted by the Board, at its sole discretion. The maximum number of awards that may be issued under the
Plan is 17,545,677. The maximum number of shares that may be reserved for issuance under the Plan,
together with any of the Corporation’s other share-based compensation arrangements, may not exceed 10%
of the issued shares of the Corporation.
The RSU’s and DSU’s that are granted vest in equal annual amounts over three years. The Neo RSU’s vest
three years after the date of grant. RSU’s, DSU’s and Neo RSU’s are entitled to be credited with dividend
equivalents in the form of additional RSU’s, DSU’s and Neo RSU’s, respectively.
With certain exceptions, the Plan provides that (i) the maximum number of awards that may be granted to
any one participant together with any other share-based compensation arrangements, in any 12 month
period, may not exceed 5% of the issued shares, and, in the case of any consultant, may not exceed 2% of
the issued shares; and (ii) the total value of all securities that may be issued to any non-employee director
under all of the Corporation’s security based compensation arrangements may not exceed $150,000 per
annum.
Notes: 19
38
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 9 – Continued
The Corporation entered into Total Return Swaps (“TRS”) as economic hedges of the Corporation’s DSU’s
and RSU’s. Under the terms of the TRS, a bank has the right to purchase the Corporation’s shares in the
marketplace as a hedge against the returns in the TRS. At December 31, 2020, 1,533,556 TRS units were
outstanding.
At December 31, 2020, 100% of the combined DSU and RSU exposures were economically hedged
(December 31, 2019 - 100%). Hedge accounting is not applied for the DSU/RSU hedging program.
Under the Plan, 574,255 common shares at a value of $2,150,636 have been issued as at December 31, 2020.
Dividends
A cash dividend of $0.002667 per common share was declared on March 18, 2020 and paid to shareholders
of record on March 31, 2020.
A cash dividend of $0.002680 per common share was declared on June 16, 2020 and paid to shareholders
of record on June 29, 2020.
A cash dividend of $0.002693 per common share was declared on September 15, 2020 and paid to
shareholders of record on September 30, 2020.
A cash dividend of $0.002707 per common share was declared on December 15, 2020 and payable to
shareholders of record on December 31, 2020.
10. Financial Risk Management and Fair Value
The Corporation is required to disclose certain information concerning its financial instruments. The fair
values of the Corporation’s cash and short term deposits, accounts receivable and accounts payable and
accrued liabilities approximate their carrying amount due to the relatively short periods to maturity of
these financial instruments. The fair value of the Corporation’s debt obligations is estimated based on
discounted future cash flows using discount rates that reflect current market conditions for instruments
with similar terms and risks. Such fair value estimates are not necessarily indicative of the amounts the
Corporation might pay or receive in actual market transactions.
IFRS establishes a three tier fair value hierarchy to reflect the significance of the inputs used in measuring
the fair value of the Corporation’s financial instruments. The three levels are:
Level 1 – This level includes assets and liabilities measured at fair market value based on
unadjusted quoted prices for identical assets and liabilities in active markets that the
Corporation can access on the measurement date.
Level 2 – This level includes measurements based on directly or indirectly observable inputs
other than quoted prices included in Level 1. Financial instruments in this category are
measured using valuation models or other standard valuation techniques that rely on
observable market inputs.
Notes: 20
39
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 10 – Continued
Level 3 – The measurements used in this level rest on inputs that are unobservable, unavailable,
or whose observable inputs do not justify the largest part of the fair value instrument.
The fair value of financial liabilities was as follows:
Financial Liabilities:
Debt - at amortized cost
Debt - at FVTPL
Interest rate swaps
Fair Value
Hierarchy
As at December 31, 2020
Carrying
Amount
Fair
Value
As at December 31, 2019
Carrying
Amount
Fair
Value
Level 2
Level 2
Level 2
453,565,664
674,505,311
51,668,157
474,372,525
674,505,311
51,668,157
443,830,101
599,958,291
9,291,210
443,830,101
599,958,291
9,291,210
Financial instruments may expose the Corporation to a number of financial risks including interest rate
risk, credit risk and environmental risk.
a)
Interest rate risk – Interest rate risk arises from changes in market interest rates that may affect
the fair value of future cash flows from the Corporation’s financial assets or liabilities. Interest
rate risk may be partially mitigated by holding both fixed and floating rate debt, or by
staggering the maturities of fixed rate debt. The Corporation is exposed to interest rate risk
primarily relating to its long term debt. The Corporation will manage interest rate risk by
utilizing fixed interest rates on its mortgages where possible, entering into interest rate swap
contracts, staggering maturities over a number of years to mitigate exposure to any single year,
and by attempting to ensure access to diverse sources of funding.
There is interest rate risk associated with variable rate mortgages and lines of credit as interest
expense is impacted by changes in the prime rate. The impact on the Consolidated Statements
of Income (Loss) and Comprehensive Income (Loss) if interest rates on variable rate debt had
been 1% higher or lower for the year ended December 31, 2020 would have been approximately
$747,821 (December 31, 2019 - $1,369,745).
b) Credit risk – Credit risk arises from the possibility that customers may experience financial
difficulty and be unable to fulfill their financial obligations to the Corporation. The risk of
incurring bad debts often arises if storage customers relocate and cannot be found to enforce
payment, or if storage customers abandon their possessions. The extent of bad debts can be
mitigated by quickly following up on any unpaid amounts shortly after the due date, enforcing
late fees, denying access to any customers with delinquent accounts, and ultimately seizing the
possessions of the customer. Additionally, the Corporation typically rents to numerous
customers, each of which constitutes significantly less than 5% of the Corporation’s monthly
revenue. This diversification in the customer base reduces credit risk from any given tenant.
The Corporation has approximately $350,000 of receivables from related parties at December
31, 2020. Management believes there is low credit risk associated with these related party
balances due to the nature of the relationships and the historical loss rates.
Notes: 21
40
Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 10 – Continued
Change in the Corporation’s allowance for expected credit losses is as follows:
Balance December 31, 2018
Charges or adjustments during the year
Balance December 31, 2019
Charges or adjustments during the year
Balance December 31, 2020
$250,658
98,968
349,626
63,865
$413,491
The creation and release of the allowance for expected credit losses has been included in
operating costs in the Consolidated Statements of Income (Loss) and Comprehensive Income
(Loss). Amounts charged to the allowance account are generally written off when there is no
expectation of recovering additional cash.
c) Liquidity risk – Liquidity risk is the risk that the Corporation will be unable to meet its financial
obligations as they fall due. The Corporation manages liquidity risk through cash flow
forecasting and regular monitoring of cash requirements including anticipated investing and
financing activities. Typically, the Corporation ensures that it has sufficient cash or liquid
investments available to meet expected operating expenses for a period of 30 days, excluding
the potential impact of extreme circumstances that cannot reasonably be predicted, such as
natural disasters. For the foreseeable future, the Corporation anticipates that cash flows from
operations, working capital, and other sources of financing will be sufficient to meet its
operating requirements, debt repayment obligations and will provide sufficient funding for
anticipated capital expenditures. It is the Corporation’s intention to renew any debt coming
due in the next fiscal year. The maturities of long term financial liabilities are summarized in
Note 7.
d) Environmental risk – Environmental risk is inherent in the ownership of property. Various
municipal, provincial and federal regulations can result in penalties or potential liability for
remediation should hazardous materials enter the environment. The presence of hazardous
substances could also impair the Corporation’s ability to finance or sell the property, or it may
expose the Corporation to civil lawsuits. To mitigate such risk, the Corporation will procure
recent or updated environmental reports for all acquisitions. It also prohibits the storage of
hazardous substances as a condition of the rental contract signed by customers.
Unless otherwise noted, it is management’s opinion that the Corporation is not exposed to
significant currency risk.
Notes: 22
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
11. Income Tax
2020
2019
Loss before taxes
Combined federal and provincial statutory income tax rate
(44,145,281)
26.50%
(62,380,647)
26.75%
Income tax recovery calculated at statutory rate
Non-deductible items
Change in tax rate and other items
Income tax expense (recovery)
(11,698,499)
1,681,173
(845,733)
(16,686,823)
2,325,303
(1,900,658)
(10,863,059)
(16,262,178)
Movements in deferred tax assets (liabilities) related to temporary differences during the year are as
follows:
December 31,
2019
Recognized on
acquisitions
Recognized in
earnings
December 31,
2020
Property, plant and equipment
Goodwill and intangible assets
Long term debt
Interest rate swaps
Lease liability
Deferred tax assets not recognized
Non-capital loss carry forwards
(96,315,732)
(1,399,440)
(1,004,049)
2,456,596
6,739,836
1,508,047
23,951,666
Deferred tax asset (liability)
(64,063,076)
-
-
-
-
-
-
-
-
(8,224,597)
4,904,798
(104,540,329)
3,505,358
(826,063)
(1,830,112)
(2,456,596)
4,702,035
346,868
12,416,614
10,863,059
-
11,441,871
1,854,915
36,368,280
(53,200,017)
12. Related Party Transactions
The Corporation holds a Master Franchise from Canadian PUPS Franchises Inc. (CPFI) which provides the
Corporation with the exclusive Canadian franchise rights for the development and operation of portable
storage throughout Canada. CPFI is a corporation related to Steven Scott and Iqbal Khan who are directors
of the Corporation. The Corporation pays a monthly royalty of 3.5% on the gross sales. During the year
ended December 31, 2020, the Corporation paid $289,218 (December 31, 2019 - $291,152) for royalties and
$nil (December 31, 2019 - $82,585) for storage containers and other equipment under the Master Franchise
Agreement.
Included in accounts payable and accrued liabilities, relating to the previously noted transactions, at
December 31, 2020 was $25,231 (December 31, 2019 - $73,783) payable to CPFI.
The Corporation has management agreements with Access Self Storage Inc. and related companies
(“Access Group”). These companies are related to Steven Scott and Iqbal Khan who are directors of the
Corporation. The Corporation invoices the Access Group for management fees as well as additional
services it provides as part of the management agreements. The Access Group will also invoice the
Corporation for construction, maintenance and other services related to its day-to-day operations.
Notes: 23
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 12 – Continued
During the year ended December 31, 2020, the Corporation received $5,877,719 (December 31, 2019 -
$7,559,825) in payments and reimbursements related to the management agreements. During the year
ended December 31, 2020, the Corporation also incurred $20,491,351 (December 31, 2019 - $14,078,522) in
expenditures related to construction, maintenance and other services related to its day-to-day operations.
Included in accounts payable and accrued liabilities as at December 31, 2020 was $2,665,248 (December 31,
2019 - $2,356,616) payable to the Access Group. Included in accounts receivable as at December 31, 2020
was $349,185 (December 31, 2019 - $671,452) receivable from the Access Group.
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Corporation, directly and indirectly, and include directors. The
remuneration of key management personnel for employment services rendered are as follows:
Wages, management fees, bonuses and directors fees
$
629,644
$
539,196
December 31, 2020 December 31, 2019
Stock based compensation
13. Capital Risk Management
3,404,873
2,561,230
$
4,034,517
$
3,100,426
The Corporation’s objectives when managing capital are to safeguard the Corporation’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The
Corporation defines capital as shareholders’ equity excluding contributed surplus, and long term debt. The
Corporation manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,
the Corporation may attempt to issue new shares, issue new debt, acquire or dispose of assets, and adjust
the amount of cash and short term deposits. The Board of Directors does not establish a quantitative return
on capital criteria, but rather promotes year over year sustainable growth.
The Corporation reviews and assesses its capital structure on an ongoing basis. The Corporation
determines the appropriate mortgage debt to be placed on properties at the time a particular property is
acquired or when an existing mortgage financing matures. Consideration is given to various factors
including, but not limited to: interest rates, financing costs, the term of the mortgage and the strength of
cash flow arising from the underlying asset. Mortgage debt is usually only secured by the underlying asset.
The Corporation monitors its capital using a debt to fair value ratio.
Except for the debt covenants described in Note 7, the Corporation is not subject to any externally imposed
capital requirements.
Notes: 24
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
14. Segmented Information
The Corporation operates three reportable business segments. Each segment is a component of the
Corporation for which separate discrete financial information is available for evaluation by the chief
decision makers of the Corporation.
•
Self Storage – involves the customer renting space at the Corporation’s property for short or long term
storage. Self storage also includes customers utilizing space for inventory storage for last mile delivery,
small commercial operations, and vehicles.
• Portable Storage – involves delivering a portable storage unit to the customer. The customer can opt
to keep the portable storage unit at their location, or have it moved to another location for further
storage.
• Management Division – involves revenues generated from the management of stores owned by third
parties.
The Corporation evaluates performance and allocates resources based on earnings before interest, taxes,
depreciation, amortization and stock based compensation. Corporate costs are not allocated to the
segments and are shown separately.
Notes: 25
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 14 – Continued
For the Year Ended December 31, 2020
Self
Storage
Portable
Management
Storage
Division
Corporate
Total
Revenue
$
145,591,137
$
7,803,639
$
2,069,146
$
-
$
155,463,922
Operating expenses
Net operating income
45,926,537
99,664,600
5,324,321
2,479,318
-
2,069,146
-
-
51,250,858
104,213,064
Acquisition and integration
Selling, general & admin.
-
-
Interest expense
45,820,583
Unrealized loss (gain) on swaps
Stock based compensation
-
-
-
-
-
-
-
-
-
-
-
-
7,402,034
7,402,034
15,550,356
15,550,356
-
45,820,583
(9,291,210)
(9,291,210)
6,318,156
6,318,156
Depreciation & amortization
79,493,782
1,632,364
631,285
800,995
82,558,426
Deferred tax recovery
-
-
-
(10,863,059)
(10,863,059)
Net income (loss)
$
(25,649,765)
$
846,954
$
1,437,861
$
(9,917,272)
$
(33,282,222)
Additions:
Real estate and equipment
273,929,664
232,806
-
2,198,550
276,361,020
For the Year Ended December 31, 2019
Se lf
Portable
Manage me nt
Storage
Storage
Division
Corporate
Total
Re ve nue
$
125,764,839
$
7,447,897
$
1,750,304
$
-
$
134,963,040
Ope rating e xpe nse s
Ne t ope rating income
39,730,109
86,034,730
5,134,990
2,312,907
-
1,750,304
-
-
44,865,099
90,097,941
Acquisition and inte gration
Se lling, ge ne ral & admin.
-
-
Inte re st e xpe nse
42,189,684
Unre alized loss on swaps
Stock base d compe nsation
-
-
-
-
-
-
-
-
-
-
-
-
6,982,983
6,982,983
11,214,718
11,214,718
-
42,189,684
9,291,210
3,593,638
9,291,210
3,593,638
De pre ciation & amortization
76,804,172
1,867,949
365,308
168,926
79,206,355
De fe rre d tax re cove ry
-
-
-
(16,262,178)
(16,262,178)
Ne t income (loss)
$
(32,959,126)
$
444,958
$
1,384,996
$
(14,989,297)
$
(46,118,469)
Additions:
Re al e state and e quipme nt
409,430,685
334,753
-
247,509
410,012,947
Notes: 26
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
Note 14 – Continued
Total Assets
Se lf
Storage
Portable
Storage
Manage me nt
Division
Corporate
Total
As at De ce mbe r 31, 2019
$
1,334,810,756
$
17,946,452
$
17,408,039
$
22,700,715
$
1,392,865,962
As at De ce mbe r 31, 2020
$
1,529,514,473
$
16,019,542
$
17,492,262
$
24,353,662
$
1,587,379,939
15. Commitments and Contingencies
Lease Liabilities
The Corporation leases buildings and land in Kamloops, BC, Montreal, QC, Sudbury, ON, Toronto, ON,
Kitchener, ON and Winnipeg, MB. The leases expire between 2023 and 2054, with the leases expiring in
2023 and 2027 having up to 15 years and 20 years of renewals, respectively, which are expected to be
exercised by the Corporation.
The lease liabilities are measured at the present value of the lease payments that are not paid at the balance
sheet date. Lease payments are apportioned between interest expense and a reduction of the lease liability
using the Corporation’s incremental borrowing rate to achieve a constant rate of interest on the remaining
balances of the liability.
For the year ended December 31, 2020, the Corporation recognized $1,418,221 (December 31, 2019 -
$1,019,236) in interest expense related to its lease liabilities.
A reconciliation of the lease liabilities from the date of adoption of IFRS 16 to December 31, 2020 is as
follows:
Self Storage Properties
Balance, December 31, 2019
$
25,491,060
Additions
Cash Payments
Interest
19,695,524
(2,569,755)
1,418,221
Balance, December 31, 2020
$
44,035,050
Contingency
The Corporation has no legal contingency provisions at either December 31, 2020 or December 31, 2019.
Letters of Credit
The Corporation has various letters of credit in the amount of $91,758 which expire on September 6, 2021,
with automatic extensions of a year from any future expiration date.
Notes: 27
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
16. Subsequent Events
On January 25, 2021, the Corporation announced that it has received conditional acceptance from the TSX
Venture Exchange to renew its Normal Course Issuer Bid (“NCIB”) to purchase for cancellation, during the
12-month period starting January 25, 2021, up to 18,312,741 of the outstanding Common Shares of the
Corporation. In addition, the Corporation has received conditional acceptance from the TSX Venture
Exchange to commence a NCIB to purchase for cancellation, during the 12-month period starting January
25, 2021, outstanding senior unsecured hybrid debentures of the Corporation in the aggregate principal
amount of $3,750,000.
17. COVID-19 Pandemic
In March 2020, the World Health Organization declared a global pandemic related to COVID-19. As a
result, and for the future benefit of the Corporation, we modified our operating platform to continue to
meet the strong demand for our services. These changes included improving our virtual systems to offer a
no-contact rental process, installation of plexiglass partitions and limiting the number of customers in our
offices to one at a time. Our teams are fully employed and customers are able to safely store and access
their valuables. We continue to be extremely proud of our team for continuing to adapt to new processes
and for being committed to providing exceptional customer and community service.
As fiscal 2020 progressed, we experienced a significant increase in leads and rentals which has resulted in
higher occupancies and rental rates across the portfolio. These positive trends resulted in the Corporation
achieving strong revenue growth. While customers may be further impacted, including through
unemployment, the Corporation has experienced no meaningful increases in accounts receivable.
Since the start of COVID-19, the Corporation continued to execute on our strategies to attract customers
through search engine marketing, improving our online presence, virtual community connection programs
and the development of a national platform and initiatives to fulfill last mile storage needs. These efforts
have allowed us to attract customers who are leveraging our national footprint to offer a complete storage,
inventory management and mobilization solution through our self and portable storage and records
management infrastructures.
18. Comparative Figures
Certain comparative figures have been reclassified to comply with the current presentation.
Notes: 28
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
Notes to the Consolidated Financial Statements
For the Years Ended December 31, 2020 and 2019
StorageVault Canada Inc.
DIRECTORS
Jay Lynne Fleming
Vancouver, BC
OFFICERS
Steven Scott
Chief Executive Officer
Ben Harris Iqbal Khan
Bedford, NY Chief Financial Officer
Iqbal Khan
Toronto, ON
Steven Scott
Toronto, ON
Alan Simpson
Regina, SK
LEGAL COUNSEL
AUDITORS
DLA Piper (Canada LLP)
Livingston Place
1000 – 250 2nd St S.W.
Calgary, AB T2P 0C1
Telephone 403-296-4470
Facsimile 403-296-4474
MNP LLP
1500, 640 – 5th Avenue
Calgary, AB T2P 3G4
Telephone 403-263-3385
Facsimile 403-269-8450
HEAD OFFICE
REGISTRAR & TRANSFER AGENT
StorageVault Canada Inc.
100 Canadian Rd
Toronto, ON M1R 4Z5
Telephone 1-877-622-0205
Email: ir@storagevaultcanada.com
TSX Trust
300-5th Avenue S.W., 10th Floor
Calgary, AB T2P 3C4
Telephone 403-218-2800
Facsimile 403-265-0232
TSX VENTURE EXCHANGE LISTING:
SVI
Notes: 29
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Annual Report 2020CANADA SELF STORAGE CENTRES
StorageVault Canada Inc.
(the “Corporation”)
Form 51-102F1
Management’s Discussion and Analysis
For the Three Months and Fiscal Year Ended December 31, 2020
The following Management’s Discussion and Analysis (“MD&A”) provides a review of corporate and
market developments, results of operations and the financial position of StorageVault Canada Inc. (“SVI”
or “the Corporation”) for the three months and fiscal year ended December 31, 2020. This MD&A should
be read in conjunction with the audited fiscal 2020 consolidated financial statements and accompanying
notes contained therein, which have been prepared in Canadian dollars and in accordance with
International Financial Reporting Standards (“IFRS”). This MD&A is based on information available to
Management as of February 24, 2021.
FORWARD LOOKING STATEMENTS
This MD&A and the accompanying Letter to Shareholders contains forward-looking information. All
statements, other than statements of historical fact, included in this MD&A and the accompanying Letter
to Shareholders may be forward-looking information. Generally, forward-looking information may be
identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”,
“proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or
“does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or
phrases which state that certain actions, events or results may, could, would, or might occur or be achieved.
In particular, forward-looking information included in this MD&A and the accompanying Letter to
Shareholders includes statements with respect to: the Corporation’s outlook as to the market for self
storage, portable storage and third party management fees; economic conditions; the availability of credit;
the expectation of cash flows; the Corporation’s strategic objectives, growth strategies, goals and plans;
potential sources of financing including issuing additional common shares as a source financing, generally,
and as a source of financing for potential acquisitions; future expansion of existing SVI stores; the size of
potential future acquisitions the Corporation may make in 2021; the annualized net operating income
(NOI), a non-IFRS measure, and annualized funds from operations (FFO), a non-IFRS measure, assumes
acquisitions that occurred in fiscal 2020 were purchased on January 1, 2020; and the general outlook for the
Corporation. This forward-looking information is contained in “Highlights”, “Nature of Business”,
“Business and General Corporate Strategy”, “Outlook”, “Financial Results Overview” and “Working
Capital, Long Term Debt and Share Capital” and other sections of this MD&A.
Forward-looking information is subject to known risks, such as the COVID-19 pandemic, and unknown
risks, uncertainties and other factors that may cause the actual results, level of activity, performance or
achievements of the Corporation to be materially different from those expressed or implied by such
forward-looking information. Certain of such risks are discussed in the “Risks and Uncertainties” section
of this MD&A.
Although the Corporation has attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking information, there may be
other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can
be no assurance that forward-looking information will prove to be accurate, as actual results and future
49
Annual Report 2020CANADA SELF STORAGE CENTRES
events could differ materially from those anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information. The factors identified above are not intended to
represent a complete list of the factors that could affect the Corporation.
The forward-looking information in this MD&A and the accompanying Letter to Shareholders should not
be relied upon as representing the Corporation’s views as of any date subsequent to the date of this MD&A.
Such forward-looking information is based on a number of assumptions which may prove to be incorrect,
including, but not limited to: the ability of the Corporation to obtain sufficient or necessary financing,
satisfy conditions under previously announced acquisition agreements, or satisfy any requirements of the
TSX Venture Exchange with respect to these acquisitions and any related private financing; the level of
activity in the storage business and the economy generally; consumer interest in the Corporation’s services
and products; competition and SVI’s competitive advantages; trends in the storage industry, including
increased growth and growth in the portable storage business; the availability of attractive and financially
competitive asset acquisitions in the future; the revenue from acquisitions completed in fiscal 2020 being
extrapolated to the entire period for 2020 and being consistent with, and reproducible as, revenue in future
periods; and anticipated and unanticipated costs. A description of additional assumptions used to develop
such forward-looking information and a description of additional risk factors that may cause actual results
to differ materially from forward-looking information can be found in the Corporation’s disclosure
documents on the SEDAR website at www.sedar.com. The Corporation undertakes no obligation to
publicly update or review any forward-looking information, except in accordance with applicable
securities laws. Historical results of operations and trends that may be inferred from this MD&A may not
necessarily indicate future results from operations.
The amount of potential future acquisitions by the Corporation in fiscal 2021 and revenue and NOI growth
for 2021 may be considered a financial outlook, as defined by applicable securities legislation, contained in
this MD&A and the accompanying Letter to Shareholders. Such information and any other financial
outlooks or future-oriented financial information has been approved by management of the Corporation
as of the date hereof. Such financial outlook or future-oriented financial information is provided for the
purpose of presenting information about management's current expectations and goals relating to the
future business of the Corporation. Readers are cautioned that reliance on such information may not be
appropriate for other purposes.
Additional information relating to StorageVault Canada Inc. can be found at www.sedar.com.
- 2 -
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Annual Report 2020CANADA SELF STORAGE CENTRES
TABLE OF CONTENTS
GLOSSARY OF TERMS
NATURE OF OUR BUSINESS
BUSINESS AND GENERAL CORPORATE STRATEGY
OUTLOOK
DESCRIPTION OF OUR OPERATIONS
FINANCIAL RESULTS OVERVIEW
WORKING CAPITAL, DEBT AND SHARE CAPITAL
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
RELATED PARTY TRANSACTIONS
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
ACQUISITION COMMITTEE AND ACQUISITION COMMITTEE MANDATE
ACCOUNTING POLICIES
RISKS AND UNCERTAINTIES
CORPORATE CONTACT INFORMATION
52
53
54
56
58
60
67
72
72
73
74
75
76
79
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51
Annual Report 2020CANADA SELF STORAGE CENTRES GLOSSARY OF TERMS
The following abbreviated terms are used in the Management Discussion & Analysis and have the
following respective meanings:
“AFFO” means FFO plus acquisition and integration costs. Acquisition and integration costs are one time
in nature to the specific assets purchased in the current period or pending and are expensed under IFRS;
AFFO is a non-IFRS measure – see Accounting Policies Non-IFRS Measures;
“Existing Self Storage” means stores that the Corporation has owned or leased since the beginning of the
previous fiscal year; Existing Self Storage is a non-IFRS measure – see Accounting Policies Non-IFRS
Measures;
“FFO” means net income (loss) excluding gains or losses from the sale of depreciable real estate, plus
depreciation and amortization, stock based compensation expenses, unrealized gains or losses on interest
rate swaps, and deferred income taxes; and after adjustments for equity accounted entities and non-
controlling interests;
“IFRS” means International Financial Reporting Standards;
“MD & A” means this management discussion and analysis disclosure document;
“New Self Storage” means stores that have not been owned or leased continuously since the beginning of
the previous fiscal year; New Self Storage is a non-IFRS measure – see Accounting Policies Non-IFRS
Measures;
“NOI” means net operating income, calculated as revenue from storage and related services less related
property operating costs; NOI is a non-IFRS measure – see Accounting Policies Non-IFRS Measures;
“Non-IFRS Measures” means operating and performance metrics that are not always calculated with
reference to IFRS, but are used commonly in the storage industry to measure operating results for assets
owned or leased;
“Q1, Q2, Q3 or Q4” means a three month fiscal quarter of the Company, ending on March 31, June 30,
September 30 and December 31 respectively;
“Revenue Management” means the operating principle of achieving optimal revenue through a
combination of rental rate increases on existing customers (increases the existing revenue base and rent per
square foot) and dynamic pricing of available inventory;
“Store” means self storage property or location or facility or site;
“Subsequent Events” means material transactions that have occurred from January 1, 2021 to February 24,
2021;
“SVI” means StorageVault Canada Inc.;
“The Company” or “The Corporation” or “We” or “Our” means StorageVault Canada Inc.
- 4 -
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Annual Report 2020CANADA SELF STORAGE CENTRES
NATURE OF OUR BUSINESS
Business Overview
The Corporation’s primary business is owning, managing and renting self storage and portable storage
space to individuals, government and commercial customers. The Corporation also stores, shreds, and
manages documents and records for its customers. The common shares of the Company are publicly
traded on the TSX Venture Exchange, under the symbol ‘SVI’.
As of December 31, 2020, SVI owned 167 stores and 4,475 portable storage units across Canada, for a total
of 9,206,940 square feet of rentable storage space in 82,718 rental units. The stores operate under the Access
Storage, Depotium Mini-Entrepots, Sentinel Storage and Storage For Your Life brands. Our portable
storage business operates under the Cubeit and PUPS brands. Our records management business operates
under the RecordXpress brand.
In addition to our owned stores, SVI manages 45 stores that are owned by third parties for a management
fee, bringing the total number of stores owned and managed to 212.
We are able to leverage our national storage presence to offer last-mile storage solutions, such as personal
protective equipment handling for health care organizations across the country with our over 200 locations.
Through our portable and records management businesses, we offer mobilization solutions to move items
from our locations directly to the end user.
SVI’s objective is to own and manage storage assets in Canada’s top markets. The Corporation will focus
on acquiring storage assets with strong existing cash flows, in strategic markets, preferably with excess
capacity and land allowing for future development and expansion of our self, portable and information
and records management storage businesses. Financing for this growth is intended to come from a
combination of free cash flow from operations, mortgage financing and the issuance of debt or equity
securities.
The Storage Landscape
The significant growth in demand for storage space in Canada over the past decade has largely been driven
by the following factors: population growth, change of circumstances, smaller living areas and workspaces,
business incubation, last-mile solutions, immigration, downsizing, renovations, moving, death, divorce,
insurance, e-commerce, etc. We have seen these trends continue or accelerate over the past year with the
exception of immigration. We expect these trends to continue in 2021 and beyond and for immigration to
recover going forward.
Market Size
The Canadian storage market is estimated to be 90 million square feet across 3,000 stores, with the top 10
operators owning less than 15% of these stores; by comparison, the US market is estimated at over 2.7
billion square feet across 51,000 plus stores. This translates into approximately 8.3 square feet per capita in
the US versus 2.5 square feet per capita in Canada suggesting that Canada is an under-stored nation.
The market fragmentation of the Canadian storage industry combined with the low square foot per capita
provides significant consolidation, expansion and development opportunities. Our existing platform,
relationships, reputation and knowledge of the storage industry allows us to identify and take advantage
of accretive and strategic acquisition opportunities.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Pricing and Occupancy
A store’s rental rates and level of occupancy are dependent upon factors such as population density and
growth, the local economy, pricing, customer service and curb appeal. We believe in managing our
inventory (units) through pricing. Since our rentals are either weekly or monthly, we are able to react to
market demand very quickly. Our objective is to maximize revenue by increasing rent per square foot first
and maximizing occupancy second.
Competition
New development in a market impacts the occupancy and the ability to raise rates at existing stores until
the market absorbs the new space. New entrants tend to offer significant move-in specials to achieve more
rapid occupancy gains. Once the new space has leased up, promotions are reduced or eliminated and the
focus switches to maximizing revenue through price increases. This can result in short term fluctuations
in occupancy and revenue per square foot at existing stores.
Seasonality
The storage business is subject to seasonality. There is naturally more activity in the warmer months and
less activity in the colder months. As a result, occupancies and revenue per square foot tend to be highest
in Q2 and Q3 and lowest in Q1 and Q4. This trend is consistent with what is experienced in the Northern
US. This seasonality is more significant in the portable storage business as all of our portable units are
non-climate controlled. Also, operating costs tend to be higher during the winter months in Canada due to
heating and snow removal costs resulting in lower NOI margins in Q1 and Q4 versus Q2 and Q3.
BUSINESS AND GENERAL CORPORATE STRATEGY
SVI owns and manages storage locations offering both self storage and portable storage for rent on a weekly
or monthly basis, for personal and commercial use. We are focused on owning and operating locations in
the top markets in Canada with a plan to have multiple stores, where possible, in each market we operate.
Growth Strategies
Our growth strategy is described in the following five segments: acquisitions, organic growth through
improved performance of existing stores, expansion of our existing stores to meet pent up demand, and
expansion of our portable storage and records management businesses.
Acquisitions
The combination of our corporate platform, our track record of closing transactions, our industry
relationships and our storage experience provides SVI with a unique advantage in the Canadian
marketplace. This advantage allows us to identify accretive and strategic purchasing opportunities at
attractive prices that provide synergies in operations, marketing and revenue maximization.
We intend to be a disciplined purchaser, with a focus on Canada’s top markets. As there is more
competition to acquire existing stores, especially from US purchasers, we may find it difficult to acquire
assets that meet our criteria.
Organic Growth
Scale is important and the increased size of SVI provides a significant advantage in negotiating better rates
on: marketing, insurance, software, office supplies, resale retail products, merchant services, technical
support and long distance transport of portable units. These economies of scale translate into improved
margins and better results.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Efficiencies are also gained through cross promotion and marketing of the self storage and portable storage
platforms and our records management services due to our national footprint, offering different but
complementary product choices at various price points to our customers.
The most significant evolution in the storage industry has been in the area of revenue management.
Revenue management is the principle of achieving optimal revenue through a combination of rental rate
increases on existing customers (increases the existing revenue base and rent per square foot) and dynamic
pricing of available inventory so that we are selling the right product, to the right customer at the right
time, for the right price. With a focus on revenue management, stores are able to achieve significant top
and bottom line growth even when occupancies are stable.
Existing Store Expansion
There is over 1,000,000 square feet of development potential on excess land currently owned and operated
by SVI. When market conditions are suitable and high occupancies and leads indicate pent up demand,
we expect to expand a number of our existing locations. In 2020, we completed 50,000 square feet of
expansion and have plans to complete another 25,000 to 50,000 square feet expansion in the next 18 months.
Expansion of Portable Storage Business
The portable storage business continues to complement our overall business, providing additional
synergies and efficiencies to our platform. While margins in portable storage are not as high as they are in
self storage, they are still very attractive, and with the larger geographic and operating footprint achieved
through our growth strategy, we believe margins will continue to improve.
Expansion of Information and Records Management Business
The records management business is a complementary vertical in the storage space, much like portable
storage, and fills up excess space, and delivers strong "sticky" cash flows. By virtue of consolidation in the
records management industry, RecordXpress is one of the largest records management companies in
Canada and as part of SVI, it is the only Canadian owned company that can provide a national platform.
This is a significant competitive advantage as government organizations, such as hospitals and charities,
do not want their confidential information in foreign hands.
Financing Strategy
We anticipate funding the capital requirements of our growth strategy through excess operating cash flow,
utilization of suitable leverage and from the issuance of equity and debt securities.
Financing With Secured Debt and Lines of Credit
The Corporation will partially fund the purchase of storage assets with debt. A number of factors are
considered when evaluating the level of debt in our capital structure, as well as the amount of debt that
will be fixed or variable rate. In making financing decisions, the factors that we consider include, but are
not limited to, interest rate, amortization period, covenants and restrictions, security requirements,
prepayment rights and costs, overall debt level, maturity date in relation to existing debt, overall
percentage of fixed and variable rate debt and expected store performance.
Issuance of Common Shares
The Corporation will, from time to time, issue common shares to the public or to vendors to fund the
purchase of storage assets or pay down debt. SVI will consider issuances of additional common shares for
cash proceeds or as consideration in the purchase of storage assets in the upcoming fiscal year if accretive
to shareholders. Future issuances will be dependent upon financing needs, acquisitions and expansion,
equity market conditions at the time and transaction pricing.
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Annual Report 2020CANADA SELF STORAGE CENTRES
OUTLOOK
The Corporation’s update and outlook for the COVID-19 pandemic, acquisitions, share capital, results from
operations and subsequent events are:
The COVID-19 Pandemic
Throughout fiscal 2020 and for the future benefit of the Corporation, we modified our operating platform
to continue to meet the strong demand for our services – these changes included improving our virtual
systems to offer a no-contact rental processes, installation of plexiglass partitions and limiting the number
of customers in our offices to one at a time. Our teams are fully employed and clients are able to safely
store and access their valuables. We continue to be extremely proud of our team for continuing to adapt
to new processes and for being committed to providing exceptional client and community service.
As fiscal 2020 year progressed and to date in fiscal 2021, we experienced a significant increase in leads and
rentals which has resulted in higher occupancies and rental rates across the portfolio. These positive trends
resulted in the Corporation achieving strong same store revenue and NOI growth. While clients may be
further impacted, including through unemployment, the Corporation has experienced no meaningful
increases in accounts receivable.
Since the start of the COVID-19 pandemic, the Corporation continued to execute on our strategies to attract
clients through search engine marketing, improving our online presence, virtual community connection
programs and the development of a national platform and initiatives to fulfill last mile storage needs. These
efforts have allowed us to attract clients who are leveraging our national footprint to offer a complete
storage, inventory management and mobilization solution through our self and portable storage and
records management infrastructures.
As at December 31, 2020, we continue to generate significant cash flows from our operations, with $25.5
million in cash on hand. Our balance sheet, along with our strong relationships with our lenders, provides
us with sufficient borrowing capacity, refinancing and liquidity options to take advantage of acquisition
opportunities that meet our requirements, evidenced by the $232.7 million in acquisitions completed in
fiscal 2020.
Acquisitions
In 2021, we expect to acquire $100 million of assets.
Historically, we have been successful in meeting our acquisition targets; however, as there is uncertainty
in the Canadian economy, and more competition to acquire existing stores, especially from foreign
purchasers, we may not be able to find acquisitions that meet our criteria.
Share Capital
The Corporation will from time to time issue common shares to the public or to vendors to fund the
purchase of storage assets. F uture issuances will be dependent upon financing needs, acquisition
opportunities, expansion plans, equity market conditions and transaction pricing.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Results from Operations
We expect growth in revenue and NOI in 2021 as we continue to streamline and integrate operations,
implement our revenue management system and continue to control costs on the over $1.6 billion of assets
purchased in the past five years. We also expect significant contributions from the acquisitions made in late
2020 as well as those we expect to make this year.
The Corporation may use discounts in select markets to match competitive forces and retain its customer
base as a result of competitors trying to jump-start their lease up periods by offering significant discounts
to new customers. This can result in short term fluctuations in occupancy and rent per square foot at
existing stores. The effect on overall revenues is not expected to be significant, but it may be enough to slow
the rate of growth in revenues experienced in past years.
Subsequent Events
On January 25, 2021, the Corporation announced that it has received conditional acceptance from the TSX
Venture Exchange to renew its Normal Course Issuer Bid (“NCIB”) to purchase for cancellation, during the
12-month period starting January 25, 2021, up to 18,312,741 of the outstanding Common Shares of the
Corporation. In addition, the Corporation has received conditional acceptance from the TSX Venture
Exchange to commence a NCIB to purchase for cancellation, during the 12-month period starting January
25, 2021, outstanding senior unsecured hybrid debentures of the Corporation in the aggregate principal
amount of $3,750,000.
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Annual Report 2020CANADA SELF STORAGE CENTRES
DESCRIPTION OF OUR OPERATIONS
As at December 31, 2020, the Corporation owned the following self storage and portable storage
operations:
Acres
Number of
Stores
Units
Rentable Square
Feet
Location
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
Nova Scotia
Portable Storage Units
45
111
26
36
262
37
16
18
32
8
12
76
16
5
Total
533
167
9,514
16,468
1,766
4,898
36,203
7,629
1,765
4,475
82,718
935,574
1,914,611
238,201
492,700
4,204,084
732,497
173,483
515,790
9,206,940
Management is focused on increasing value and increasing NOI as follows:
Revenue Management
In today’s competitive climate, revenue per square foot is the greatest driver in increasing NOI and creating
value. Our management platform has intelligent software, supported by dedicated personnel, that
understands the nuances of each local market. Our in-depth knowledge of our customer base and the
competition allows us to implement strategic rate increases and optimize proven promotions to attract
clientele that will become long-term customers, repeat renters and strong referral sources.
Professional Management
The management team at SVI has extensive experience in all aspects of the storage industry including:
• delivering results
• management of over 200 storage locations throughout Canada
•
• over 200 years of combined experience in the storage industry by senior management
acquisition, development and management of over 15 million square feet of storage space
Marketing
We implement specific marketing plans for the different localities, stages and seasons of our business with
emphasis on maximizing return on investment for every dollar spent. Our strategies to attract customers
include strong search engine marketing, user friendly online presence and no-contact rental processes,
community connection programs and development of large national accounts to fulfill their last-mile
storage needs. We conduct specific store and market analysis to determine how, when and where to focus
our marketing dollars with the goal of efficiently and consistently increasing the value of our stores.
Costco Supplier
Our storage business is the exclusive supplier to Costco Wholesale Canada Ltd. (Costco) members across
Canada. This relationship provides exclusive access to Costco’s vast membership base as a marketing
channel.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Reservation Centre
Our management platform includes a Reservation Centre (call centre) that provides call management
services designed to increase reservations and move-ins, increase productivity at the store level and
improve our corporate image through professionalism, consistency of messaging and willingness to
resolve issues. Our Reservation Centre agents have training in the storage business and understand the
need to introduce and greet professionally, establish rapport with customers, build trust, ask the right
questions, listen, ask for the business and close the sale. The overall result is an increased close rate leading
to improved financial performance.
Technology and Software
SVI stores utilize modern and intelligent software, technology and security systems. We work with vendors
and developers, who have knowledge of the storage business, to take advantage of developing trends,
including: (i) exception reports that allow management to monitor key performance and fraud indicators
ensuring that management time is more effectively spent preventing and resolving issues than identifying
them; and (ii) web-based software reporting that allows authorized individuals to view specific store
information in real time. The user can choose to see daily rental rates achieved and the number of customers
moving-in or moving-out. This tool allows us to adjust quickly to opportunities and threats in each
marketplace.
Economies of Scale
The size and scope of our management platform, combined with the growing size of our own operations,
translates into higher gross margins through the centralization of many functions such as revenue
management, property management, employee compensation and benefits programs, as well as the
development and documentation of standardized operating procedures and best practices.
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Annual Report 2020CANADA SELF STORAGE CENTRES
FINANCIAL RESULTS OVERVIEW
In fiscal 2020, SVI acquired 16 stores and one piece of vacant land for $232.7 million. In fiscal 2019, SVI
acquired 46 stores and an information and records management business for $372.7 million. The
comparative results are impacted by the timing of these acquisitions.
Selected Financial Information
(unaudited)
Three Months Ended December 31
(audited)
Fiscal
2020
2019
$
%
2020
2019
$
%
Change
Change
Storage revenue and related services
$
41,592,792
$
36,712,435
$
4,880,357
13.3%
$
153,394,776
$
133,212,736
$
20,182,040
Management fees
557,497
461,930
95,567
Operating costs
Net operating income 1
Less:
42,150,289
37,174,365
4,975,924
13,798,341
12,493,978
1,304,363
28,351,948
24,680,387
3,671,561
20.7%
13.4%
10.4%
14.9%
2,069,146
1,750,304
318,842
155,463,922
134,963,040
20,500,882
51,250,858
44,865,099
6,385,759
104,213,064
90,097,941
14,115,123
Acquisition and integration costs
5,039,927
687,286
4,352,641
633.3%
7,402,034
6,982,983
419,051
Selling, general and administrative
4,542,505
3,788,657
Interest
12,500,650
11,502,474
753,848
998,176
19.9%
8.7%
15,550,356
11,214,718
4,335,638
45,820,583
42,189,684
3,630,899
Stock based compensation
6,318,156
-
6,318,156
-
6,318,156
3,593,638
2,724,518
15.2%
18.2%
15.2%
14.2%
15.7%
6.0%
38.7%
8.6%
75.8%
Unrealized (gain) loss on interest rate
swap contracts
(9,291,210)
9,291,210
(18,582,420)
-200.0%
(9,291,210)
9,291,210
(18,582,420)
-200.0%
Depreciation and amortization
21,100,449
22,602,353
(1,501,904)
-6.6%
82,558,426
79,206,355
3,352,071
4.2%
40,210,477
47,871,980
(7,661,503)
-16.0%
148,358,345
152,478,588
(4,120,243)
-2.7%
Net income (loss) before taxes
(11,858,529)
(23,191,593)
11,333,064
-48.9%
(44,145,281)
(62,380,647)
18,235,366
-29.2%
Deferred tax recovery
1,870,681
11,627,715
(9,757,034)
-83.9%
10,863,059
16,262,178
(5,399,119)
-33.2%
Net income (loss)
$
(9,987,848)
$
(11,563,878)
$
1,576,030
-13.6%
$
(33,282,222)
$
(46,118,469)
$
12,836,247
-27.8%
Weighted average number of common shares outstanding
Basic
Diluted
364,460,666
362,759,780
1,700,886
364,460,666
362,759,780
1,700,886
0.5%
0.5%
363,469,712
360,468,060
3,001,652
363,469,712
360,468,060
3,001,652
0.8%
0.8%
Net income (loss) per common share
Basic
Diluted
1 Non-IFRS Measure.
$
(0.027)
$
(0.032)
$
(0.027)
$
(0.032)
$
(0.092)
$
(0.128)
$
(0.092)
$
(0.128)
Storage revenue and related services
For the three months ended December 31, 2020, the Corporation had revenues of $41.6 million (December
31, 2019 - $36.7 million), an increase of 13.3%. This increase is attributable to incremental revenue from the
stores acquired in the prior fiscal year and from organic revenue growth. For additional information, see
“Segmented, Existing and New Self Storage and Portable Storage Results.”
Management fees
The three months and fiscal year ended December 31, 2020 were up 20.7% and 18.2% over the same prior
year periods. The increase in management fees is a direct result of increased revenues from the stores
managed by the Corporation and muted by the Corporation acquiring managed stores, reducing the
number of stores in our third party management platform.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Operating costs
Operating costs for the three months and fiscal year ended December 31, 2020 were $13.8 million and $51.3
million (December 31, 2019 - $12.5 million and $44.9 million). The increase relates to stores acquired in 2020
and 2019 and increases in advertising, property taxes and wages.
Net income (loss)
Our net loss of $33.3 million for the fiscal year ended December 31, 2020 results from non-cash items of
$82.6 million of depreciation and amortization and $6.3 million in stock based compensation, and which
are offset by the recovery of $10.9 million of deferred tax and $9.3 million of unrealized gain on interest
rate swap contracts.
Net operating income
For the three months ended December 31, 2020, the Corporation had net operating income (NOI), a non-
IFRS measure, of $28.4 million (December 31, 2019 - $24.7 million), an increase of 14.9%. Despite the impact
of COVID-19, for the fiscal year ended December 31, 2020, NOI increased 15.7% year over year. The
increase was due to the NOI from assets purchased throughout fiscal 2020 and 2019, streamlining and
integration of operations, increased occupancy, increased rates through our revenue management systems
and controlling costs.
Acquisition and integration costs
Acquisition and integration costs include costs and professional fees incurred to identify, qualify, close and
integrate the assets purchased and pending, as well as purchases that we elected not to pursue. SVI has
closed $232.7 million of acquisitions in fiscal 2020, following closing $372.7 million of acquisitions in fiscal
2019 and $161.4 million in fiscal 2018.
Selling, general and administrative
Selling, general and administrative expenses include all expenses not related to the stores including
corporate office overhead and payroll, operations platform innovation and professional fees. These costs
have increased as a result of increased activity associated with the growth and anticipated future growth
of the business.
Interest
The modest increase in interest expense is due to the hybrid debentures which carry a 5.75% interest rate.
As at December 31, 2020, our debt was $1.2 billion compared to $1.1 billion at December 31, 2019.
Depreciation and amortization
The increase in depreciation and amortization expense is primarily due to depreciating the additional
assets acquired throughout fiscal 2020 and 2019.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
FFO and AFFO are non-IFRS measures. They allow management and investors to evaluate the financial
results of an entity without taking into consideration the impact of non-cash items and non-recurring
acquisition and integration costs on the Consolidated Statement of Income (Loss) and Comprehensive
Income (Loss). Net income (loss) assumes that the values of our assets diminish over time through
depreciation and amortization, irrespective of the value of our real estate assets in the open market. Other
non-cash and non-recurring capital items include stock based compensation costs, deferred income tax
expenses (recoveries), unrealized loss on interest rate swap contracts and acquisition and integration costs,
if any. Acquisition and integration costs, adjusted for in our AFFO, are one time in nature to the specific
assets purchased or pending. While the specific acquisition and integration costs may vary from period to
period, given that the Corporation is planning to continue to complete acquisitions as part of its growth
strategy, these costs will continue to be included as an adjustment in determining AFFO (i.e. the amount
of the costs are "non-recurring" but the actual adjustment for these types of costs is "recurring").
As a result of acquisition and integration costs incurred ($5.0 million in Q4 2020 versus $0.7 million in Q4
2019) for the $221.2 million of acquisitions closed in the quarter, FFO for the three months and fiscal year
ended December 31, 2020 was $6.3 million and $35.4 million versus $8.7 million and $29.7 million,
respectively for the same period in 2019.
AFFO for the three months and fiscal year ended December 31, 2020 was $11.3 million and $42.8 million
versus $9.4 million and $36.7 million, respectively for the same period in 2019, a 20.4% and 16.8% increase.
These increases are the result of contributions from assets purchased and strong operational performance.
Both the FFO and AFFO are muted by the $114.6 million in new build and lease-up stores and raw land
acquisitions made in fiscal 2020. The Corporation expects to start to realizing the benefits of these
acquisitions in fiscal 2022 and beyond.
The FFO and AFFO for the three months and fiscal year ended December 31, 2020 and 2019 are:
(unaudited)
Three Months Ended December 31
(audited)
Fiscal
2020
2019
Change
2020
2019
Change
$
%
$
%
Net income (loss)
$
(9,987,848)
$
(11,563,878)
$
1,576,030
-13.6%
$
(33,282,222)
$
(46,118,469)
$
12,836,247
-27.8%
Adjustments:
Stock based compensation
6,318,156
-
6,318,156
-
6,318,156
3,593,638
2,724,518
75.8%
Unrealized (gain) loss on interest rate
swap contracts
(9,291,210)
9,291,210
(18,582,420)
-200.0%
(9,291,210)
9,291,210
(18,582,420)
-200.0%
Deferred tax recovery
(1,870,681)
(11,627,715)
9,757,034
-83.9%
(10,863,059)
(16,262,178)
5,399,119
-33.2%
Depreciation and amortization
21,100,449
22,602,353
(1,501,904)
-6.6%
82,558,426
79,206,355
3,352,071
4.2%
FFO 1
Adjustments:
16,256,714
20,265,848
(4,009,134)
-19.8%
68,722,313
75,829,025
(7,106,712)
-9.4%
$
6,268,866
$
8,701,970
$
(2,433,104)
-28.0%
$
35,440,091
$
29,710,556
$
5,729,535
19.3%
Acquisition and integration costs
5,039,927
687,286
4,352,641
633.3%
7,402,034
6,982,983
419,051
6.0%
AFFO 1
1 Non-IFRS Measure.
$
11,308,793
$
9,389,256
$
1,919,537
20.4%
$
42,842,125
$
36,693,539
$
6,148,586
16.8%
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Annual Report 2020CANADA SELF STORAGE CENTRES
Annualized Net Operating Income and Funds from Operations
The Company completed the purchase of 16 stores and one vacant land during fiscal 2020 and the revenues
and operating expenses from each acquisition are reflected in the statements from the date of acquisition
forward for these stores. In order to understand a full year of operations with the acquired assets, utilizing
historical data, we have prepared an annualized NOI, FFO and AFFO (all non-IFRS measures) statement
annualizing the revenues and expenses as if the stores purchased in fiscal 2020, were purchased as of
January 1, 2020 and owned for the entire 12-month period.
The results of this annualized statement show that NOI, FFO and AFFO would be higher by $5.8 million,
$1.9 million and $1.9 million, respectively. NOI would have been $110.0 million, FFO would be $37.8
million and the AFFO would be $45.2 million. This annualization is muted by the $114.6 million in new
build and lease-up stores and raw land acquisitions made in fiscal 2020. The Corporation expects to start
realizing the benefits of these acquisitions in fiscal 2022 and beyond and, at stabilization, add
approximately $8 million in NOI.
For the Year Ended December 31, 2020
Actual
Annualized Results
Incremental
Notes
Storage revenue and related services
$
153,394,776
$
163,542,122
$
10,147,346
Management fees
Property operating costs
Net operating income
Adjustments:
Acquisition and integration costs
Selling, general and administrative
Interest
2,069,146
155,463,922
51,250,858
104,213,064
7,402,034
15,550,356
45,820,583
68,772,973
2,069,146
165,611,268
55,562,589
110,048,679
7,402,034
16,057,723
48,830,546
72,290,303
Funds from Operations
35,440,091
37,758,376
-
10,147,346
4,311,731
5,835,615
-
507,367
3,009,963
3,517,330
2,318,285
Adjustment:
Acquisition and integration costs
7,402,034
7,402,034
-
Adjusted Funds from Operations
$
42,842,125
$
45,160,410
$
2,318,285
1
1
2
3
4
2
Note 1 – the results from all stores acquired in fiscal 2020, have been adjusted as if the purchase occurred
on January 1, 2020. For revenues, we assumed achieved occupancies and rent per square foot were
repeated from the period prior to acquisition. Information regarding expenses incurred during 2020 and
prior to acquisition, has been sourced from due diligence materials received during the acquisition process
to determine a full year of operating costs.
Note 2 – these costs are one time in nature and do not change based on acquisition date.
Note 3 – based on existing scale and management infrastructure.
Note 4 – annualized amount determined based on interest rate and debt outstanding at December 31,
2020.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Segmented, Existing and New Self Storage and Portable Storage Results
The Corporation operates three reportable business segments - self storage, portable storage and
management fees. Self storage involves customers renting space at the Corporation’s property for short or
long term storage. Portable storage involves delivering a storage unit to the customer. The customer can
choose to keep the portable storage unit at their location or have it moved to one of our location.
Management fees are revenues generated from the management of stores owned by third parties.
Revenue, operating costs and net operating income
(unaudited)
Three Months Ended December 31
(audited)
Fiscal
2020
2019
Change
2020
2019
Change
$
%
$
%
Revenue
Existing Self Storage 1
$
28,174,093
$
26,524,763
$
1,649,330
6.2%
$
107,556,462
$
102,642,606
$
4,913,856
4.8%
New Self Storage 1
11,222,822
8,393,732
2,829,090
Total Self Storage
39,396,915
34,918,495
4,478,420
Portable Storage
2,195,877
1,793,940
401,937
Management Fees
557,497
461,930
95,567
Combined
42,150,289
37,174,365
4,975,924
33.7%
12.8%
22.4%
20.7%
13.4%
38,034,675
23,122,233
14,912,442
64.5%
145,591,137
125,764,839
19,826,298
15.8%
7,803,639
7,447,897
355,742
4.8%
2,069,146
1,750,304
318,842
18.2%
155,463,922
134,963,040
20,500,882
15.2%
Operating Costs
Existing Self Storage
7,916,749
7,460,743
456,006
6.1%
30,600,294
29,383,768
1,216,526
4.1%
New Self Storage
4,328,075
3,744,111
583,964
15.6%
15,326,243
10,346,342
4,979,901
48.1%
Total Self Storage
12,244,824
11,204,854
1,039,970
9.3%
45,926,537
39,730,110
6,196,427
15.6%
Portable Storage
1,553,517
1,289,124
264,393
Combined
13,798,341
12,493,978
1,304,363
Net Operating Income 1
Existing Self Storage
20,257,344
19,064,020
1,193,324
New Self Storage
6,894,747
4,649,621
2,245,126
Total Self Storage
27,152,091
23,713,641
3,438,450
Portable Storage
Management Fees
642,360
557,497
504,816
461,930
137,544
95,567
20.5%
10.4%
6.3%
48.3%
14.5%
27.2%
20.7%
5,324,321
5,134,990
189,331
3.7%
51,250,858
44,865,100
6,385,758
14.2%
76,956,168
73,258,838
3,697,330
5.0%
22,708,432
12,775,891
9,932,541
77.7%
99,664,600
86,034,729
13,629,871
15.8%
2,479,318
2,312,907
166,411
7.2%
2,069,146
1,750,304
318,842
18.2%
Combined
$
28,351,948
$
24,680,387
$
3,671,561
14.9%
$
104,213,064
$
90,097,940
$
14,115,124
15.7%
1 Non -IFRS Measure.
Existing Self Storage
For the three months ended December 31, 2020, revenue and NOI increased by 6.2% and 6.3%, respectively,
over the same prior year period. Despite the impacts of the pandemic, we achieved a full year revenue and
NOI growth of 4.8% and 5.0%. The revenue increase was driven from the strength of our business,
continued execution of our revenue management program and increased occupancy. For operating costs,
we continue to control costs through operational efficiencies, however we experienced increases in
advertising, property taxes and wages.
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Annual Report 2020CANADA SELF STORAGE CENTRES
New Self Storage
Increase is a result of acquiring stores throughout 2020 and 2019 resulting in revenue, operating costs and
NOI growth as we commenced reporting results.
Portable Storage
Increase in revenue and NOI was generally due to occupancy increases and cost savings.
Quarterly net operating income
The Corporation’s quarterly results are affected by the timing of acquisitions, both in the current year and
prior year. SVI also incurs non-recurring initial expenses when a new location is acquired. These costs
may include labor, severance, training, travel, advertising and or office expenses.
The storage business is subject to seasonality. There is naturally more activity in the warmer months and
less activity in the colder months. This natural increase in activity was muted in Q2 2020 due to COVID-19.
Operating costs are higher during the winter months due to heating and snow removal costs resulting in
lower NOI margins in Q1 and Q4, versus Q2 and Q3. This is consistent with results experienced in the
Northern US.
Fiscal 2020 ('000)
Fiscal 2019 ('000)
Q4
Q3
Q2
Q1
Total
Q4
Q3
Q2
Q1
Total
NOI 1
Existing Self Storage
$
20,257
$
20,199
$
18,982
$
17,518
$
76,956
$
19,064
$
19,427
$
18,407
$
16,361
$
73,259
New Self Storage
6,895
5,879
5,248
4,687
Total Self Storage
27,152
26,078
24,229
22,205
Portable Storage
Management Fees
642
557
853
585
575
488
410
439
22,708
99,665
2,479
2,069
4,650
4,153
3,700
274
12,776
23,714
23,580
22,106
16,635
86,035
505
462
779
469
642
400
387
419
2,313
1,750
$
28,352
$
27,516
$
25,291
$
23,054
$
104,213
$
24,680
$
24,828
$
23,148
$
17,441
$
90,098
1 Non-IFRS Measure
Existing Self Storage
The increase in Q4 2020 over Q4 2019 was driven from continued execution of our revenue management
program, occupancy increases and controlling costs through operational efficiencies.
New Self Storage
SVI acquired 16 stores in 2020 and 46 stores in 2019. These additions have resulted in NOI growth quarter
over quarter as we commenced reporting results.
Portable Storage
Increase in revenue and NOI was generally due to occupancy increases and cost savings.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Summary of Quarterly Results (unaudited)
Period
2020 - Q4
2020 - Q3
2020 - Q2
2020 - Q1
Total 2020
2019 - Q4
2019 - Q3
2019 - Q2
2019 - Q1
Total 2019
2018 - Q4
2018 - Q3
2018 - Q2
2018 - Q1
Total 2018
2017 - Q4
2017 - Q3 1
2017 - Q2
2017 - Q1 1
Total 2017
2016 - Q4
2016 - Q3
2016 - Q2
2016 - Q1
Total 2016
2015 - Q4
2015 - Q3
2015 - Q2
2015 - Q1
Total 2015
Revenue
$42,150,289
$40,053,371
$37,425,908
$35,834,354
$155,463,922
Net Income /
(Loss)
($9,987,848)
($6,276,846)
($8,651,142)
($8,366,386)
($33,282,222)
$37,174,365
$37,310,765
$34,255,855
$26,222,055
$134,963,040
($11,563,878)
($9,399,776)
($16,310,988)
($8,843,827)
($46,118,469)
$26,562,429
$25,733,852
$23,173,856
$20,913,462
$96,383,599
($843,810)
($6,355,654)
($9,158,368)
($7,793,463)
($24,151,295)
$20,744,110
$18,453,960
$12,557,306
$10,133,138
$61,888,514
$15,343,505
($15,402,377)
($2,995,895)
($10,797,865)
($13,852,632)
$8,900,182
$7,307,070
$6,320,322
$5,296,970
$27,824,544
($18,657,288)
($537,379)
($663,764)
($1,331,005)
($21,189,436)
$4,795,266
$3,137,527
$2,111,281
$1,096,513
$11,140,587
($2,702,281)
($821,330)
($677,127)
($374,472)
($4,575,210)
Fully
diluted Net
Income /
(Loss) per
share
($0.027)
($0.017)
($0.024)
($0.023)
N/A
Net Income /
(Loss) per
share
($0.027)
($0.017)
($0.024)
($0.023)
N/A
($0.032)
($0.026)
($0.045)
($0.025)
N/A
($0.002)
($0.018)
($0.026)
($0.022)
N/A
$0.044
($0.046)
($0.010)
($0.037)
N/A
($0.070)
($0.022)
($0.004)
($0.008)
N/A
($0.026)
($0.012)
($0.012)
($0.010)
N/A
($0.032)
($0.026)
($0.045)
($0.025)
N/A
($0.002)
($0.018)
($0.026)
($0.022)
N/A
$0.044
($0.046)
($0.010)
($0.037)
N/A
($0.070)
($0.022)
($0.004)
($0.008)
N/A
($0.026)
($0.012)
($0.012)
($0.010)
N/A
Total Assets
$1,587,379,939
$1,354,801,560
$1,369,097,150
$1,371,022,824
N/A
Total
Liabilities
$1,377,204,772
$1,149,197,801
$1,155,700,318
$1,151,432,603
N/A
Dividends
$991,452
$978,240
$973,985
$966,317
$3,909,994
$1,392,865,962
$1,377,237,690
$1,385,491,977
$1,044,914,091
N/A
$1,162,117,984
$1,134,721,033
$1,132,963,923
$794,584,280
N/A
$1,022,791,417
$990,262,630
$959,256,102
$922,656,903
N/A
$895,496,381
$839,525,204
$400,216,946
$404,743,767
N/A
$342,803,581
$253,955,856
$179,885,223
$176,728,097
N/A
$171,486,477
$108,865,822
$54,449,748
$27,910,360
N/A
$761,864,860
$731,939,098
$694,025,713
$661,214,665
N/A
$627,421,264
$585,777,091
$237,005,503
$238,025,850
N/A
$187,115,587
$131,931,530
$118,343,352
$114,010,014
N/A
$112,922,559
$85,594,955
$25,372,609
$25,033,929
N/A
$961,654
$958,230
$952,321
$930,288
$3,802,493
$925,235
$920,981
$920,562
$889,786
$3,656,564
$880,328
$879,376
$765,016
$749,946
$3,274,666
$724,931
$630,309
$440,398
-
$1,795,638
-
-
-
-
-
Note 1:
The Corporation reversed $12,420,000 of goodwill impairment taken in Q1 2017 and Q3 2017.
The Q1 2017 goodwill impairment that was recorded was $5,361,176, and as a result, Q1 2017 previously
reported net loss of $10,797,865, would have been $5,436,689 without such goodwill impairment. The Q3
2017 goodwill impairment that was recorded was $7,058,823, and as a result, Q3 2017 reported net loss of
$15,402,377 would have been $8,343,553 without such goodwill impairment.
The previously reported Total Assets for Q1 2017 of $404,743,767 would have been $410,104,943. The
previously reported Total Assets for Q2 2017 of $400,216,946 would have been $405,578,122. The previously
reported Total Assets for Q3 2017 of $839,525,204 would have been $851,945,204.
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Annual Report 2020CANADA SELF STORAGE CENTRES
WORKING CAPITAL, DEBT AND SHARE CAPITAL
Working Capital
Cash provided by operating activities was $38.5 million for the fiscal year ended December 31, 2020,
compared to $32.0 million for the same prior year period. The increase arises from increased rates through
our revenue management systems, increased occupancy, controlling costs and continued streamlining and
integration of operations and lower acquisition and integrations costs.
As at December 31, 2020, the Corporation had $25.5 million of cash compared to $24.5 million at December
31, 2019. Despite cash used to pay down debt, fund expansions and repurchase common shares through
our NCIB, the Corporation maintained a strong cash balance. The Corporation expects its cash flow from
operations to continue to increase as the full benefit of stores purchased in 2019 and 2020 are realized and
we continue to execute our operational plans as society adjusts to the impacts of COVID-19. In addition,
the Corporation will borrow against existing assets to fund acquisitions and its expansion plans.
Debt
As at December 31, 2020 and December 31, 2019, the Corporation held the following debt:
December 31, 2020
Weighted
Average
Rate
Range
Balance
December 31, 2019
Weighted
Average
Rate
Range
Balance
Mortgages
At amortized cost - Fixed/Variable
At FVTPL - Variable
- Interest rate swap
Lines of Credit and Promissory Notes
3.18% to 4.99% 4.19%
Maturity: Apr 2021 to Apr 2028
382,219,232
3.18% to 5.00% 4.25%
Maturity: Jul 2020 to Apr 2028
362,374,897
394,261,163
31,912,305
426,173,468
3.93%
299,958,291
8,478,824
308,437,115
4.17%
Maturity: Jan 2024 to Dec 2030
Maturity: May 2028 to Nov 2029
4.05%
808,392,700
4.21%
670,812,012
At amortized cost - Variable
3.54%
61,413,656
4.78%
72,413,656
Maturity: Dec 2022 to May 2024
Maturity: Aug 2020 to Dec 2022
At amortized cost - Fixed
4.25%
13,750,069
5.00%
12,898,053
Maturity: Jan 2021 to Dec 2023
Maturity: Feb 2020 to Oct 2021
At FVTPL - Variable
- Interest rate swap
280,244,148
19,755,852
300,000,000
3.97%
300,000,000
812,386
300,812,386
3.97%
Maturity: Apr 2022
Maturity: Apr 2022
Deferred financing costs, net of accretion
of $4,871,753 (Dec 31, 2019 - $3,656,956)
3.84%
375,163,725
4.12%
386,124,095
(3,817,293)
(3,856,505)
3.98%
1,179,739,132
4.18% 1,053,079,602
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Annual Report 2020CANADA SELF STORAGE CENTRES
Reconciliation of Debt
The following table reconciles the changes in cash flows from financing activities for the
Corporation's debt:
Debt, beginning of period
Advances from debt
Repayment of debt
Amounts offset against accounts receivable
Change in fair value of debt measured at FVTPL
Change in fair value of interest rate swaps
Total cash flow from debt financing activities
December 31, 2020
December 31, 2019
$
1,053,079,602
$
702,411,156
264,041,758
(123,419,291)
(4,710,939)
(51,668,157)
42,376,947
126,620,318
536,106,032
(187,662,004)
(5,715,583)
-
9,291,210
352,019,655
Change in deferred financing costs
39,212
(1,351,209)
Debt, end of period
$
1,179,739,132
$
1,053,079,602
The bank prime rate at December 31, 2020 was 2.45% (December 31, 2019 - 3.95%). The weighted average
cost of debt at December 31, 2020 is 3.98% (December 31, 2019 - 4.18%). The Corporation’s variable interest
rate exposure is limited as it has significant fixed interest rate debt.
The weighted years to maturity, excluding lines of credit, at December 31, 2020 is 4.93 years (December 31,
2019 – 5.72 years).
Mortgages are secured by a first mortgage charge on the real estate and equipment of the Corporation,
general security agreements, assignment of rents and leases and assignments of insurance coverages. The
Corporation must maintain certain financial ratios to comply with the facilities. These covenants include
debt service coverage ratios, a tangible net worth ratio, and a loan to value ratio. As of December 31, 2020
and December 31, 2019, the Corporation is in compliance with all covenants.
The deferred financing costs are made up of fees and costs incurred to obtain the related mortgage
financing, less accumulated amortization into income of these costs.
Principal repayments on debt and lines of credit in each of the next five years are estimated as follows:
Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
$
$
$
$
$
$
465,985,377 (includes $361.4 million lines of credit)
191,270,632
58,520,159
111,172,658
23,523,953
333,083,646
Of the repayments shown in Year 1, $14.8 million are required under our amortizing term debt mortgages,
$80.0 million relates to loans due in the upcoming twelve months that are expected to be refinanced, $9.8
relates to promissory notes and $361.4 million relates to our lines of credit. Our lines of credit are covenant
based (debt service coverage ratios, tangible net worth ratios, and loan to value ratios) and do not require
repayment as long as the covenants are met. As of December 31, 2020 and December 31, 2019, the
Corporation is in compliance with all covenants.
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Annual Report 2020CANADA SELF STORAGE CENTRES
The Corporation terms out assets on our lines of credit when deemed appropriate, which includes
determination that the Corporation has been able to implement its operating systems to increase the value
of the assets and that the Corporation has an appropriate mix of assets supporting our lines of credit.
The Corporation’s detailed debt maturity profile as at December 31, 2020 is:
Contractual Mortgage Maturities and Interest Rates
Weighted
Weighted
Year of
Debt
Average
Mortgages
Interest
Maturity
Payable
Rate
Lines of Credit
2021
$
80,025,444
2022
2023
2024
2025
180,442,242
37,006,910
98,838,428
21,906,866
Thereafter
390,172,810
$
808,392,700
4.42%
4.16%
4.46%
3.26%
3.59%
4.10%
4.05%
$
9,725,069
347,705,323
4,000,000
13,733,333
-
-
$
375,163,725
Deferred financing costs net of accretion
Average
Interest
Rate
3.38%
3.90%
0.00%
3.70%
0.00%
0.00%
3.84%
Balance
Total Debt
$
89,750,513
528,147,565
41,006,910
112,571,761
21,906,866
390,172,810
1,183,556,425
(3,817,293)
$
1,179,739,132
Weighted
Average
Interest
Rate
4.30%
3.99%
4.09%
3.26%
3.59%
4.10%
3.98%
The Corporation entered into interest rate swap contracts in order to fix the interest rate on $726 million of
debt at a weighted average rate of 3.94%. The swaps mature between April 2022 and December 2030.
Hybrid Debentures
On July 20, 2020, $75 million of unsecured senior hybrid debentures were issued at a price of $1,000 per
debenture with a term of sixty-six months, due January 31, 2026. These debentures bear a fixed interest rate
of 5.75% per annum, payable semi-annually in arrears on January 31 and July 31 of each year, commencing
January 31, 2021.
On and after January 31, 2024 and prior to January 31, 2025, the debentures will be redeemable in whole or
in part from time to time at the Corporation’s option at a redemption price equal to 102.875% of the
principal amount of the debentures redeemed plus accrued and unpaid interest, if any, up to but excluding
the date set for redemption. On and after January 31, 2025 and prior to the maturity date, the debentures
will be redeemable, in whole or in part, from time to time at the Corporation’s option at par plus accrued
and unpaid interest, if any, up to but excluding the date set for redemption.
On redemption or at maturity on January 31, 2026, the Corporation may elect to, in whole or part, convert
the debentures into freely tradable common shares. In such event, payment will be satisfied by delivering
for each $1,000 due, that number of freely tradable shares obtained by dividing $1,000 by 95% of the current
market price on the date fixed for redemption or maturity, as the case may be. Any accrued and unpaid
interest will be paid in cash.
The debentures were recorded as a financial instrument. The debentures were recorded at a fair value of
$75 million net of deferred financing costs of $3.2 million. Each embedded feature was evaluated separately
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Annual Report 2020CANADA SELF STORAGE CENTRES
and it was determined that the economic and risk characteristics are closely related to the host contract and
therefore were not accounted for as separate financial instruments.
The debentures are subsequently measured at amortized cost using the effective interest method over the
life of the debenture. The balance of the hybrid debentures is:
Opening balance
Additions during period
Less:
Issuance costs
Accretion during period
Ending balance
Share Capital
The common shares issued are:
December 31, 2020
$
-
75,000,000
3,524,177
(289,902)
$
71,765,725
Number of Shares
Amount
Balance, December 31, 2018
355,722,974
$
338,552,701
Issued on asset acquisitions
Dividend reinvestment plan
Share option and warrant redemption
Share issuance costs
5,464,286
537,795
1,080,000
-
15,300,000
1,447,278
350,350
(64,666)
Balance, December 31, 2019
362,805,055
355,585,663
Issued on acquisitions
Dividend reinvestment plan
Share option redemption
Share issuance costs
Common shares repurchased
3,419,287
481,306
782,800
-
11,845,000
1,518,011
901,588
(25,121)
(1,233,622)
(3,938,229)
Balance, December 31, 2020
366,254,826
$
365,886,912
Dividend Reinvestment Plan
Represents common shares issued under the Corporation’s dividend reinvestment plan (“DRIP") for
holders of common shares approved on April 18, 2016. Under the terms of the DRIP, eligible registered
holders of a minimum of 10,000 Common Shares (the "Shareholders") may elect to automatically reinvest
their cash dividends, payable in respect to the common shares, to acquire additional common shares, which
will be issued from treasury or purchased on the open market. The Corporation may initially issue up to
5,000,000 common shares under the DRIP, which may be increased upon Board of Directors approval,
acceptance of the increase by the Exchange, and upon public disclosure of the increase.
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Annual Report 2020CANADA SELF STORAGE CENTRES
Stock Options
A total of 23,639,650 options were outstanding as at December 31, 2020 (December 31, 2019 – 18,442,450).
Of the outstanding amount, 23,639,650 options were exercisable (December 31, 2019 – 18,442,450). The
details are as follows:
Exercise Price
Vesting Date
Expiry Date
December 31, 2020 December 31, 2019
$
0.33
Jun. 19, 2014
Jun. 19, 2024
$
0.41
Apr. 28, 2015
Apr. 28, 2025
$
0.50
Sep. 14, 2015
Sep. 14, 2025
$
1.36
Dec. 21, 2016
Dec. 21, 2026
$
1.78
Mar. 16, 2017
Mar. 16, 2027
$
2.52
May 4, 2018
May 4, 2028
$
2.90
May 28, 2019
May 28, 2029
$
3.98
Dec. 15, 2020
Dec. 15, 2030
140,000
1,660,650
1,550,000
2,785,000
2,810,000
2,825,000
5,869,000
6,000,000
140,000
2,122,450
1,570,000
2,810,000
2,850,000
3,000,000
5,950,000
-
Options exercisable and outstanding
23,639,650
18,442,450
The Board of Directors of the Corporation may from time to time, at its discretion, and in accordance with
the Exchange requirements, grant to directors, officers, employees and consultants of the Corporation, non-
transferable options to purchase common shares.
Equity Incentive Plan
Under the Corporation’s Equity Incentive Plan passed on May 30, 2018 (the “Plan”), directors, employees
and consultants are eligible to receive awards, in the form of Restricted Share Units (“RSU’s”), Deferred
Share Units (“DSU’s”) and Named Executive Officer Restricted Share Units (“Neo RSU’s”), as and when
granted by the Board, at its sole discretion. The maximum number of awards that may be issued under the
Plan is 17,545,677. The maximum number of shares that may be reserved for issuance under the Plan,
together with any of the Corporation’s other share-based compensation arrangements, may not exceed 10%
of the issued shares of the Corporation.
The RSU’s and DSU’s that are granted vest in equal annual amounts over three years. The Neo RSU’s vest
three years after the date of grant. RSU’s, DSU’s and Neo RSU’s are entitled to be credited with dividend
equivalents in the form of additional RSU’s, DSU’s and Neo RSU’s, respectively.
With certain exceptions, the Plan provides that (i) the maximum number of awards that may be granted to
any one participant together with any other share-based compensation arrangements, in any 12 month
period, may not exceed 5% of the issued shares, and, in the case of any consultant, may not exceed 2% of
the issued shares; and (ii) the total value of all securities that may be issued to any non-employee director
under all of the Corporation’s security based compensation arrangements may not exceed $150,000 per
annum.
The Corporation entered into Total Return Swaps (“TRS”) as economic hedges of the Corporation’s DSUs
and RSUs. Under the terms of the TRS, a bank has the right to purchase the Corporation’s shares in the
marketplace as a hedge against the returns in the TRS. At December 31, 2020, 1,533,556 TRS units were
outstanding. At December 31, 2020, 100% of the combined DSU and RSU exposures were economically
hedged (December 31, 2019 - 100%). Hedge accounting is not applied for the DSU/RSU hedging program.
Under the Plan, 574,255 common shares at a value of $2,150,636 have been issued as at December 31, 2020.
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Annual Report 2020CANADA SELF STORAGE CENTRES
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
Lease Liabilities
The Corporation leases buildings and land in Kamloops, BC, Montreal, QC, Sudbury, ON, Toronto, ON,
Kitchener, ON and Winnipeg, MB. The leases expire between 2023 and 2054, with the leases expiring in
2023 and 2027 having up to 15 years and 20 years of renewals, respectively, which are expected to be
exercised by the Corporation.
The lease liabilities are measured at the present value of the lease payments that are not paid at the balance
sheet date. Lease payments are apportioned between interest expense and a reduction of the lease liability
using the Corporation’s incremental borrowing rate to achieve a constant rate of interest on the remaining
balances of the liability.
For the year ended December 31, 2020, the Corporation recognized $1,418,221 (December 31, 2019 -
$1,019,236) in interest expense related to its lease liabilities.
A reconciliation of the lease liabilities from the date of adoption of IFRS 16 to December 31, 2020 is as
follows:
Self Storage Properties
Balance, December 31, 2019
$
25,491,060
Additions
Cash Payments
Interest
19,695,524
(2,569,755)
1,418,221
Balance, December 31, 2020
$
44,035,050
Contingency
The Corporation has no legal contingency provisions at either December 31, 2020 or December 31, 2019.
Off-Balance Sheet Arrangements
The Corporation is not party to any industry contracts or arrangements other than those disclosed in the
consolidated financial statements.
RELATED PARTY TRANSACTIONS
The Corporation holds a Master Franchise from Canadian PUPS Franchises Inc. (CPFI) which provides the
Corporation with the exclusive Canadian franchise rights for the development and operation of portable
storage throughout Canada. CPFI is a corporation related to Steven Scott and Iqbal Khan who are directors
of the Corporation. The Corporation pays a monthly royalty of 3.5% on the gross sales. During the year
ended December 31, 2020, the Corporation paid $289,218 (December 31, 2019 - $291,152) for royalties and
$nil (December 31, 2019 - $82,585) for storage containers and other equipment under the Master Franchise
Agreement.
Included in accounts payable and accrued liabilities, relating to the previously noted transactions, at
December 31, 2020 was $25,231 (December 31, 2019 - $73,783) payable to CPFI.
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The Corporation has management agreements with Access Self Storage Inc. and related companies
(“Access Group”). These companies are related to Steven Scott and Iqbal Khan who are directors of the
Corporation. The Corporation invoices the Access Group for management fees as well as additional
services it provides as part of the management agreements. The Access Group will also invoice the
Corporation for construction, maintenance and other services related to its day-to-day operations.
During the year ended December 31, 2020, the Corporation received $5,877,719 (December 31, 2019 –
$7,559,825) in payments and reimbursements related to the management agreements. During the year
ended December 31, 2020, the Corporation also incurred $20,491,351 (December 31, 2019 – $14,078,522) in
expenditures related to construction, maintenance and other services related to its day-to-day operations.
Included in accounts payable and accrued liabilities as at December 31, 2020 was $2,665,248 (December 31,
2019 - $2,356,616) payable to the Access Group. Included in accounts receivable as at December 31, 2020
was $349,185 (December 31, 2019 - $671,452) receivable from the Access Group.
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Corporation, directly and indirectly, and include directors. The
remuneration of key management personnel for employment services rendered are as follows:
Year Ended
December 31, 2020 December 31, 2019
Wages, management fees, bonuses and directors fees
$
629,644
$
539,196
Stock based compensation
3,404,873
2,561,230
$
4,034,517
$
3,100,426
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Environmental integrity, social responsibility and adherence to strong governance practices are core values
at StorageVault and will continue to remain focused on reducing the already extremely low environmental
impact of our stores, improving our engagement with colleagues and shareholders, supporting the
communities in which we operate, and adopting sound corporate governance practices.
Environmental
We are a community-based business that believes it is our responsibility to implement sustainable
operating practices to minimize our impact on the world and protect the environment, while
simultaneously improving the performance of our portfolio. With this in mind, incorporating
environmental efficiencies into our building design and operations is core to our company, our
shareholders, our clients and our communities.
When compared to other types of commercial properties, the storage industry has an inherently low
environmental impact given low daily activity levels. Strategically, we offer a mix of square footage that
is non-climate controlled and climate controlled, with non-climate controlled space having minimal
ecological affect. For our properties that provide climate controlled storage, we hold inside temperatures
at moderate levels which safeguard contents while minimizing energy required to heat or cool the space.
Operationally, water usage is very low and minimal daily client activity helps to limit the carbon footprint
within our communities.
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Ongoing and forward-thinking energy saving initiatives include rooftop solar panels, solar walls, motion
activated systems to turn lights on and off automatically and replacing older fixtures with modern energy
saving fixtures and bulbs. In addition to this, we source and sell packing supplies made of recycled
materials and have significantly reduced paper use with our no-contact rental process.
Social
As a team, we are a united nation of over 600 colleagues across 100 communities in Canada. Diversity is
in our DNA and is the foundation of our strength and stability. Our culture of continuous improvement,
together with our ongoing training programs, promote diversity of thought, development of skills,
personal wellness and safety. As such, we naturally foster internal advancement opportunities and
promotions within our organization.
At StorageVault, we are aware that our services support people in moments of transition, and we
appreciate the importance of our role and the impact we have in our local communities. Through the
strength of our business, we support over 150 local charities, grassroots initiatives and national
organizations. We are passionate about supporting organizations across the country to support causes that
are dear to our families and important within our communities, including those related to health,
education, sports, equality and quality of life.
Governance
StorageVault’s Management and Board are committed to ensuring strong corporate governance that
protects the long-term interests of our stakeholders, strengthens management accountability and fosters
public trust in StorageVault. We understand the importance of equality, diversity and good corporate
governance, and are dedicated to maintaining the highest standards through the following practices:
•
Independent Director led Audit, Acquisition and Governance, Nominating and Compensation
Committees
• Acquisition Committee Mandate to review, approve and recommend transactions to the Board
• Diverse Management team and Board and Diversity Policy
• Annual review and vote to approve executive compensation
• Annual election by shareholders of Directors, CEO and CFO at AGM
• Whistleblower Policy
•
Insider Trading and Reporting Policy
• Disclosure and Confidentiality Policy
• Regular review and updates of all Corporate Governance principles and policies
• Code of Business Conduct & Ethics which is signed by all employees
A proud moment for us, and evidence of our ongoing commitment to gender diversity, StorageVault was
recognized in the Report on Business Magazine’s Women Lead Here inaugural list in 2020.
ACQUISITION COMMITTEE AND ACQUISITION COMMITTEE MANDATE
The Corporation may, from time to time, purchase assets from parties related to the Corporation, and in
particular, assets or shares owned or controlled by management of the Corporation or Access Self Storage
Inc. (Access) or any of its subsidiaries or affiliates. To govern such potential related party transactions, the
Corporation has established an Acquisition Committee and an Acquisition Committee Mandate.
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The Acquisition Committee is comprised of six voting members, four members being independently
appointed and independent of management and two of which are appointed by Access. Acquisition
Committee members who are deemed to be in a conflict of interest position with respect to related party
transactions are required to abstain from voting on such related party transactions.
The mandate of the Corporation’s Acquisition Committee is to review, evaluate, and approve the terms of
proposed acquisitions in the context of the current strategic direction of the Corporation. In particular, and
with respect to related party property acquisitions, the Acquisition Committee has the authority to appoint
appraisers, environmental consultants, and professional advisors to evaluate and report to the Acquisition
Committee on the suitability of such transactions. Thereafter, the Acquisition Committee provides its
recommendation as to whether the Board of Directors should approve an acquisition.
The Board of Directors of the Corporation must accept the recommendations that the Acquisition
Committee makes with respect to any related party transaction, and in particular, an acquisition involving
assets or shares of Access or any of its subsidiaries or affiliates.
ACCOUNTING POLICIES
The Corporation’s significant accounting policies are summarized in Note 3 to the December 31, 2020
annual audited consolidated financial statements. There has been no change in significant accounting
policies from the Corporation’s audited consolidated annual financial statements from December 31, 2019.
In addition, there has been no change in the Company’s financial instrument risks.
Non-IFRS Financial Measures
Management uses both IFRS and Non-IFRS Measures to assess the Corporation’s operating performance.
In this MD&A, management uses the following terms and ratios which do not have a standardized meaning
under IFRS and are unlikely to be comparable to similar measures presented by other companies:
i. Net Operating Income (“NOI”) – NOI is defined as storage and related services less operating costs.
NOI does not include interest expense or income, depreciation and amortization, selling, general
and administrative costs, acquisition and integration costs, stock based compensation costs or
taxes. NOI assists management in assessing profitability and valuation from principal business
activities.
ii.
Funds from Operations (“FFO”) – FFO is defined as net income (loss) excluding gains or losses
from the sale of depreciable real estate, plus depreciation and amortization, unrealized gains or
losses from interest rate swaps, stock based compensation expenses, and deferred income taxes;
and after adjustments for equity accounted entities and non-controlling interests. FFO should not
be viewed as an alternative to cash from operating activities, net income, or other measures
calculated in accordance with IFRS. The Corporation believes that FFO can be a beneficial measure,
when combined with primary IFRS measures, to assist in the evaluation of the Corporation’s ability
to generate cash and evaluate its return on investments as it excludes the effects of real estate
amortization and gains and losses from the sale of real estate, all of which are based on historical
cost accounting and which may be of limited significance in evaluating current performance.
iii. Adjusted Funds from Operations (“AFFO”) – AFFO is defined as FFO plus acquisition and
integration costs. Acquisition and integration costs are one time in nature to the specific assets
purchased in the current period or pending and are expensed under IFRS.
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iv.
Existing Self Storage and New Self Storage performance – “Existing Self Storage” are defined as
stores that the Corporation has owned or leased since the beginning of the previous fiscal year.
“New Self Storage” are stores that have not been owned or leased continuously since the beginning
of the previous fiscal year. We believe the use of this metric combined with primary IFRS measures
is beneficial in understanding the full operating performance of our operations during a growth
period. Comparative figures for the New Self Storage and Existing Self Storage categories may
differ from amounts reported in previous MD&A reports.
Recent and Future Accounting Pronouncements
The IASB and the International Financial Reporting Interpretations Committee have issued a number of
new or revised standards or interpretations that will become effective for future periods and have a
potential implication for the Corporation. There have been no pronouncements in addition to those
disclosed in the December 31, 2020 annual audited consolidated financial statements.
Disclosure Controls and Procedures
Pursuant to National Instrument 52-109, which requires certification of disclosure in an issuer’s annual and
interim filings, the Chief Executive Officer and the Chief Financial Officer have evaluated the effectiveness
of the Corporation’s internal disclosure controls and procedures for the three months and fiscal year ended
December 31, 2020, including the design of internal controls over financial reporting, to provide reasonable
assurance regarding the reliability of financial reporting in accordance with IFRS. These officers have
concluded that the Corporation’s disclosure controls and procedures are designed effectively to ensure that
information required to be disclosed in reports that are filed or submitted under Canadian securities
legislation are recorded, processed and reported within the time specified in those rules.
There have been no changes in the Corporation’s internal controls over financial reporting that have
materially affected or are reasonably likely to affect the Corporation’s internal controls over financial
reporting for the three months and fiscal year ended December 31, 2020.
RISKS AND UNCERTAINTIES
As our primary business consists of owning and operating storage real estate, we are exposed to risks
related to such ownership and operations that can adversely impact our business and financial position.
The following is a brief overview of some of the potential risks and the potential impacts these risks and
uncertainties may have on the operations of the Corporation:
Real Estate Industry
Real estate investments are subject to varying degrees of risk depending on the nature of each property.
Such investments are affected by general economic conditions, local real estate markets, supply and
demand for rental space, competition from others with similar developments, the perceived
“attractiveness” of a given property and various other factors.
Liquidity Risk
Liquidity risk is the risk that the Corporation will be unable to meet its financial obligations as they fall
due. The Corporation manages liquidity risk through cash flow forecasting and regular monitoring of cash
requirements including anticipated investing and financing activities. Typically, the Corporation ensures
that it has sufficient cash or liquid investments available to meet expected operating expenses for a period
of 30 days, excluding the potential impact of extreme circumstances that cannot reasonably be predicted,
such as natural disasters. For the foreseeable future, the Corporation anticipates that cash flows from
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operations, working capital, and other sources of financing will be sufficient to meet its operating
requirements, debt repayment obligations and will provide sufficient funding for anticipated capital
expenditures.
Refinancing Risk
There is no certainty that financing will be available upon the maturity of any existing mortgage at terms
that are as favorable as the expiring mortgage, or at all. If the Corporation is unable to refinance an existing
indebtedness on favorable terms, the Corporation may need to dispose of one or more properties on
disadvantageous terms. Prevailing interest rates, limited availability of credit or other factors at the time
of refinancing could increase interest expense and ultimately decrease the return to investors.
Interest Rate Risk
Interest rate risk arises from changes in market interest rates that may affect the fair value of future cash
flows from the Corporation’s financial assets or liabilities. Interest rate risk may be partially mitigated by
holding both fixed and floating rate debt, or by staggering the maturities of fixed rate debt. The Corporation
is exposed to interest rate risk primarily relating to its long term debt. The Corporation will manage interest
rate risk by utilizing fixed interest rates on its mortgages where possible, entering into floating-to-fixed
interest rate swaps, staggering maturities over a number of years to mitigate exposure to any single year,
and by attempting to ensure access to diverse sources of funding.
Economic Conditions
Even though storage is less susceptible to changes in the local economy, as storage space is often needed
during times of both growth and recession, downturns in a local economy could negatively affect our
revenues and NOI. A significant portion of storage customers use storage during periods of moving from
one residence to another or when a residence is being renovated. In times of economic downturn, the level
of activity in housing sales and housing renovation could decrease, thereby decreasing storage rental
demand.
Contagious Diseases
The COVID-19 pandemic or any future outbreak of other highly infectious or contagious diseases, will
impact demand for our storage space and ancillary products and services, which can result in potential
decreases in occupancy, rental rates and administrative fees and increases in expenses, which could
adversely affect our results.
Environmental Risk
Environmental risk is inherent in the ownership of property. Various municipal, provincial and federal
regulations can result in penalties or potential liability for remediation, to the extent that hazardous
materials enter the environment. The presence of hazardous substances could also impair the
Corporation’s ability to finance or sell the property, and might expose the Corporation to civil lawsuits. To
mitigate such risk, the Corporation procures recent or updated environmental reports for all acquisitions
to ascertain the risk, if any, that exist at a property. It also prohibits the storage of hazardous substances as
a condition of the user agreement signed by customers.
Credit Risk
Credit risk arises from the possibility that customers may experience financial difficulty and be unable to
fulfill their financial obligations to the Corporation. The risk of incurring bad debts often arises if storage
customers relocate and cannot be found to enforce payment, or if storage customers abandon their
possessions. The extent of bad debts can be mitigated by quickly following up on any unpaid amounts
shortly after the due date, enforcing late fees, denying access to any customers with delinquent accounts,
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and ultimately seizing the possessions of the customer. Additionally, the Corporation typically rents to
numerous customers, each of which constitutes significantly less than 5% of the Corporation’s monthly
revenue. This diversification in the customer base reduces credit risk from any given customer.
Other Self Storage Operators or Storage Alternatives
The Corporation competes with other individuals, corporations and institutions which currently own, or
are anticipating owning a similar property in a given region. Competitive forces could have a negative
effect on occupancy levels, rental rates or operating costs such as marketing.
Acquisition of Future Locations
Competition also exists when the Corporation attempts to grow through acquisitions of storage locations.
An increase in the availability of investment funds in the general market, and a subsequent increase in
demand for storage locations would have a tendency to increase the price for future acquisitions of storage
locations and reduce the yields thereon.
Anticipated Results from New Acquisitions
The realization of anticipated results and value from acquisitions can be jeopardized from unexpected
circumstances in integrating stores into our existing operations, from situations we did not detect during
our due diligence or from increased property tax following reassessment of newly acquired locations.
Increase in Operating Costs
Our operating margins can be negatively impacted from increases in operating costs such as property tax,
staffing costs, insurance premiums, repairs and maintenances costs, utility costs and others due to various
factors such as the need for governments to raise funds, natural disasters, and energy prices.
Climate and Natural Disasters
The storage industry in Canada can be cyclical. Due to the climate, demand for storage is generally weaker
in winter months with an increase in operating costs resulting in potentially lower NOI during Q1 and Q4.
Natural disasters, such as floods, earthquakes or severe winter storms may result in damage and business
interruption losses that are greater than the aggregate limits of our insurance coverage. We maintain a
comprehensive insurance policy to cover such events, however some insurance coverage may be or become
unavailable or cost prohibitive.
Litigation
Legal claims may arise from the ordinary course of our business. Resolution of these claims would divert
resources from the Corporation such as cash to pay expenses and damages and the diversion of
management’s time and attention from the Corporation’s business. The impact and results from litigation
cannot be predicted with certainty and can have a material adverse effect on the business.
Use and Dependency on Information Technology Systems
Our business is heavily dependent on the use of information technology, with the majority of our new
customers communicating and transacting with us electronically or over the phone. Commerce over the
internet and the nature of our business requires us to retain private information about our customers.
Significant aspects of these systems are centrally managed, such as our financial information and some are
managed by third party vendors. These systems may be subject to telecommunication failures, cyber-
attacks, computer worms and viruses and other disruptive security breaches, all of which could materially
impact our operations, resulting in additional costs and or in legal action either by governments agencies
or private individuals.
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StorageVault Canada Inc.
OFFICERS
Steven Scott
Chief Executive Officer
Iqbal Khan
Chief Financial Officer
DIRECTORS
Jay Lynne Fleming
Vancouver, BC
Ben Harris
Bedford, NY
Iqbal Khan
Toronto, ON
Steven Scott
Toronto, ON
Alan Simpson
Regina, SK
LEGAL COUNSEL
AUDITORS
DLA Piper (Canada) LLP
Livingston Place
1000 – 250 2nd St S.W.
Calgary, AB T2P 0C1
Telephone 403-296-4470
Facsimile 403-296-4474
MNP LLP
1500, 640 – 5th Avenue
Calgary, AB T2P 3G4
Telephone 403-263-3385
Facsimile 403-269-8450
HEAD OFFICE
REGISTRAR & TRANSFER AGENT
StorageVault Canada Inc.
100 Canadian Rd
Toronto, ON M1R 4Z5
Telephone 1-877-622-0205
Email: ir@storagevaultcanada.com
TSX Trust
300-5th Avenue S.W., 10th Floor
Calgary, AB T2P 3C4
Telephone 403-218-2800
Facsimile 403-265-0232
TSX VENTURE EXCHANGE LISTING
SVI
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ANNUAL
REPORT
20
20
CANADA SELF STORAGE CENTRES