StorageVault Canada Inc.
Annual Report 2021

Plain-text annual report

ANNUAL REPORT 2021 Corporate Information Phone: 1-877-622-0205 Web site: storagevaultcanada.com Email: ir@storagevaultcanada.com Address: 100 Canadian Road, Toronto, Ontario, M1R 4Z5 CANADA SELF STORAGE CENTRES About StorageVault Canada Inc. StorageVault is Canada’s largest storage provider and is dedicated to safeguarding the belongings of Canadian families and businesses. Owning and operating 230 locations and over 10.7 million square feet of space. StorageVault is represented regionally under the following brands: Access Storage, Sentinel Storage, Depotium Mini-Entrepôt and Cubeit Portable Storage. StorageVault also provides last mile storage and logistics solutions through FlexSpace Logistics and professional records management services, such as document and media storage, imaging and shredding services through RecordXpress. 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 2021 CANADA SELF STORAGE CENTRES TABLE OF CONTENTS LETTER TO OUR SHAREHOLDERS OUR BOARD MEMBERS 2021 HIGHLIGHTS OUR NATIONAL FOOTPRINT ENVIRONMENTAL, SOCIAL AND GOVERNANCE FINANCIAL STATEMENTS MANAGEMENT DISCUSSION AND ANALYSIS 4 5 6 8 10 17 53 Annual Report 2021 | 3 CANADA SELF STORAGE CENTRESLETTER TO OUR SHAREHOLDERS Dear Fellow Shareholders, 2021 was an exceptional year for our business, exceeding all continues to be robust and we expect to close in excess of $100 expectations, budgets and stretch goals by a wide margin. We million of acquisitions in 2022, with $45 million already closed. We are achieved 20.1% same store NOI growth, 46.3% AFFO growth, and confident that the $500 million of acquisitions over the past two years acquired $270 million of strategic properties. We were recognized for the 5th time, as one of the 50 fastest growing companies on the TSXV and received approval to move to the TSX, will improve efficiency, synergy and pricing power many years into the future, further extending our lead as the largest, most prominent storage provider in Canada. which happened on January 26, 2022 We continue to be recognized In addition to our acquisitions, we have plans to complete 25,000 to as one of the most gender diverse companies in Canada. We continue 50,000 square feet of expansion in the next 12 months, with another to support over 150 community organizations and charities across our 425,000 rentable square feet of expansion projects currently in the great country and are very proud to be the Official Storage Partner for entitlement and permitting stages. Team Canada – we have the space to store all those medals! Operations Our results were unprecedented in the real estate industry, achieving ESG StorageVault continues its focus on community and the sustainability of our country by supporting over 150 organizations focusing on 46.3% AFFO, 33.4% NOI and 34.2% revenue growth. The continued children, health, education, sport and quality of life. demand for last mile solutions and space for essential business customers combined with home office use, change in life circumstances, the fallout from Covid impacts and the resurgence of immigration have pushed demand up while supply chain and entitlement delays have constrained supply. This has resulted in high occupancy levels and tremendous efficiency from our revenue management system. Platform Strength and Innovation We continue to improve our operating platform to meet the strong demand for our services – these changes include improving our We continue to invest in roof top solar, solar walls, motion sensor LED lighting, low-flow plumbing fixtures, in-floor radiant heat, LED replacement programs for acquired stores and paperless back office practices in an ongoing effort to improve our environment. We are proud to be recognized as leaders in gender diversity and equality and continue to promote a culture of continuous improvement, diversity of thought, skills development, personal wellness and safety. virtual systems to offer no-contact “self-serve” rental processes to We are excited for 2022 with hopes of seeing an end to Covid and having another very successful year. We remain focused on growing cash flow, increasing shareholder value and supporting our people and communities by executing on our strategies and being disciplined purchasers and operators of great assets across Canada. We appreciate your continued support. Steven Scott Chief Executive Officer February 23, 2022 accommodate societies shift in behavior. We launched FlexSpace Logistics, a technology platform that focuses on providing end to end solutions for business clients with storage, logistics, and inventory management offerings. Services are provided across Canada through SVI’s existing portfolio of businesses and our extensive network of partners, allowing us to offer everything from warehousing and storage to last mile delivery to records management. A true one-stop shop for businesses, especially small – medium sized companies who were previously underserved in the space. Acquisitions and Expansion We acquired over $270 million of strategic self storage assets, eclipsing the $230 million in 2020, resulting in 230 stores owned and managed across the country (the next largest is 68 stores). Our pipeline 4 | Annual Report 2021 CANADA SELF STORAGE CENTRES OUR BOARD MEMBERS JAY LYNNE FLEMING BEN HARRIS IQBAL KHAN - CFO In 1999, Ms. Fleming founded Storage Mr. Harris has more than 20 years of real Chief Financial Officer of the Corpora- For Your Life which was sold to the estate investment and management ex- tion. Mr. Khan is a Principal and Chief Corporation in September 2015. She perience. Mr. Harris is the founder and Financial Officer of The Access Group currently serves the Corporation as a CEO of Pinedale Capital Partners, a pri- of Companies focusing on the own- director and as a member of the Audit vately-held investment management ership, acquisition and development Committee, the Governance, Nominat- firm focused on the acquisition, de- of storage, industrial, multi-residential ing and Compensation Committee and velopment and operation of industrial and commercial real estate in Canada, the Acquisition Committee. Ms. Flem- properties across the United States. Mr. and prior to the internalization into the ing is the President and CEO of CVL Harris is a graduate of Dalhousie Univer- Corporation, President of RecordXpress, Investments Ltd., and is an active vol- sity and the University of Kings College a records management company. Mr. unteer member of the Building & Land in Canada where he received joint sci- Khan is the Chief Executive Officer and a Committee of Mulgrave School, West ence degrees in Economics. Mr. Harris director of Parkit Enterprise Inc. (TSX-V: Vancouver. Ms. Fleming completed her also serves on the board of Rippowam PKT). He is the Chairperson of the Cana- Business Certificate with Capilano Uni- Cisqua School in Bedford, New York and dian Self Storage Association Tax Com- versity in 1991. serves on the board of Sonida Senior mittee. Living (NYSE:SNDA). STEVEN SCOTT - CEO AL SIMPSON Chair and Chief Executive Officer of the In 2007, Mr. Simpson co-founded the Corporation. Mr. Scott is currently a Corporation and was President and Chief director and Audit Committee Chair of Executive Officer until April 2015. He now Park Lawn Corporation (TSX: PLC). Mr. serves the Corporation as a director and Scott is also a director and Chair of Parkit Acquisition Committee Chair. In 2000, Mr. Enterprise Inc. (TSX-V: PKT). Mr. Scott is Simpson co-founded Hospitality Network a Principal and Chief Executive Officer Canada now operating as HealthHub Pa- of The Access Group of Companies tient Engagement Solutions Inc. and was focusing on the ownership, acquisition President and Chief Executive Officer until and development of stoage, industrial, 2005 and Chair from 2011 to 2017. Recently, multi-residential and commercial real Mr. Simpson co-founded Living Sky Sports estate in Canada. Mr. Scott is also a and Entertainment Inc. in 2020. Mr. Simp- Director and Treasurer of the Canadian son holds a PgD Business Administration Self Storage Association. from Edinburgh Business School. Mr. Simp- son also serves on the Saskatchewan Gov- ernment House Board of Trustees. “We remain focused on growing cash flow, increasing shareholder value and supporting our people and communities by executing on our strategies and being disciplined purchasers and operators of great assets across Canada.” Annual Report 2021 | 5 CANADA SELF STORAGE CENTRES2021 HIGHLIGHTS +186 STORES t n e m e g a n a M w e N * Q4/2014 10 STORES Q4/2015* 29 STORES Q4/2016 49 STORES Q4/2017 90 STORES Q4/2018 105 STORES Q4/2019 151 STORES Q4/2020 167 STORES Q4/2021** 196 STORES d e n w O I V S * * +34% REVENUE +33% NOI +46% AFFO NOI AFFO 140 MM 120 MM 100 MM 80 MM 60 MM 40 MM 20 MM 70 MM 60 MM 50 MM 40 MM 30 MM 20 MM 10 MM ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 6 | Annual Report 2021 CANADA SELF STORAGE CENTRES WE GREW TO OVER 10.7 MILLION SQFT OF RENTABLE SPACE IN 96,000 STORAGE UNITS $270.2 MILLION IN ACQUISITIONS RESULTING IN 29 STORES BEING ADDED IN 2021 REVENUE GROWTH OF 34% TO $208.7 MILLION FROM $155.5 MILLION NOI GROWTH OF 33% TO $139.0 MILLION FROM $104.2 MILLION EXPECTING $100+ MILLION IN ACQUISITIONS 1,470% 7 YEAR TOTAL SHAREHOLDER RETURN Annual Report 2021 | 7 CANADA SELF STORAGE CENTRESOUR NATIONAL FOOTPRINT 230+ locations owned and managed across Canada and growing! 18 OUR BRANDS 44 11 12 5 5 26 26 114 114 8 | Annual Report 2021 Annual Report 2021 | 9 D O C U M E N TI S T O R A G E R E T R I E V A LI S E R V I C E S A Division of Storagevault Canada Inc. CONTAINERS CANADA SELF STORAGE CENTRESCANADA SELF STORAGE CENTRESENVIRONMENTAL, SOCIAL AND GOVERNANCE 10 | Annual Report 2021 CANADA SELF STORAGE CENTRESEnvironmental integrity, social responsibility and adherence to strong governance practices are core values at StorageVault. We continue to focus 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 maintaining sound corporate governance practices. Annual Report 2021 | 11 CANADA SELF STORAGE CENTRESENVIRONMENTAL It is our responsibility to be leaders in the communities in which At the end of 2021, StorageVault operated 28 stores with we live and work, to minimize our impact while actively seeking solar panels installed and will continue to expand solar opportunities to protect the environment and encourage panel installations across our portfolio. Our solar panel sustainable operating practices. We continuously explore installations utilize available roof space to generate electricity opportunities to improve the environmental efficiency in our for consumption while providing a solid financial return, buildings and operations given the importance to our company, demonstrating that sustainability efforts not only benefit the our shareholders, our customers, and our communities. environment and community, but also our shareholders. Of all the real estate asset classes, self storage has the lowest Below are highlights of some of the environmental practices environmental impact in the areas of energy consumption, that we have adopted in an effort to reduce our overall water consumption and waste production. While the self environmental footprint: storage industry has an inherently light environmental footprint, we proactively strive to be even better. Energy Consumption • motion controlled lighting by zone, allowing for usage Strategically, we offer a mix of square footage that is non- only where and when required climate controlled and climate controlled, with non-climate • LED lighting (internal and external) for all new buildings controlled space having minimal environmental affect. For our and light fixture replacements properties that offer climate controlled storage, we regulate • solar power generation inside temperatures at moderate levels to safeguard contents • modern, energy efficient HVAC systems while minimizing energy required for heating or cooling. • automated and self adjusting internal thermostat Operationally, water usage is very low, and minimal daily client temperature controls activity contributes to limiting our carbon footprint within our • all new roofs installed are reflective “cool” roofs that help communities. minimize energy consumption 12 | Annual Report 2021 CANADA SELF STORAGE CENTRESLOW ENVIROMENTAL IMPACT RELATIVE TO OTHER ASSET CLASSES 85% LESS 92% LESS 84% LESS ENERGY CONSUMPTION (KWh/SqFt) WATER CONSUMPTION (L/SqFt) WASTE PRODUCTION (KG/SqFt) STORAGE OTHER REAL ESTATE ASSET CLASSES s l e t o h d n a , l i a t e r , l a i r t s u d n i , e c i f f o , y l i m a f i t l u m e d u l c n i s e p y t y t r e p o r p r e h t O 1 1 e m u o V l , t r o p e R e c n a m r o f r e P t n i r p n e e r G , e t u t i t s n I d n a L n a b r U : e c r u o S Water Consumption refurbished equipment to local charities or recycling • given low occupant levels at our properties, on average, equipment that cannot be repurposed one washroom per property • energy efficient plumbing systems and appliances Building Design and Construction Practices • low-water irrigation systems • energy efficient glazing • landscaping using native and drought-tolerant species • use of SolarWall systems or insulated metal panels used in • water run-off controls • storm water retention construction of new or retrofitted buildings • replacing standard exterior storage doors with energy efficient doors Waste Production • insulated foundation walls to help maintain and keep the • sale of recycled packaging materials foundation slab warm • waste recycling program at our stores and corporate • all proposed acquisitions are subject to environmental site offices assessments prior to closing • reduced paper usage through more efficient technology options including paperless rental agreements • e-waste reduction and electronic recycling program for decommissioned computer equipment by either donating Annual Report 2021 | 13 CANADA SELF STORAGE CENTRES SOCIAL At StorageVault, we respect the role and impact we have Being a community based business, we believe in giving back in our host communities. We are proud to employ a diverse in the places where we live and work by supporting local, team of 700 colleagues, who represent both our communities grass-roots initiatives as well as national organizations. In 2021, and our customer bases, and who help support the over 100 StorageVault continued our annual support of over 150 local, communities we are in across Canada. Diversity is in our DNA provincial and national organizations. Our dedicated Corporate and is the foundation of our strength and stability. We are proud Partnerships team’s mission is to align with organizations that our culture of continuous improvement has led to a high across the country to support important initiatives that matter number of promotions within our organization. As colleagues, to our communities. We are committed to engaging with our we believe that taking care of each other leads to a greater level communities in a way that allows us to make meaningful and of care for our stores, customers and communities. We do so lasting contributions. by focusing on engagement, advancement, wellness and safety. OFFICIAL STORAGE PARTNER OF THE CANADIAN OLYMPIC COMMITTEE Sports Sports have the power to connect us in all areas of community. It is our desire to support communities across Canada, so that they are healthy and strong. StorageVault is proud to be the official Self Storage Partner for Team Canada. It is with great pride and patriotism that we support our athletes and communities from coast to coast. From young hopefuls in grassroots organizations to Olympians striving for gold, we proudly support their journey to excellence. 14 | Annual Report 2021 CANADA SELF STORAGE CENTRESCommunity Support Our partnership family consists of more than 150 partners nationally. We work closely with our partners to foster relationships to better assist and understand the needs within communities across Canada - from food security, to flood relief, to healthcare or sponsoring programs for vulnerable youth. We align with like-minded organizations, to work together in support of healthy and resilient communities. Annual Report 2021 | 15 CANADA SELF STORAGE CENTRESGOVERNANCE The Board and Management of StorageVault are committed • Annual election by shareholders of Directors, CEO and to maintaining the highest standards of governance to ensure CFO at AGM long-term value for our shareholders, mitigate and manage risk • Whistleblower Policy and proactively protect the best interests of all our stakeholders. • Insider Trading and Reporting Policy • Disclosure and Confidentiality Policy As part of StorageVault’s recent graduation to the TSX, we • Regular review and updates of all Corporate Governance were subject to an audit, scrutiny and testing to ensure that principles and policies our corporate policies, practices and accounting standards met • Code of Business Conduct & Ethics which is signed by all the TSX’s stringent compliance requirements. Our corporate employees policies and standards promote the long-term interests of our • Majority Voting Policy (to be implemented at Annual shareholders, strengthen management accountability and help General Meeting) maintain public trust in StorageVault. Our Board and Management recognize the importance of diversification and equality. We are proud to organically have equality, diversity and good corporate governance and is this balance within our organization and continue to promote dedicated to maintaining the highest governance standards a culture of continuous improvement, diversity of thought, through the following: development of skills, personal wellness and safety. StorageVault continues to be recognized as a leader in gender • Independent Director led Audit, Acquisition and Governance, Nominating and Compensation Committees Our approach to governance and the continuous execution of • Diverse Management team and Board, along with a sound ESG principles places StorageVault in a strong position comprehensive Diversity Policy to deliver sustainable returns to our fellow shareholders while • 40% Board Diversity (gender and race) supporting our many stakeholders. • Acquisition Committee Mandate to review, approve and recommend transactions to the Board • Annual review and vote to approve executive compensation 16 | Annual Report 2021 CANADA SELF STORAGE CENTRESStorageVault Canada Inc. Consolidated Financial Statements For the Years Ended December 31, 2021 and 2020 Annual Report 2021 | 17 CANADA 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. (the "Corporation"), which comprise the consolidated statements of financial position as at December 31, 2021 and December 31, 2020, and the consolidated statements of income (loss) and other 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, 2021 and December 31, 2020, 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 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 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. 18 | Annual Report 2021 CANADA SELF STORAGE CENTRES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 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.  Annual Report 2021 | 19 CANADA SELF STORAGE CENTRES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 Scott Laluk. Calgary, Alberta February 23, 2022 Chartered Professional Accountants 20 | Annual Report 2021 CANADA SELF STORAGE CENTRES__________________________________________________________________________________________ Annual Report 2021 | 21 CANADA SELF STORAGE CENTRES__________________________________________________________________________________________ 22 | Annual Report 2021 CANADA SELF STORAGE CENTRES__________________________________________________________________________________________ Annual Report 2021 | 23 CANADA SELF STORAGE CENTRES__________________________________________________________________________________________ 24 | Annual Report 2021 CANADA SELF STORAGE CENTRESAnnual Report 2021 | 25 CANADA SELF STORAGE CENTRES 26 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 27 CANADA SELF STORAGE CENTRES 28 | Annual Report 2021 CANADA SELF STORAGE CENTRES - - - Annual Report 2021 | 29 CANADA SELF STORAGE CENTRES - - - - 30 | Annual Report 2021 CANADA SELF STORAGE CENTRES - - - - - - Annual Report 2021 | 31 CANADA SELF STORAGE CENTRES 32 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 33 CANADA SELF STORAGE CENTRES 34 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 35 CANADA SELF STORAGE CENTRES 36 | Annual Report 2021 CANADA SELF STORAGE CENTRES - - - - - Annual Report 2021 | 37 CANADA SELF STORAGE CENTRES - - - - - - - - - - - - - - - 38 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 39 CANADA SELF STORAGE CENTRES 40 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 41 CANADA SELF STORAGE CENTRES 42 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 43 CANADA SELF STORAGE CENTRES 44 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 45 CANADA SELF STORAGE CENTRES 46 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 47 CANADA SELF STORAGE CENTRES 48 | Annual Report 2021 CANADA SELF STORAGE CENTRES - - - Annual Report 2021 | 49 CANADA SELF STORAGE CENTRES 50 | Annual Report 2021 CANADA SELF STORAGE CENTRES Annual Report 2021 | 51 CANADA SELF STORAGE CENTRES 52 | Annual Report 2021 CANADA SELF STORAGE CENTRES SSttoorraaggeeVVaauulltt CCaannaaddaa IInncc.. ((tthhee ““CCoorrppoorraattiioonn””)) FFoorrmm 5511--110022FF11 MMaannaaggeemmeenntt’’ss DDiissccuussssiioonn aanndd AAnnaallyyssiiss FFoorr tthhee TThhrreeee MMoonntthhss aanndd FFiissccaall YYeeaarr EEnnddeedd DDeecceemmbbeerr 3311,, 22002211 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, 2021. This MD&A should be read in conjunction with the audited fiscal 2021 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 23, 2022. FFOORRWWAARRDD LLOOOOKKIINNGG SSTTAATTEEMMEENNTTSS This MD&A contains forward-looking information. All statements, other than statements of historical fact, included in this MD&A, 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 includes statements with respect to: the Corporation’s outlook as to the market for self storage and portable storage; 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 of 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 2022; 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 2021 were purchased on January 1, 2021; and the general outlook for the Corporation. This forward-looking information is contained in “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 to be not as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future 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 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 with respect to these acquisitions and any related private placement; the level of activity in the storage business and the economy generally; consumer interest in the Corporation’s services and 1 Annual Report 2021 | 53 CANADA SELF STORAGE CENTRES products; competition and SVI’s competitive advantages; trends in the storage industry, including, increased growth in self storage, portable storage and management segments; the availability of attractive and financially competitive asset acquisitions in the future; the revenue from acquisitions completed in fiscal 2021 being extrapolated to the entire period for 2021 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 2022 and revenue and NOI growth for 2022 may be considered a financial outlook, as defined by applicable securities legislation, contained in this MD&A and the accompanying news release. 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. 54 | Annual Report 2021 2 CANADA SELF STORAGE CENTRES TTAABBLLEE OOFF CCOONNTTEENNTTSS 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 5566 5577 5588 6600 6611 6633 7700 7755 7766 7777 7799 7799 8800 8833 3 Annual Report 2021 | 55 CANADA SELF STORAGE CENTRES GGLLOOSSSSAARRYY OOFF TTEERRMMSS The following abbreviated terms are used in the Management Discussion & Analysis and have the following respective meanings: ““AAFFFFOO”” 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; ““EExxiissttiinngg SSeellff SSttoorraaggee”” 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; ““FFFFOO”” 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, unrealized gains or losses on derivative financial instruments and deferred income taxes; and after adjustments for equity accounted entities and non-controlling interests; ““IIFFRRSS”” means International Financial Reporting Standards; ““MMDD && AA”” means this Management’s Discussion and Analysis disclosure document; ““NNeeww SSeellff SSttoorraaggee”” 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; ““NNOOII”” 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; ““NNoonn--IIFFRRSS MMeeaassuurreess”” 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; ““QQ11,, QQ22,, QQ33 oorr QQ44”” means a three month fiscal quarter of the Company, ending on March 31, June 30, September 30 and December 31 respectively; ““RReevveennuuee MMaannaaggeemmeenntt”” 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; ““SSttoorree”” means self storage property or location or facility or site; ““SSuubbsseeqquueenntt EEvveennttss”” means material transactions that have occurred from January 1, 2022 to February 23, 2022; ““SSVVII”” means StorageVault Canada Inc.; ““TThhee CCoommppaannyy”” or ““TThhee CCoorrppoorraattiioonn” or ““WWee”” or ““OOuurr”” or “SSttoorraaggeeVVaauulltt” means StorageVault Canada Inc. 56 | Annual Report 2021 4 CANADA SELF STORAGE CENTRES NNAATTUURREE OOFF OOUURR BBUUSSIINNEESSSS BBuussiinneessss OOvveerrvviieeww The Corporation’s primary business is owning, managing and renting self storage and portable storage space to individuals and commercial customers. The Corporation also stores, shreds, and manages documents and records for its customers. As of January 26, 2022, the common shares of the Company are publicly traded on the TSX, prior to that on the TSX Venture Exchange, under the symbol ‘SVI’. As of December 31, 2021, SVI owned 196 stores and 4,527 portable storage units across Canada, for a total of 10,772,252 square feet of rentable storage space in 96,047 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 34 stores that are owned by third parties for a management fee, bringing the total number of stores owned and managed to 230. 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. Through our portable storage 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. TThhee SSttoorraaggee LLaannddssccaappee 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 mile solutions, lack of warehouse space, immigration, downsizing, renovations, incubation, e moving, death, divorce, insurance, etc. We expect these trends to continue in 2022 and beyond. commerce, last ‐ ‐ 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. Pricing and Occupancy A store’s rental rates and level of occupancy are dependent upon factors such as lead generation, 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 and inflationary pressures quickly. Our objective is to maximize revenue by increasing rent per square foot first, and maximizing occupancy second. 5 Annual Report 2021 | 57 CANADA SELF STORAGE CENTRES 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 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. BBUUSSIINNEESSSS AANNDD GGEENNEERRAALL CCOORRPPOORRAATTEE SSTTRRAATTEEGGYY 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. GGrroowwtthh SSttrraatteeggiieess Our growth strategy is described in the following six 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, records management and FlexSpace Logistics business segments. 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. 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, and 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 space, to the right customer, at the right time, for the right price. With a focus on providing the best value to the customer and on revenue management, stores are able to achieve significant top and bottom line growth, even when occupancies are stable. 58 | Annual Report 2021 6 CANADA SELF STORAGE CENTRES Existing Store Expansion There is over 1,500,000 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 2021, we completed 10,000 square feet of expansion and currently have plans to complete another 25,000 to 50,000 square feet of expansion in the next 12 months. In addition, we have another 425,000 rentable square feet of expansions projects in the entitlement and permitting stage. 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, delivering strong "sticky" cash flows. RecordXpress is one of the largest records management companies in Canada and 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. Expansion of FlexSpace Logistics Business The FlexSpace Logistics business is a technology platform that focuses on providing end to end solutions for business clients with our storage, logistics, and inventory management offerings. Services are provided across Canada through SVI’s existing portfolio of businesses and our extensive network of partners, allowing us to offer everything from warehousing and storage to last mile delivery to records management. A true one-stop shop for businesses, especially small – medium sized companies who were previously underserved in the space. FFiinnaanncciinngg SSttrraatteeggyy 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. 7 Annual Report 2021 | 59 CANADA SELF STORAGE CENTRES OOUUTTLLOOOOKK The Corporation’s update and outlook for the COVID-19 pandemic, acquisitions, share capital, results from operations and subsequent events are: TThhee CCOOVVIIDD--1199 PPaannddeemmiicc Since the commencement of the pandemic 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 no-contact “self-serve” rental processes, installation of plexiglass partitions and limiting the number of customers in our offices to one at a time. Our teams have been continuously employed and clients are able to safely store and access their valuables. We are proud of our team for continuing to adapt to new processes and for committing to provide exceptional client and community service. In fiscal 2021, we experienced a significant increase in leads and rentals which has resulted in higher occupancies and rental rates across our 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 has 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 storage, portable storage, records management and FlexSpace Logistics infrastructures. As at December 31, 2021, we continue to generate significant cash flows from our operations, with $25.1 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 $270.2 million in acquisitions completed in fiscal 2021. AAccqquuiissiittiioonnss In 2022, we expect to acquire in excess of $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. SShhaarree CCaappiittaall The Corporation will, from time to time, issue common shares to the public or to vendors to fund the purchase of storage assets. Future issuances will be dependent upon financing needs, acquisition opportunities, expansion plans, equity market conditions and transaction pricing. RReessuullttss ffrroomm OOppeerraattiioonnss We expect growth in revenue and NOI in 2022 as we continue to streamline and integrate operations, implement our revenue management system and continue to control costs on the over $1.8 billion of assets purchased in the past six years. We also expect significant contributions from the acquisitions made in late fiscal 2020 as well as those we have completed in fiscal 2021. 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. 60 | Annual Report 2021 8 CANADA SELF STORAGE CENTRES SSuubbsseeqquueenntt EEvveennttss The following items have been announced by the Corporation: • On January 24, 2022, announced the acquisition of one store in Toronto, Ontario for $45 million. The acquisition was paid by the issuance of 3,356,560 common shares of SVI at an aggregate purchase price of $22 million, with the remainder of the purchase price being paid with funds on hand or consisting of debt of the store being acquired. The acquisition is a related party acquisition. • On January 26, 2022 StorageVault’s common shares, its 5.75% senior unsecured hybrid debentures and its 5.50% senior unsecured hybrid debentures were listed and commenced trading on the Toronto Stock Exchange (the “TSX”), under the symbols SVI, SVI.DB and SVI.DB.B, respectively • On February 23, 2022, approved the increase to the quarterly dividend for Q1 2022 by 0.5% to $0.002775 per common share. DDEESSCCRRIIPPTTIIOONN OOFF OOUURR OOPPEERRAATTIIOONNSS As at December 31, 2021, the Corporation owned the following self storage and portable storage operations: LLooccaattiioonn AAccrreess NNuummbbeerr ooff SSttoorreess UUnniittss RReennttaabbllee SSqquuaarree FFeeeett British Columbia Alberta Saskatchewan Manitoba Ontario Quebec Nova Scotia Portable Storage Units 45 139 33 36 324 37 16 18 40 11 12 90 20 5 9,627 20,544 2,715 4,846 42,760 9,373 1,655 4,527 932,960 2,333,851 356,554 490,057 5,070,527 887,201 179,454 521,648 TToottaall 663300 119966 9966,,004477 1100,,777722,,225522 Management is focused on increasing value and increasing NOI as follows: RReevveennuuee MMaannaaggeemmeenntt 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. PPrrooffeessssiioonnaall MMaannaaggeemmeenntt The management team at SVI has extensive experience in all aspects of the storage industry including: • delivering superior results • management of over 230 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 MMaarrkkeettiinngg 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 “self serve” 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. 9 Annual Report 2021 | 61 CANADA SELF STORAGE CENTRES CCoossttccoo SSuupppplliieerr 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. RReesseerrvvaattiioonn CCeennttrree 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, listen, ask the right questions, ask for the business and close the sale. The overall result is an increased close rate leading to improved financial performance. TTeecchhnnoollooggyy aanndd SSooffttwwaarree 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 indicators ensuring that management’s 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. EEccoonnoommiieess ooff SSccaallee 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. 62 | Annual Report 2021 10 CANADA SELF STORAGE CENTRES FFIINNAANNCCIIAALL RREESSUULLTTSS OOVVEERRVVIIEEWW In fiscal 2021, SVI acquired 29 stores for $270.2 million. In fiscal 2020, SVI acquired 16 stores and one piece of vacant land for $232.7 million. The timing of these acquisitions affects the comparative results. SSeelleecctteedd FFiinnaanncciiaall IInnffoorrmmaattiioonn (unaudited) TThhrreeee MMoonntthhss EEnnddeedd DDeecceemmbbeerr 3311 (audited) FFiissccaall 22002211 2020 $$ % 22002211 2020 $$ % CChhaannggee CChhaannggee Storage revenue and related services $$ 5566,,336644,,779955 $ 41,592,792 $ 14,772,003 35.5% $$ 220066,,662255,,993333 $ 153,394,776 $ 53,231,157 Management fees 448800,,449944 557,497 (77,003) -13.8% 22,,003344,,774455 2,069,146 (34,401) Operating costs Net operating income 1 Less: 5566,,884455,,228899 42,150,289 14,695,000 1199,,002266,,111111 13,798,341 3377,,881199,,117788 28,351,948 5,227,770 9,467,230 34.9% 37.9% 33.4% 220088,,666600,,667788 155,463,922 53,196,756 6699,,666600,,334466 51,250,858 18,409,488 113399,,000000,,333322 104,213,064 34,787,268 Acquisition and integration costs Selling, general and administrative Interest 22,,770000,,330066 44,,885599,,667700 5,039,927 4,542,505 1155,,662233,,997755 12,500,650 Stock based compensation 1100,,775500,,668877 6,318,156 (2,339,621) -46.4% 317,165 3,123,325 4,432,531 7.0% 25.0% 70.2% 88,,002277,,337733 1177,,881177,,559944 5588,,550088,,449922 1111,,228888,,333355 7,402,034 625,339 15,550,356 2,267,238 45,820,583 12,687,909 6,318,156 4,970,179 34.7% -1.7% 34.2% 35.9% 33.4% 8.4% 14.6% 27.7% 78.7% Unrealized (gain) loss on derivative financial instruments Unrealized (gain) loss on interest rate swap contracts ((66,,114422,,774477)) - (6,142,747) - ((66,,114422,,774477)) - (6,142,747) - -- (9,291,210) 9,291,210 -100.0% -- (9,291,210) 9,291,210 -100.0% Depreciation and amortization 2244,,552211,,993388 21,100,449 3,421,489 16.2% 9933,,118899,,338877 82,558,426 10,630,961 12.9% 5522,,331133,,882299 40,210,477 12,103,352 30.1% 118822,,668888,,443344 148,358,345 34,330,089 23.1% Net income (loss) before taxes ((1144,,449944,,665511)) (11,858,529) (2,636,122) 22.2% ((4433,,668888,,110022)) (44,145,281) 457,179 -1.0% Deferred tax recovery 11,,448899,,119911 1,870,681 (381,490) -20.4% 77,,882233,,001100 10,863,059 (3,040,049) -28.0% Net income (loss) $$ ((1133,,000055,,446600)) $ (9,987,848) $ (3,017,612) 30.2% $$ ((3355,,886655,,009922)) $ (33,282,222) $ (2,582,870) 7.8% Weighted average number of common shares outstanding Basic Diluted 337733,,556677,,119933 364,460,666 337733,,556677,,119933 364,460,666 9,106,527 9,106,527 2.5% 2.5% 337700,,226677,,662299 363,469,712 337700,,226677,,662299 363,469,712 6,797,917 6,797,917 1.9% 1.9% Net income (loss) per common share Basic Diluted 1 Non-IFRS Measure. $$ ((00..003355)) $ (0.027) $$ ((00..003355)) $ (0.027) $$ ((00..009977)) $ (0.092) $$ ((00..009977)) $ (0.092) Storage revenue and related services For the three months ended December 31, 2021, the Corporation had revenues of $56.4 million (December 31, 2020 - $41.6 million), an increase of 35.5% for the quarter and contributing to a $53.2 million or 34.7% increase for the fiscal year. This increase is attributable to incremental revenue from organic revenue growth and from the stores acquired in the current and prior fiscal year. For additional information, see “Segmented, Existing and New Self Storage and Portable Storage Results.” Management fees For the three months ended December 31, 2021, management fees have changed by 13.8% over the same prior year periods. The change is a result of the Corporation acquiring managed stores, reducing the number of stores in our third party management platform. 11 Annual Report 2021 | 63 CANADA SELF STORAGE CENTRES Operating costs Operating costs for the three months ended December 31, 2021 were $19.0 million (December 31, 2020 - $13.8 million). The increase relates to stores acquired in 2021 and 2020 and increases in advertising, property taxes and wages (mainly incentives earned by our store teams). Net income (loss) Our net loss of $13.0 million for the three months ended December 31, 2021 results from non-cash items of $24.5 million of depreciation and amortization and $10.8 million in stock based compensation, and which is offset by the recovery of $1.5 million of deferred tax. Net operating income For the three months ended December 31, 2021, the Corporation had net operating income (NOI), a non-IFRS measure, of $37.8 million (December 31, 2020 - $28.4 million), an increase of 33.4% for quarter and contributing to a $34.8 million or 33.4% increase for the fiscal year. The increase was due to increased occupancy, increased rates through our revenue management systems, controlling costs, NOI from assets purchased in throughout fiscal 2021 and 2020 and from streamlining and integration of operations. 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 transactions that we elected not to pursue. SVI closed $270.2 million of acquisitions in fiscal 2021, following closing $232.7 million in acquisitions in fiscal 2020 and $372.7 million in fiscal 2019. 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 Interest expense increased as the total amount of debt outstanding increased with the current and prior year acquisitions. As at December 31, 2021, our debt was $1.3 billion compared to $1.2 billion at December 31, 2020. Depreciation and amortization The increase in depreciation and amortization expense is primarily due to depreciating the additional assets acquired throughout fiscal 2021 and full year of depreciation for assets acquired in fiscal 2020. 64 | Annual Report 2021 12 CANADA SELF STORAGE CENTRES FFuunnddss ffrroomm OOppeerraattiioonnss ((FFFFOO)) aanndd AAddjjuusstteedd FFuunnddss ffrroomm OOppeerraattiioonnss ((AAFFFFOO)) 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 gain or loss on interest rate swap contracts, unrealized gain or loss on derivative financial instruments 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"). FFO for the three months and fiscal year ended December 31, 2021 was $14.6 million and $54.6 million versus $6.3 million and $35.4 million, respectively for the same period in 2020, a 133.5% and 54.2% increase. These increases are the result of contributions from strong operational performance and from assets purchased. AFFO for the three months and fiscal year ended December 31, 2021 was $17.3 million and $62.7 million versus $11.3 million and $42.8 million, respectively for the same period in 2020, a 53.3% and 46.3% increase. These increases are the result of contributions from strong operational performance and from assets purchased. Both the FFO and AFFO are muted by the operational and interest expenses related to the $114.6 million in new build and lease-up stores and raw land acquisitions completed in Q4 2020. In fiscal 2021, these acquisitions reduced our FFO and AFFO by $0.7 million. The Corporation expects to be cash flow positive and realize the benefits of these acquisitions commencing in fiscal 2022 and at stabilization that these assets will add approximately $3.0 million in incremental FFO and AFFO. The FFO and AFFO for the three months and fiscal year ended December 31, 2021 and 2020 are: (unaudited) TThhrreeee MMoonntthhss EEnnddeedd DDeecceemmbbeerr 3311 (audited) FFiissccaall 22002211 22002200 CChhaannggee 22002211 22002200 CChhaannggee $ % $ % Net income (loss) $$ ((1133,,000055,,446600)) $ (9,987,848) $ (3,017,612) 30.2% $$ ((3355,,886655,,009922)) $ (33,282,222) $ (2,582,870) 7.8% Adjustments: Stock based compensation 1100,,775500,,668877 6,318,156 4,432,531 70.2% 1111,,228888,,333355 6,318,156 4,970,179 78.7% Unrealized (gain) loss on derivative financial instruments Unrealized (gain) loss on interest rate swap contracts ((66,,114422,,774477)) - (6,142,747) - ((66,,114422,,774477)) - (6,142,747) - -- (9,291,210) 9,291,210 -100.0% -- (9,291,210) 9,291,210 -100.0% Deferred tax recovery ((11,,448899,,119911)) (1,870,681) 381,490 -20.4% ((77,,882233,,001100)) (10,863,059) 3,040,049 -28.0% Depreciation and amortization 2244,,552211,,993388 21,100,449 3,421,489 16.2% 9933,,118899,,338877 82,558,426 10,630,961 12.9% FFO 1 Adjustments: 2277,,664400,,668877 16,256,714 11,383,973 70.0% 9900,,551111,,996655 68,722,313 21,789,652 31.7% $$ 1144,,663355,,222277 $ 6,268,866 $ 8,366,361 133.5% $$ 5544,,664466,,887733 $ 35,440,091 $ 19,206,782 54.2% Acquisition and integration costs 22,,770000,,330066 5,039,927 (2,339,621) -46.4% 88,,002277,,337733 7,402,034 625,339 8.4% AFFO 1 1 Non-IFRS Measure. $$ 1177,,333355,,553333 $ 11,308,793 $ 6,026,740 53.3% $$ 6622,,667744,,224466 $ 42,842,125 $ 19,832,121 46.3% 13 Annual Report 2021 | 65 CANADA SELF STORAGE CENTRES AAnnnnuuaalliizzeedd NNeett OOppeerraattiinngg IInnccoommee aanndd FFuunnddss ffrroomm OOppeerraattiioonnss The Company completed the purchase of 29 stores in fiscal 2021 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 2021, were purchased as of January 1, 2021 and owned for the entire 12-month period. The results of this annualized statement show that NOI, FFO and AFFO would be higher by $7.8 million, $6.2 million and $6.2 million, respectively. NOI would have been $146.8 million, FFO would be $60.9 million and the AFFO would be $68.9 million. This annualization continues to be muted by the $114.6 million in new build and lease-up stores and raw land acquisitions made in Q4 2020. The Corporation expects that at stabilization, these assets will add approximately $3 million in incremental NOI. FFoorr tthhee YYeeaarr EEnnddeedd DDeecceemmbbeerr 3311,, 22002211 Actual AAnnnnuuaalliizzeedd RReessuullttss Incremental Notes Storage revenue and related services $ 206,625,933 $$ 221188,,444400,,334455 $ 11,814,412 1 Management fees Property operating costs NNeett ooppeerraattiinngg iinnccoommee Adjustments: Acquisition and integration costs Selling, general and administrative Interest 2,034,745 208,660,678 69,660,346 139,000,332 8,027,373 17,817,594 58,508,492 84,353,459 22,,003344,,774455 222200,,447755,,009900 7733,,770077,,889966 114466,,776677,,119944 88,,002277,,337733 1188,,440088,,331155 5599,,444411,,551155 8855,,887777,,220033 FFuunnddss ffrroomm OOppeerraattiioonnss 54,646,873 6600,,888899,,999911 Adjustment: - 11,814,412 4,047,550 7,766,862 - 590,721 933,023 1,523,744 6,243,118 1 2 3 4 Acquisition and integration costs 8,027,373 88,,002277,,337733 - 2 AAddjjuusstteedd FFuunnddss ffrroomm OOppeerraattiioonnss $ 62,674,246 $$ 6688,,991177,,336644 $ 6,243,118 Note 1 – the results from all stores acquired in fiscal 2021, have been adjusted as if the purchase occurred on January 1, 2021. For revenues, we assumed achieved occupancies and rent per square foot were repeated from the period prior to acquisition. Information regarding expenses incurred during 2021 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, 2021. 66 | Annual Report 2021 14 CANADA SELF STORAGE CENTRES SSeeggmmeenntteedd,, EExxiissttiinngg aanndd NNeeww SSeellff SSttoorraaggee aanndd PPoorrttaabbllee SSttoorraaggee RReessuullttss 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 locations. Management fees are revenues generated from the management of stores owned by third parties. Revenue, operating costs and net operating income Revenue Existing Self Storage 1 New Self Storage 1 (unaudited) Three Months Ended December 31 (audited) Fiscal 2021 2020 Change 2021 2020 Change $ % $ % $ 41,980,296 $ 35,913,162 $ 6,067,134 16.9% $ 161,105,286 $ 136,076,029 $ 25,029,257 18.4% 11,617,246 3,483,753 8,133,493 233.5% Total Self Storage 53,597,542 39,396,915 14,200,627 36.0% Portable Storage Management Fees 2,767,253 480,494 2,195,877 557,497 571,376 (77,003) Combined 56,845,289 42,150,289 14,695,000 26.0% -13.8% 34.9% 35,000,602 196,105,888 10,520,045 2,034,745 9,515,108 25,485,494 267.8% 145,591,137 50,514,751 34.7% 7,803,639 2,716,406 34.8% 2,069,146 (34,401) -1.7% 208,660,678 155,463,922 53,196,756 34.2% Operating Costs Existing Self Storage 12,307,024 10,666,469 1,640,555 15.4% New Self Storage Total Self Storage 4,810,360 17,117,384 1,578,355 3,232,005 204.8% 12,244,824 4,872,560 39.8% 47,299,126 15,166,068 62,465,194 41,372,352 5,926,774 14.3% 4,554,185 10,611,883 233.0% 45,926,537 16,538,657 36.0% Portable Storage 1,908,727 1,553,517 355,210 Combined 19,026,111 13,798,341 5,227,770 22.9% 37.9% 7,195,152 5,324,321 1,870,831 35.1% 69,660,346 51,250,858 18,409,488 35.9% Net Operating Income 1 Existing Self Storage 29,673,272 25,246,693 4,426,579 17.5% 113,806,160 94,703,677 19,102,483 20.2% New Self Storage Total Self Storage Portable Storage Management Fees 6,806,886 36,480,158 858,526 480,494 1,905,398 4,901,488 257.2% 19,834,534 4,960,923 14,873,611 299.8% 27,152,091 9,328,067 34.4% 133,640,694 99,664,600 33,976,094 34.1% 642,360 557,497 216,166 (77,003) 33.7% -13.8% 3,324,893 2,034,745 2,479,318 2,069,146 845,575 (34,401) 34.1% -1.7% Combined $ 37,819,178 $ 28,351,948 $ 9,467,230 33.4% $ 139,000,332 $ 104,213,064 $ 34,787,268 33.4% 1 Non -IFRS Measure. Existing Self Storage For the three months ended December 31, 2021, revenue and NOI increased by 16.9% and 17.5%, respectively, over the same prior year period, resulting in a full year revenue and NOI growth of 18.4% and 20.2%. In the midst of COVID-19, the Corporation achieved 4.8% revenue and 5.0% NOI growth for fiscal 2020, strong results compared to our peers. Revenue and NOI increases are a result 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 (mainly incentives earned by our store teams). New Self Storage Increase is a result of acquiring stores in 2021 and throughout 2020 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, resulting in full year NOI growth of 34.1%. 15 Annual Report 2021 | 67 CANADA SELF STORAGE CENTRES 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. 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 2021 ('000) Fiscal 2020 ('000) Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total NOI 1 Existing Self Storage $ 29,673 $ 31,276 $ 29,022 $ 23,835 $ 113,806 $ 25,247 $ 24,958 $ 23,182 $ 21,316 $ 94,704 New Self Storage 6,807 5,825 4,622 Total Self Storage 36,480 37,101 33,644 2,581 26,416 19,835 133,641 1,905 1,120 1,047 889 4,961 27,152 26,078 24,229 22,205 99,665 Portable Storage Management Fees 859 480 1,169 536 844 529 454 490 3,325 2,035 642 557 853 585 575 488 410 439 2,479 2,069 $ 37,819 $ 38,805 $ 35,017 $ 27,359 $ 139,000 $ 28,352 $ 27,516 $ 25,292 $ 23,054 $ 104,214 1 Non-IFRS Measure Existing Self Storage The increase in Q4 2021 over Q4 2020 was driven from continued execution of our revenue management program, occupancy increases and controlling costs through operational efficiencies. New Self Storage SVI has acquired 29 stores fiscal 2021 and 16 stores in 2020. 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. 68 | Annual Report 2021 16 CANADA SELF STORAGE CENTRES SSuummmmaarryy ooff QQuuaarrtteerrllyy RReessuullttss (unaudited) RReevveennuuee $56,845,289 NNeett IInnccoommee // ((LLoossss)) ($13,005,460) NNeett IInnccoommee // ((LLoossss)) ppeerr sshhaarree ($0.035) FFuullllyy ddiilluutteedd NNeett IInnccoommee // ((LLoossss)) ppeerr sshhaarree ($0.035) PPeerriioodd 22002211 –– QQ44 22002211 –– QQ33 22002211 –– QQ22 22002211 –– QQ11 $56,854,002 ($4,286,770) $51,701,291 ($7,172,789) $43,260,095 ($11,400,073) ($0.012) ($0.019) ($0.031) TToottaall 22002211 $$220088,,666600,,667788 (($$3355,,886655,,009922)) NN//AA 22002200 -- QQ44 22002200 -- QQ33 22002200 -- QQ22 22002200 -- QQ11 $42,150,289 ($9,987,848) $40,053,371 ($6,276,846) $37,425,908 ($8,651,142) $35,834,354 ($8,366,386) ($0.027) ($0.017) ($0.024) ($0.023) TToottaall 22002200 $$115555,,446633,,992222 (($$3333,,228822,,222222)) NN//AA 22001199 -- QQ44 22001199 -- QQ33 22001199 -- QQ22 22001199 -- QQ11 $37,174,365 ($11,563,878) $37,310,765 ($9,399,776) $34,255,855 ($16,310,988) $26,222,055 ($8,843,827) ($0.032) ($0.026) ($0.045) ($0.025) TToottaall 22001199 $$113344,,996633,,004400 (($$4466,,111188,,446699)) NN//AA 22001188 -- QQ44 22001188 -- QQ33 22001188 -- QQ22 22001188 -- QQ11 $26,562,429 ($843,810) $25,733,852 ($6,355,654) $23,173,856 ($9,158,368) $20,913,462 ($7,793,463) ($0.002) ($0.018) ($0.026) ($0.022) TToottaall 22001188 $$9966,,338833,,559999 (($$2244,,115511,,229955)) NN//AA 22001177 -- QQ44 22001177 -- QQ33 11 22001177 -- QQ22 22001177 -- QQ11 11 $20,744,110 $15,343,505 $18,453,960 ($15,402,377) $12,557,306 ($2,995,895) $10,133,138 ($10,797,865) $0.044 ($0.046) ($0.010) ($0.037) TToottaall 22001177 $$6611,,888888,,551144 (($$1133,,885522,,663322)) NN//AA 22001166 -- QQ44 22001166 -- QQ33 22001166 -- QQ22 22001166 -- QQ11 $8,900,182 ($18,657,288) $7,307,070 $6,320,322 $5,296,970 ($537,379) ($663,764) ($1,331,005) ($0.070) ($0.022) ($0.004) ($0.008) TToottaall 22001166 $$2277,,882244,,554444 (($$2211,,118899,,443366)) NN//AA 22001155 -- QQ44 22001155 -- QQ33 22001155 -- QQ22 22001155 -- QQ11 $4,795,266 $3,137,527 $2,111,281 $1,096,513 ($2,702,281) ($821,330) ($677,127) ($374,472) ($0.026) ($0.012) ($0.012) ($0.010) TToottaall 22001155 $$1111,,114400,,558877 (($$44,,557755,,221100)) NN//AA ($0.012) ($0.019) ($0.031) NN//AA ($0.027) ($0.017) ($0.024) ($0.023) NN//AA ($0.032) ($0.026) ($0.045) ($0.025) NN//AA ($0.002) ($0.018) ($0.026) ($0.022) NN//AA $0.044 ($0.046) ($0.010) ($0.037) NN//AA ($0.070) ($0.022) ($0.004) ($0.008) NN//AA ($0.026) ($0.012) ($0.012) ($0.010) NN//AA TToottaall AAsssseettss $1,836,156,209 TToottaall LLiiaabbiilliittiieess $1,613,949,693 DDiivviiddeennddss $1,034,371 $1,710,707,686 $1,503,314,182 $1,021,120 $1,693,800,047 $1,487,413,665 $1,012,517 $1,610,798,998 $1,403,279,361 $1,002,868 NN//AA NN//AA $$44,,007700,,887766 $1,587,379,939 $1,377,204,772 $1,354,801,560 $1,149,197,801 $1,369,097,150 $1,155,700,318 $1,371,022,824 $1,151,432,603 $991,452 $978,240 $973,985 $966,317 NN//AA NN//AA $$33,,990099,,999944 $1,392,865,962 $1,162,117,984 $1,377,237,690 $1,134,721,033 $1,385,491,977 $1,132,963,923 $1,044,914,091 $794,584,280 $961,654 $958,230 $952,321 $930,288 NN//AA NN//AA $$33,,880022,,449933 $1,022,791,417 $761,864,860 $990,262,630 $731,939,098 $959,256,102 $694,025,713 $922,656,903 $661,214,665 $925,235 $920,981 $920,562 $889,786 NN//AA NN//AA $$33,,665566,,556644 $895,496,381 $627,421,264 $839,525,204 $585,777,091 $400,216,946 $237,005,503 $404,743,767 $238,025,850 $880,328 $879,376 $765,016 $749,946 NN//AA NN//AA $$33,,227744,,666666 $342,803,581 $187,115,587 $253,955,856 $131,931,530 $179,885,223 $118,343,352 $724,931 $630,309 $440,398 $176,728,097 $114,010,014 - NN//AA NN//AA $$11,,779955,,663388 $171,486,477 $112,922,559 $108,865,822 $85,594,955 $54,449,748 $25,372,609 $27,910,360 $25,033,929 NN//AA NN//AA - - - - -- 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. 17 Annual Report 2021 | 69 CANADA SELF STORAGE CENTRES WWOORRKKIINNGG CCAAPPIITTAALL,, DDEEBBTT AANNDD SSHHAARREE CCAAPPIITTAALL WWoorrkkiinngg CCaappiittaall Cash provided by operating activities was $59.0 million for the fiscal year ended December 31, 2021, compared to $38.5 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 despite higher acquisition and integrations costs. As at December 31, 2021, the Corporation had $25.1 million of cash compared to $25.5 million at December 31, 2020. Despite cash being used to pay down debt and fund acquisitions and expansions, the Corporation continues to maintain a strong cash balance. The Corporation expects its cash flow from operations to continue to increase as the full benefit of stores purchased in 2020 and 2021 are realized and we continue to execute our operational plans. In addition, the Corporation will borrow against existing assets to fund acquisitions and its expansion plans. DDeebbtt As at December 31, 2021 and December 31, 2020, the Corporation held the following debt: DDeecceemmbbeerr 3311,, 22002211 WWeeiigghhtteedd AAvveerraaggee RRaattee RRaannggee BBaallaannccee December 31, 2020 Weighted Average Rate Range Balance 2.84% to 5.50% 3.99% 444466,,669911,,002233 Maturity: Jan 2022 to Apr 2028 3.18% to 4.99% 4.19% Maturity: Apr 2021 to Apr 2028 382,219,232 445555,,117733,,227799 99,,887733,,993377 446655,,004477,,221166 3.82% 394,261,163 31,912,305 426,173,468 3.93% Maturity: Jan 2024 to Dec 2030 Maturity: Jan 2024 to Dec 2030 3.91% 991111,,773388,,223399 4.05% 808,392,700 MMoorrttggaaggeess At amortized cost - Fixed/Variable At FVTPL - Variable - Interest rate swap LLiinneess ooff CCrreeddiitt aanndd PPrroommiissssoorryy NNootteess At amortized cost - Variable 3.53% 8866,,990099,,446688 3.54% 61,413,656 Maturity: May 2024 to Dec 2024 Maturity: Dec 2022 to May 2024 At amortized cost - Fixed 3.95% 3388,,553366,,220000 4.25% 13,750,069 Maturity: Apr 2022 to Dec 2023 Maturity: Jan 2021 to Dec 2023 At FVTPL - Variable - Interest rate swap 229966,,004488,,772299 33,,995511,,227711 330000,,000000,,000000 3.94% 280,244,148 19,755,852 300,000,000 3.97% Maturity: Feb 2025 Maturity: Apr 2022 Deferred financing costs, net of accretion of $7,008,470 (Dec 31, 2020 - $4,871,753) 3.86% 442255,,444455,,666688 3.84% 375,163,725 ((44,,770099,,116622)) (3,817,293) 3.89% 11,,333322,,447744,,774455 3.98% 11,,117799,,773399,,113322 70 | Annual Report 2021 18 CANADA SELF STORAGE CENTRES RReeccoonncciilliiaattiioonn ooff DDeebbtt The following table reconciles the changes in cash flows from financing activities for the Corporation's debt: DDeecceemmbbeerr 3311,, 22002211 December 31, 2020 Debt, beginning of period $$ 11,,117799,,773399,,113322 $ 1,053,079,602 Advances from debt Repayment of debt Amounts offset against accounts receivable Change in fair value of debt measured at FVTPL Change in fair value of interest rate swaps Total cash flow from debt financing activities 330099,,111100,,228855 ((115522,,995533,,228822)) ((22,,552299,,552211)) 3377,,884422,,994499 ((3377,,884422,,994499)) 115533,,662277,,448822 264,041,758 (123,419,291) (4,710,939) (51,668,157) 42,376,947 126,620,318 Change in deferred financing costs ((889911,,886699)) 39,212 Debt, end of period $$ 11,,333322,,447744,,774455 $ 1,179,739,132 The bank prime rate at December 31, 2021 was 2.45% (December 31, 2020 - 2.45%). The weighted average cost of debt at December 31, 2021 is 3.89% (December 31, 2020 - 3.98%). 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, 2021 is 4.09 years (December 31, 2020 – 4.93 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, 2021 and December 31, 2020, 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 $ $ $ $ $ $ 650,808,808 (includes lines of credit of $386.9 million) 61,303,321 220,833,105 24,739,091 31,941,589 347,357,993 Of the repayments shown in Year 1, $15.8 million are required under our amortizing term debt mortgages, $248.1 million relates to loans due in the upcoming twelve months that are expected to be refinanced, and $386.9 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, 2021 and December 31, 2020, the Corporation is in compliance with all covenants. 19 Annual Report 2021 | 71 CANADA 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, 2021 is: Contractual Mortgage Maturities and Interest Rates Year of Debt Maturity 2022 2023 2024 2025 2026 Thereafter $ Mortgages Payable 213,561,160 42,545,744 210,542,015 14,330,758 21,371,272 409,387,290 911,738,239 $ Weighted Average Interest Rate 4.33% 4.46% 3.25% 3.59% 3.49% 4.00% 3.91% Weighted Average Interest Rate 4.00% 3.50% 3.53% 3.94% 0.00% 0.00% 3.86% Lines of Credit $ 34,536,200 4,000,000 86,909,468 300,000,000 - - $ 425,445,668 Deferred financing costs net of accretion Balance Weighted Average Interest Rate 4.29% 4.38% 3.33% 3.59% 3.49% 4.00% 3.89% Total Debt $ 248,097,360 46,545,744 297,451,483 314,330,758 21,371,272 409,387,290 1,337,183,907 (4,709,162) $ 1,332,474,745 The Corporation entered into interest rate swap contracts in order to fix the interest rate on $765.0 million of debt at a weighted average rate of 3.87%. The swaps mature between January 2024 and December 2030. HHyybbrriidd DDeebbeennttuurreess 2020 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. The intended use of the net proceeds of the debentures is to pay down the credit facility and fund anticipated capital expenditures. 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 $3.5 million. 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. 72 | Annual Report 2021 20 CANADA SELF STORAGE CENTRES 2021 Hybrid Debentures On July 19, 2021, $57.5 million of unsecured senior hybrid debentures were issued at a price of $1,000 per debenture with a term of sixty-six months, due September 30, 2026. These debentures bear a fixed interest rate of 5.5% per annum, payable semi-annually in arrears on March 31 and September 30 of each year, commencing September 30, 2021. The intended use of the net proceeds of the debentures is to fund potential future opportunities and for general corporate purposes. On and after September 30, 2024 and prior to September 30, 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 102.750% 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 September 30, 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 September 30, 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 $57.5 million net of deferred financing costs of $2.5 million. 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 are subsequently measured at amortized cost using the effective interest method over the life of the debenture. The balance of the hybrid debentures is: DDeecceemmbbeerr 3311,, 22002211 December 31, 2020 Opening balance Additions during period Issuance costs Accretion during period Ending balance $$ 7711,,776655,,772255 5577,,550000,,000000 ((22,,555566,,550066)) 884422,,666666 112277,,555511,,888855 $$ $ - 75,000,000 (3,524,177) 289,902 71,765,725 $ 21 Annual Report 2021 | 73 CANADA SELF STORAGE CENTRES SShhaarree CCaappiittaall The common shares issued are: Balance, December 31, 2019 Issued on acquisitions Dividend reinvestment plan Share option redemption Share issuance costs Common shares repurchased Balance, December 31, 2020 Issued on acquisitions Dividend reinvestment plan Share option redemption Share issuance costs Common shares repurchased Balance, December 31, 2021 Number of Shares Amount 362,805,055 $ 355,585,663 3,419,287 481,306 782,800 - (1,233,622) 11,845,000 1,518,011 901,588 (25,121) (3,938,229) 366,254,826 365,886,912 8,810,925 363,507 - - (792,815) 43,575,000 1,637,248 (548,300) (31,608) (3,953,358) 374,636,443 $ 406,565,894 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. Stock Options A total of 30,319,650 options were outstanding as at December 31, 2021 (December 31, 2020 – 23,639,650). Of the outstanding amount, 30,319,650 options were exercisable (December 31, 2020 – 23,639,650). The details are as follows: Exercise Price $ 0.33 $ 0.41 $ 0.50 $ 1.36 $ 1.78 $ 2.52 $ 2.90 $ 3.98 $ 6.31 Options exercisable and outstanding Vesting Date Jun. 19, 2014 Apr. 28, 2015 Sep. 14, 2015 Dec. 21, 2016 Mar. 16, 2017 May 4, 2018 May 28, 2019 Dec. 15, 2020 Dec. 20, 2021 Expiry Date Jun. 19, 2024 Apr. 28, 2025 Sep. 14, 2025 Dec. 21, 2026 Mar. 16, 2027 May 4, 2028 May 28, 2029 Dec. 15, 2030 Dec. 20, 2031 DDeecceemmbbeerr 3311,, 22002211 December 31, 2020 140,000 1,660,650 1,550,000 2,785,000 2,810,000 2,825,000 5,869,000 6,000,000 114400,,000000 11,,556600,,665500 11,,555500,,000000 22,,778855,,000000 22,,881100,,000000 22,,882255,,000000 55,,885544,,000000 55,,997755,,000000 66,,882200,,000000 3300,,331199,,665500 - 23,639,650 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. 74 | Annual Report 2021 22 CANADA SELF STORAGE CENTRES 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, 2021, 1,533,556 TRS units were outstanding at a value of $6,142,747. At December 31, 2021, 100% of the combined DSU and RSU exposures were economically hedged (December 31, 2020 - 100%). Hedge accounting is not applied for the DSU/RSU hedging program. During the year, the Corporation issued 282,906 common shares at a value of $1,131,624 (December 31, 2020 – 333,275 common shares at a value of $1,256,598) under the Plan. A total of 857,161 common shares at a value of $3,282,260 were outstanding at December 31, 2021 (December 31, 2020 – 574,255 common shares at a value of $2,150,636). CCOONNTTRRAACCTTUUAALL OOBBLLIIGGAATTIIOONNSS AANNDD OOFFFF--BBAALLAANNCCEE SSHHEEEETT AARRRRAANNGGEEMMEENNTTSS LLeeaassee LLiiaabbiilliittiieess The Corporation leases buildings and land in Kamloops, BC, Montreal, QC, Sudbury, ON, Toronto, ON, Kitchener, ON, Ottawa, ON, Etobicoke, ON, Whitby, ON and Winnipeg, MB. The leases expire between 2023 and 2057, 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, 2021, the Corporation recognized $2,054,942 (December 31, 2020 - $1,418,221) in interest expense related to its lease liabilities. A reconciliation of the lease liabilities associated with self storage properties from the date of adoption of IFRS 16 to December 31, 2021 is as follows: 23 Annual Report 2021 | 75 CANADA SELF STORAGE CENTRES Balance, beginning of year Additions Cash Payments Interest Capitalized Interest Balance, end of year 22002211 2020 $$ $$ 4444,,003355,,005500 3355,,115522,,770033 ((44,,331111,,991122)) 22,,005544,,994422 116633,,995599 7777,,009944,,774422 $ 25,491,060 19,695,524 (2,569,755) 1,418,221 - $ 44,035,050 CCoonnttiinnggeennccyy The Corporation has no legal contingency provisions at December 31, 2021 or December 31, 2020. OOffff--BBaallaannccee SShheeeett AArrrraannggeemmeennttss The Corporation is not party to any industry contracts or arrangements other than those disclosed in the consolidated financial statements. RREELLAATTEEDD PPAARRTTYY TTRRAANNSSAACCTTIIOONNSS 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, 2021, the Corporation paid $382,592 (December 31, 2020 - $289,218) for royalties and $1,014,360 (December 31, 2020 - $nil) 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, 2021 was $33,087 (December 31, 2020 - $25,231) 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. During the year ended December 31, 2021, the Corporation received $6,856,964 (December 31, 2020 - $5,877,719) in payments and reimbursements related to the management agreements. During the year ended December 31, 2021, the Corporation also incurred $24,658,103 (December 31, 2020 - $20,491,351) 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, 2021 was $1,503,979 (December 31, 2020 - $2,665,248) payable to the Access Group. Included in accounts receivable as at December 31, 2021 was $491,942 (December 31, 2020 - $349,185) 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: DDeecceemmbbeerr 3311,, 22002211 December 31, 2020 Wages, management fees, bonuses and directors fees Stock based compensation $$ $ 661122,,449977 55,,446699,,447788 66,,008811,,997755 629,644 3,404,873 4,034,517 $$ $ 76 | Annual Report 2021 24 CANADA SELF STORAGE CENTRES EENNVVIIRROONNMMEENNTTAALL,, SSOOCCIIAALL AANNDD GGOOVVEERRNNAANNCCEE ((EESSGG)) Environmental integrity, social responsibility and adherence to strong governance practices are core values at StorageVault and we continue to focus 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 maintaining sound corporate governance practices. EEnnvviirroonnmmeennttaall It is our responsibility to be leaders in the communities in which we live and work, to minimize our impact while actively seeking opportunities to protect the environment and encourage sustainable operating practices. We continuously explore opportunities to improve the environmental efficiency in our buildings and operations given the importance to our company, our shareholders, our customers, and our communities. Of all the real estate asset classes, self storage has the lowest environmental impact in the areas of energy consumption, water consumption and waste production. While the self storage industry has an inherently light environmental footprint, we proactively strive to be even better. Strategically, we offer a mix of square footage that is non-climate controlled and climate controlled, with non- climate controlled space having minimal environmental affect. For our properties that offer climate controlled storage, we regulate inside temperatures at moderate levels to safeguard contents while minimizing energy required for heating or cooling. Operationally, water usage is very low, and minimal daily client activity contributes to limiting our carbon footprint within our communities. At the end of 2021, StorageVault operated 28 stores with solar panels installed and will continue to expand solar panel installations across our portfolio. Our solar panel installations utilize available roof space to generate electricity for consumption while providing a solid financial return, demonstrating that sustainability efforts not only benefit the environment and community, but also our shareholders. Below are highlights of some of the environmental practices that we have adopted in an effort to reduce our overall environmental footprint: Energy Consumption • motion controlled lighting by zone, allowing for usage only where and when required • LED lighting (internal and external) for all new buildings and light fixture replacements • solar power generation • modern energy efficient HVAC systems • • automated and self adjusting internal thermostat temperature controls all new roofs installed are reflective “cool” roofs that help minimize energy consumption Water Consumption • given low occupant levels at our properties, on average, one washroom per property • energy efficient plumbing systems and appliances • • • water run-off controls • storm water retention low-water irrigation systems landscaping using native and drought-tolerant species Waste Production sale of recycled packaging materials • • waste recycling program at our stores and corporate offices • reduced paper usage through more efficient technology options including paperless rental agreements • e-waste reduction and electronic recycling program for decommissioned computer equipment by either donating refurbished equipment to local charities or recycling equipment that cannot be repurposed 25 Annual Report 2021 | 77 CANADA SELF STORAGE CENTRES Building Design and Construction Practices • energy efficient glazing • use of SolarWall systems or insulated metal panels used in construction of new or retrofitted buildings • • • replacing standard exterior storage doors with energy efficient doors insulated foundation walls to help maintain and keep the foundation slab warm all proposed acquisitions are subject to environmental site assessments prior to the closing SSoocciiaall At StorageVault, we respect the role and impact we have in our host communities. We are proud to employ a diverse team of over 700 colleagues, who represent both our communities and our customer bases, and who help support the over 100 communities we are in across Canada. Diversity is in our DNA and is the foundation of our strength and stability. We are proud that our culture of continuous improvement has led to a high number of promotions within our organization. As colleagues, we believe that taking care of each other leads to a greater level of care for our stores, customers and communities. We do so by focusing on engagement, advancement, wellness and safety. Being a community based business, we believe in giving back in the places where we live and work by supporting local, grass-roots initiatives as well as national organizations. In 2021, StorageVault continued to support over 150 local, provincial and national organizations. Our dedicated Corporate Partnerships team’s mission is to align with organizations across the country to support important initiatives that matter to our communities. We are committed to engaging with our communities in a way that allows us to make meaningful and lasting contributions. GGoovveerrnnaannccee The Board and Management of StorageVault are committed to maintaining the highest standards of governance to ensure long-term value for our shareholders, mitigate and manage risk and proactively protect the best interests of all our stakeholders. As part of StorageVault’s recent graduation to the TSX, we were subject to a strict audit, scrutiny and testing to ensure that our corporate policies, practices and accounting standards met the TSX’s stringent compliance requirements. Our corporate policies and standards promote the long-term interests of our shareholders, strengthen management accountability and help maintain public trust in StorageVault. Our Board and Management recognize the importance of equality, diversity and good corporate governance and is dedicated to maintaining the highest governance standards through the following: • Independent Director led Audit, Acquisition and Governance, Nominating and Compensation Committees • Diverse Management team and Board and along with a comprehensive Diversity Policy • 40% Board Diversity (gender and race) • Acquisition Committee Mandate to review, approve and recommend transactions to the Board • 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 • Majority Voting Policy (to be implemented at Annual General Meeting) StorageVault continues to be recognized as a leader in gender diversification and equality. We are proud to organically have this balance within our organization and continue to promote a culture of continuous improvement, diversity of thought, development of skills, personal wellness and safety. Our approach to governance and the continuous execution of sound ESG principles places StorageVault in a strong position to deliver sustainable returns to our fellow shareholders while supporting our many stakeholders. 26 78 | Annual Report 2021 CANADA SELF STORAGE CENTRES AACCQQUUIISSIITTIIOONN CCOOMMMMIITTTTEEEE AANNDD AACCQQUUIISSIITTIIOONN CCOOMMMMIITTTTEEEE MMAANNDDAATTEE 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. 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. AACCCCOOUUNNTTIINNGG PPOOLLIICCIIEESS The Corporation’s significant accounting policies are summarized in Note 3 to the December 31, 2021 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, 2020. In addition, there has been no change in the Company’s financial instrument risks. NNoonn--IIFFRRSS FFiinnaanncciiaall MMeeaassuurreess 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. 27 Annual Report 2021 | 79 CANADA SELF STORAGE CENTRES iv. Existing Self Storage and New Self Storage performance – “Existing Self Storage” are 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. RReecceenntt aanndd FFuuttuurree AAccccoouunnttiinngg PPrroonnoouunncceemmeennttss 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, 2021 annual audited consolidated financial statements. DDiisscclloossuurree CCoonnttrroollss aanndd PPrroocceedduurreess 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, 2021, 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, 2021. RRIISSKKSS AANNDD UUNNCCEERRTTAAIINNTTIIEESS 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: RReeaall EEssttaattee IInndduussttrryy 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. LLiiqquuiiddiittyy RRiisskk 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. 80 | Annual Report 2021 28 CANADA SELF STORAGE CENTRES RReeffiinnaanncciinngg RRiisskk 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. IInntteerreesstt RRaattee RRiisskk 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. EEccoonnoommiicc CCoonnddiittiioonnss 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. CCoonnttaaggiioouuss DDiisseeaasseess The COVID-19 pandemic or any future outbreak of other highly infectious or contagious diseases, may 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. EEnnvviirroonnmmeennttaall RRiisskk 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. CCrreeddiitt RRiisskk 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 customer. OOtthheerr SSeellff SSttoorraaggee OOppeerraattoorrss oorr SSttoorraaggee AAlltteerrnnaattiivveess 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. AAccqquuiissiittiioonn ooff FFuuttuurree LLooccaattiioonnss 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 29 Annual Report 2021 | 81 CANADA SELF STORAGE CENTRES storage locations would have a tendency to increase the price for future acquisitions of storage locations and reduce the yields thereon. AAnnttiicciippaatteedd RReessuullttss ffrroomm NNeeww AAccqquuiissiittiioonnss 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. IInnccrreeaassee iinn OOppeerraattiinngg CCoossttss 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. CClliimmaattee aanndd NNaattuurraall DDiissaasstteerrss 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. LLiittiiggaattiioonn 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. UUssee aanndd DDeeppeennddeennccyy oonn IInnffoorrmmaattiioonn TTeecchhnnoollooggyy SSyysstteemmss 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 government agencies or private individuals. 82 | Annual Report 2021 30 CANADA SELF STORAGE CENTRES SSttoorraaggeeVVaauulltt CCaannaaddaa IInncc.. OOFFFFIICCEERRSS Steven Scott Chief Executive Officer Iqbal Khan Chief Financial Officer DDIIRREECCTTOORRSS Jay Lynne Fleming Vancouver, BC Ben Harris Bedford, NY Iqbal Khan Toronto, ON Steven Scott Toronto, ON Alan Simpson Regina, SK LLEEGGAALL CCOOUUNNSSEELL AAUUDDIITTOORRSS 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 HHEEAADD OOFFFFIICCEE RREEGGIISSTTRRAARR && TTRRAANNSSFFEERR AAGGEENNTT 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 TTSSXX LLIISSTTIINNGG:: SVI 31 Annual Report 2021 | 83 CANADA SELF STORAGE CENTRES ANNUAL REPORT 2021 Corporate Information Phone: 1-877-622-0205 Web site: storagevaultcanada.com Email: ir@storagevaultcanada.com Address: 100 Canadian Road, Toronto, Ontario, M1R 4Z5 CANADA SELF STORAGE CENTRES 

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