UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     .
Commission File Number: 001-32269

EXTRA SPACE STORAGE INC.
(Exact name of registrant as specified in its charter) 
Maryland 20-1076777
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

2795 East Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84121
(Address of principal executive offices)

Registrant’s telephone number, including area code: (801) 365-4600

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $0.01 par valueEXRNew York Stock Exchange

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of May 1,November 6, 2023, was 135,049,531.211,277,822.

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Table of Contents
EXTRA SPACE STORAGE INC.

TABLE OF CONTENTS
 


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STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information presented in this report contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.

All forward-looking statements, including without limitation, management’s examination of historical operating trends and estimates of future earnings, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks referenced in “Part II. Item 1A. Risk Factors” below and in “Part I. Item 1A. Risk Factors” included in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to:
adverse changes in general economic conditions, the real estate industry and the markets in which we operate;
failure to realize the expected benefits of the recent acquisition of Life Storage, Inc. (“Life Storage”);
the risk that Life Storage’s business will not be fully integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, including our ability to retain and hire key personnel;
the uncertainty of expected future financial performance and results of the combined company following completion of the Life Storage merger;
failure to close pending acquisitions and developments on expected terms, or at all;
risks associated with our ability to consummate the mergers with Life Storage, Inc. (“Life Storage”) and the timing and closing of the mergers including, among other things, our ability to obtain stockholder approval required to consummate the mergers, the satisfaction or waiver of other conditions to closing in the merger agreement, unanticipated difficulties or expenditures relating to the mergers, potential difficulties in employee retention as a result of the mergers, the occurrence of any event, change or other circumstances that could give rise to the termination of the mergers and the outcome of legal proceedings instituted against us, our directors and others related to the mergers;
the effect of competition from new and existing stores or other storage alternatives, including increased or unanticipated competition for our or Life Storage’s properties, which could cause rents and occupancy rates to decline;
potential liability for uninsured losses and environmental contamination;
the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results;
disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases, including reduced demand for self-storage space and ancillary products and services such as tenant reinsurance, and potential decreases in occupancy and rental rates and staffing levels, which could adversely affect our results;
our reliance on information technologies, which are vulnerable to, among other things, attack from computer viruses and malware, hacking, cyberattacks and other unauthorized access or misuse, any of which could adversely affect our business and results;
increased interest rates;
reductions in asset valuations and related impairment charges;
our lack of sole decision-making authority with respect to our joint venture investments;
our ability to recover losses under our insurance policies;
the effect of recent or future changes to U.S. tax laws;
the failure to maintain our REIT status for U.S. federal income tax purposes; and
economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.
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The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and

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uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities.

We disclaim any duty or obligation to update or revise any forward-looking statements set forth in this report to reflect new information, future events or otherwise.

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PART I.     FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Extra Space Storage Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
 
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
(unaudited)(unaudited)
Assets:Assets:Assets:
Real estate assets, netReal estate assets, net$9,991,446 $9,997,978 Real estate assets, net$24,556,678 $9,997,978 
Real estate assets - operating lease right-of-use assetsReal estate assets - operating lease right-of-use assets226,483 221,725 Real estate assets - operating lease right-of-use assets248,483 221,725 
Investments in unconsolidated real estate entitiesInvestments in unconsolidated real estate entities600,617 582,412 Investments in unconsolidated real estate entities1,077,548 582,412 
Investments in debt securities and notes receivableInvestments in debt securities and notes receivable863,913 858,049 Investments in debt securities and notes receivable891,311 858,049 
Cash and cash equivalentsCash and cash equivalents47,951 92,868 Cash and cash equivalents216,121 92,868 
Other assets, netOther assets, net402,259 414,426 Other assets, net635,677 414,426 
Total assetsTotal assets$12,132,669 $12,167,458 Total assets$27,625,818 $12,167,458 
Liabilities, Noncontrolling Interests and Equity:Liabilities, Noncontrolling Interests and Equity:Liabilities, Noncontrolling Interests and Equity:
Notes payable, netNotes payable, net$1,306,301 $1,288,555 Notes payable, net$1,276,555 $1,288,555 
Unsecured term loans, netUnsecured term loans, net2,672,668 2,340,116 Unsecured term loans, net3,247,076 2,340,116 
Unsecured senior notes, netUnsecured senior notes, net3,258,329 2,757,791 Unsecured senior notes, net5,805,448 2,757,791 
Revolving lines of creditRevolving lines of credit94,500 945,000 Revolving lines of credit623,000 945,000 
Operating lease liabilitiesOperating lease liabilities234,255 229,035 Operating lease liabilities242,441 229,035 
Cash distributions in unconsolidated real estate venturesCash distributions in unconsolidated real estate ventures68,284 67,352 Cash distributions in unconsolidated real estate ventures69,445 67,352 
Accounts payable and accrued expensesAccounts payable and accrued expenses178,156 171,680 Accounts payable and accrued expenses430,124 171,680 
Other liabilitiesOther liabilities287,475 289,655 Other liabilities365,028 289,655 
Total liabilitiesTotal liabilities8,099,968 8,089,184 Total liabilities12,059,117 8,089,184 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies
Noncontrolling Interests and Equity:Noncontrolling Interests and Equity:Noncontrolling Interests and Equity:
Extra Space Storage Inc. stockholders' equity:Extra Space Storage Inc. stockholders' equity:Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstandingPreferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding— — Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding— — 
Common stock, $0.01 par value, 500,000,000 shares authorized, 135,007,280 and 133,921,020 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively1,350 1,339 
Common stock, $0.01 par value, 500,000,000 shares authorized, 211,276,086 and 133,921,020 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.01 par value, 500,000,000 shares authorized, 211,276,086 and 133,921,020 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively2,113 1,339 
Additional paid-in capitalAdditional paid-in capital3,376,458 3,345,332 Additional paid-in capital14,742,973 3,345,332 
Accumulated other comprehensive incomeAccumulated other comprehensive income35,081 48,798 Accumulated other comprehensive income44,912 48,798 
Accumulated deficitAccumulated deficit(159,556)(135,872)Accumulated deficit(252,877)(135,872)
Total Extra Space Storage Inc. stockholders' equityTotal Extra Space Storage Inc. stockholders' equity3,253,333 3,259,597 Total Extra Space Storage Inc. stockholders' equity14,537,121 3,259,597 
Noncontrolling interest represented by Preferred Operating Partnership units, netNoncontrolling interest represented by Preferred Operating Partnership units, net222,940 261,502 Noncontrolling interest represented by Preferred Operating Partnership units, net222,939 261,502 
Noncontrolling interests in Operating Partnership, net and other noncontrolling interestsNoncontrolling interests in Operating Partnership, net and other noncontrolling interests556,428 557,175 Noncontrolling interests in Operating Partnership, net and other noncontrolling interests806,641 557,175 
Total noncontrolling interests and equityTotal noncontrolling interests and equity4,032,701 4,078,274 Total noncontrolling interests and equity15,566,701 4,078,274 
Total liabilities, noncontrolling interests and equityTotal liabilities, noncontrolling interests and equity$12,132,669 $12,167,458 Total liabilities, noncontrolling interests and equity$27,625,818 $12,167,458 

See accompanying notes to unaudited condensed consolidated financial statements.

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Extra Space Storage Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except share data)
(unaudited)
For the Three Months Ended March 31, For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022 2023202220232022
Revenues:Revenues:Revenues:
Property rentalProperty rental$433,962 $379,808 Property rental$650,887 $428,787 $1,525,596 $1,216,639 
Tenant reinsuranceTenant reinsurance47,704 43,797 Tenant reinsurance69,128 47,869 165,265 138,093 
Management fees and other incomeManagement fees and other income21,384 19,957 Management fees and other income28,019 22,246 71,609 62,720 
Total revenuesTotal revenues503,050 443,562 Total revenues748,034 498,902 1,762,470 1,417,452 
Expenses:Expenses:Expenses:
Property operationsProperty operations117,166 103,542 Property operations185,194 114,577 416,997 322,371 
Tenant reinsuranceTenant reinsurance9,089 7,042 Tenant reinsurance19,130 10,770 37,701 25,349 
Transaction costsTransaction costs— — — 1,465 
Life Storage Merger transition costsLife Storage Merger transition costs54,174 — 54,174 — 
General and administrativeGeneral and administrative34,763 29,762 General and administrative37,406 32,275 107,011 93,288 
Depreciation and amortizationDepreciation and amortization78,490 67,906 Depreciation and amortization152,338 71,423 309,914 208,396 
Total expensesTotal expenses239,508 208,252 Total expenses448,242 229,045 925,797 650,869 
Gain on real estate transactionsGain on real estate transactions— — — 14,249 
Income from operationsIncome from operations263,542 235,310 Income from operations299,792 269,857 836,673 780,832 
Interest expenseInterest expense(80,099)(42,538)Interest expense(122,899)(56,245)(289,370)(146,249)
Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notesNon-cash interest expense related to amortization of discount on Life Storage unsecured senior notes(8,228)— (8,228)— 
Interest incomeInterest income19,438 18,989 Interest income22,092 18,125 62,607 52,174 
Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expenseIncome before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense202,881 211,761 Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense190,757 231,737 601,682 686,757 
Equity in earnings and dividend income from unconsolidated real estate entitiesEquity in earnings and dividend income from unconsolidated real estate entities10,305 9,097 Equity in earnings and dividend income from unconsolidated real estate entities15,043 11,149 38,602 30,436 
Income tax expenseIncome tax expense(4,308)(3,141)Income tax expense(6,944)(6,760)(17,238)(15,516)
Net incomeNet income208,878 217,717 Net income198,856 236,126 623,046 701,677 
Net income allocated to Preferred Operating Partnership noncontrolling interestsNet income allocated to Preferred Operating Partnership noncontrolling interests(2,254)(4,333)Net income allocated to Preferred Operating Partnership noncontrolling interests(2,253)(4,454)(6,761)(13,278)
Net income allocated to Operating Partnership and other noncontrolling interestsNet income allocated to Operating Partnership and other noncontrolling interests(10,320)(9,805)Net income allocated to Operating Partnership and other noncontrolling interests(8,253)(10,953)(29,221)(31,971)
Net income attributable to common stockholdersNet income attributable to common stockholders$196,304 $203,579 Net income attributable to common stockholders$188,350 $220,719 $587,064 $656,428 
Earnings per common shareEarnings per common shareEarnings per common share
BasicBasic$1.46 $1.52 Basic$0.96 $1.65 $3.78 $4.89 
DilutedDiluted$1.46 $1.51 Diluted$0.96 $1.65 $3.78 $4.89 
Weighted average number of sharesWeighted average number of sharesWeighted average number of shares
BasicBasic134,511,273 134,180,175 Basic195,324,444 133,913,652 155,112,071 134,094,490 
DilutedDiluted142,940,384 141,581,862 Diluted195,328,020 141,504,215 155,116,149 141,567,845 
Cash dividends paid per common shareCash dividends paid per common share$1.62 $1.50 Cash dividends paid per common share$1.62 $1.50 $4.86 $4.50 

See accompanying notes to unaudited condensed consolidated financial statements.

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Extra Space Storage Inc.
Condensed Consolidated Statements of Comprehensive Income
(amounts in thousands)
(unaudited)
For the Three Months Ended March 31, For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022 2023202220232022
Net incomeNet income$208,878 $217,717 Net income$198,856 $236,126 $623,046 $701,677 
Other comprehensive income:Other comprehensive income:Other comprehensive income:
Change in fair value of interest rate swaps Change in fair value of interest rate swaps(14,510)51,649  Change in fair value of interest rate swaps(2,264)24,222 (4,175)95,984 
Total comprehensive incomeTotal comprehensive income194,368 269,366 Total comprehensive income196,592 260,348 618,871 797,661 
Less: comprehensive income attributable to noncontrolling interests Less: comprehensive income attributable to noncontrolling interests11,781 16,784  Less: comprehensive income attributable to noncontrolling interests10,395 16,663 35,693 50,166 
Comprehensive income attributable to common stockholdersComprehensive income attributable to common stockholders$182,587 $252,582 Comprehensive income attributable to common stockholders$186,197 $243,685 $583,178 $747,495 


See accompanying notes to unaudited condensed consolidated financial statements.

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Extra Space Storage Inc.
Condensed Consolidated Statement of Noncontrolling Interests and Equity
For the three and nine months ended September 30, 2023
(unaudited, amounts in thousands, except share data)

Noncontrolling InterestExtra Space Storage Inc. Stockholders' Equity
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Noncontrolling Interests and Equity
Balances at June 30, 2023$222,940 $553,610 $3,079 135,058,897 $1,351 $3,383,303 $47,065 $(175,941)$4,035,407 
Issuance of common stock in connection with share based compensation— — — 1,253 — 6,994 — — 6,994 
Taxes paid upon net settlement of share based compensation— (414)— (63)— — (63)
Restricted stock grants cancelled— — — (3,128)— — — — — 
Redemption of Operating Partnership units for stock— (163)— 2,119 — 163 — — — 
Life Storage Merger issuance of common stock and Operating Partnership units— 249,470 — 76,217,359 762 11,352,576 — — 11,602,808 
Noncontrolling interest in consolidated joint ventures— — 5,209 — — — — — 5,209 
Net income (loss)2,253 8,284 (31)— — — — 188,350 198,856 
Other comprehensive loss— (111)— — — — (2,153)— (2,264)
Distributions to Operating Partnership units held by noncontrolling interests(2,254)(12,706)— — — — — — (14,960)
Dividends paid on common stock at $1.62 per share— — — — — — — (265,286)(265,286)
Balances at September 30, 2023$222,939 $798,384 $8,257 211,276,086 $2,113 $14,742,973 $44,912 $(252,877)$15,566,701 
Balances at December 31, 2022$261,502 $556,095 $1,080 133,921,020 $1,339 $3,345,332 $48,798 $(135,872)$4,078,274 
Issuance of common stock in connection with share based compensation— — — 144,640 19,431 — — 19,433 
Taxes paid upon net settlement of share based compensation— — — (8,074)— (7,606)— — (7,606)
Restricted stock grants cancelled— — — (6,983)— — — — — 
Redemption of Operating Partnership units for stock— (163)— 2,119 — 163 — — — 
Redemption of Preferred A Units in the Operating Partnership for stock(16,339)— — 851,698 11,015 — — (5,316)
Redemption of Preferred D Units in the Operating Partnership for stock(22,064)— — 154,307 22,062 — — — 
Life Storage Merger issuance of common stock and Operating Partnership units— 249,470 — 76,217,359 762 11,352,576 — — 11,602,808 
Noncontrolling interest in consolidated joint ventures— — 7,309 — — — — — 7,309 
Net income (loss)6,761 29,353 (132)— — — — 587,064 623,046 
Other comprehensive loss— (289)— — — — (3,886)— (4,175)
Distributions to Operating Partnership units held by noncontrolling interests(6,921)(36,082)— — — — — — (43,003)

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Extra Space Storage Inc.
Condensed Consolidated Statement of Noncontrolling Interests and Equity
For the three and nine months ended September 30, 2022
(unaudited, amounts in thousands, except share data)
(unaudited)

Noncontrolling InterestExtra Space Storage Inc. Stockholders' Equity
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Noncontrolling Interests and Equity
Dividends paid on common stock at $4.86 per share— — — — — — — (704,069)(704,069)
Balances at September 30, 2023$222,939 $798,384 $8,257 211,276,086 $2,113 $14,742,973 $44,912 $(252,877)$15,566,701 
Balances at June 30, 2022$261,231 $429,572 $317 133,900,184 $1,339 $3,334,317 $25,555 $(159,091)$3,893,240 
Issuance of common stock in connection with share based compensation— — — 19,654 — 5,644 — — 5,644 
Restricted stock grants cancelled— — — (1,801)— — — — — 
Issuance of Operating Partnership units in conjunction with acquisitions— 125,000 — — — — — — 125,000 
Noncontrolling interest in consolidated joint venture— — 338 — — — — — 338 
Net income4,454 10,953 — — — — — 220,719 236,126 
Other comprehensive income145 1,111 — — — — 22,966 — 24,222 
Distributions to Operating Partnership units held by noncontrolling interests(4,336)(10,058)— — — — — — (14,394)
Dividends paid on common stock at $1.50 per share— — — — — — — (200,878)(200,878)
Balances at September 30, 2022$261,494 $556,578 $655 133,918,037 $1,339 $3,339,961 $48,521 $(139,250)$4,069,298 
Balances at December 31, 2021$259,110 $410,053 $317 133,922,305 $1,339 $3,285,948 $(42,546)$(128,245)$3,785,976 
Issuance of common stock in connection with share based compensation— — — 200,454 15,431 — — 15,433 
Restricted stock grants cancelled— — — (9,702)— — — — — 
Redemption of Operating Partnership units for cash— (1,125)— — — (2,379)— — (3,504)
Redemption of Preferred B Units in the Operating Partnership for cash(4,500)— — — — — — — (4,500)
Issuance of Operating Partnership units in conjunction with business combinations— 16,000 — — — — — — 16,000 
Issuance of Operating Partnership units in conjunction with acquisitions— 125,000 — — — — — — 125,000 
Issuance of Preferred D units in the Operating Partnership in conjunction with business combinations6,000 — — — — — — — 6,000 
Issuance of common stock in conjunction with acquisitions— — — 186,766 40,961 — — 40,963 
Repurchase of common stock, net of offering costs— — — (381,786)(4)— — (63,004)(63,008)
Noncontrolling interest in consolidated joint venture— — 338 — — — — — 338 
Net income13,278 31,971 — — — — — 656,428 701,677 
Other comprehensive income578 4,339 — — — — 91,067 — 95,984 
Distributions to Operating Partnership units held by noncontrolling interests(12,972)(29,660)— — — — — — (42,632)
Dividends paid on common stock at $4.50 per share— — — — — — — (604,429)(604,429)
Balances at September 30, 2022$261,494 $556,578 $655 133,918,037 $1,339 $3,339,961 $48,521 $(139,250)$4,069,298 

Noncontrolling InterestExtra Space Storage Inc. Stockholders' Equity
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Noncontrolling Interests and Equity
Balances at December 31, 2021$259,110 $410,053 $317 133,922,305 $1,339 $3,285,948 $(42,546)$(128,245)$3,785,976 
Issuance of common stock in connection with share based compensation— — — 142,784 4,542 — — 4,544 
Restricted stock grants cancelled— — — (779)— — — — — 
Redemption of Operating Partnership units for cash— (829)— — — (1,843)— — (2,672)
Redemption of Preferred B Units in the Operating Partnership for cash(3,375)— — — — — — — (3,375)
Issuance of common stock in conjunction with acquisitions— — — 186,766 40,961 — — 40,963 
Net income4,333 9,805 — — — — 203,579 217,717 
Other comprehensive income313 2,333 — — — — 49,003 — 51,649 
Distributions to Operating Partnership units held by noncontrolling interests(4,330)(9,781)— — — — — — (14,111)
Dividends paid on common stock at $1.50 per share— — — — — — — (202,527)(202,527)
Balances at March 31, 2022$256,051 $411,581 $317 134,251,076 $1,343 $3,329,608 $6,457 $(127,193)$3,878,164 
Balances at December 31, 2022$261,502 $556,095 $1,080 133,921,020 $1,339 $3,345,332 $48,798 $(135,872)$4,078,274 
Issuance of common stock in connection with share based compensation— — — 89,564 5,498 — — 5,499 
Taxes paid upon net settlement of share based compensation— (7,087)— (7,449)— — (7,449)
Restricted stock grants cancelled— — — (2,222)— — — — — 
Redemption of Preferred A Units in the Operating Partnership for stock(16,339)851,698 11,015 — — (5,316)
Redemption of Preferred D Units in the Operating Partnership for stock(22,064)154,307 22,062 — — — 
Noncontrolling interest in consolidated joint venture— — 1,391 — — — — — 1,391 
Net income (loss)2,254 10,378 (58)— — — — 196,304 208,878 
Other comprehensive income— (793)— — — — (13,717)— (14,510)
Distributions to Operating Partnership units held by noncontrolling interests(2,413)(11,665)— — — — — — (14,078)
Dividends paid on common stock at $1.62 per share— — — — — — — (219,988)(219,988)
Balances at March 31, 2023$222,940 $554,015 $2,413 135,007,280 $1,350 $3,376,458 $35,081 $(159,556)$4,032,701 

See accompanying notes to unaudited condensed consolidated financial statements.
9
10


Extra Space Storage Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
For the Three Months Ended March 31, For the Nine Months Ended September 30,
20232022 20232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$208,878 $217,717 Net income$623,046 $701,677 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization78,490 67,906 Depreciation and amortization309,914 208,396 
Amortization of deferred financing costsAmortization of deferred financing costs2,604 1,984 Amortization of deferred financing costs9,716 6,352 
Non-cash interest expense related to fair value of Life Storage public bonds and amortization of discount on equity portion of exchangeable senior notesNon-cash interest expense related to fair value of Life Storage public bonds and amortization of discount on equity portion of exchangeable senior notes8,228 — 
Non-cash lease expenseNon-cash lease expense462 474 Non-cash lease expense1,448 1,441 
Compensation expense related to stock-based awardsCompensation expense related to stock-based awards5,499 4,542 Compensation expense related to stock-based awards19,433 15,431 
Accrual of interest income added to principal of debt securities and notes receivableAccrual of interest income added to principal of debt securities and notes receivable(8,574)(9,951)Accrual of interest income added to principal of debt securities and notes receivable(30,127)(28,514)
Gain on real estate transactionsGain on real estate transactions— (14,249)
Distributions from unconsolidated real estate venturesDistributions from unconsolidated real estate ventures3,789 2,795 Distributions from unconsolidated real estate ventures11,484 9,380 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Other assetsOther assets(2,650)(6,209)Other assets(33,123)(4,207)
Accounts payable and accrued expensesAccounts payable and accrued expenses4,724 (7,665)Accounts payable and accrued expenses134,310 48,898 
Other liabilitiesOther liabilities(11,573)15,872 Other liabilities(16,370)3,416 
Net cash provided by operating activitiesNet cash provided by operating activities281,649 287,465 Net cash provided by operating activities1,037,959 948,021 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Acquisition of real estate assets(47,296)(195,805)
Acquisition of real estate assets and improvementsAcquisition of real estate assets and improvements(197,333)(1,124,777)
Life Storage Merger, net of cash acquiredLife Storage Merger, net of cash acquired(1,182,411)— 
Cash paid for business combinationCash paid for business combination— (157,301)
Development and redevelopment of real estate assetsDevelopment and redevelopment of real estate assets(16,762)(14,716)Development and redevelopment of real estate assets(66,533)(31,652)
Proceeds from sale of real estate assets and investments in real estate venturesProceeds from sale of real estate assets and investments in real estate ventures2,132 39,367 
Investment in unconsolidated real estate entitiesInvestment in unconsolidated real estate entities(21,062)(4,321)Investment in unconsolidated real estate entities(179,258)(102,670)
Return of investment in unconsolidated real estate venturesReturn of investment in unconsolidated real estate ventures— 342 Return of investment in unconsolidated real estate ventures— 342 
Issuance and purchase of notes receivableIssuance and purchase of notes receivable(58,378)(134,408)Issuance and purchase of notes receivable(210,712)(314,542)
Principal payments received from notes receivablePrincipal payments received from notes receivable21,828 195,803 Principal payments received from notes receivable73,514 264,774 
Proceeds from sale of notes receivableProceeds from sale of notes receivable39,261 39,718 Proceeds from sale of notes receivable134,064 203,695 
Purchase of equipment and fixturesPurchase of equipment and fixtures(3,930)(7,985)Purchase of equipment and fixtures(9,515)(19,490)
Net cash used in investing activitiesNet cash used in investing activities(86,339)(121,372)Net cash used in investing activities(1,636,052)(1,242,254)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from notes payable and revolving lines of creditProceeds from notes payable and revolving lines of credit1,381,592 889,829 Proceeds from notes payable and revolving lines of credit5,194,665 3,983,865 
Principal payments on notes payable and revolving lines of creditPrincipal payments on notes payable and revolving lines of credit(1,879,049)(1,230,924)Principal payments on notes payable and revolving lines of credit(4,617,755)(3,341,881)
Proceeds from issuance of public bonds, netProceeds from issuance of public bonds, net500,000 400,000 Proceeds from issuance of public bonds, net950,000 396,100 
Deferred financing costsDeferred financing costs(6,080)(5,842)Deferred financing costs(51,359)(7,618)
Repurchase of common stockRepurchase of common stock— (63,008)
Redemption of Operating Partnership units held by noncontrolling interestsRedemption of Operating Partnership units held by noncontrolling interests— (2,672)Redemption of Operating Partnership units held by noncontrolling interests— (3,504)
Redemption of Preferred Units for cash(5,000)(3,375)
Redemption of Preferred A Units for cashRedemption of Preferred A Units for cash(5,000)— 
Redemption of Preferred B Units for cashRedemption of Preferred B Units for cash— (4,500)
Dividends paid on common stockDividends paid on common stock(219,988)(202,527)Dividends paid on common stock(704,069)(604,429)
Distributions to noncontrolling interestsDistributions to noncontrolling interests(14,078)(14,110)Distributions to noncontrolling interests(43,003)(42,632)
Net cash used in financing activities(242,603)(169,621)
Net decrease in cash, cash equivalents, and restricted cash(47,293)(3,528)
Net cash provided by financing activitiesNet cash provided by financing activities723,479 312,393 
Net increase in cash, cash equivalents, and restricted cashNet increase in cash, cash equivalents, and restricted cash125,386 18,160 
Cash, cash equivalents, and restricted cash, beginning of the periodCash, cash equivalents, and restricted cash, beginning of the period97,735 76,194 Cash, cash equivalents, and restricted cash, beginning of the period97,735 76,194 
Cash, cash equivalents, and restricted cash, end of the periodCash, cash equivalents, and restricted cash, end of the period$50,442 $72,666 Cash, cash equivalents, and restricted cash, end of the period$223,121 $94,354 
Cash and equivalents, including restricted cash at the beginning of the period:
Cash and equivalents$92,868 $71,126 
Restricted cash included in other assets4,867 5,068 
$97,735 $76,194 
Cash and equivalents, including restricted cash at the end of the period:
Cash and equivalents$47,951 $65,978 
Restricted cash included in other assets2,491 6,688 
$50,442 $72,666 
10
11


Extra Space Storage Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
For the Three Months Ended March 31, For the Nine Months Ended September 30,
20232022
Cash and equivalents, including restricted cash at the beginning of the period:Cash and equivalents, including restricted cash at the beginning of the period:
Cash and equivalentsCash and equivalents$92,868 $71,126 
Restricted cash included in other assetsRestricted cash included in other assets4,867 5,068 
$97,735 $76,194 
Cash and equivalents, including restricted cash at the end of the period:Cash and equivalents, including restricted cash at the end of the period:
Cash and equivalentsCash and equivalents$216,121 $86,991 
Restricted cash included in other assetsRestricted cash included in other assets7,000 7,363 
20232022$223,121 $94,354 
Supplemental schedule of cash flow informationSupplemental schedule of cash flow informationSupplemental schedule of cash flow information
Interest paidInterest paid$78,656 $43,197 Interest paid$207,569 $137,683 
Income taxes paidIncome taxes paid1,910 703 Income taxes paid20,222 14,489 
Supplemental schedule of noncash investing and financing activities:Supplemental schedule of noncash investing and financing activities:Supplemental schedule of noncash investing and financing activities:
Redemption of Operating Partnership units held by noncontrolling interests for common stockRedemption of Operating Partnership units held by noncontrolling interests for common stock
Noncontrolling interests in Operating PartnershipNoncontrolling interests in Operating Partnership$116,336 $— 
Common stock and paid-in capitalCommon stock and paid-in capital(11,336)— 
Noncontrolling interests in Operating Partnership Note Receivable PayoffNoncontrolling interests in Operating Partnership Note Receivable Payoff(100,000)— 
OP Unit Redemption - Cash ProceedsOP Unit Redemption - Cash Proceeds(5,000)— 
Acquisition and establishment of operating lease right of use assets and lease liabilitiesAcquisition and establishment of operating lease right of use assets and lease liabilitiesAcquisition and establishment of operating lease right of use assets and lease liabilities
Real estate assets - operating lease right-of-use assetsReal estate assets - operating lease right-of-use assets$— $1,440 Real estate assets - operating lease right-of-use assets$265 $1,689 
Operating lease liabilitiesOperating lease liabilities— (1,440)Operating lease liabilities(265)(1,689)
Acquisitions of real estate assetsAcquisitions of real estate assetsAcquisitions of real estate assets
Real estate assets, netReal estate assets, net$— $40,492 Real estate assets, net$— $173,873 
Value of equity issuedValue of equity issued— (40,965)Value of equity issued— (165,965)
Net Liabilities Assumed— (274)
Investment in unconsolidated real estate venturesInvestment in unconsolidated real estate ventures— 747 Investment in unconsolidated real estate ventures— (1,085)
Finance lease liabilityFinance lease liability— (6,823)
Life Storage Merger real estate assetsLife Storage Merger real estate assets
Real estate assets, netReal estate assets, net$13,575,501 $— 
Value of common stock issuedValue of common stock issued(11,353,338)— 
Unsecured senior notesUnsecured senior notes(2,106,866)
Value of OP units issuedValue of OP units issued(249,470)— 
Net liabilities assumedNet liabilities assumed(191,077)— 
Investment in unconsolidated real estate venturesInvestment in unconsolidated real estate ventures325,250 — 
Accrued construction costs and capital expendituresAccrued construction costs and capital expendituresAccrued construction costs and capital expenditures
Acquisition of real estate assetsAcquisition of real estate assets$1,752 $2,236 Acquisition of real estate assets$6,835 $368 
Accounts payable and accrued expensesAccounts payable and accrued expenses(1,752)(2,236)Accounts payable and accrued expenses(6,835)(368)
Redemption of Preferred Operating Partnership units for common stockRedemption of Preferred Operating Partnership units for common stockRedemption of Preferred Operating Partnership units for common stock
Preferred Operating Partnership unitsPreferred Operating Partnership units$33,403 $— Preferred Operating Partnership units$33,403 $— 
Additional paid-in capitalAdditional paid-in capital(33,403)$— Additional paid-in capital(33,403)$— 
Issuance of OP and Preferred OP units in conjunction with business combinationIssuance of OP and Preferred OP units in conjunction with business combination
Preferred OP units issuedPreferred OP units issued$— $(6,000)
OP units issuedOP units issued— (16,000)

See accompanying notes to unaudited condensed consolidated financial statements.

11
12


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Amounts in thousands, except store and share data, unless otherwise stated


1.    ORGANIZATION
Extra Space Storage Inc. (the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”),REIT, formed as a Maryland corporation on April 30, 2004, to own, operate, manage, acquire, develop and redevelop self-storage properties ("stores") located throughout the United States. The Company was formed to continue the business of Extra Space Storage LLC and its subsidiaries, which had engaged in the self-storage business since 1977. The Company’s interest in its stores is held through its operating partnership, Extra Space Storage LP (the “Operating Partnership”), which was formed on May 5, 2004. The Company’s primary assets are general partner and limited partner interests in the Operating Partnership, which meets the definition of a variable interest entity and is consolidated. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company invests in stores by acquiring wholly-owned stores or by acquiring an equity interest in real estate entities. At March 31,September 30, 2023, the Company had direct and indirect equity interests in 1,4572,369 stores. In addition, the Company managed 9311,282 stores for third parties, bringing the total number of stores which it owns and/or manages to 2,388.3,651. These stores are located in 4142 states and Washington, D.C. The Company also offers tenant reinsurance at its owned and managed stores that insures the value of goods in the storage units.
2.    BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended March 31,September 30, 2023 are not necessarily indicative of results that may be expected for the year ending December 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission.

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024. TheAs of September 30, 2023, the Company electedhad converted all of its LIBOR-indexed debt and derivatives to applySOFR-based indexes (effective with the respective instrument’s next reset date for certain instruments). For all derivatives in hedge accounting expedients related to probability andrelationships, the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The Company also elected to apply additional expedients related to contract modifications, changeselective relief in critical terms, and updates to the designated hedged risks as qualifying changes are made to applicable debt and derivative contracts. Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope", which refines the scope of Topic 848 and clarifies somethat allows for the continuation of its guidance. The Company continues to evaluatehedge accounting throughout the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company has begun transitioning debt over to Secured Overnight Financing Rate ("SOFR") as part of the reference rate reform.transition process was utilized.

1213


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
3.    FAIR VALUE DISCLOSURES

Derivative Financial Instruments
Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of March 31,September 30, 2023, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31,September 30, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall. 
Fair Value Measurements at Reporting Date Using
DescriptionQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Other assets - Cash flow hedge swap agreements$— $40,18048,611 $— 
Other liabilities - Cash flow hedge swap agreements$— $1,190 $— 

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of March 31,September 30, 2023 or December 31, 2022.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Long-lived assets held for use are evaluated for impairment when events or circumstances indicate there may be impairment. The Company reviews each store at least annually to determine if any such events or circumstances have occurred or exist. The Company focuses on stores where occupancy and/or rental income have decreased by a significant amount. For these stores, the Company determines whether the decrease is temporary or permanent, and whether the store will likely recover the lost occupancy and/or revenue in the short term. In addition, the Company reviews stores in the lease-up stage and compares actual operating results to original projections.

When the Company determines that an event that may indicate impairment has occurred, the Company compares the carrying value of the related long-lived assets to the undiscounted future net operating cash flows attributable to the assets. An impairment loss is recorded if the net carrying value of the assets exceeds the undiscounted future net operating cash flows attributable to the assets. The impairment loss recognized equals the excess of net carrying value over the related fair value of the assets.

13
14


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
The Company evaluates goodwill for impairment at least annually and whenever events, circumstances, and other related factors indicate that the fair value of the related reporting unit may be less than the carrying value. If the fair value of the reporting unit is determined to exceed the aggregate carrying amount, no impairment charge is recorded. Otherwise, an impairment charge is recorded to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value.
When real estate assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the fair value of the assets, net of selling costs. If the estimated fair value, net of selling costs, of the assets that have been identified as held for sale is less than the net carrying value of the assets, the Company would recognize an impairment loss on the assets held for sale. The operations of assets held for sale or sold during the period is presented as part of normal operations for all periods presented. As of March 31,September 30, 2023, the Company had no operating stores classified as held for sale which are included in real estate assets, net.

The Company assesses annually whether there are any indicators that the value of the Company’s investments in unconsolidated real estate ventures may be impaired and when events or circumstances indicate that there may be impairment. An investment is impaired if management’s estimate of the fair value of the investment is less than its carrying value. To the extent impairment has occurred, and is considered to be other than temporary, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment.

In connection with the Company’s acquisition of stores, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their relative fair values, which are estimated using significant unobservable inputs. The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Intangible assets, which represent the value of existing tenant relationships, are recorded at their fair values based on the avoided cost to replace the current leases. The Company measures the value of tenant relationships based on the rent lost due to the amount of time required to replace existing customers, which is based on the Company’s historical experience with turnover in its stores. Any debt assumed as part of an acquisition is recorded at fair value based on current interest rates compared to contractual rates. Acquisition-related transaction costs are capitalized as part of the purchase price. For acquisitions that meet the definition of a business, the Company estimates the fair value of the identifiable assets and liabilities of the acquired entity on the acquisition date. We measure goodwillGoodwill is measured as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. Acquisition-related expenses arising from the transaction are expensed as incurred. The Company includes the results of operations of the businesses that it acquires beginning on the acquisition date.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, restricted cash, receivables, other financial instruments included in other assets, accounts payable and accrued expenses, variable-rate notes payable, investments in debt securities and notes receivable, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at March 31,September 30, 2023 and December 31, 2022 approximate fair value. Restricted cash is comprised of funds deposited with financial institutions located throughout the United States primarily relating to earnest money deposits on potential acquisitions.

The fair values of the Company’s notes receivable from Preferred and Common Operating Partnership unit holders and other fixed rate notes receivable were based on the discounted estimated future cash flows of the notes (categorized within Level 3 of the fair value hierarchy); the discount rate used approximated the current market rate for loans with similar maturities and credit quality. The fair values of the Company’s fixed-rate notes payable were estimated using the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality.

15


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated

The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Notes receivable from Preferred and Common Operating Partnership unit holdersNotes receivable from Preferred and Common Operating Partnership unit holders$1,879 $1,900 $95,965 $101,900 Notes receivable from Preferred and Common Operating Partnership unit holders$1,885 $1,900 $95,965 $101,900 
Fixed rate notes receivableFixed rate notes receivable$1,139 $1,175 $5,191 $5,241 Fixed rate notes receivable$889 $900 $5,191 $5,241 
Fixed rate debtFixed rate debt$4,797,276 $5,207,398 $4,320,014 $4,762,196 Fixed rate debt$6,695,430 $7,654,623 $4,320,014 $4,762,196 

4.    ACQUISITIONS AND DISPOSITIONS

The Life Storage Merger

On July 20, 2023, the Company closed its merger with Life Storage (the "Life Storage Merger" or "Merger"). Under the terms of the Life Storage Merger, Life Storage stockholders and holders of units of the Life Storage operating partnership received 0.895 of a share of common stock (or OP Unit, as applicable) of the Company for each issued and outstanding share (or operating partnership unit) of Life Storage they owned for total consideration of $11,602,808, based on the Company's closing share price on July 19, 2023. At closing, the Company retired $1,160,000 in balances on Life Storage's line of credit which included $375,000 that Life Storage used to pay off its private placement notes in connection with the closing of the Life Storage Merger. The Company also paid off $32,000 in secured loans. On July 25, 2023, the Company completed obligor exchange offers and consent solicitations (together the "Exchange Offers") related to Life Storage's various senior notes. Upon the closing of the Exchange Offers, a total of $2,351,100 of Life Storage's senior notes were exchanged for senior notes of the same tenor of Extra Space Storage L.P. The remaining Life Storage senior note balances which were not exchanged total $48,900 and no longer have any financial reporting requirements or covenants.

Consideration and Purchase Price Allocation

The Merger was accounted for as an asset acquisition in accordance with ASC Topic 805 which requires that the cost of an acquisition be allocated on a relative fair value basis to the assets acquired and the liabilities assumed. The following table summarizes the fair value of total consideration transferred in the Life Storage Merger:
Consideration TypeJuly 20, 2023
Common stock$11,353,338 
OP units249,470 
Cash for payoff of Life Storage credit facility and debt1,192,000 
Transaction Costs55,318 
Total consideration$12,850,127 


14
16


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
The following table summarizes the estimated fair values assigned to the assets acquired and liabilities assumed:
July 20, 2023
Real estate assets$14,587,735 
Equity investment in joint venture partnerships325,250 
Cash and other assets107,423 
Intangible assets - other82,000 
Trade name50,000 
Unsecured senior notes(2,106,866)
Accounts payable, accrued expenses and other liabilities(191,077)
Noncontrolling interests(4,338)
Fair value of net assets acquired$12,850,127 

Fair Value Measurement

The estimated fair values of assets acquired and liabilities assumed were primarily based on information that was available as of the closing date of the Life Storage Merger. The methodology used to estimate the fair values to apply purchase accounting and the ongoing financial statement impact, if any, are summarized below.

Real estate assets – the Company engaged third party valuation specialists to calculate the fair value of the real estate assets acquired by the Company using standard valuation methodologies, including the cost and market approaches. The remaining useful lives for real estate assets, excluding land, were reset to 39 years. The Company also engaged third party valuation specialists to calculate the fair value of tenant relationships for storage leases based on estimated costs the Company avoided to replace them. Tenant relationships are amortized to expense over 18 months, which is based on the Company’s historical experience with turnover in its stores.
Equity investment in joint venture partnerships - the Company calculated the fair value of equity investment in joint venture partnerships based on a direct capitalization of net operating income.
Intangible assets - other – the Company engaged third party valuation specialists to calculate the fair value of customer relationships relating to tenant reinsurance contracts based on the income approach which estimates the potential revenue loss the Company avoided to replace them. These assets are amortized to expense over 36 months, which is based on the Company’s historical experience with average length of stay for tenants.
Trade name – the Company engaged third party valuation specialists to calculate the fair value of trade names based on royalty payments avoided had the trade name been owned by a third party. This is determined using market royalty rates and a discounted cash flow analysis under the relief-from-royalty method to estimate the fair value of the trade name. This method incorporates various assumptions, including projected revenue growth rates, the terminal growth rate, the royalty rate to be applied, and the discount rate utilized.
Unsecured senior notes – the Company calculated the fair value of the unsecured senior notes using standard valuation methodology, including readily available market data. The below-market value of debt is recorded as a debt discount and reported as a reduction of the unsecured senior notes balance on the condensed consolidated balance sheets. The discount is amortized using effective interest method as an increase to interest expense over the remaining terms of the unsecured senior notes.
Other assets and liabilities – the carrying values of cash, accounts receivable, prepaids and other assets, accounts payable, accrued expenses and other liabilities represented the fair values.


17


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
September 30, 2023Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Intangible Assets:Gross Carrying AmountAccumulated AmortizationAmortization ExpenseAmortization Expense
Trade name$50,000 $— $— $— 
Intangible assets - other82,000 4,723 4,723 4,723 
132,000 4,723 4,723 4,723 
Estimated Aggregate Amortization Expense
Intangible Assets:202420252026
Trade name$— $— $— 
Intangible assets - other23,375 19,833 11,569 
$23,375 $19,833 $11,569 


Store Acquisitions

The following table shows the Company’s acquisitions of stores, excluding the Life Storage Merger, for the three and nine months ended September 30, 2023 and 2022. The table excludes purchases of raw land and improvements made to existing assets. All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."
Total
PeriodNumber of StoresCash PaidFinance Lease LiabilityInvestments in Real Estate VenturesNet Liabilities/ (Assets) AssumedValue of Equity IssuedReal estate assets
Q3 20233$18,578 $— $— $86 $— $18,664 
Q2 2023332,888 — — 26 — 32,914 
Q1 2023113,111 — — — 13,117 
Total 20237$64,577 $ $ $118 $ $64,695 
Q3 2022118$639,106 $— $338 $(2,291)$125,000 $762,153 
Q2 202215220,933 6,823 — 811 — 228,567 
Q1 202214185,910 — 747 274 40,965 227,896 
Total 2022147$1,045,949 $6,823 $1,085 $(1,206)$165,965 $1,218,616 

Other Investments

On June 1, 2022, the Company completed the acquisition of Bargold Storage Systems, LLC ("Bargold") for a purchase price of approximately $179.3 million. Bargold leases space in apartment buildings, primarily in New York City and its boroughs, builds out the space as storage units, and subleases the units to tenants. As of the date of the acquisition, Bargold had approximately 17,000 storage units with an approximate occupancy of 97%. This acquisition is considered a business combination under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.


18


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
Cash and cash equivalents$175 
Fixed assets6,411 
Developed technology500 
Trademarks500 
Customer relationships1,870 
Other assets125 
Accounts payables and accrued liabilities assumed(1,090)
Nets asset acquired8,491 
Goodwill170,811 
Total assets acquired$179,302 

The following table summarizes the revenues and earnings related to Bargold since the acquisition date of June 1, 2022, which are included in the Company's consolidated statement of operations for the year ended December 31, 2022:

Total revenues$9,374 
Net income from operations$1,718 

Pro Forma Information

During the year ended December 31, 2022, the Company acquired Bargold. The following pro forma financial information is based on the combined historical financial statements of the Company and Bargold, however, it only includes revenue and presents the Company's results as if the acquisition had occurred on January 1, 2021. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.

For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Pro FormaPro Forma
Total revenues$1,930,816 $1,592,021 


5.     REAL ESTATE ASSETS
The components of real estate assets are summarized as follows:
September 30, 2023December 31, 2022
Land$4,895,651 $2,356,746 
Buildings, improvements and other intangibles21,502,492 9,425,468 
Right of use asset - finance lease142,851 136,259 
Intangible assets - tenant relationships320,333 152,775 
Intangible lease rights12,943 12,943 
26,874,270 12,084,191 
Less: accumulated depreciation and amortization(2,440,327)(2,138,524)
Net operating real estate assets24,433,943 9,945,667 
Real estate under development/redevelopment122,735 52,311 
Real estate assets, net$24,556,678 $9,997,978 


19


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
4.     REAL ESTATE ASSETS
The components of real estate assets are summarized as follows:
March 31, 2023December 31, 2022
Land$2,362,399 $2,356,746 
Buildings, improvements and other intangibles9,491,340 9,425,468 
Right of use asset - finance lease140,871 136,259 
Intangible assets - tenant relationships152,707 152,775 
Intangible lease rights12,943 12,943 
12,160,260 12,084,191 
Less: accumulated depreciation and amortization(2,218,705)(2,138,524)
Net operating real estate assets9,941,555 9,945,667 
Real estate under development/redevelopment49,891 52,311 
Real estate assets, net$9,991,446 $9,997,978 

5.6.     OTHER ASSETS
The components of other assets are summarized as follows:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
GoodwillGoodwill$170,811 $170,811 Goodwill$170,811 $170,811 
Receivables, netReceivables, net84,682 85,937 Receivables, net131,614 85,937 
Prepaid expenses and depositsPrepaid expenses and deposits55,574 50,318 Prepaid expenses and deposits94,409 50,318 
Other intangible assets, netOther intangible assets, net75,749 — 
Trade nameTrade name50,000 — 
Fair value of interest rate swapsFair value of interest rate swaps48,611 54,839 
Equipment and fixtures, netEquipment and fixtures, net43,716 42,808 Equipment and fixtures, net45,626 42,808 
Fair value of interest rate swaps40,180 54,839 
Deferred line of credit financing costs, netDeferred line of credit financing costs, net4,805 4,846 Deferred line of credit financing costs, net11,857 4,846 
Restricted cashRestricted cash2,491 4,867 Restricted cash7,000 4,867 
$402,259 $414,426 $635,677 $414,426 

6.7.    EARNINGS PER COMMON SHARE

Basic earnings per common share is computed using the two-class method by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. All outstanding unvested restricted stock awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common stockholders; accordingly, they are considered participating securities that are included in the two-class method. Diluted earnings per common share measures the performance of the Company over the reporting period while giving effect to all potential common shares that were dilutive and outstanding during the period. The denominator includes the weighted average number of basic shares and the number of additional common shares that would have been outstanding if the potential common shares that were dilutive had been issued, and is calculated using either the two-class, treasury stock or as if-converted method, whichever is most dilutive. Potential common shares are securities (such as options, convertible debt, Series A Participating Redeemable Preferred Units (“Series A Units”), Series B Redeemable Preferred Units (“Series B Units”), Series D Redeemable Preferred Units (“Series D Units” and, together with the Series A Units and Series B Units, the “Preferred OP Units”) and common Operating Partnership units (“OP Units”)) that do not have a current right to participate in earnings of the Company but could do so in the future by virtue of their option, redemption or conversion right.

In computing the dilutive effect of convertible securities, net income is adjusted to add back any changes in earnings in the period associated with the convertible security. The numerator also is adjusted for the effects of any other non-discretionary
15


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
changes in income or loss that would result from the assumed conversion of those potential common shares. In computing diluted earnings per common share, only potential common shares that are dilutive (i.e. those that reduce earnings per common share) are included.


20


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
For the purposes of computing the diluted impact of the potential exchange of the Preferred Operating Partnership units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the intent and ability to settle the redemption in shares, the Company divided the total value of the Preferred Operating Partnership units by the average share price for the period presented. The average share price for the three months ended March 31,September 30, 2023 and 2022 was $157.15$134.24 and $198.83,$189.11, respectively.

The following table presents the number of Preferred Operating Partnership units as if converted into potential common shares that were excluded from the computation of earnings per share as their effect would have been anti-dilutive.
For the Three Months Ended March 31,For the Three Months Ended September 30,For the Nine Months Ended September 30,
202320222023202220232022
Equivalent Shares (if converted)Equivalent Shares (if converted)Equivalent Shares (if converted)Equivalent Shares (if converted)Equivalent Shares (if converted)Equivalent Shares (if converted)
Common OP UnitsCommon OP Units8,541,775 — 7,661,885 — 
Series B UnitsSeries B Units213,606 182,974 Series B Units250,061 177,506 228,029 181,408 
Series D UnitsSeries D Units— 1,033,222 Series D Units1,409,198 1,118,056 1,287,256 1,089,389 
213,606 1,216,196 10,201,034 1,295,562 9,177,170 1,270,797 

On January 25, 2023, the remaining Series A Units were redeemed (see Note 13 below). For the purposes of computing the diluted impact on earnings per share of the potential exchange of Series A Units for common shares upon redemption, where the Company had the option to redeem in cash or shares and where the Company had stated the positive intent and ability to settle at least $101,700 of the instrument in cash (or net settle a portion of the Series A Units against the related outstanding note receivable), only the amount of the instrument in excess of $101,700 was considered in the calculation of shares contingently issuable for the purposes of computing diluted earnings per share as allowed by ASC 260-10-45-46. Accordingly, the number of shares included in the computation for diluted earnings per share related to the Series A Units was equal to the number of Series A Units outstanding, with no additional shares included related to the fixed $101,700 amount.

16
21


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
The computation of earnings per common share is as follows for the periods presented:

For the Three Months Ended March 31,For the Three Months Ended September 30,For the Nine Months Ended September 30,
202320222023202220232022
Net income attributable to common stockholdersNet income attributable to common stockholders$196,304 $203,579 Net income attributable to common stockholders$188,350 $220,719 $587,064 $656,428 
Earnings and dividends allocated to participating securitiesEarnings and dividends allocated to participating securities(304)(286)Earnings and dividends allocated to participating securities(304)(313)(931)(914)
Earnings for basic computationsEarnings for basic computations196,000 203,293 Earnings for basic computations188,046 220,406 586,133 655,514 
Earnings and dividends allocated to participating securitiesEarnings and dividends allocated to participating securities— — — — 
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership UnitsIncome allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units12,128 11,693 Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units— 12,954 — 37,932 
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)— (572)Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)— (572)— (1,716)
Net income for diluted computationsNet income for diluted computations$208,128 $214,414 Net income for diluted computations$188,046 $232,788 $586,133 $691,730 
Weighted average common shares outstanding:Weighted average common shares outstanding:Weighted average common shares outstanding:
Average number of common shares outstanding - basicAverage number of common shares outstanding - basic134,511,273 134,180,175 Average number of common shares outstanding - basic195,324,444 133,913,652 155,112,071 134,094,490 
OP UnitsOP Units7,214,649 6,520,781 OP Units— 6,709,854 — 6,592,606 
Series A UnitsSeries A Units— 875,480 Series A Units— 875,480 — 875,480 
Series D UnitsSeries D Units1,210,056 — Series D Units— — — — 
Unvested restricted stock awards included for treasury stock methodUnvested restricted stock awards included for treasury stock method— — — — 
Shares related to dilutive stock optionsShares related to dilutive stock options4,406 5,426 Shares related to dilutive stock options3,576 5,229 4,078 5,269 
Average number of common shares outstanding - dilutedAverage number of common shares outstanding - diluted142,940,384 141,581,862 Average number of common shares outstanding - diluted195,328,020 141,504,215 155,116,149 141,567,845 
Earnings per common shareEarnings per common shareEarnings per common share
BasicBasic$1.46 $1.52 Basic$0.96 $1.65 $3.78 $4.89 
DilutedDiluted$1.46 $1.51 Diluted$0.96 $1.65 $3.78 $4.89 

7.    ACQUISITIONS AND DISPOSITIONS

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three months ended March 31, 2023 and 2022. The table excludes purchases of raw land and improvements made to existing assets. All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."
Total
PeriodNumber of StoresCash PaidFinance Lease LiabilityInvestments in Real Estate VenturesNet Liabilities/ (Assets) AssumedValue of Equity IssuedReal estate assets
Q1 2023113,111 — — — 13,117 
Q1 202214185,910 — 747 274 40,965 227,896 



17


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
Other Investments

On June 1, 2022 the Company completed the acquisition of Bargold Storage Systems, LLC ("Bargold") for a purchase price of approximately $179.3 million. Bargold leases space in apartment buildings, primarily in New York City and its boroughs, builds out the space as storage units, and subleases the units to tenants. As of June 1, 2022, Bargold had approximately 17,000 storage units with an approximate occupancy of 97%. This acquisition is considered a business combination under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.
Cash and cash equivalents$175 
Fixed assets6,411 
Developed technology500 
Trademarks500 
Customer relationships1,870 
Other assets125 
Accounts payables and accrued liabilities assumed(1,090)
Nets asset acquired8,491 
Goodwill170,811 
Total assets acquired$179,302 

The following table summarizes the revenues and earnings related to Bargold since the acquisition date of June 1, 2022, which are included in the Company's consolidated statement of operations for the year ended December 31, 2022:
Total revenues$9,374 
Net income from operations$1,718 

Pro Forma Information

During the year ended December 31, 2022, the Company acquired Bargold. The following pro forma financial information is based on the combined historical financial statements of the Company and Bargold, however, only includes revenue and presents the Company's results as if the acquisition had occurred on January 1, 2021. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.

For the Year Ended December 31, 2022For the Year Ended December 31, 2021
Pro FormaPro Forma
Total revenues$1,930,816 $1,592,021 
8.    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
Investments in unconsolidated real estate entities and cash distributions in unconsolidated real estate ventures represent the Company's interest in preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") and Strategic Storage Trust VI, Inc. ("Strategic Storage"), an affiliate of SmartStop, and the Company's noncontrolling interest in real estate joint ventures that own stores. The Company accounts for its investment in SmartStop preferred stock, which does not have a readily determinable fair value, at the transaction price less impairment, if any. The Company accounts for its investments in joint ventures using the equity method of accounting. The Company initially records these investments at cost and subsequently adjusts for cash contributions, distributions and net equity in income or loss, which is allocated in accordance with the provisions of the applicable partnership or joint venture agreement.
18


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
In these joint ventures, the Company and the joint venture partner generally receive a preferred return on their invested capital. To the extent that cash or profits in excess of these preferred returns are generated through operations or capital transactions, the Company would receive a higher percentage of the excess cash or profits than its equity interest.

The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets. The net equity of certain joint ventures is less than zero because distributions have exceeded the Company's investment in and share of income from these joint ventures. This is generally the result of financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.

22


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
Net investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:
Number of StoresEquity Ownership %
Excess Profit % (1)
March 31,December 31, Number of StoresEquity Ownership %
Excess Profit % (1)
September 30,December 31,
20232022 20232022
PRISA Self Storage LLCPRISA Self Storage LLC844%4%$8,564 $8,596 PRISA Self Storage LLC844%4%$8,475 $8,596 
Sovran HHF Storage Holdings LLCSovran HHF Storage Holdings LLC3720%20%106,509 — 
Storage Portfolio II JV LLCStorage Portfolio II JV LLC3610%30%(7,487)(7,200)Storage Portfolio II JV LLC3610%30%(7,724)(7,200)
Storage Portfolio IV JV LLCStorage Portfolio IV JV LLC3210%30%48,861 49,139 Storage Portfolio IV JV LLC3210%30%48,261 49,139 
Storage Portfolio I LLCStorage Portfolio I LLC2434%49%(41,619)(41,372)Storage Portfolio I LLC2434%49%(42,061)(41,372)
PR II EXR JV LLCPR II EXR JV LLC2325%25%109,651 110,172 PR II EXR JV LLC2325%25%108,716 110,172 
Sovran HHF Storage Holdings II LLCSovran HHF Storage Holdings II LLC2215%15%42,220 — 
Life Storage-HIERS Storage LLCLife Storage-HIERS Storage LLC1720%20%26,237 — 
191 V Life Storage Holdings LLC191 V Life Storage Holdings LLC1720%20%13,410 — 
ESS-CA TIVS JV LPESS-CA TIVS JV LP1655%60%30,405 30,778 ESS-CA TIVS JV LP1655%59%29,610 30,778 
VRS Self Storage, LLCVRS Self Storage, LLC1645%54%(15,613)(15,399)VRS Self Storage, LLC1645%55%(15,932)(15,399)
Life Storage HHF Wasatch Holdings LLCLife Storage HHF Wasatch Holdings LLC1620%20%20,568 — 
GII Life Storage HoldingsGII Life Storage Holdings1335%35%18,189 — 
ARA-EXR JV LLCARA-EXR JV LLC1210%30%19,062 19,137 ARA-EXR JV LLC1210%30%18,967 19,137 
ESS-NYFL JV LPESS-NYFL JV LP1116%24%11,224 11,332 ESS-NYFL JV LP1116%26%10,880 11,332 
Extra Space Northern Properties Six LLCExtra Space Northern Properties Six LLC1010%35%(3,565)(3,382)Extra Space Northern Properties Six LLC1010%35%(3,728)(3,382)
Alan Jathoo JV LLCAlan Jathoo JV LLC910%10%7,361 7,414 Alan Jathoo JV LLC910%10%7,258 7,414 
ESS Bristol Investments LLCESS Bristol Investments LLC810%30%2,062 2,110 ESS Bristol Investments LLC810%30%1,979 2,110 
ESS - BGO Atlanta GA JV LLCESS - BGO Atlanta GA JV LLC820%35%35,398 30,467 ESS - BGO Atlanta GA JV LLC820%35%35,037 30,467 
Storage Portfolio V JV LLCStorage Portfolio V JV LLC710%30%9,561 9,517 
ESS - BGO Storage JV I LLCESS - BGO Storage JV I LLC620%35%22,898 7,466 ESS - BGO Storage JV I LLC620%35%22,572 7,466 
Storage Portfolio V JV LLC610%30%9,509 9,517 
Life Storage Spacemax, LLCLife Storage Spacemax, LLC640%40%33,730 — 
PR EXR Self Storage, LLCPR EXR Self Storage, LLC525%40%58,252 58,476 PR EXR Self Storage, LLC525%40%57,797 58,476 
Storage Portfolio III JV LLCStorage Portfolio III JV LLC510%30%5,438 5,467 Storage Portfolio III JV LLC510%30%5,378 5,467 
Lake Wobegon Storage LLCLake Wobegon Storage LLC550%50%8,150 3,441 
Other unconsolidated real estate venturesOther unconsolidated real estate ventures1220-50%20-50%31,932 32,342 Other unconsolidated real estate ventures2610%-50%10%-50%94,045 28,901 
SmartStop Self Storage REIT, Inc. Preferred Stock (2)
SmartStop Self Storage REIT, Inc. Preferred Stock (2)
n/an/an/a200,000 200,000 
SmartStop Self Storage REIT, Inc. Preferred Stock (2)
n/an/an/a200,000 200,000 
Strategic Storage Trust VI, Inc. Preferred Stock (3)
Strategic Storage Trust VI, Inc. Preferred Stock (3)
n/an/an/a150,000 — 
Net Investments in and Cash distributions in unconsolidated real estate entitiesNet Investments in and Cash distributions in unconsolidated real estate entities323$532,333 $515,060 Net Investments in and Cash distributions in unconsolidated real estate entities471$1,008,104 $515,060 
(1)    Includes pro-rata equity ownership share and maximum potential promoted interest.
(2)    TheIn October 2019, the Company invested $200,000 in shares of convertible preferred stock of SmartStop. TheSmartStop with a dividend rate for the preferred shares isof 6.25% per annum, subject to increase after five years. The preferred shares are generally not redeemable for five years, except in the case of a change of control or initial listing of SmartStop. Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's condensed consolidated statements of operations.
(3)    In May 2023, the Company invested $150,000 in shares of convertible preferred stock of Strategic Storage with a dividend rate of 8.35% per annum, subject to increase after five years. The preferred shares are generally not redeemable for three years, except in the case of a change of control or initial listing of Strategic Storage. Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's condensed consolidated statements of operations.

23


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
During the threenine months ended March 31,September 30, 2023, the Company contributed a total of $20,622$28,611 of cash to its joint ventures (not including joint ventures added as a result of the Life Storage Merger), for its pro-rata portion of the purchase price of 5seven operating stores.
9.    INVESTMENTS IN DEBT SECURITIES AND NOTES RECEIVABLE
Investments in debt securities and notes receivable consists of the Company's investment in mandatorily redeemable preferred stock of Jernigan Capital, Inc. ("JCAP") in connection with JCAP's acquisition by affiliates of NexPoint Advisors,
19


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
L.P. ("NexPoint Investment") and receivables due to the Company under its bridge loan program. Information about these balances is as follows:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
Debt securities - NexPoint Preferred StockDebt securities - NexPoint Preferred Stock$300,000 $300,000 Debt securities - NexPoint Preferred Stock$300,000 $300,000 
Notes Receivable - Bridge LoansNotes Receivable - Bridge Loans507,885 491,879 Notes Receivable - Bridge Loans533,000 491,879 
Dividends and Interest ReceivableDividends and Interest Receivable56,028 66,170 Dividends and Interest Receivable58,311 66,170 
$863,913 $858,049 $891,311 $858,049 
In November 2020, the Company invested $300,000 in the preferred stock of JCAP in connection with the acquisition of JCAP by affiliates of NexPoint Advisors, L.P. This investment consisted of 200,000 Series A Preferred Shares valued at a total of $200,000, and 100,000 Series B Preferred Shares valued at a total of $100,000. In December 2022, a modification was completed that exchanged the Series A and Series B Preferred Shares for 300,000 Series D Preferred Shares, valued at a total of $300,000. The Series D Preferred Shares are mandatorily redeemable after six years from the modification in December 2022, with two one-year extension options. NexPoint may redeem the Series D Preferred Shares at any time, subject to certain prepayment penalties. The Company accounts for the JCAP Series D Preferred Shares as a held to maturity debt security at amortized cost. The Series D Preferred Shares have an initial dividend ratesrate of 8.5%. If the investment is not retired after six years, the preferred dividends increase annually.

In July 2020, the Company purchased a senior mezzanine note receivable with a principal amount of $103,000. This note receivable bore interest at 5.5%, matured in December 2023 and was collateralized through an equity interest in which it or its subsidiaries wholly own 62 storage facilities. The Company paid cash of $101,142 for the loan receivable and accounted for the discount at amortized cost. The discount was being amortized over the term of the loan receivable. In February 2022, a junior mezzanine lender exercised its right to buy the Company’s position for the full principal balance plus interest due, as a result of which the Company sold this note for a total of $103,315 in cash. The remaining unamortized discount was recognized in the February 2022 as interest income.

The Company provides bridge loan financing to third-party self-storage operators. These notes receivable consist of mortgage loans receivable, which are collateralized by self-storage properties and unsecured mezzanine loans receivable. These notes receivable typically have a term of three years with two one-year extensions, and have variable interest rates. The Company intends to sell the majoritya portion of the mortgage receivables. During the threenine months ended March 31,September 30, 2023 the Company sold a total principal amount of $39,261$134,064 of its mortgage bridge loans receivable to third parties for a total of $39,261$134,064 in cash, and closed on $58,378$173,980 in new bridge loans.initial loan draws, and recorded $20,981 of draws from interest holdbacks.

The bridge loans typically have a loan to value ratio between 70% and 80%. None of the debt securities or notes receivable are in past-due or nonaccrual status and the allowance for potential credit losses is immaterial.
20
24


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
10.    DEBT
In March 2023, the Operating Partnership executed a public bond issuance by selling $500.0 million principal amount of 5.700% Senior Notes due 2028 (the "Notes Due 2028"). Interest on the Notes Due 2028 is paid semi-annually in arrears on April 1 and October 1 of each year. The Notes Due 2028 will mature on April 1, 2028, and the Operating Partnership may redeem the Notes Due 2028 at its option and sole discretion at any time prior to March 1, 2028 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.
In March 2022, the Operating Partnership executed a public bond issuance by selling $400.0 million principal amount of 3.900% Senior Notes due 2029 (the "Notes Due 2029"). Interest on the Notes Due 2029 is paid semi-annually in arrears on April 1 and October 1 of each year. The Notes Due 2029 will mature on April 1, 2029, and the Operating Partnership may redeem the Notes Due 2029 at its option and sole discretion at any time prior to February 1, 2029 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.
In September 2021, the Operating Partnership executed a public bond issuance by selling $600.0 million principal amount of 2.350% Senior Notes due 2032 (the "Notes Due 2032"). Interest on the Notes Due 2032 is paid semi-annually in arrears on March 15 and September 15 of each year. The Notes Due 2032 will mature on March 15, 2032, and the Operating Partnership may redeem the Notes Due 2032 at its option and sole discretion at any time prior to December 15, 2031 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.
In May 2021, the Operating Partnership executed its initial public bond issuance by selling $450.0 million principal amount of 2.550% Senior Notes due 2031 (the "Notes Due 2031"). Interest on the Notes Due 2031 is paid semi-annually in arrears on June 1 and December 1 of each year. The Notes Due 2031 will mature on June 1, 2031, and the Operating Partnership may redeem the Notes Due 2031 at its option and sole discretion at any time prior to March 1, 2031 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.
The Operating Partner may redeem the Notes Due 2028, the Notes Due 2029, the Notes Due 2031 and/or the Notes Due 2032 (collectively, the "Notes") in whole at any time or in part from time to time, at the Operating Partnership’s option and sole discretion, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) a make-whole premium calculated in accordance with the indenture governing the notes, plus, in each case, accrued and unpaid interest thereon to, but not including, the applicable redemption date. Notwithstanding the foregoing, on or after the par call date, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date. The par call date on the Notes Due 2028 is one month prior to the maturity. The par call date on the Notes Due 2029 is two months prior to the maturity. The par call date on the Notes Due 2031 and the Notes Due 2032 is three months prior to their maturity dates.
Certain events are considered events of default, which may result in the accelerated maturity of the Notes, including, among other things, a default for 30 days in the payment of any installment of interest under the notes or a default in the payment of the principal amount or redemption price due with respect to the notes, when the same become due and payable.
The Notes are unsecured, and are fully and unconditionally guaranteed by the Company, ESS Holdings Business Trust I, and ESS Holdings Business Trust II (the "Guarantors," and together with the Operating Partnership, the "Obligated Group"), on a joint and several basis. The guarantee of the Notes will be a senior unsecured obligation of each Guarantor. The Guarantors have no material operations separate from the operation of the Operating Partnership and no material assets, other than their respective investments directly or indirectly in the Operating Partnership, and therefore the assets, liabilities, and results of operations of the Obligated Group are not materially different than those reported in the Company's financial statements.
21


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
The components of term debt are summarized as follows:
Term DebtTerm DebtMarch 31, 2023December 31, 2022Fixed Rate
Variable Rate (2)
Maturity DatesTerm DebtSeptember 30, 2023December 31, 2022Fixed Rate
Variable Rate (2)
Maturity Dates
Secured fixed-rate (1)
Secured fixed-rate (1)
$520,764 $521,820 2.56% - 4.56%April 2025 - February 2030
Secured fixed-rate (1)
$402,896 $521,820 2.67% - 4.56%April 2025 - February 2030
Secured variable-rate (1)
Secured variable-rate (1)
791,703 772,604 5.80% - 6.37%August 2023 - September 2030
Secured variable-rate (1)
880,438 772,604 6.32% - 6.81%November 2023 - September 2030
Unsecured fixed-rateUnsecured fixed-rate4,686,633 4,240,376 2.35% - 5.70%February 2024 - March 2032Unsecured fixed-rate7,536,633 4,240,376 2.20% - 5.70%January 2025 - March 2032
Unsecured variable-rateUnsecured variable-rate1,273,367 884,624 5.85% - 5.85%January 2024 - January 2028Unsecured variable-rate1,848,367 884,624 6.26% - 6.27%January 2024 - January 2028
TotalTotal7,272,467 6,419,424 Total10,668,334 6,419,424 
Less: Discount on unsecured senior notes (3)
Less: Discount on unsecured senior notes (3)
(284,906)— 
Less: Unamortized debt issuance costsLess: Unamortized debt issuance costs(35,169)(32,962)Less: Unamortized debt issuance costs(54,349)(32,962)
TotalTotal$7,237,298 $6,386,462 Total$10,329,079 $6,386,462 
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Term SOFR and Daily Simple SOFR.
(2) Basis rates include Adjusted Term SOFR and Adjusted Daily Simple SOFR.(2) Basis rates include Adjusted Term SOFR and Adjusted Daily Simple SOFR.
(3) Unsecured senior notes from the Life Storage Merger were recorded at fair value, resulting in a discount to be amortized over the term of the debt.(3) Unsecured senior notes from the Life Storage Merger were recorded at fair value, resulting in a discount to be amortized over the term of the debt.
The following table summarizes the scheduled maturities of term debt, excluding available extensions, at March 31,September 30, 2023:
2023$354,175 
2024760,000 
2025708,595 
2026809,427 
2027871,079 
Thereafter3,769,191 
$7,272,467 
As of March 31,
2023$248,250 
20241,335,000 
2025789,920 
20261,409,581 
20271,318,350 
20281,029,300 
20291,543,074 
20301,344,859 
20311,050,000 
2032600,000 
$10,668,334 
On June 22, 2023, the terms ofCompany entered into the SecondThird Amended and Restated Credit Agreement dated(the “Credit Agreement”), which increased the commitment of the revolving credit facility to $1,940,000, and later to $2,000,000 with an Increasing Lender Supplement entered into in August 2023, and extended its maturity to June 22, 2021 (the "Credit Agreement") are as follows:
Debt CapacityMaturity Date
Revolving Credit Facility$1,250,000 June 2025
Tranche 1 Term Loan Facility (1)
400,000 January 2027
Tranche 2 Term Loan Facility (1)
425,000 October 2026
Tranche 3 Term Loan Facility (1)
245,000 January 2025
Tranche 4 Term Loan Facility (1)
255,000 June 2026
Tranche 5 Term Loan Facility (1)
425,000 February 2024
Tranche 6 Term Loan Facility (1)
175,000 January 2028
Tranche 7 Term Loan Facility (1)
425,000 July 2029
$3,600,000 
(1) The2027. In connection with entering into the Credit Agreement, the Company paid off Tranche 5 and added the Tranche 8 term loan, amounts have beenmaturing June 2024, which allowed the Company to draw up to $1,000,000 in connection with the Life Storage Merger. Tranche 8 was fully drawn ason July 20, 2023, in connection with the closing of March 31, 2023.the Life Storage Merger.

Pursuant to the terms of the Credit Agreement, the Company may request an extension of the term of the revolving credit facility for up to two additional periods of six months each, and the term of the Tranche 8 term loan facility for one year, after satisfying certain conditions.

As of March 31,September 30, 2023, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) Adjusted Term or Daily Simple SOFR plus the Applicable Margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or
22
25


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
prime rate or (d) the SOFR rate plus 1.00%. Per the Credit Agreement, the applicable SOFR rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the SOFR rate margin ranging from 0.7% to 1.6%2.2% per annum and the applicable base rate margin ranging from 0.00% to 0.60%1.20% per annum.

The Credit Agreement is guaranteed by the Company and is not secured by any assets of the Company. The Company's unsecured debt is subject to certain financial covenants. As of March 31,September 30, 2023, the Company was in compliance with all of its financial covenants.

In July 2022, the Company completed an accordion transaction in its credit facility, which added a $175.0 million unsecured debt tranche maturing January 2028 and a $425.0 million unsecured debt tranche maturing July 2029. The currentAs of September 30, 2023, the interest rates for the tranches arewere Adjusted Term SOFR/Adjusted Daily Simple SOFR ("ASOFR") + 0.95%0.85% and ASOFR + 1.25%1.15%, respectively.

All of the Company’s lines of credit are guaranteed by the Company. The following table presents information on the Company’s lines of credit, the proceeds of which are used to repay debt and for general corporate purposes, for the periods indicated:
As of March 31, 2023
Revolving Lines of CreditAmount DrawnCapacityInterest RateMaturity
Basis Rate (1)
Credit Line 1 (2)
$24,500 $140,000 6.22%7/1/2026SOFR plus 1.35%
Credit Line 2 (3)(4)
70,000 1,250,000 5.82%6/20/2025SOFR plus 0.95%
$94,500 $1,390,000 
(1) Term SOFR or Daily Simple SOFR
(2) Secured by mortgages on certain real estate assets. On January 13, 2023 the maturity date was extended to July 1, 2026 with one extension of one year available.
(3) Unsecured with two six-month extensions available.
(4) Basis Rate as of March 31, 2023. Rate is subject to change based on our investment grade rating.

As of September 30, 2023
Revolving Lines of CreditAmount DrawnCapacityInterest RateMaturity
Basis Rate (1)
Credit Line 1 (2)
$— $140,000 6.66%7/1/2026SOFR plus 1.35%
Credit Line 2 (3)(4)
623,000 2,000,000 6.19%6/22/2027ASOFR plus 0.775%
$623,000 $2,140,000 
(1) Term SOFR or Daily Simple SOFR
(2) Secured by mortgages on certain real estate assets. On January 13, 2023, the maturity date was extended to July 1, 2026 with one extension of one year available.
(3) Unsecured. On June 22, 2023, the maturity date was extended to June 22, 2027 with two six-month extensions available. On August 11, 2023, the capacity was increased by $60.0 million.
(4) Basis Rate as of September 30, 2023. Rate is subject to change based on the Company's investment grade rating.
As of March 31,September 30, 2023, the Company’s percentage of fixed-rate debt to total debt was 70.7%70.3%. The weighted average interest rates of the Company’s fixed and variable-rate debt were 3.6% and 6.0%6.4%, respectively. The combined weighted average interest rate was 4.3%4.4%.
11.    DERIVATIVES

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposure that arises from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“OCI”) and is subsequently reclassified into earnings in the period that
23
26


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
the hedged forecasted transaction affects earnings. A portion of these changes is excluded from accumulated other comprehensive income as it is allocated to noncontrolling interests. During the three and nine months ended March 31,September 30, 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. In the coming 12 months, the Company estimates that $30,899$31,372 will be reclassified as an increase to interest income.

The Company held 1817 derivative financial instruments which had a total combined notional amount of $1,782,610$1,664,918 as of March 31,September 30, 2023.

Fair Values of Derivative Instruments
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets:
Asset / Liability Derivatives Asset / Liability Derivatives
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:March 31, 2023December 31, 2022Derivatives designated as hedging instruments:September 30, 2023December 31, 2022
Other assetsOther assets$40,180 $54,839 Other assets$48,611 $54,839 
Other liabilitiesOther liabilities$1,190 $73 Other liabilities$— $73 

Effect of Derivative Instruments
The table below presents the effect of the Company’s derivative financial instruments on the condensed consolidated statements of operations for the periods presented. No tax effect has been presented as the derivative instruments are held by the Company:
Gain (loss) recognized in OCI for the Three Months Ended March 31,Location of amounts reclassified from OCI into incomeGain (loss) reclassified from OCI for the Three Months Ended March 31,Gain (loss) recognized in OCI for the Three Months Ended September 30,Location of amounts reclassified from OCI into incomeGain (loss) reclassified from OCI for the Three Months Ended September 30,
TypeType2023202220232022Type2023202220232022
Swap AgreementsSwap Agreements$(5,562)$42,741 Interest expense$8,950 $(8,912)Swap Agreements$9,146 $25,350 Interest expense$11,415 $1,131 
Gain (loss) recognized in OCI for the Nine Months Ended September 30,Location of amounts reclassified from OCI into incomeGain (loss) reclassified from OCI for the Nine Months Ended September 30,
Type2023202220232022
Swap Agreements$27,212 $82,449 Interest expense$31,398 $(13,536)

Credit-risk-related Contingent Features
The Company has agreements with some of its derivative counterparties that contain provisions pursuant to which the Company could be declared in default of its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender.

The Company also has an agreement with some of its derivative counterparties that incorporates the loan covenant provisions of the Company’s indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.

As of March 31,September 30, 2023, the Company did not have any net liability positions in the fair value of derivatives. 
12.    STOCKHOLDERS’ EQUITY

On July 20, 2023, the Company issued 76,217,359 shares of its common stock for a total value of $11,353,338. This was based on an exchange ratio of 0.895 per share conversion of Life Storage common stock at the Company's closing share price on July 19, 2023 of $148.96 as part of the Life Storage Merger.

On January 7, 2022, the Company issued 186,766 shares of its common stock to acquire two stores for $40,965.


27


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
On August 9, 2021, the Company filed its $800,000 "at the market" equity program with the Securities and Exchange Commission using a shelf registration statement on Form S-3, and entered into separate equity distribution agreements with ten sales agents. No shares have been sold under the current "at the market" equity program. From January 1, 2021, through August 8, 2021, the Company sold 585,685 shares of common stock under its prior "at the market" equity program resulting in net proceeds of $66,617.

24


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
On October 15, 2020, the Company's board of directors authorized a new share repurchase program allowing for the repurchase of shares with an aggregate value up to $400,000. During 2022, a total of $63,008 was paid to repurchase 381,786 shares. During the threenine months ended March 31,September 30, 2023, no shares were repurchased. As of March 31,September 30, 2023, the Company had remaining authorization to repurchase shares with an aggregate value up to $336,992.
13.    NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS

Classification of Noncontrolling Interests
GAAP requires a company to present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section, but separate from the company’s equity. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity.

The Company has evaluated the terms of the Operating Partnership’s preferred units and classifies the noncontrolling interest represented by such preferred units as stockholders’ equity in the accompanying condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the condensed consolidated balance sheets. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount and (2) the redemption value as of the end of the period in which the determination is made.

At March 31,September 30, 2023 and December 31, 2022, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets. The partnership agreement of the Operating Partnership (as amended, the "Partnership Agreement") provides for the designation and issuance of the OP Units. As of December 31, 2022, noncontrolling interests in Preferred OP Units were presented net of notes receivable from Preferred OP Unit holders of $100,000 as more fully described below. The balances for each of the specific Preferred OP Units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

March 31, 2023December 31, 2022
Series A Units$— $16,498 
Series B Units33,568 33,568 
Series D Units189,372 211,436 
$222,940 $261,502 

September 30, 2023December 31, 2022
Series A Units$— $16,498 
Series B Units33,567 33,568 
Series D Units189,372 211,436 
$222,939 $261,502 

Series A Participating Redeemable Preferred Units

The Partnership Agreement provides for the designation and issuance of the Series A Units. The Series A Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation.
The Series A Units were issued in June 2007. Series A Units in the amount of $101,700 bore a fixed priority return of 2.3% and originally had a fixed liquidation value of $115,000. The remaining balance participated in distributions with, and had a liquidation value equal to that of the OP Units. The Series A Units were redeemable at the option of the holder, which redemption obligation could have been satisfied, at the Company’s option, in cash or shares of its common stock. As a result of a redemption of 114,500 Series A Units in October 2014, the remaining fixed liquidation value was reduced to $101,700, which represented 875,480 Series A Units.

28


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
On June 25, 2007, the Operating Partnership loaned the holder of the Series A Units $100,000. The loan bore interest at 2.1%. The loan was secured by the borrower’s Series A Units, which are shown on the balance sheet net of the $100,000 loan as of December 31, 2022 because the borrower under the loan was also the holder of the Series A Units.
25


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
On January 25, 2023, the redemption obligation for all outstanding Series A Units was satisfied, at the Company’s option, in $5,000 cash and 851,698 shares of its common stock, which was net of the noncash settlement of the $100,000 loan. As a result of this redemption, no Series A Units were outstanding as of March 31,September 30, 2023.

Series B Redeemable Preferred Units

The Partnership Agreement provides for the designation and issuance of the Series B Units. The Series B Units rank junior to the Series A Units, on parity with the Series C Units and Series D Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation.

The Series B Units were issued in 2013 and 2014. The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $33,568$33,567 which represents 1,342,727 Series B Units. Holders of the Series B Units receive distributions at an annual rate of 6.0%. These distributions are cumulative. The Series B Units became redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock.

On May 10, 2022, 45,000 Series B Units were redeemed for $1,125 in cash.

Series C Redeemable Preferred Units

The Partnership Agreement provides for the designation and issuance of the Series C Units. The Series C Units ranked junior to the Series A Units, on parity with the Series B Units and Series D Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation.

As of March 31,September 30, 2023 and December 31, 2022, there were no outstanding Series C Units.

Series D Redeemable Preferred Units

The Partnership Agreement provides for the designation and issuance of the Series D Units. The Series D Units rank junior to the Series A Units, on parity with the Series B Units and Series C Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation.
The Series D Units have a liquidation value of $25.00 per unit, for a fixed liquidation value of $189,171,$189,372, which represents 7,566,828 Series D Units. Holders of the Series D Units receive distributions at an annual rate between 3.0% and 5.0%. These distributions are cumulative. The Series D Units become redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock. In addition, certain of the Series D Units are exchangeable for OP Units at the option of the holder until the tenth anniversary of the date of issuance, with the number of OP Units to be issued equal to $25.00 per Series D Unit, divided by the value of a share of common stock as of the exchange date.
On January 3, 2023, 890,594 Series D Units were redeemed for 154,307 shares of common stock.
The Series D Units have been issued at various times from 2014 to 2022. On June 1, 2022, the Operating Partnership issued a total of 240,000 Series D unitsUnits valued at $6,000 in connection with the acquisition of Bargold.
On January 3, 2023, 890,594 Series D units were redeemed for 154,307 shares of common stock.

2629


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
14.    NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP AND OTHER NONCONTROLLING INTERESTS

Noncontrolling Interest in Operating Partnership

The Company’s interest in its stores is held through the Operating Partnership. Between its general partner and limited partner interests, the Company held a 94.0%95.2% ownership interest in the Operating Partnership as of March 31,September 30, 2023. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.0%4.8% are held by certain former owners of assets acquired by the Operating Partnership. As of March 31,September 30, 2023 and December 31, 2022, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $1,900 because a borrower under the note receivable is also a holder of OP Units. This note receivable originated in December 2014, bears interest at 5.0% per annum and matures on December 15, 2024.

The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. OP Units are redeemable at the option of the holder, which redemption may be satisfied at the Company's option in cash, based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption, or shares of the Company's common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Partnership Agreement. As of March 31,September 30, 2023, the ten-day average closing price of the Company's common stock was $155.29$123.46 and there were 7,214,6498,887,278 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on March 31,September 30, 2023 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,120,363$1,097,223 in cash consideration to redeem the units.

OP Unit activity is summarized as follows for the periods presented:
For the Three Months Ended March 31,For the Nine Months Ended September 30,
2023202220232022
OP Units redeemed for cashOP Units redeemed for cash— 13,028 OP Units redeemed for cash— 18,028 
Cash paid for OP Units redeemedCash paid for OP Units redeemed$— $2,672 Cash paid for OP Units redeemed$— $3,504 
OP Units issued in conjunction with business combination and acquisitionsOP Units issued in conjunction with business combination and acquisitions1,674,748 711,037 
Value of OP Units issued in conjunction with business combination and acquisitionsValue of OP Units issued in conjunction with business combination and acquisitions$249,470 $141,000 

On July 20, 2023, the Company issued 1,674,748 shares of its common stock for a total value of $249,470. This was based on an exchange ratio of 0.895 per share conversion of Life Storage OP Units at the Company's closing share price on July 19, 2023 of $148.96 as part of the Life Storage Merger.

GAAP requires a company to present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section, but separate from the company’s equity. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations, and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity.

The Company has evaluated the terms of the OP Units and classifies the noncontrolling interest represented by the OP Units as stockholders’ equity in the accompanying condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling amount as permanent equity in the condensed consolidated balance sheets. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount and (2) the redemption value as of the end of the period in which the determination is made.

Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interests of third parties in fivenine consolidated joint ventures as of March 31,September 30, 2023. OneTwo joint venture ownsventures each own one operating store and the other fourseven joint ventures each have a combined total of six propertiesproperty under development. The voting interest of each third-party owner is between 3.0%2.0% and 31.0%.


30


EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
Based on the facts and circumstances of each of the Company’s joint ventures, the Company has determined that one of the joint ventures at September 30, 2023 was a variable interest entity (“VIE”) in accordance with ASC 810, “Consolidation.” The Company has consolidated that joint venture as it was determined that the Company has the power to direct the activities of the joint venture and is the primary beneficiary of the joint venture.
15.    SEGMENT INFORMATION

The Company’s segment disclosures present the measure used by the chief operating decision makers ("CODMs") for purposes of assessing each segment’s performance. The Company’s CODMs are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company’s
reportable operating segments. The Company’s segments are comprised of two reportable segments: (1) self-storage operations and (2) tenant reinsurance. NOI for the Company's self-storage operations represents total property revenue less direct property operating expenses. NOI for the Company's tenant reinsurance segment represents tenant reinsurance revenues less tenant reinsurance expense.

The self-storage operations activities include rental operations of wholly-owned stores and self-storage units acquired in the Bargold transaction. The Company's consolidated revenues equal total segment revenues plus property management fees and other income. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in the stores operated by the Company. Excluded from segment revenues and net operating income is property management fees and other income.

For all periods presented, substantially all of the Company's real estate assets, intangible assets, other assets, and accrued and other liabilities are associated with the self-storage operations segment. Financial information for the Company’s business segments is set forth below:
For the Three Months Ended March 31,For the Three Months Ended September 30,For the Nine Months Ended September 30,
202320222023202220232022
Revenues:Revenues:Revenues:
Self-Storage OperationsSelf-Storage Operations$433,962 $379,808 Self-Storage Operations$650,887 $428,787 $1,525,596 $1,216,639 
Tenant ReinsuranceTenant Reinsurance47,704 43,797 Tenant Reinsurance69,128 47,869 165,265 138,093 
Total segment revenuesTotal segment revenues$481,666 $423,605 Total segment revenues$720,015 $476,656 $1,690,861 $1,354,732 
Operating expenses:Operating expenses:Operating expenses:
Self-Storage OperationsSelf-Storage Operations$117,166 $103,542 Self-Storage Operations$185,194 $114,577 $416,997 $322,371 
Tenant ReinsuranceTenant Reinsurance9,089 7,042 Tenant Reinsurance19,130 10,770 37,701 25,349 
Total segment operating expensesTotal segment operating expenses$126,255 $110,584 Total segment operating expenses$204,324 $125,347 $454,698 $347,720 
Net operating income:Net operating income:Net operating income:
Self-Storage OperationsSelf-Storage Operations$316,796 $276,266 Self-Storage Operations$465,693 $314,210 $1,108,599 $894,268 
Tenant ReinsuranceTenant Reinsurance38,615 36,755 Tenant Reinsurance49,998 37,099 127,564 112,744 
Total segment net operating income:Total segment net operating income:$355,411 $313,021 Total segment net operating income:$515,691 $351,309 $1,236,163 $1,007,012 
Other components of net income:Other components of net income:Other components of net income:
Management fees and other incomeManagement fees and other income$21,384 $19,957 Management fees and other income$28,019 $22,246 $71,609 $62,720 
Transaction costsTransaction costs— — — (1,465)
Life Storage Merger transition costsLife Storage Merger transition costs(54,174)— (54,174)— 
General and administrative expenseGeneral and administrative expense(34,763)(29,762)General and administrative expense(37,406)(32,275)(107,011)(93,288)
Depreciation and amortization expenseDepreciation and amortization expense(78,490)(67,906)Depreciation and amortization expense(152,338)(71,423)(309,914)(208,396)
Gain on real estate transactionsGain on real estate transactions— — — 14,249 
Interest expenseInterest expense(80,099)(42,538)Interest expense(122,899)(56,245)(289,370)(146,249)
Interest incomeInterest income19,438 18,989 Interest income22,092 18,125 62,607 52,174 
Equity in earnings and dividend income from unconsolidated real estate entitiesEquity in earnings and dividend income from unconsolidated real estate entities10,305 9,097 Equity in earnings and dividend income from unconsolidated real estate entities15,043 11,149 38,602 30,436 
Income tax expenseIncome tax expense(4,308)(3,141)Income tax expense(6,944)(6,760)(17,238)(15,516)
Net incomeNet income$208,878 $217,717 Net income$198,856 $236,126 $623,046 $701,677 

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EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
16.    COMMITMENTS AND CONTINGENCIES

As of March 31,September 30, 2023, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business. Because litigation is inherently unpredictable, the outcome of these matters cannot presently be determined with any degree of certainty. In accordance with applicable accounting guidance, management establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. The Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period, notwithstanding the fact that the Company is currently vigorously defending any legal proceedings against it.


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EXTRA SPACE STORAGE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)
Amounts in thousands, except store and share data, unless otherwise stated
As of March 31,September 30, 2023, the Company was under agreement to acquire 1115 stores at a total purchase price of $144,106. Five$199,770. Nine stores are scheduled to close in 2023 and six stores are scheduled to close in 2024. Additionally, the Company is under agreement to acquire threetwo stores with joint venture partners, for a total investment of $9,864. Two stores are$2,864. One store is scheduled to close in 2023 and one store is scheduled to close in 2024.

Although there can be no assurance, the Company is not aware of any material environmental liability, for which it believes it will be ultimately responsible, that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s stores, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to its stores could result in future material environmental liabilities.

17.    SUBSEQUENT EVENTS

On April 3, 2023, the Company entered into a definitive merger agreement with Life Storage, Inc. (NYSE: LSI) (“Life Storage”) in an all-stock transaction. Under the terms of the agreement, Life Storage stockholders will receive 0.895 of an Extra Space common share for each Life Storage share they own for estimated total consideration of $12.7 billion, based on Life Storage's closing share price on March 31, 2023. The combined company will own and/or manage over 3,500 locations and over 264.0 million net rentable square feet. The transaction is currently expected to close in the second half of 2023, subject to the approval of the Company and Life Storage stockholders and satisfaction of other customary closing conditions.

On May 1, 2023, the Company invested $150.0 million in shares of newly issued convertible preferred stock of Strategic Storage Trust VI, Inc., an affiliate of SmartStop Self Storage REIT, Inc. The dividend rate for the preferred shares is 8.35% per annum, subject to increase after five years.The preferred shares are generally not redeemable for three years, except in the case of a change of control, initial listing or certain other events, and are redeemable thereafter subject to a redemption premium.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Amounts in thousands, except store and share data

CAUTIONARY LANGUAGE

The following discussion and analysis should be read in conjunction with our unaudited “Condensed Consolidated Financial Statements” and the “Notes to Condensed Consolidated Financial Statements (unaudited)” appearing elsewhere in this report and the “Consolidated Financial Statements,” “Notes to Consolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Form 10-K for the year ended December 31, 2022. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-Q entitled “Statement on Forward-Looking Information.”

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements contained elsewhere in this report, which have been prepared in accordance with GAAP. Our notes to the unaudited condensed consolidated financial statements contained elsewhere in this report and the audited financial statements contained in our Form 10-K for the year ended December 31, 2022 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the notes to the unaudited condensed consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.


OVERVIEW

We are a fully integrated, self-administered and self-managed real estate investment trust (“REIT”), formed to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”). We derive substantially all of our revenues from our two segments: storage operations and tenant reinsurance. Primary sources of revenue for our storage operations segment include rents received from tenants under leases at each of our wholly-owned stores. Our operating results depend materially on our ability to lease available self-storage units, to actively manage unit rental rates, and on the ability of our tenants to make required rental payments. Consequently, management spends a significant portion of their time maximizing cash flows from our diverse portfolio of stores. Revenue from our tenant reinsurance segment consists of insurance revenues from the reinsurance of risks relating to the loss of goods stored by tenants in our stores.
Our stores are generally situated in highly visible locations clustered around large population centers. These areas typically enjoy above average population growth and income levels. The clustering of our assets around these population centers enables us to reduce our operating costs through economies of scale. To maximize the performance of our stores, we employ industry-leading revenue management systems. Developed internally, these systems enable us to analyze, set and adjust rental rates in real time across our portfolio in order to respond to changing market conditions. We believe our systems and processes allow us to more pro-actively manage revenues.
We operate in competitive markets, often where consumers have multiple stores from which to choose. Competition has impacted, and will continue to impact, our store results. We experience seasonal fluctuations in occupancy levels, with occupancy levels generally higher in the summer months due to increased moving activity. We believe that we are able to
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respond quickly and effectively to changes in local, regional and national economic conditions by adjusting rental rates through the combination of our revenue management team and our proprietary pricing systems. We consider a store to be in the lease-up stage after it has been issued a certificate of occupancy, but before it has achieved stabilization. We consider a store to be stabilized once it has achieved either an 80% occupancy rate for a full year measured as of January 1 of the current year, or has been open for three years prior to January 1 of the current year.
On April 3,July 20, 2023, we entered into a definitive merger agreement for an all-stock transactionmerged with Life Storage, Inc. (“Life Storage”), Life Storage LP (the “Operating Partnership”), Extra Space Storage LP (“Extra Space OP”), Eros Merger Sub, LLC ("Eros Merger Sub”) and Eros OP Merger Sub, LLC (“Eros OP Merger Sub”), pursuant to which Eros Merger Sub will merge with and into Life Storage (the “company merger”), with Life Storage surviving the company merger as our wholly owned subsidiary and (b) following certain conversion and contributions transactions, Eros OP Merger Sub will merge with and into the Operating Partnership (the “partnership merger” and together with the companysuch merger, the “mergers”"Life Storage Merger"), with the Operating Partnership surviving the partnership merger and becoming a wholly owned subsidiary of Extra Space OP.. Under the terms of the merger agreement,Life Storage Merger, Life Storage stockholders will receiveand holders of units of the Life Storage operating partnership received 0.895 of an Extra Space common share (or Extra Space OP Unit, as applicable) for each Life Storage share (or Life Storage partnership unit) they ownowned for estimated total consideration of $12.7 billion, based on$11.6 billion. Immediately following the Life Storage's closing share price on March 31, 2023. The combined company will ownStorage Merger, we owned and/or managemanaged over 3,500 locations and over 264.0 million net rentable square feet. The transaction is currently expected to close in the second half of 2023, subject to the approval of our stockholders and Life Storage stockholders and satisfaction of other customary closing conditions.

PROPERTIES

As of March 31,September 30, 2023, we owned or had ownership interests in 1,4572,369 operating stores. Of these stores, 1,1331,896 are wholly-owned, two in consolidated joint ventures and 323471 are in unconsolidated joint ventures. In addition, we managed an additional 9311,282 stores for third parties bringing the total number of stores which we own and/or manage to 2,388.3,651. These stores are located in 4142 states and Washington, D.C. The majority of our stores are clustered around large population centers. The clustering of assets around these population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.

As a result of March 31,the Life Storage Merger on July 20, 2023, we added 903 operating stores which we either own or have ownership interests. Of these stores, 757 are wholly-owned, one in a consolidated joint venture and 145 are in unconsolidated joint ventures. In addition, we manage an additional 261 stores for third parties bringing the total number of stores from the Life Storage Merger which we own and/or manage to 3,651. Also as a result of the Life Storage Merger we entered the markets of one additional state.

As of September 30, 2023, approximately 1,380,0002,100,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For stores that were stabilized as of March 31,September 30, 2023, the average length of stay was approximately 16.617.2 months.

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $21.05$21.43 for the three months ended March 31,September 30, 2023, compared to $19.47$20.96 for the three months ended March 31,September 30, 2022. Average annual rent per square foot for new leases was $17.00$16.01 for the three months ended March 31,September 30, 2023, compared to $19.23$18.40 for the three months ended March 31,September 30, 2022. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 2.4%2.7% and 3.0%3.2%, respectively.

Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider “hybrid” stores, a mix of drive-up and multi-floor buildings. We have a number of multi-floor buildings with elevator access only, and a number of stores featuring ground-floor access only.

The following table presents additional information regarding net rentable square feet and the number of stores by state.
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March 31, 2023September 30, 2023
REIT OwnedJoint Venture OwnedManagedTotalREIT OwnedJoint Venture OwnedManagedTotal
LocationLocation
Property Count(1)
Net Rentable Square FeetProperty CountNet Rentable Square FeetProperty CountNet Rentable Square FeetProperty CountNet Rentable Square FeetLocation
Property Count(1)
Net Rentable Square FeetProperty CountNet Rentable Square FeetProperty CountNet Rentable Square FeetProperty CountNet Rentable Square Feet
AlabamaAlabama679,423 150,808 331,376 16 1,161,607 Alabama37 2,906,906 150,859 568,462 48 3,626,227 
ArizonaArizona25 1,782,842 11 838,314 22 1,886,960 58 4,508,116 Arizona46 3,434,804 26 2,085,800 43 3,521,498 115 9,042,102 
CaliforniaCalifornia177 13,674,825 49 3,593,534 103 9,438,394 329 26,706,753 California218 17,829,779 50 3,712,327 120 11,316,403 388 32,858,509 
ColoradoColorado17 1,149,673 664,192 26 1,883,566 52 3,697,431 Colorado27 1,891,353 13 937,653 29 2,101,674 69 4,930,680 
ConnecticutConnecticut538,516 575,936 565,783 23 1,680,235 Connecticut23 1,754,346 713,999 14 933,217 45 3,401,562 
DelawareDelaware— — 143,615 229,006 372,621 Delaware— — 143,590 228,861 372,451 
FloridaFlorida112 8,676,790 45 3,780,667 113 8,775,945 270 21,233,402 Florida242 18,236,347 56 4,643,034 156 12,091,435 454 34,970,816 
GeorgiaGeorgia68 5,270,188 15 1,216,731 25 1,916,018 108 8,402,937 Georgia117 8,961,164 23 1,888,883 47 3,513,933 187 14,363,980 
HawaiiHawaii14 943,023 — — 159,393 17 1,102,416 Hawaii14 941,698 — — 159,039 17 1,100,737 
IdahoIdaho131,444 — — 144,965 276,409 Idaho131,319 — — 201,597 332,916 
IllinoisIllinois60 3,761,398 10 740,804 32 2,323,422 102 6,825,624 Illinois105 7,522,933 12 938,442 40 3,035,448 157 11,496,823 
IndianaIndiana91 3,947,901 57,786 21 1,511,350 113 5,517,037 Indiana91 3,934,174 57,827 26 1,835,692 118 5,827,693 
IowaIowa— — — — 175,414 175,414 
KansasKansas50,209 108,920 229,403 388,532 Kansas50,219 108,921 355,253 514,393 
KentuckyKentucky13 961,009 51,771 784,596 23 1,797,376 Kentucky15 1,062,313 51,770 14 1,129,983 30 2,244,066 
LouisianaLouisiana386,884 — — 13 968,790 18 1,355,674 Louisiana10 771,438 — — 24 1,688,210 34 2,459,648 
MaineMaine— — — — 572,816 572,816 Maine353,492 — — 11 706,108 16 1,059,600 
MarylandMaryland35 2,953,703 11 898,245 43 3,137,011 89 6,988,959 Maryland44 3,467,462 11 898,570 46 3,355,015 101 7,721,047 
MassachusettsMassachusetts47 3,001,958 614,539 29 1,819,757 85 5,436,254 Massachusetts64 4,039,247 16 984,395 36 2,354,974 116 7,378,616 
MichiganMichigan667,804 309,126 11 831,784 23 1,808,714 Michigan672,885 309,053 15 1,186,026 27 2,167,964 
MinnesotaMinnesota584,539 304,397 16 1,171,915 27 2,060,851 Minnesota709,104 645,691 15 1,083,621 31 2,438,416 
MississippiMississippi234,295 — — 65,368 299,663 Mississippi560,429 — — 10 738,236 17 1,298,665 
MissouriMissouri431,181 119,600 13 986,582 21 1,537,363 Missouri27 2,196,952 508,309 20 1,525,417 54 4,230,678 
NebraskaNebraska— — — — 278,106 278,106 Nebraska— — — — 277,966 277,966 
NevadaNevada14 1,039,847 474,001 817,803 26 2,331,651 Nevada33 2,906,845 840,070 12 1,149,474 54 4,896,389 
New HampshireNew Hampshire134,764 84,165 483,879 13 702,808 New Hampshire17 1,268,477 84,485 12 584,823 31 1,937,785 
New JerseyNew Jersey64 5,116,539 17 1,228,585 40 3,028,054 121 9,373,178 New Jersey88 7,024,858 33 2,607,517 52 4,078,245 173 13,710,620 
New MexicoNew Mexico11 712,687 10 683,410 13 955,943 34 2,352,040 New Mexico11 713,990 10 681,290 15 1,080,407 36 2,475,687 
New YorkNew York28 2,050,035 18 1,512,084 37 2,274,036 83 5,836,155 New York79 5,693,583 27 2,246,018 80 5,537,572 186 13,477,173 
North CarolinaNorth Carolina23 1,728,522 401,432 21 1,642,836 49 3,772,790 North Carolina52 3,729,167 619,297 34 2,556,343 94 6,904,807 
OhioOhio24 1,464,162 325,295 10 766,260 39 2,555,717 Ohio50 3,354,038 325,317 21 1,617,038 76 5,296,393 
OklahomaOklahoma61,503 — — 20 1,550,456 21 1,611,959 Oklahoma194,552 — — 20 1,428,613 23 1,623,165 
OregonOregon550,177 65,245 10 738,443 19 1,353,865 Oregon549,740 166,538 10 672,512 20 1,388,790 
PennsylvaniaPennsylvania21 1,547,250 680,007 38 2,767,209 68 4,994,466 Pennsylvania31 2,356,905 12 935,928 48 3,521,475 91 6,814,308 
Rhode IslandRhode Island138,252 — — 425,653 563,905 Rhode Island351,302 95,794 473,092 13 920,188 
South CarolinaSouth Carolina23 1,718,988 11 708,356 28 2,358,398 62 4,785,742 South Carolina40 2,974,956 11 707,784 38 3,084,475 89 6,767,215 
TennesseeTennessee22 1,855,601 13 880,881 12 890,194 47 3,626,676 Tennessee29 2,409,064 16 1,090,756 23 1,635,222 68 5,135,042 
TexasTexas111 9,109,526 30 2,369,336 87 7,617,215 228 19,096,077 Texas241 19,908,210 71 5,444,649 120 10,196,205 432 35,549,064 
UtahUtah10 729,132 — — 24 1,951,598 34 2,680,730 Utah10 733,148 — — 27 2,184,273 37 2,917,421 
VirginiaVirginia53 4,271,375 703,437 27 1,814,830 89 6,789,642 Virginia73 5,930,138 10 758,569 35 2,475,040 118 9,163,747 
WashingtonWashington685,706 — — 13 1,057,123 22 1,742,829 Washington14 1,090,309 199,870 16 1,259,659 32 2,549,838 
Washington, DCWashington, DC100,019 103,618 311,337 514,974 Washington, DC100,163 104,126 537,914 742,203 
WisconsinWisconsin— — 371,423 12 921,101 16 1,292,524 Wisconsin97,888 884,522 15 1,242,584 25 2,224,994 
TotalsTotals1,134 82,841,690 323 24,760,260 931 72,384,674 2,388 179,986,624 Totals1,898 142,815,697 471 36,571,653 1,282 99,398,448 3,651 278,785,798 

(1)    ExcludesIncludes two consolidated joint ventures and excludes approximately 17,000 units related to the Bargold transaction.Bargold. See Note 74 in the Notes to the Condensed Consolidated Financial Statements.

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RESULTS OF OPERATIONS

Comparison of the three and nine months ended March 31,September 30, 2023 and 2022

Overview
Results for the three and nine months ended March 31,September 30, 2023 included the operations of 1,4572,369 stores (1,133(1,896 wholly-owned, onetwo in a consolidated joint venture, and 323471 in joint ventures accounted for using the equity method) compared to the results for the three and nine months ended March 31,September 30, 2022, which included the operations of 1,2831,441 stores (995(1,126 wholly-owned, zero in consolidated joint ventures, and 288315 in joint ventures accounted for using the equity method).

Revenues
The following table presents information on revenues earned for the periods indicated:
For the Three Months Ended March 31,For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022$ Change% Change20232022$ Change% Change20232022$ Change% Change
Revenues:Revenues:Revenues:
Property rentalProperty rental$433,962 $379,808 $54,154 14.3 %Property rental$650,887 $428,787 $222,100 51.8 %$1,525,596 $1,216,639 $308,957 25.4 %
Tenant reinsuranceTenant reinsurance47,704 43,797 3,907 8.9 %Tenant reinsurance69,128 47,869 21,259 44.4 %165,265 138,093 27,172 19.7 %
Management fees and other incomeManagement fees and other income21,384 19,957 1,427 7.2 %Management fees and other income28,019 22,246 5,773 26.0 %71,609 62,720 8,889 14.2 %
Total revenuesTotal revenues$503,050 $443,562 $59,488 13.4 %Total revenues$748,034 $498,902 $249,132 49.9 %$1,762,470 $1,417,452 $345,018 24.3 %

Property Rental—The increase in property rental revenues for the three and nine months ended March 31,September 30, 2023 was primarily the result of an increase of $26,692$213,343 and $252,641 associated with the Life Storage Merger and acquisitions completed in 2023 and 2022, respectively. We acquired 757 wholly-owned stores in the merger and an additional 7 wholly-owned stores during the nine months ended September 30, 2023. We acquired a total of 153 stores during the year ended December 31, 2022. Property rental revenues also increased by $6,903 and $43,397 at our stabilized stores related primarily to higher average rates to existing customers. Property rental revenue also increased by $21,109 associated with acquisitions completed in 2023 and 2022. We acquired one wholly-owned storecustomers during the three and nine months ended March 31,September 30, 2023, and a total of 153 stores during the year ended December 31, 2022.respectively.

Tenant Reinsurance—The increase in our tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 2,3883,651 stores at March 31,September 30, 2023 compared to 2,1302,327 stores at March 31,September 30, 2022.

Management Fees and Other Income—Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income. The increase for the three and nine months ended March 31,September 30, 2023 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year. As of March 31,September 30, 2023, we managed 1,2551,755 stores for joint ventures and third parties, compared to 1,1351,201 stores as of March 31,September 30, 2022.


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Expenses
The following table presents information on expenses for the periods indicated:
For the Three Months Ended March 31,
20232022$ Change% Change
Expenses:
Property operations$117,166 $103,542 $13,624 13.2 %
Tenant reinsurance9,089 7,042 2,047 29.1 %
General and administrative34,763 29,762 5,001 16.8 %
Depreciation and amortization78,490 67,906 10,584 15.6 %
Total expenses$239,508 $208,252 $31,256 15.0 %
For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022$ Change% Change20232022$ Change% Change
Expenses:
Property operations$185,194 $114,577 $70,617 61.6 %$416,997 $322,371 $94,626 29.4 %
Tenant reinsurance19,130 10,770 8,360 77.6 %37,701 25,349 12,352 48.7 %
Transaction costs— — — — %— 1,465 (1,465)(100.0)%
Life Storage Merger transition costs54,174 — 54,174 100.0 %54,174 — 54,174 100.0 %
General and administrative37,406 32,275 5,131 15.9 %107,011 93,288 13,723 14.7 %
Depreciation and amortization152,338 71,423 80,915 113.3 %309,914 208,396 101,518 48.7 %
Total expenses$448,242 $229,045 $219,197 95.7 %$925,797 $650,869 $274,928 42.2 %

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Property Operations—The increase in property operations expense during the three and nine months ended March 31,September 30, 2023 consists primarily of an increase of $7,006$64,549 and $77,188 related to the Life Storage Merger and acquisitions completed in 2023 and 2022.2022, respectively. We acquired one757 wholly-owned storestores in the Life Storage Merger and and additional 7 wholly-owned stores during the threenine months ended March 31,September 30, 2023 and a total of 153 stores during the year ended December 31, 2022. Additionally, for the three and nine months ended March 31,September 30, 2023 there was an increase of $4,394$8,535 and $16,620, respectively, at our stabilized stores primarily due to payroll, marketing, credit card processing fees, utilities and insurance, partially offset by repairs and maintenance and property taxes.maintenance.

Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. These increases are primarily related to an increase in stores. We operated 2,3883,651 stores at March 31,September 30, 2023 compared to 2,1302,327 stores at March 31,September 30, 2022.

Life Storage Merger Transitions Costs— Represents the costs that were incurred as part of the Life Storage Merger that did not meet the definition of transaction costs and primarily consist of severance paid as part of employment agreements with certain employees and officers of Life Storage.

General and Administrative—General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, office expense, office rent, travel and professional fees. Payroll has continued to increase as a result of outsized inflation. We did not observe any material trends in specific travel or other expenses apart from inflationary pressures and from the increase due to the management of additional stores. Also, during the three and nine months ended March 31,September 30, 2023 increases relate in part to the acquisition of Bargold in June153 stores added during the year ended December 31, 2022 and 106757 stores added with the acquisition of Life Storage Express acquisition in September 2022 compared to the same period last year.July 2023.

Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired one757 wholly-owned storestores in the Life Storage Merger and an additional 7 wholly-owned stores during the threenine months ended March 31,September 30, 2023 and a total of 153 stores during the year ended December 31, 2022.

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Other Revenues and Expenses
The following table presents information about other revenues and expenses for the periods indicated:
For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022$ Change% Change20232022$ Change% Change
Gain on real estate transactions$— $— $— — %$— $14,249 $(14,249)(100.0)%
Interest expense(122,899)(56,245)(66,654)118.5 %(289,370)(146,249)(143,121)97.9 %
Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notes(8,228)— (8,228)100.0 %(8,228)— (8,228)100.0 %
Interest income22,092 18,125 3,967 21.9 %62,607 52,174 10,433 20.0 %
Equity in earnings and dividend income from unconsolidated real estate entities15,043 11,149 3,894 34.9 %38,602 30,436 8,166 26.8 %
Income tax expense(6,944)(6,760)(184)2.7 %(17,238)(15,516)(1,722)11.1 %
Total other revenues & expenses, net$(100,936)$(33,731)$(67,205)199.2 %$(213,627)$(64,906)$(148,721)229.1 %

For the Three Months Ended March 31,
20232022$ Change% Change
Interest expense(80,099)(42,538)(37,561)88.3 %
Interest income19,438 18,989 449 2.4 %
Equity in earnings and dividend income from unconsolidated real estate entities10,305 9,097 1,208 13.3 %
Income tax expense(4,308)(3,141)(1,167)37.2 %
Total other revenues & expenses, net$(54,664)$(17,593)$(37,071)210.7 %
Gain on Real Estate Transactions—During the nine months ended September 30, 2022, we sold two stores. We recognized a total gain of $14,249 related to the sale of these assets.

Interest Expense—The increase in interest expense during the three and nine months ended March 31,September 30, 2023 was primarily the result of a higher debt balance and higher weighted average interest rate and debt balance compared to the same period in the prior year. The weighted average interest rate of the total of fixed- and variable-rate debt was 4.4% at September 30, 2023, compared to 3.6% at September 30, 2022.

Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes—Represents the amortization of the discount assigned in order to present the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

Interest Income—Interest income represents interest earned on bridge loans, notes receivable, and debt securities and income earned on notes receivable from Common and Preferred Operating Partnership unit holders. The increase in interest income during the three and nine months ended March 31,September 30, 2023 was primarily the result of an increase in the notes receivable for ouramount of bridge loan program alongloans held combined with an increase in interest rates. The balance of bridge loans was $533,000 as of September 30, 2023, compared to $298,108 as of September 30, 2022.

Equity in Earnings and Dividend Income from Unconsolidated Real Estate Entities—Equity in earnings of unconsolidated real estate entities represents the income earned through our ownership interests in unconsolidated joint ventures. In these joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital. To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits. Dividend income represents dividends from our $200,000 investment in preferred stock of SmartStop.SmartStop and Strategic Storage.

Income Tax Expense—The increase in income tax expense for the three and nine months ended March 31,September 30, 2023 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.
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FUNDS FROM OPERATIONS

Funds from operations (“FFO”) provides relevant and meaningful information about our operating performance that is necessary, along with net income and cash flows, for an understanding of our operating results. We believe FFO is a meaningful disclosure as a supplement to net earnings. Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and we believe FFO more accurately reflects the value of our real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) as net income computed in accordance with GAAP, excluding gains or losses on sales of operating stores and impairment write downs of depreciable real estate assets, plus real estate related depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in our condensed consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.

The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities, as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

The following table presents the calculation of FFO for the periods indicated:
For the Three Months Ended March 31, For the Three Months Ended September 30,For the Nine Months Ended September 30,
20232022 2023202220232022
Net income attributable to common stockholdersNet income attributable to common stockholders$196,304 $203,579 Net income attributable to common stockholders$188,350 $220,719 $587,064 $656,428 
Adjustments:Adjustments:Adjustments:
Real estate depreciationReal estate depreciation71,248 62,692 Real estate depreciation121,635 65,483 265,268 191,940 
Amortization of intangiblesAmortization of intangibles4,170 2,766 Amortization of intangibles21,270 3,279 29,049 8,741 
Gain on real estate transactionsGain on real estate transactions— — — (14,249)
Unconsolidated joint venture real estate depreciation and amortizationUnconsolidated joint venture real estate depreciation and amortization4,939 3,853 Unconsolidated joint venture real estate depreciation and amortization6,698 4,381 16,359 12,349 
Distributions paid on Series A Preferred Operating Partnership unitsDistributions paid on Series A Preferred Operating Partnership units(159)(572)Distributions paid on Series A Preferred Operating Partnership units— (572)(159)(1,716)
Income allocated to Operating Partnership noncontrolling interestsIncome allocated to Operating Partnership noncontrolling interests12,574 14,138 Income allocated to Operating Partnership noncontrolling interests10,506 15,407 35,982 45,249 
Funds from operations attributable to common stockholders and unit holdersFunds from operations attributable to common stockholders and unit holders$289,076 $286,456 Funds from operations attributable to common stockholders and unit holders$348,459 $308,697 $933,563 $898,742 



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SAME-STORE RESULTS

Our same-store pool for the periods presented consists of 914 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented. We consider a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80% or more for one calendar year. We believe that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to: occupancy, rental revenue growth, operating expense growth, net operating income growth, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments.  Same-store results should not be used as a basis for future same-store performance or for the performance of our stores as a whole. The following table presents operating data for our same-store portfolio.
 For the Three Months Ended September 30,PercentFor the Nine Months Ended September 30,Percent
 20232022Change20232022Change
Same-store rental revenues
Net rental income$382,006 $376,268 1.5 %$1,127,481 $1,088,337 3.6 %
Other operating income15,940 14,370 10.9 %44,012 39,322 11.9 %
Total same-store rental revenues397,946 390,638 1.9 %1,171,493 1,127,659 3.9 %
Same-store operating expenses
Payroll and benefits21,605 21,239 1.7 %63,233 61,955 2.1 %
Marketing6,971 5,793 20.3 %19,841 17,481 13.5 %
Office expense12,171 11,393 6.8 %36,120 033,307 8.4 %
Property operating expense8,935 8,786 1.7 %26,712 25,643 4.2 %
Repairs and maintenance5,739 5,863 (2.1)%17,930 19,603 (8.5)%
Property taxes38,018 36,229 4.9 %106,633 104,594 1.9 %
Insurance4,874 3,731 30.6 %12,462 9,311 33.8 %
Total same-store operating expenses98,313 93,034 5.7 %282,931 271,894 4.1 %
Same-store net operating income$299,633 $297,604 0.7 %$888,562 $855,765 3.8 %
Same-store square foot occupancy as of quarter end94.1%95.1%94.1%95.1%
Properties included in same-store914914914914

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 For the Three Months Ended March 31,Percent
 20232022Change
Same-store rental revenues
Net rental income$370,630 $345,875 7.2 %
Other operating income13,462 11,748 14.6 %
Total same-store rental revenues384,092 357,623 7.4 %
Same-store operating expenses
Payroll and benefits20,842 20,060 3.9 %
Marketing6,172 5,560 11.0 %
Office expense11,979 10,679 12.2 %
Property operating expense9,863 8,828 11.7 %
Repairs and maintenance6,417 7,486 (14.3)%
Property taxes34,346 34,790 (1.3)%
Insurance3,622 2,713 33.5 %
Total same-store operating expenses93,241 90,116 3.5 %
Same-store net operating income$290,851 $267,507 8.7 %
Same-store square foot occupancy as of quarter end93.5%94.3%
Properties included in same-store914914
Same-store revenues for the three months ended March 31, 2023 increased compared to the same period in 2022 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy.
Same-store expenses increased for the three months ended March 31, 2023 compared to the same period in 2022 due to increases in payroll, marketing, credit card processing fees, utilities and insurance, partially offset by saving in repairs and maintenance and property taxes.
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The following table presents a reconciliation of same-store net operating income to net income as presented on our condensed consolidated statements of operations for the periods indicated:
For the Three Months Ended March 31,For the Three Months Ended September 30,For the Nine Months Ended September 30,
202320222023202220232022
Net IncomeNet Income$208,878 $217,717 Net Income$198,856 $236,126 $623,046 $701,677 
Adjusted to exclude:Adjusted to exclude:Adjusted to exclude:
Gain on real estate transactionsGain on real estate transactions— — — (14,249)
Equity in earnings and dividend income from unconsolidated real estate entitiesEquity in earnings and dividend income from unconsolidated real estate entities(10,305)(9,097)Equity in earnings and dividend income from unconsolidated real estate entities(15,043)(11,149)(38,602)(30,436)
Interest expenseInterest expense80,099 42,538 Interest expense122,899 56,245 289,370 146,249 
Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notesNon-cash interest expense related to amortization of discount on Life Storage unsecured senior notes8,228 — 8,228 — 
Depreciation and amortizationDepreciation and amortization78,490 67,906 Depreciation and amortization152,338 71,423 309,914 208,396 
Income tax expenseIncome tax expense4,308 3,141 Income tax expense6,944 6,760 17,238 15,516 
Transaction costsTransaction costs— — — 1,465 
Life Storage Merger transition costsLife Storage Merger transition costs54,174 — 54,174 — 
General and administrativeGeneral and administrative34,763 29,762 General and administrative37,406 32,275 107,011 93,288 
Management fees, other income and interest incomeManagement fees, other income and interest income(40,822)(38,946)Management fees, other income and interest income(50,111)(40,371)(134,216)(114,894)
Net tenant insuranceNet tenant insurance(38,615)(36,755)Net tenant insurance(49,998)(37,099)(127,564)(112,744)
Non same-store rental revenueNon same-store rental revenue(49,870)(22,185)Non same-store rental revenue(252,941)(38,149)(354,103)(88,980)
Non same-store operating expenseNon same-store operating expense23,925 13,426 Non same-store operating expense86,881 21,543 134,066 50,477 
Total same-store net operating incomeTotal same-store net operating income$290,851 $267,507 Total same-store net operating income$299,633 $297,604 $888,562 $855,765 
Same-store rental revenuesSame-store rental revenues$384,092 $357,623 Same-store rental revenues$397,946 $390,638 $1,171,493 $1,127,659 
Same-store operating expensesSame-store operating expenses93,241 90,116 Same-store operating expenses98,313 93,034 282,931 271,894 
Same-store net operating incomeSame-store net operating income$290,851 $267,507 Same-store net operating income$299,633 $297,604 $888,562 $855,765 



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CASH FLOWS

Cash flows from operating activities for the threenine months ended March 31,September 30, 2023 decreasedincreased when compared to the same period in the prior year. Cash flows used in investing activities relates primarily to our acquisition and development of REIT and joint venture assets, as well as activity on our bridge loan program. Cash flows from financing activities depend primarily on our debt and equity financing activities. A summary of cash flows along with significant components are as follows:
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For the Three Months Ended March 31,For the Nine Months Ended September 30,
2023202220232022
Net cash provided by operating activitiesNet cash provided by operating activities$281,649 $287,465 Net cash provided by operating activities$1,037,959 $948,021 
Net cash used in investing activitiesNet cash used in investing activities(86,339)(121,372)Net cash used in investing activities(1,636,052)(1,242,254)
Net cash used in financing activities(242,603)(169,621)
Net cash provided by financing activitiesNet cash provided by financing activities723,479 312,393 
Significant components of net cash flow included:Significant components of net cash flow included:Significant components of net cash flow included:
Net incomeNet income$208,878 $217,717 Net income$623,046 $701,677 
Depreciation and amortizationDepreciation and amortization78,490 67,906 Depreciation and amortization309,914 208,396 
Accounts payable and accrued expensesAccounts payable and accrued expenses134,310 48,898 
Gain on real estate transactionsGain on real estate transactions— (14,249)
Acquisition and development of real estate assetsAcquisition and development of real estate assets(64,058)(210,521)Acquisition and development of real estate assets(263,866)(1,156,429)
Life Storage Merger, net of cash acquiredLife Storage Merger, net of cash acquired(1,247,407)— 
Cash paid for business combinationCash paid for business combination— (157,301)
Proceeds from sale of real estate assets and investments in real estate venturesProceeds from sale of real estate assets and investments in real estate ventures— 39,367 
Investment in unconsolidated real estate entitiesInvestment in unconsolidated real estate entities(21,062)(4,321)Investment in unconsolidated real estate entities(179,258)(102,670)
Issuance and purchase of notes receivableIssuance and purchase of notes receivable(58,378)(134,408)Issuance and purchase of notes receivable(210,712)(314,542)
Proceeds from sale of notes receivableProceeds from sale of notes receivable39,261 39,718 Proceeds from sale of notes receivable134,064 203,695 
Principal payments received from notes receivablePrincipal payments received from notes receivable21,828 195,803 Principal payments received from notes receivable73,514 264,774 
Proceeds from notes payable and revolving lines of creditProceeds from notes payable and revolving lines of credit1,381,592 889,829 Proceeds from notes payable and revolving lines of credit5,194,665 3,983,865 
Principal payments on notes payable and revolving lines of creditPrincipal payments on notes payable and revolving lines of credit(1,879,049)(1,230,924)Principal payments on notes payable and revolving lines of credit(4,617,755)(3,341,881)
Proceeds from issuance of public bonds, netProceeds from issuance of public bonds, net500,000 400,000 Proceeds from issuance of public bonds, net950,000 396,100 
Repurchase of common stockRepurchase of common stock— (63,008)
Dividends paid on common stockDividends paid on common stock(219,988)(202,527)Dividends paid on common stock(704,069)(604,429)

We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next 12 months. These cash needs include operating expenses, monthly debt service payments, recurring capital expenditures, acquisitions, redevelopments and expansions, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification.

We expect to generate positive cash flow from operations in 2023, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our tenants. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds under our existing lines of credit, curtail planned capital expenditures, or seek other additional sources of financing.

LIQUIDITY AND CAPITAL RESOURCES
As of March 31,September 30, 2023, we had $47,951$216,121 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2023 and 2022, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

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As of March 31,September 30, 2023, we had $7,366,967$11,291,333 face value of debt, resulting in a debt to total enterprise value ratio of 23.9%29.5%. As of March 31,September 30, 2023, the ratio of total fixed-rate debt and other instruments to total debt was 70.7%70.3% ($5,207,3987,939,529 total fixed-rate debt including $1,782,610$1,664,918 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of the total of fixed- and variable-rate debt at March 31,September 30, 2023 was 4.3%4.4%. Certain of our real estate assets are pledged as collateral for our debt. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at March 31,September 30, 2023.

We expect to fund our short-term liquidity requirements, including operating expenses, recurring capital expenditures, dividends to stockholders, distributions to holders of Operating Partnership units and interest on our outstanding indebtedness, out of our operating cash flow, cash on hand and borrowings under our revolving lines of credit. In addition, we are pursuing additional sources of financing based on anticipated funding needs and growth assumptions.

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We currently hold a BBB/BBB+/Stable rating from S&P, which was upgraded from BBB/Stable in July 2023 in connection with the Life Storage Merger, and a Baa2 rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of March 31,September 30, 2023, we had a total of 9061,664 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $17,247,796$31,978,397 and our total asset value was calculated as $22,407,701$37,603,482 according to the calculations as defined by our public bonds.

Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, dividends to stockholders and distributions to unit holders necessary to maintain our REIT qualification. We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In addition, we evaluate, on an ongoing basis, the merits of strategic acquisitions and other relationships, which may require us to raise additional funds. We may also use Operating Partnership units as currency to fund acquisitions from self-storage owners.



OFF-BALANCE SHEET ARRANGEMENTS

Except as disclosed in the notes to our consolidated financial statements of our most recently filed Annual Report on Form 10-K, we do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purposes entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our condensed consolidated financial statements, we have not guaranteed any obligations of unconsolidated entities, nor do we have any commitments or intent to provide funding to any such entities. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

SEASONALITY

The self-storage business is subject to seasonal fluctuations. A greater portion of revenues and profits are realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our future income, cash flows and fair values of financial instruments are dependent upon prevailing market interest rates.

Interest Rate Risk
Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.
As of March 31,September 30, 2023, we had approximately $7.4$11.3 billion in total face value of debt, of which approximately $2.2$3.4 billion was subject to variable interest rates (excluding debt with interest rate swaps). If LIBOR or SOFR werewas to increase or decrease by

43


100 basis points, the increase or decrease in interest expense on the variable-rate debt would increase or decrease future earnings and cash flows by approximately $21.6$33.5 million annually.
Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

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ITEM 4.    CONTROLS AND PROCEDURES

(1)Disclosure Controls and Procedures

We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We have a disclosure committee that is responsible for considering the materiality of information and determining our disclosure obligations on a timely basis. The disclosure committee meets quarterly and reports directly to our Chief Executive Officer and Chief Financial Officer.

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.

(2)Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.     OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are involved in various legal proceedings and are subject to various claims and complaints arising in the ordinary course of business. Because litigation is inherently unpredictable, the outcome of these matters cannot presently be determined with any degree of certainty. In accordance with applicable accounting guidance, management establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. We could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations in any particular period, notwithstanding the fact that we are currently vigorously defending any legal proceedings against us.

ITEM 1A.    RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and in “Part II. Item 1A. Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023, which could materially affect our business, financial condition and results of operations. Other than as set forth below, thereThere have been no material changes to the risk factors described in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2022.2022, and the risk factors described in the “Risk Factors” section in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023. The risks described below and in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and results of operations.


Risks Related to the Mergers

The exchange ratio is fixed and will not be adjusted in the event of any change in our stock price or the stock price of Life Storage.
Upon the closing of the company merger, each outstanding share of Life Storage common stock (other than shares of Life Storage common stock owned by any of the Life Storage parties or any wholly owned subsidiary of Life Storage and each share of Life Storage common stock owned by us or any of our wholly owned subsidiaries) will be converted into the right to receive 0.895 of a share of our common stock, with cash paid in lieu of any fractional shares, without interest. The exchange ratio of 0.895 was fixed in the merger agreement and, except for certain adjustments on account of changes in the capitalization of the parties, will not be adjusted for changes in the market prices of shares of our common stock or of Life Storage common stock. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:
market reaction to the announcement of the mergers and our prospects following the mergers;
changes in the respective businesses, operations, assets, liabilities and prospects of us and Life Storage;
changes in market assessments of the business, operations, financial position and prospects of us and Life Storage;
market assessments of the likelihood that the mergers will close;
interest rates (including changes or anticipated changes in interest rates), general market and economic conditions and other factors generally affecting the market prices of our common stock and Life Storage common stock;
federal, state and local legislation, governmental regulation and legal developments in the businesses in which we or Life Storage operate; and
other factors beyond the control of either us or Life Storage, including those described or referred to elsewhere in this “Risk Factors” section.
The market price of shares of our common stock at the closing of the mergers may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus, on the date of our special meeting and on the date of the Life Storage special meeting. As a result, the market value of the merger consideration represented by the exchange ratio will also vary.
If the market price of shares of our common stock increases between the date the merger agreement was signed, the date of our special meeting or the date of the Life Storage special meeting and the date of the closing of the mergers, Life Storage
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stockholders could receive shares of our common stock that have a market value upon completion of the mergers that is greater than the market value of such shares calculated pursuant to the exchange ratio on the date the merger agreement was signed, the date of our special meeting or the date of the Life Storage special meeting, respectively. Conversely, if the market price of shares of our common stock declines between the date the merger agreement was signed, the date of our special meeting or the date of the Life Storage special meeting and the closing of the mergers, Life Storage stockholders could receive shares of our common stock that have a market value upon the closing of the mergers that is less than the market value of such shares calculated pursuant to the exchange ratio on the date the merger agreement was signed, the date of our special meeting or the date of the Life Storage special meeting, respectively. Furthermore, at the time of our special meeting and the Life Storage special meeting, our stockholders and Life Storage stockholders will not know with certainty the value of the our common stock that Life Storage stockholders will receive upon completion of the mergers.
Therefore, while the number of shares of our common stock to be issued per share of Life Storage common stock is fixed, our stockholders and Life Storage shareholders cannot be sure of the market value of the merger consideration Life Storage stockholders will receive upon the closing of the mergers.

Holders of our common stock will have a reduced ownership and voting interest after the mergers and will exercise less influence over our management.
The mergers will result in our stockholders having an ownership stake that is smaller than their current stake in our company as of immediately prior to the mergers. Upon completion of the mergers, based on the number of shares of our common stock outstanding on March 31, 2023, we estimate that our existing stockholders will own approximately 65% of the issued and outstanding common stock of the combined company. Consequently, our stockholders will have less influence over our management and policies after the company merger effective time than they currently exercise over our management and policies.

Completion of the mergers is subject to many conditions, and if these conditions are not satisfied or waived, the mergers will not be completed, which could result in a requirement that we pay termination fees.
The consummation of the mergers is subject to certain conditions, including (i) the approval of the company merger by the affirmative vote of the holders of two-thirds of the outstanding shares of Life Storage common stock entitled to vote on such matter, (ii) the approval of our common stock issuance by affirmative vote of a majority of the votes cast by the holders of our common stock, (iii) the shares of our common stock to be issued in the company merger having been approved for listing on the NYSE, (iv) the Form S-4 having been declared effective, (v) the absence of any temporary restraining order, injunction or other order, decree or judgment being issued by any governmental authority and no law being enacted, which would have the effect of making illegal or otherwise prohibiting the consummation of the mergers, (vi) the receipt of certain legal opinions by us and Life Storage and (vii) other customary conditions specified in the merger agreement.
There can be no assurance that the conditions to the closing of the mergers will be satisfied or waived or that the mergers will be completed. Failure to consummate the mergers may adversely affect our results of operations and business prospects for the following reasons, among others: (i) we have incurred and will incur certain transaction costs, regardless of whether the proposed mergers close, which could adversely affect our financial condition, results of operations and ability to make distributions to our shareholders; and (ii) the proposed mergers, whether or not they close, will divert the attention of certain of our management and other key employees from ongoing business activities, including the pursuit of other opportunities that could be beneficial to us. In addition, we or Life Storage may terminate the merger agreement under certain circumstances, including, among other reasons, if the mergers are not completed by December 31, 2023.
If the merger agreement is terminated under certain circumstances specified in the merger agreement, we may be required to pay Life Storage a termination fee of $761 million and/or reimburse Life Storage’s transaction expenses up to an amount equal to $20 million. If the mergers are not consummated, the price of our common stock might decline.

Failure to complete the mergers could negatively impact the stock prices and our future business and financial results.
If the mergers are not completed, our ongoing business could be materially adversely affected and without realizing any of the benefits of having completed the mergers, we will be subject to a variety of risks associated with the failure to complete the mergers, including the following:
the market price of our common stock could decline;
our being required, under certain circumstances, to pay to Life Storage a termination fee of $761 million depending on the circumstances;
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if the merger agreement is terminated and our board seeks another business combination, our stockholders cannot be certain that we will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms of the merger agreement;
we may experience negative reactions from the financial markets or our customers, vendors or employees;
our having to pay certain costs relating to the mergers, such as legal, accounting, financial advisor, filing, printing and mailing fees whether or not the mergers are completed; and
diversion of our management’s focus and resources from operational matters and other strategic opportunities while working to implement the mergers.
If the mergers are not completed, these risks could materially affect our business, financial results and share price. In addition, if the mergers are not completed, we could be subject to litigation related to any failure to complete the mergers or related to any enforcement proceeding commenced against us to perform our obligations under the merger agreement. The materialization of any of these risks could adversely impact our ongoing business.

The pendency of the mergers could adversely affect our business and operations.
Prior to the effective time of the mergers, some of our customers, prospective customers or vendors may delay or defer decisions, which could negatively affect our revenues, earnings, cash flows and expenses, regardless of whether the mergers are completed. In addition, third-party owners of stores which Life Storage manages, or which we manage, may cancel their management agreements, which could negatively affect our revenues, earnings, cash flows and expenses, regardless of whether the mergers are completed as well as negatively affect the financial position of the combined company. Further, due to operating restrictions in the merger agreement, we may be unable, during the pendency of the mergers, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial.

An adverse outcome in any litigation or other legal proceedings relating to the merger agreement, or the transactions contemplated thereby, could have a material adverse impact on our or our ability to consummate the transactions contemplated by the merger agreement.
Transactions like the mergers are frequently the subject of litigation, shareholder demands, or other legal proceedings, including actions alleging that either party’s board of directors breached their respective duties to their stockholders or other equity holders by entering into the merger agreement, by failing to obtain a greater value in the transaction for their stockholders or other equity holders or otherwise, or any other claims (contractual or otherwise) arising out of the mergers or the transactions related thereto. With respect to these proceedings, and any other litigation or other legal proceedings that are brought against us or our board of directors or subsidiaries in connection with the merger agreement, or the transactions contemplated thereby, we intend to defend against any such claims made therein but may not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on our ability to consummate the mergers in a timely manner, or at all, or our business, results of operation or financial position, including through the possible diversion of our resources or distraction of key personnel.

We expect to incur substantial expenses related to the mergers.
Following the mergers, we expect to incur substantial expenses in connection with completing the mergers and integrating the operations and systems of Life Storage with ours. While we have assumed that a certain level of expenses would be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of our expenses relating to the completion of the mergers and our operations. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the expenses associated with the mergers could, particularly in the near term, reduce the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the operations of Life Storage following the completion of the mergers.

Following the mergers, we may be unable to integrate the operations of Life Storage successfully with ours and realize the anticipated synergies and other benefits of the mergers or do so within the anticipated time frame.
The mergers involve the combination of two companies that currently operate as independent public companies and their respective operating partnerships. We are expected to benefit from the elimination of duplicative costs associated with supporting a public company platform and the leveraging of state-of-the-art technology and systems. However, we will be
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required to devote significant management attention and resources to integrating the operations of Life Storage with our own. Potential difficulties we may encounter in the integration process include the following:
the inability to successfully combine the operations of Life Storage, including the integration of employees, customer records and maintaining cybersecurity protections, in a manner that permits us to achieve the cost savings anticipated to result from the mergers, which would result in the anticipated benefits of the mergers not being realized in the time frame currently anticipated or at all;
the inability to dispose of former Life Storage assets or operations that we may desire to dispose of;
the complexities associated with managing the combined businesses out of different locations and integrating personnel from the two companies;
the failure to retain our key employees or the key employees of Life Storage;
potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the mergers; and
performance shortfalls as a result of the diversion of management’s attention caused by completing the mergers and integrating the companies’ operations.
For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the mergers, or could otherwise adversely affect our business and financial results.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.    OTHER INFORMATION

None.During the three months ended September 30, 2023, none of our officers or directors adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non Rule 10b5-1 trading arrangement.”

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ITEM 6.    EXHIBITS

Exhibit
Number
Exhibit DescriptionIncorporated by ReferenceFiled Herewith
FormDateNumber
4.28-KJuly 25, 20234.2
4.38-KJuly 25, 20234.4
4.48-KJuly 25, 20234.5
4.58-KJuly 25, 20234.6
4.68-KJuly 25, 20234.7
4.78-KJuly 25, 20234.8
22.1X
31.1X
31.2X
32.1X
101The following materials from Extra Space Storage Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, are formatted in XBRL (eXtensible Business Reporting Language): (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Operations, (3) the Condensed Consolidated Statements of Comprehensive Income (4) the Condensed Consolidated Statement of Noncontrolling Interests and Equity, (5) the Condensed Consolidated Statements of Cash Flows and (6) notes to these financial statements.X
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).X
Exhibit
Number
Exhibit DescriptionIncorporated by ReferenceFiled Herewith
FormDateNumber
10.18-KMarch 31, 20224.2
10.28-KMarch 28, 20234.2
10.38-KApril 3, 20232.1
22.1X
31.1X
31.2X
32.1X
101The following materials from Extra Space Storage Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, are formatted in XBRL (eXtensible Business Reporting Language): (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Operations, (3) the Condensed Consolidated Statements of Comprehensive Income (4) the Condensed Consolidated Statement of Noncontrolling Interests and Equity, (5) the Condensed Consolidated Statements of Cash Flows and (6) notes to these financial statements.X
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).X

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 EXTRA SPACE STORAGE INC.
 Registrant
Date: May 4,November 9, 2023 /s/ Joseph D. Margolis
 Joseph D. Margolis
 Chief Executive Officer
(Principal Executive Officer)
Date: May 4,November 9, 2023 /s/ P. Scott Stubbs
 P. Scott Stubbs
 Executive Vice President and Chief Financial Officer
 (Principal Financial Officer)

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