10-Q

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 June 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 class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	EXR	New 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	☐

1

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 August 2, 2023, was 211,276,502.

2

EXTRA SPACE STORAGE INC.

TABLE OF CONTENTS

 

STATEMENT ON FORWARD-LOOKING INFORMATION	4
PART I. FINANCIAL INFORMATION	6
ITEM 1. FINANCIAL STATEMENTS (unaudited)	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	13
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
ITEM 4. CONTROLS AND PROCEDURES	41
PART II. OTHER INFORMATION	42
ITEM 1. LEGAL PROCEEDINGS	42
ITEM 1A. RISK FACTORS	42
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	43
ITEM 4. MINE SAFETY DISCLOSURES	43
ITEM 5. OTHER INFORMATION	43
ITEM 6. EXHIBITS	44
SIGNATURES	46

3

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 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;

•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.

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

4

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.

5

PART I.     FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Extra Space Storage Inc.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

 

	June 30, 2023		December 31, 2022
	(unaudited)
Assets:
Real estate assets, net	$	10,017,351	$	9,997,978
Real estate assets - operating lease right-of-use assets	220,090		221,725
Investments in unconsolidated real estate entities	747,775		582,412
Investments in debt securities and notes receivable	891,190		858,049
Cash and cash equivalents	50,644		92,868
Other assets, net	438,403		414,426
Total assets	$	12,365,453	$	12,167,458
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net	$	1,273,448	$	1,288,555
Unsecured term loans, net	2,248,840		2,340,116
Unsecured senior notes, net	3,695,200		2,757,791
Revolving lines of credit	275,250		945,000
Operating lease liabilities	228,343		229,035
Cash distributions in unconsolidated real estate ventures	69,183		67,352
Accounts payable and accrued expenses	212,416		171,680
Other liabilities	327,366		289,655
Total liabilities	8,330,046		8,089,184
Commitments and contingencies
Noncontrolling Interests and Equity:
Extra Space Storage Inc. stockholders' equity:
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, 135,058,897 and 133,921,020 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,351		1,339
Additional paid-in capital	3,383,303		3,345,332
Accumulated other comprehensive income	47,065		48,798
Accumulated deficit	(175,941)		(135,872)
Total Extra Space Storage Inc. stockholders' equity	3,255,778		3,259,597
Noncontrolling interest represented by Preferred Operating Partnership units, net	222,940		261,502
Noncontrolling interests in Operating Partnership, net and other noncontrolling interests	556,689		557,175
Total noncontrolling interests and equity	4,035,407		4,078,274
Total liabilities, noncontrolling interests and equity	$	12,365,453	$	12,167,458

See accompanying notes to unaudited condensed consolidated financial statements.

6

Extra Space Storage Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except share data)

(unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Property rental	$	440,747	$	408,044	$	874,709	$	787,852
Tenant reinsurance	48,433		46,427		96,137		90,224
Management fees and other income	22,206		20,517		43,590		40,474
Total revenues	511,386		474,988		1,014,436		918,550
Expenses:
Property operations	114,637		104,252		231,803		207,794
Tenant reinsurance	9,482		7,537		18,571		14,579
Transaction related costs	—		1,465		—		1,465
General and administrative	34,842		31,251		69,605		61,013
Depreciation and amortization	79,086		69,067		157,576		136,973
Total expenses	238,047		213,572		477,555		421,824
Gain on real estate transactions	—		14,249		—		14,249
Income from operations	273,339		275,665		536,881		510,975
Interest expense	(86,372)		(47,466)		(166,471)		(90,004)
Interest income	21,077		15,060		40,515		34,049
Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense	208,044		243,259		410,925		455,020
Equity in earnings and dividend income from unconsolidated real estate entities	13,254		10,190		23,559		19,287
Income tax expense	(5,986)		(5,615)		(10,294)		(8,756)
Net income	215,312		247,834		424,190		465,551
Net income allocated to Preferred Operating Partnership noncontrolling interests	(2,254)		(4,491)		(4,508)		(8,824)
Net income allocated to Operating Partnership and other noncontrolling interests	(10,648)		(11,213)		(20,968)		(21,018)
Net income attributable to common stockholders	$	202,410	$	232,130	$	398,714	$	435,709
Earnings per common share
Basic	$	1.50	$	1.73	$	2.96	$	3.24
Diluted	$	1.50	$	1.73	$	2.95	$	3.24
Weighted average number of shares
Basic	134,832,232		134,192,540		134,672,672		134,186,426
Diluted	143,529,817		142,737,909		143,337,522		141,600,206
Cash dividends paid per common share	$	1.62	$	1.50	$	3.24	$	3.00

See accompanying notes to unaudited condensed consolidated financial statements.

7

Extra Space Storage Inc.

Condensed Consolidated Statements of Comprehensive Income

(amounts in thousands)

(unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	215,312	$	247,834	$	424,190	$	465,551
Other comprehensive income:
Change in fair value of interest rate swaps	12,599		20,113		(1,911)		71,762
Total comprehensive income	227,911		267,947		422,279		537,313
Less: comprehensive income attributable to noncontrolling interests	13,517		16,719		25,298		33,503
Comprehensive income attributable to common stockholders	$	214,394	$	251,228	$	396,981	$	503,810

See accompanying notes to unaudited condensed consolidated financial statements.

8

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and six months ended June 30, 2023

(unaudited, amounts in thousands, except share data)

	Noncontrolling Interest							Extra Space Storage Inc. Stockholders' Equity
		Preferred Operating Partnership		Operating Partnership		Other		Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Noncontrolling Interests and Equity
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
Issuance of common stock in connection with share based compensation		—		—		—		53,823	1		6,939		—		—		6,940
Taxes paid upon net settlement of share based compensation		—						(573)	—		(94)		—		—		(94)
Restricted stock grants cancelled		—		—		—		(1,633)	—		—		—		—		—
Noncontrolling interest in consolidated joint venture		—		—		709		—	—		—		—		—		709
Net income (loss)		2,254		10,691		(43)		—	—		—		—		202,410		215,312
Other comprehensive income		—		615		—		—	—		—		11,984		—		12,599
Distributions to Operating Partnership units held by noncontrolling interests		(2,254)		(11,711)		—		—	—		—		—		—		(13,965)
Dividends paid on common stock at $1.62 per share		—		—		—		—	—		—		—		(218,795)		(218,795)
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
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		—		—		—		143,387	2		12,437		—		—		12,439
Taxes paid upon net settlement of share based compensation		—		—		—		(7,660)	—		(7,543)		—		—		(7,543)
Restricted stock grants cancelled		—		—		—		(3,855)	—		—		—		—		—
Redemption of Preferred A Units in the Operating Partnership for stock		(16,339)		—		—		851,698	8		11,015		—		—		(5,316)
Redemption of Preferred D Units in the Operating Partnership for stock		(22,064)		—		—		154,307	2		22,062		—		—		—
Noncontrolling interest in consolidated joint venture		—		—		2,100		—	—		—		—		—		2,100
Net income (loss)		4,508		21,069		(101)		—	—		—		—		398,714		424,190
Other comprehensive income		—		(178)		—		—	—		—		(1,733)		—		(1,911)
Distributions to Operating Partnership units held by noncontrolling interests		(4,667)		(23,376)		—		—	—		—		—		—		(28,043)
Dividends paid on common stock at $3.24 per share		—		—		—		—	—		—		—		(438,783)		(438,783)
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

9

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and six months ended June 30, 2022

(unaudited, amounts in thousands, except share data)

	Noncontrolling Interest							Extra Space Storage Inc. Stockholders' Equity
		Preferred Operating Partnership		Operating Partnership		Other		Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Noncontrolling Interests and Equity
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
Issuance of common stock in connection with share based compensation		—		—		—		38,016	—		5,245		—		—		5,245
Restricted stock grants cancelled		—		—		—		(7,122)	—		—		—		—		—
Redemption of Operating Partnership units for cash		—		(296)		—		—	—		(536)		—		—		(832)
Redemption of Preferred B Units in the Operating Partnership for cash		(1,125)		—		—		—	—		—		—		—		(1,125)
Issuance of Operating Partnership units in conjunction with business combinations		—		16,000		—		—	—		—		—		—		16,000
Issuance of Preferred D Units in the Operating Partnership in conjunction with business combinations		6,000		—		—		—	—		—		—		—		6,000
Repurchase of common stock, net of offering costs		—		—		—		(381,786)	(4)		—		—		(63,004)		(63,008)
Net income		4,491		11,213		—		—	—		—		—		232,130		247,834
Other comprehensive income		120		895		—		—	—		—		19,098		—		20,113
Distributions to Operating Partnership units held by noncontrolling interests		(4,306)		(9,821)		—		—	—		—		—		—		(14,127)
Dividends paid on common stock at $1.50 per share		—		—		—		—	—		—		—		(201,024)		(201,024)
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
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		—		—		—		180,800	2		9,787		—		—		9,789
Restricted stock grants cancelled		—		—		—		(7,901)	—		—		—		—		—
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 Preferred D units in the Operating Partnership in conjunction with business combinations		6,000		—		—		—	—		—		—		—		6,000
Issuance of common stock in conjunction with acquisitions		—		—		—		186,766	2		40,961		—		—		40,963
Repurchase of common stock, net of offering costs		—		—		—		(381,786)	(4)		—		—		(63,004)		(63,008)
Net income		8,824		21,018		—		—	—		—		—		435,709		465,551
Other comprehensive income		433		3,228		—		—	—		—		68,101		—		71,762
Distributions to Operating Partnership units held by noncontrolling interests		(8,636)		(19,602)		—		—	—		—		—		—		(28,238)
Dividends paid on common stock at $3.00 per share		—		—		—		—	—		—		—		(403,551)		(403,551)
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

See accompanying notes to unaudited condensed consolidated financial statements.

10

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	424,190	$	465,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	157,576		136,973
Amortization of deferred financing costs	5,470		3,933
Non-cash lease expense	942		939
Compensation expense related to stock-based awards	12,439		9,787
Accrual of interest income added to principal of debt securities and notes receivable	(16,200)		(19,235)
Gain on real estate transactions	—		(14,249)
Distributions from unconsolidated real estate ventures	7,594		6,204
Changes in operating assets and liabilities:
Other assets	(28,129)		15,789
Accounts payable and accrued expenses	36,234		28,646
Other liabilities	29,411		6,049
Net cash provided by operating activities	629,527		640,387
Cash flows from investing activities:
Acquisition of real estate assets	(127,416)		(438,287)
Cash paid for business combination	—		(157,301)
Development and redevelopment of real estate assets	(37,244)		(29,256)
Proceeds from sale of real estate assets and investments in real estate ventures	1,046		39,367
Investment in unconsolidated real estate entities	(171,126)		(76,339)
Return of investment in unconsolidated real estate ventures	—		342
Issuance and purchase of notes receivable	(124,103)		(204,930)
Principal payments received from notes receivable	46,466		223,773
Proceeds from sale of notes receivable	60,696		82,115
Purchase of equipment and fixtures	(5,905)		(9,512)
Net cash used in investing activities	(357,586)		(570,028)
Cash flows from financing activities:
Proceeds from notes payable and revolving lines of credit	2,479,592		1,948,657
Principal payments on notes payable and revolving lines of credit	(3,246,378)		(1,915,531)
Proceeds from issuance of public bonds, net	950,000		400,000
Deferred financing costs	(28,151)		(6,713)
Repurchase of common stock	—		(63,008)
Redemption of Operating Partnership units held by noncontrolling interests	—		(3,504)
Redemption of Preferred Units for cash	(5,000)		(4,500)
Dividends paid on common stock	(438,783)		(403,551)
Distributions to noncontrolling interests	(28,043)		(28,237)
Net cash used in financing activities	(316,763)		(76,387)
Net decrease in cash, cash equivalents, and restricted cash	(44,822)		(6,028)
Cash, cash equivalents, and restricted cash, beginning of the period	97,735		76,194
Cash, cash equivalents, and restricted cash, end of the period	$	52,913	$	70,166
Cash and equivalents, including restricted cash at the beginning of the period:
Cash and equivalents	$	92,868	$	71,126
Restricted cash included in other assets	4,867		5,068
	$	97,735	$	76,194

11

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2023		2022
Cash and equivalents, including restricted cash at the end of the period:
Cash and equivalents	$	50,644	$	58,729
Restricted cash included in other assets	2,269		11,437
	$	52,913	$	70,166
Supplemental schedule of cash flow information
Interest paid	$	150,459	$	82,381
Income taxes paid	1,910		9,116
Supplemental schedule of noncash investing and financing activities:
Redemption of Operating Partnership units held by noncontrolling interests for common stock
Noncontrolling interests in Operating Partnership	$	116,336	$	—
Common stock and paid-in capital	(11,336)		—
Noncontrolling interests in Operating Partnership Note Receivable Payoff	(100,000)		—
OP Unit Redemption - Cash Proceeds	(5,000)		—
Acquisition and establishment of operating lease right of use assets and lease liabilities
Real estate assets - operating lease right-of-use assets	$	—	$	1,689
Operating lease liabilities	—		(1,689)
Acquisitions of real estate assets
Real estate assets, net	$	—	$	48,535
Value of equity issued	—		(40,965)
Net Liabilities Assumed	—		—
Investment in unconsolidated real estate ventures	—		(747)
Accrued construction costs and capital expenditures
Acquisition of real estate assets	$	4,503	$	987
Accounts payable and accrued expenses	(4,503)		(987)
Redemption of Preferred Operating Partnership units for common stock
Preferred Operating Partnership units	$	33,403	$	—
Additional paid-in capital	(33,403)		$	—
Issuance of OP and Preferred OP units in conjunction with business combination
Preferred OP units issued	$	—	$	(6,000)
OP units issued	—		(16,000)

See accompanying notes to unaudited condensed consolidated financial statements.

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”), 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 June 30, 2023, the Company had direct and indirect equity interests in 1,460 stores. In addition, the Company managed 978 stores for third parties, bringing the total number of stores which it owns and/or manages to 2,438. These stores are located in 41 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 six months ended June 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. As of June 30, 2023, the Company has converted all of its LIBOR-indexed debt and derivatives to SOFR-based indexes (effective with the respective instrument’s next reset date for certain instruments). For all derivatives in hedge accounting relationships, the elective relief in Topic 848 that allows for the continuation of hedge accounting throughout the transition process was utilized.

13

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 June 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 June 30, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	Quoted 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	$	—	$	51,235	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of June 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.

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 June 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. Goodwill 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 June 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:

	June 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	1,889	$	1,900	$	95,965	$	101,900
Fixed rate notes receivable	$	1,571	$	1,625	$	5,191	$	5,241
Fixed rate debt	$	5,005,056	$	5,540,970	$	4,320,014	$	4,762,196

4.     REAL ESTATE ASSETS

The components of real estate assets are summarized as follows:

	June 30, 2023		December 31, 2022
Land	$	2,371,918	$	2,356,746
Buildings, improvements and other intangibles	9,579,378		9,425,468
Right of use asset - finance lease	141,861		136,259
Intangible assets - tenant relationships	152,735		152,775
Intangible lease rights	12,943		12,943
	12,258,835		12,084,191
Less: accumulated depreciation and amortization	(2,295,568)		(2,138,524)
Net operating real estate assets	9,963,267		9,945,667
Real estate under development/redevelopment	54,084		52,311
Real estate assets, net	$	10,017,351	$	9,997,978

5.     OTHER ASSETS

The components of other assets are summarized as follows:

	June 30, 2023		December 31, 2022
Goodwill	$	170,811	$	170,811
Receivables, net	99,971		85,937
Prepaid expenses and deposits	67,078		50,318
Equipment and fixtures, net	42,657		42,808
Fair value of interest rate swaps	51,235		54,839
Deferred line of credit financing costs, net	4,382		4,846
Restricted cash	2,269		4,867
	$	438,403	$	414,426

16

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

Amounts in thousands, except store and share data, unless otherwise stated

6.    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, 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 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.

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 June 30, 2023 and 2022 was $150.45 and $185.25, 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 June 30,		For the Six Months Ended June 30,
	2023	2022	2023	2022
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	223,118	183,807	218,259	183,342
Series D Units	—	—	—	1,074,933
	223,118	183,807	218,259	1,258,275

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.

17

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to common stockholders	$	202,410	$	232,130	$	398,714	$	435,709
Earnings and dividends allocated to participating securities	(323)		(313)		(627)		(601)
Earnings for basic computations	202,087		231,817		398,087		435,108
Earnings and dividends allocated to participating securities	323		—		627		—
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,441		15,201		24,569		24,978
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	—		(572)		—		(1,144)
Net income for diluted computations	$	214,851	$	246,446	$	423,283	$	458,942
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	134,832,232		134,192,540		134,672,672		134,186,426
OP Units	7,214,649		6,545,104		7,214,649		6,533,010
Series A Units	—		875,480		—		875,480
Series D Units	1,257,366		1,119,641		1,233,178		—
Unvested restricted stock awards included for treasury stock method	221,380		—		212,723		—
Shares related to dilutive stock options	4,190		5,144		4,300		5,290
Average number of common shares outstanding - diluted	143,529,817		142,737,909		143,337,522		141,600,206
Earnings per common share
Basic	$	1.50	$	1.73	$	2.96	$	3.24
Diluted	$	1.50	$	1.73	$	2.95	$	3.24

7.    ACQUISITIONS AND DISPOSITIONS

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three and six months ended June 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
Period	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q2 2023	3	32,888		—		—		26		—		32,914
Q1 2023	1	13,111		—		—		6		—		13,117
Total 2023	4	$	45,999	$	—	$	—	$	32	$	—	$	46,031
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	29	$	406,843	$	6,823	$	747	$	1,085	$	40,965	$	456,463

Other Investments

18

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 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.

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
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, 2022		For the Year Ended December 31, 2021
	Pro Forma		Pro 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 indirect subsidiary of SmartStop Self Storage REIT, Inc. 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.

19

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.

Net investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:

	Number of Stores	Equity Ownership %	Excess Profit % (1)	June 30,		December 31,
				2023		2022
PRISA Self Storage LLC	84	4%	4%	$	8,487	$	8,596
Storage Portfolio II JV LLC	36	10%	30%	(7,628)		(7,200)
Storage Portfolio IV JV LLC	32	10%	30%	48,511		49,139
Storage Portfolio I LLC	24	34%	49%	(42,000)		(41,372)
PR II EXR JV LLC	23	25%	25%	109,014		110,172
ESS-CA TIVS JV LP	16	55%	60%	29,938		30,778
VRS Self Storage, LLC	16	45%	54%	(15,922)		(15,399)
ARA-EXR JV LLC	12	10%	30%	18,982		19,137
ESS-NYFL JV LP	11	16%	24%	11,031		11,332
Extra Space Northern Properties Six LLC	10	10%	35%	(3,633)		(3,382)
Alan Jathoo JV LLC	9	10%	10%	7,313		7,414
ESS Bristol Investments LLC	8	10%	30%	2,017		2,110
ESS - BGO Atlanta GA JV LLC	8	20%	35%	35,185		30,467
ESS - BGO Storage JV I LLC	6	20%	35%	22,781		7,466
Storage Portfolio V JV LLC	6	10%	30%	9,416		9,517
PR EXR Self Storage, LLC	5	25%	40%	57,984		58,476
Storage Portfolio III JV LLC	5	10%	30%	5,419		5,467
Other unconsolidated real estate ventures	12	20-50%	20-50%	31,697		32,342
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Strategic Storage Trust VI, Inc. Preferred Stock (3)	n/a	n/a	n/a	150,000		—
Net Investments in and Cash distributions in unconsolidated real estate entities	323			$	678,592	$	515,060

(1)    Includes pro-rata equity ownership share and maximum potential promoted interest.

(2)    In October 2019, the Company invested $200,000 in shares of convertible preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") with a dividend rate of 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 Trust VI, Inc. ("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 Trust VI, Inc.. 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.

20

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 six months ended June 30, 2023, the Company contributed a total of $20,686 of cash to its joint ventures, for its pro-rata portion of the purchase price of five 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, L.P. ("NexPoint Investment") and receivables due to the Company under its bridge loan program. Information about these balances is as follows:

	June 30, 2023		December 31, 2022
Debt securities - NexPoint Preferred Stock	$	300,000	$	300,000
Notes Receivable - Bridge Loans	540,355		491,879
Dividends and Interest Receivable	50,835		66,170
	$	891,190	$	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 initial dividend rates of 8.5%. If the investment is not retired after six years, the preferred dividends increase annually.

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 a portion of the mortgage receivables. During the six months ended June 30, 2023 the Company sold a total principal amount of $60,696 of its mortgage bridge loans receivable to third parties for a total of $60,696 in cash and closed on $104,120 in new bridge loans.

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.

21

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 June 2023, the Operating Partnership executed a public bond issuance by selling $450.0 million principal amount of 5.500% Senior Notes due 2030 (the "Notes Due 2030"). Interest on the Notes Due 2030 is paid semi-annually in arrears on January 1 and July 1 of each year. The Notes Due 2030 will mature on July 1, 2030, and the Operating Partnership may redeem the Notes Due 2030 at its option and sole discretion at any time prior to May 1, 2030 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 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 Partnership may redeem the Notes Due 2028, the Notes Due 2029, the Notes Due 2030, 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 and the Notes Due 2030 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.

22

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 Debt	June 30, 2023		December 31, 2022		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	404,336	$	521,820	2.67% - 4.56%		April 2025 - February 2030
Secured variable-rate (1)	883,052		772,604			6.14% - 6.59%	August 2023 - September 2030
Unsecured fixed-rate	5,136,633		4,240,376		2.35% - 5.70%		January 2025 - March 2032
Unsecured variable-rate	848,367		884,624			6.14% - 6.19%	January 2024 - January 2028
Total	7,272,388		6,419,424
Less: Unamortized debt issuance costs	(54,900)		(32,962)
Total	$	7,217,488	$	6,386,462
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Adjusted Term SOFR and Adjusted Daily Simple SOFR.

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at June 30, 2023:

2023	$	332,680
2024	335,000
2025	707,289
2026	809,508
2027	869,713
Thereafter	4,218,198
	$	7,272,388

On June 22, 2023, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”), which increased the commitment of the revolving credit facility to $1,940.0 million and extended maturity to June 2027. In connection with entering into the Credit Agreement, the Company paid off Tranche 5 and added the Tranche 8 term loan, maturing June 2024, which allowed the Company to draw up to $1,000.0 million in connection with the Life Storage merger. Tranche 8 was undrawn as of June 30, 2023, but was fully drawn on July 20, 2023, in connection with the closing of the merger with Life Storage, Inc. (“Life Storage”).

As of June 30, 2023, the terms of the Credit Agreement are as follows:

23

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

Amounts in thousands, except store and share data, unless otherwise stated

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,940,000	June 2027
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 (2)	—		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
Tranche 8 Term Loan Facility (3)	$	1,000,000	June 2024
	$	4,865,000
(1) Term loan amounts have been fully drawn as of June 30, 2023.
(2) The Tranche 5 Term Loan was paid off prior to maturity as part of the June 2023 recast.
(3) The Tranche 8 Term Loan was undrawn as of June 30, 2023, but was fully drawn on July 20, 2023.

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 June 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 (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 2.2% per annum and the applicable base rate margin ranging from 0.00% to 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 June 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. As of June 30, 2023, the interest rates for the tranches are Adjusted Term SOFR/Adjusted Daily Simple SOFR ("ASOFR") + 0.95% and ASOFR + 1.25%, 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 June 30, 2023
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	23,250	$	140,000	6.44%	7/1/2026	SOFR plus 1.35%
Credit Line 2 (3)(4)	252,000		1,940,000		6.04%	6/22/2027	ASOFR plus 0.95%
	$	275,250	$	2,080,000
(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 was extended to June 22, 2027 with two six-month extensions available.
(4) Basis Rate as of June 30, 2023. Rate is subject to change based on our investment grade rating.

24

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 June 30, 2023, the Company’s percentage of fixed-rate debt to total debt was 73.4%. The weighted average interest rates of the Company’s fixed and variable-rate debt were 3.8% and 6.4%, respectively. The combined weighted average interest rate was 4.5%.

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 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 six months ended June 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 $34,219 will be reclassified as an increase to interest income.

The Company held 17 derivative financial instruments which had a total combined notional amount of $1,666,265 as of June 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
Derivatives designated as hedging instruments:	June 30, 2023		December 31, 2022
Other assets	$	51,235	$	54,839
Other liabilities	$	—	$	73

25

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

Amounts in thousands, except store and share data, unless otherwise stated

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 June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Three Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	23,628	$	14,358	Interest expense	$	11,033	$	(5,755)

	Gain (loss) recognized in OCI for the Six Months Ended June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Six Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	18,065	$	57,099	Interest expense	$	19,984	$	(14,667)

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 June 30, 2023, the Company did not have any net liability positions in the fair value of derivatives. 

12.    STOCKHOLDERS’ EQUITY

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

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.

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 six months ended June 30, 2023, no shares were repurchased. As of June 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.

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 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 June 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:

	June 30, 2023		December 31, 2022
Series A Units	$	—	$	16,498
Series B Units	33,568		33,568
Series D Units	189,372		211,436
	$	222,940	$	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.

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.

On January 25, 2023, the redemption obligation for all outstanding Series A Units was satisfied, at the Company’s option, in $5,000 cash, 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 June 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 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.

27

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

Amounts in thousands, except store and share data, unless otherwise stated

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 June 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 $189,372, 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 units valued at $6,000 in connection with the acquisition of Bargold.

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% ownership interest in the Operating Partnership as of June 30, 2023. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.0% are held by certain former owners of assets acquired by the Operating Partnership. As of June 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 June 30, 2023, the ten-day average closing price of the Company's common stock was $145.79 and there were 7,214,649 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on June 30, 2023 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,051,824 in cash consideration to redeem the units.

OP Unit activity is summarized as follows for the periods presented:

	For the Six Months Ended June 30,
	2023		2022
OP Units redeemed for cash	—		18,028
Cash paid for OP Units redeemed	$	—	$	3,504
OP Units issued in conjunction with business combination and acquisitions	—		91,743

28

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

Amounts in thousands, except store and share data, unless otherwise stated

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 seven consolidated joint ventures as of June 30, 2023. One joint venture owns one operating store and the other six joint ventures each have a property under development. The voting interest of each third-party owner is between 2.0% and 31.0%.

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Self-Storage Operations	$	440,747	$	408,044	$	874,709	$	787,852
Tenant Reinsurance	48,433		46,427		96,137		90,224
Total segment revenues	$	489,180	$	454,471	$	970,846	$	878,076
Operating expenses:
Self-Storage Operations	$	114,637	$	104,252	$	231,803	$	207,794
Tenant Reinsurance	9,482		7,537		18,571		14,579
Total segment operating expenses	$	124,119	$	111,789	$	250,374	$	222,373
Net operating income:
Self-Storage Operations	$	326,110	$	303,792	$	642,906	$	580,058
Tenant Reinsurance	38,951		38,890		77,566		75,645
Total segment net operating income:	$	365,061	$	342,682	$	720,472	$	655,703
Other components of net income:
Management fees and other income	$	22,206	$	20,517	$	43,590	$	40,474
Transaction related costs	—		(1,465)		—		(1,465)
General and administrative expense	(34,842)		(31,251)		(69,605)		(61,013)
Depreciation and amortization expense	(79,086)		(69,067)		(157,576)		(136,973)
Gain on real estate transactions	—		14,249		—		14,249
Interest expense	(86,372)		(47,466)		(166,471)		(90,004)
Interest income	21,077		15,060		40,515		34,049
Equity in earnings and dividend income from unconsolidated real estate entities	13,254		10,190		23,559		19,287
Income tax expense	(5,986)		(5,615)		(10,294)		(8,756)
Net income	$	215,312	$	247,834	$	424,190	$	465,551

16.    COMMITMENTS AND CONTINGENCIES

As of June 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.

29

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 June 30, 2023, the Company was under agreement to acquire 11 stores at a total purchase price of $125,245. Four stores are scheduled to close in 2023 and seven stores are scheduled to close in 2024. Additionally, the Company is under agreement to acquire three stores with joint venture partners, for a total investment of $9,864. Two stores are 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 July 20, 2023, the Company closed its merger with Life Storage, Inc. in an all-stock transaction (the "Life Storage 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 partnership unit) of Life Storage they owned for an estimated total consideration of $11,600,000, based on the Company's closing share price on July 19, 2023. At closing, the Company retired $1,200,000 in balances on Life Storage's line of credit which included $375,000 which Life Storage used to pay off its private placement notes in connection with the closing. The Company also paid off and/or defeased $32,000 in secured loans. On July 25, 2023, the Company completed an obligor exchange of Life Storage's various Senior Notes totaling $2,400,000. Remaining Life Storage senior note balances which were not exchanged total $48,900 and no longer have any financial reporting requirements or covenants. Following the merger, the combined company owned and/or managed over 3,500 locations and over 264.0 million net rentable square feet.

.

30

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

31

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 July 20, 2023, we merged with Life Storage, Inc. (“Life Storage”) in an all-stock transaction. Under the terms of the merger, Life Storage stockholders and 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 owned for total consideration of $11.6 billion. Following the merger, we owned and/or managed over 3,500 locations and over 264.0 million net rentable square feet.

PROPERTIES

As of June 30, 2023, we owned or had ownership interests in 1,460 operating stores. Of these stores, 1,136 are wholly-owned, one in a consolidated joint venture and 323 are in unconsolidated joint ventures. In addition, we managed an additional 978 stores for third parties bringing the total number of stores which we own and/or manage to 2,438. These stores are located in 41 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 of June 30, 2023, approximately 1,440,000 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 June 30, 2023, the average length of stay was approximately 16.7 months.

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $21.08 for the three months ended June 30, 2023, compared to $20.38 for the three months ended June 30, 2022. Average annual rent per square foot for new leases was $17.71 for the three months ended June 30, 2023, compared to $19.74 for the three months ended June 30, 2022. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 2.6% and 3.3%, 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.

32

	June 30, 2023
	REIT Owned		Joint Venture Owned		Managed		Total
Location	Property Count(1)	Net Rentable Square Feet	Property Count	Net Rentable Square Feet	Property Count	Net Rentable Square Feet	Property Count	Net Rentable Square Feet
Alabama	9	679,649	2	150,809	7	414,558	18	1,245,016
Arizona	25	1,782,264	11	838,049	23	1,941,832	59	4,562,145
California	177	13,731,151	49	3,595,468	106	9,987,493	332	27,314,112
Colorado	17	1,149,321	9	663,467	26	1,877,909	52	3,690,697
Connecticut	7	538,516	7	575,866	9	565,352	23	1,679,734
Delaware	—	—	2	143,615	3	228,606	5	372,221
Florida	114	8,810,535	45	3,863,695	122	9,429,320	281	22,103,550
Georgia	68	5,270,803	15	1,215,230	25	1,882,740	108	8,368,773
Hawaii	14	941,713	—	—	3	159,174	17	1,100,887
Idaho	2	131,369	—	—	2	145,045	4	276,414
Illinois	60	3,766,202	10	741,518	34	2,542,236	104	7,049,956
Indiana	91	3,911,998	1	57,787	23	1,681,541	115	5,651,326
Kansas	1	50,219	2	108,921	3	229,403	6	388,543
Kentucky	13	959,512	1	51,770	12	1,011,289	26	2,022,571
Louisiana	5	387,009	—	—	13	1,013,377	18	1,400,386
Maine	—	—	—	—	8	572,516	8	572,516
Maryland	35	2,940,475	11	898,167	43	3,137,284	89	6,975,926
Massachusetts	47	3,007,110	9	614,889	30	1,873,553	86	5,495,552
Michigan	8	670,531	4	309,133	10	751,917	22	1,731,581
Minnesota	7	585,109	4	304,344	14	1,009,116	25	1,898,569
Mississippi	3	234,266	—	—	2	146,138	5	380,404
Missouri	6	430,026	2	119,750	13	985,731	21	1,535,507
Nebraska	—	—	—	—	3	278,106	3	278,106
Nevada	14	1,039,720	4	473,756	9	933,193	27	2,446,669
New Hampshire	2	134,764	2	84,693	10	515,835	14	735,292
New Jersey	64	5,213,130	17	1,228,879	41	3,091,484	122	9,533,493
New Mexico	11	717,809	10	683,210	15	1,081,169	36	2,482,188
New York	28	2,049,490	18	1,512,505	38	2,420,093	84	5,982,088
North Carolina	24	1,770,821	5	401,280	22	1,738,074	51	3,910,175
Ohio	24	1,468,239	5	325,394	14	1,096,202	43	2,889,835
Oklahoma	1	61,588	—	—	20	1,548,373	21	1,609,961
Oregon	8	549,715	1	65,245	10	737,298	19	1,352,258
Pennsylvania	21	1,597,995	9	680,246	40	2,917,965	70	5,196,206
Rhode Island	2	137,802	—	—	5	420,300	7	558,102
South Carolina	23	1,721,101	11	707,978	30	2,519,377	64	4,948,456
Tennessee	22	1,855,267	13	880,463	18	1,226,956	53	3,962,686
Texas	111	9,156,853	30	2,370,219	89	7,730,522	230	19,257,594
Utah	10	733,305	—	—	25	2,034,918	35	2,768,223
Virginia	53	4,272,270	9	703,762	27	1,812,938	89	6,788,970
Washington	9	681,056	—	—	14	1,153,617	23	1,834,673
Washington, DC	1	100,203	1	103,558	4	311,082	6	514,843
Wisconsin	—	—	4	371,423	13	1,072,344	17	1,443,767
Totals	1,137	83,238,906	323	24,845,089	978	76,225,976	2,438	184,309,971

(1)    Excludes 17,000 units related to the Bargold transaction. See Note 7 in the Notes to the Condensed Consolidated Financial Statements.

33

RESULTS OF OPERATIONS

Comparison of the three and six months ended June 30, 2023 and 2022

Overview

Results for the three and six months ended June 30, 2023 included the operations of 1,460 stores (1,136 wholly-owned, one in a consolidated joint venture, and 323 in joint ventures accounted for using the equity method) compared to the results for the three and six months ended June 30, 2022, which included the operations of 1,313 stores (1,009 wholly-owned, zero in consolidated joint ventures, and 304 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 June 30,								For the Six Months Ended June 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Revenues:
Property rental	$	440,747	$	408,044	$	32,703	8.0	%	$	874,709	$	787,852	$	86,857	11.0	%
Tenant reinsurance	48,433		46,427		2,006		4.3	%	96,137		90,224		5,913		6.6	%
Management fees and other income	22,206		20,517		1,689		8.2	%	43,590		40,474		3,116		7.7	%
Total revenues	$	511,386	$	474,988	$	36,398	7.7	%	$	1,014,436	$	918,550	$	95,886	10.4	%

Property Rental—The increase in property rental revenues for the three and six months ended June 30, 2023 was primarily the result of an increase of $18,189 and $39,298 associated with acquisitions completed in 2023 and 2022. We acquired four wholly-owned stores during the six months ended June 30, 2023 and a total of 153 stores during the year ended December 31, 2022. Property rental revenues also increased by $9,802 and $36,494 at our stabilized stores related primarily to higher average rates to existing customers.

Tenant Reinsurance—The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 2,438 stores at June 30, 2023 compared to 2,177 stores at June 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 six months ended June 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 June 30, 2023, we managed 1,302 stores for joint ventures and third parties, compared to 1,168 stores as of June 30, 2022.

Expenses

The following table presents information on expenses for the periods indicated:

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Expenses:
Property operations	$	114,637	$	104,252	$	10,385	10.0	%	$	231,803	$	207,794	$	24,009	11.6	%
Tenant reinsurance	9,482		7,537		1,945		25.8	%	18,571		14,579		3,992		27.4	%
Transaction related costs	—		1,465		(1,465)		(100.0)	%	—		1,465		(1,465)		(100.0)	%
General and administrative	34,842		31,251		3,591		11.5	%	69,605		61,013		8,592		14.1	%
Depreciation and amortization	79,086		69,067		10,019		14.5	%	157,576		136,973		20,603		15.0	%
Total expenses	$	238,047	$	213,572	$	24,475	11.5	%	$	477,555	$	421,824	$	55,731	13.2	%

34

Property Operations—The increase in property operations expense during the three and six months ended June 30, 2023 consists primarily of an increase of $5,634 and $12,639 related to acquisitions completed in 2023 and 2022. We acquired four wholly-owned stores during the six months ended June 30, 2023 and a total of 153 stores during the year ended December 31, 2022. Additionally, for the three and six months ended June 30, 2023 there was an increase of $3,691 and $8,085 at our stabilized stores primarily due to payroll, marketing, credit card processing fees, utilities and insurance, partially offset by repairs and 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, along with an increase in claim service and administration charges. We operated 2,438 stores at June 30, 2023 compared to 2,177 stores at June 30, 2022.

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. 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 six months ended June 30, 2023 increases relate in part to the acquisition of Bargold in June 2022 and 106 stores added with the acquisition of acquisition of multiple entities doing business as Storage Express in September 2022 compared to the same period last year.

Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired four wholly-owned stores during the six months ended June 30, 2023 and a total of 153 stores during the year ended December 31, 2022.

Other Revenues and Expenses

The following table presents information about other revenues and expenses for the periods indicated:

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
Gain on real estate transactions	$	—	$	14,249	$	(14,249)	—	%	$	—	$	14,249	$	(14,249)	(100.0)	%
Interest expense	(86,372)		(47,466)		(38,906)		82.0	%	(166,471)		(90,004)		(76,467)		85.0	%
Interest income	21,077		15,060		6,017		40.0	%	40,515		34,049		6,466		19.0	%
Equity in earnings and dividend income from unconsolidated real estate entities	13,254		10,190		3,064		30.1	%	23,559		19,287		4,272		22.1	%
Income tax expense	(5,986)		(5,615)		(371)		6.6	%	(10,294)		(8,756)		(1,538)		17.6	%
Total other revenues & expenses, net	$	(58,027)	$	(13,582)	$	(44,445)	327.2	%	$	(112,691)	$	(31,175)	$	(81,516)	261.5	%

Gain on Real Estate Transactions—During the three months ended June 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 six months ended June 30, 2023 was primarily the result of a 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 4.5% at June 30, 2023, compared to 3.1% at June 30, 2022.

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 six months ended June 30, 2023 was primarily the result of an increase in amount of bridge loans held combined with an increase in interest rates. The balance of bridge loans was $540,355 as of June 30, 2023, compared to $349,056 as of June 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

35

cash or profits. Dividend income represents dividends from our investment in preferred stock of SmartStop and Strategic Storage.

Income Tax Expense—The increase in income tax expense for the three and six months ended June 30, 2023 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to common stockholders	$	202,410	$	232,130	$	398,714	$	435,709
Adjustments:
Real estate depreciation	72,385		63,765		143,633		126,457
Amortization of intangibles	3,609		2,696		7,779		5,462
Gain on real estate transactions	—		(14,249)		—		(14,249)
Unconsolidated joint venture real estate depreciation and amortization	4,722		4,115		9,661		7,968
Distributions paid on Series A Preferred Operating Partnership units	—		(572)		(159)		(1,144)
Income allocated to Operating Partnership noncontrolling interests	12,902		15,704		25,476		29,842
Funds from operations attributable to common stockholders and unit holders	$	296,028	$	303,589	$	585,104	$	590,045

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

36

portfolio.

	For the Three Months Ended June 30,				Percent		For the Six Months Ended June 30,					Percent
	2023		2022		Change		2023			2022		Change
Same-store rental revenues
Net rental income	$	374,845	$	366,195	2.4	%	$	745,474		$	712,070	4.7	%
Other operating income	14,609		13,204		10.6	%	28,071			24,952		12.5	%
Total same-store rental revenues	389,454		379,399		2.7	%	773,545			737,022		5.0	%
Same-store operating expenses
Payroll and benefits	20,785		20,657		0.6	%	41,628			40,717		2.2	%
Marketing	6,698		6,128		9.3	%	12,870			11,688		10.1	%
Office expense	11,969		11,233		6.6	%	23,947		0	21,914		9.3	%
Property operating expense	7,914		8,028		(1.4)	%	17,777			16,856		5.5	%
Repairs and maintenance	5,774		6,254		(7.7)	%	12,191			13,740		(11.3)	%
Property taxes	34,269		33,576		2.1	%	68,615			68,366		0.4	%
Insurance	3,966		2,867		38.3	%	7,588			5,580		36.0	%
Total same-store operating expenses	91,375		88,743		3.0	%	184,616			178,861		3.2	%
Same-store net operating income	$	298,079	$	290,656	2.6	%	$	588,929		$	558,161	5.5	%
Same-store square foot occupancy as of quarter end	94.5%		95.8%				94.5%			95.8%
Properties included in same-store	914		914				914			914

Same-store revenues for the three and six months ended June 30, 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.

37

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net Income	$	215,312	$	247,834	$	424,190	$	465,551
Adjusted to exclude:
Gain on real estate transactions	—		(14,249)		—		(14,249)
Equity in earnings and dividend income from unconsolidated real estate entities	(13,254)		(10,190)		(23,559)		(19,287)
Interest expense	86,372		47,466		166,471		90,004
Depreciation and amortization	79,086		69,067		157,576		136,973
Income tax expense	5,986		5,615		10,294		8,756
Transaction related costs	—		1,465		—		1,465
General and administrative	34,842		31,251		69,605		61,013
Management fees, other income and interest income	(43,283)		(35,577)		(84,105)		(74,523)
Net tenant insurance	(38,951)		(38,890)		(77,566)		(75,645)
Non same-store rental revenue	(51,293)		(28,645)		(101,164)		(50,830)
Non same-store operating expense	23,262		15,509		47,187		28,933
Total same-store net operating income	$	298,079	$	290,656	$	588,929	$	558,161
Same-store rental revenues	$	389,454	$	379,399	$	773,545	$	737,022
Same-store operating expenses	91,375		88,743		184,616		178,861
Same-store net operating income	$	298,079	$	290,656	$	588,929	$	558,161

CASH FLOWS

Cash flows from operating activities for the six months ended June 30, 2023 decreased 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:

38

	For the Six Months Ended June 30,
	2023		2022
Net cash provided by operating activities	$	629,527	$	640,387
Net cash used in investing activities	(357,586)		(570,028)
Net cash used in financing activities	(316,763)		(76,387)
Significant components of net cash flow included:
Net income	$	424,190	$	465,551
Depreciation and amortization	157,576		136,973
Gain on real estate transactions	—		(14,249)
Acquisition and development of real estate assets	(164,660)		(467,543)
Cash paid for business combination	—		(157,301)
Proceeds from sale of real estate assets and investments in real estate ventures	—		39,367
Investment in unconsolidated real estate entities	(171,126)		(76,339)
Issuance and purchase of notes receivable	(124,103)		(204,930)
Proceeds from sale of notes receivable	60,696		82,115
Principal payments received from notes receivable	46,466		223,773
Proceeds from notes payable and revolving lines of credit	2,479,592		1,948,657
Principal payments on notes payable and revolving lines of credit	(3,246,378)		(1,915,531)
Proceeds from issuance of public bonds, net	950,000		400,000
Repurchase of common stock	—		(63,008)
Dividends paid on common stock	(438,783)		(403,551)

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 June 30, 2023, we had $50,644 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.

As of June 30, 2023, we had $7,547,638 face value of debt, resulting in a debt to total enterprise value ratio of 26.1%. As of June 30, 2023, the ratio of total fixed-rate debt and other instruments to total debt was 73.4% ($5,540,970 total fixed-rate debt including $2,006,668 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 June 30, 2023 was 4.5%. 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 June 30, 2023.

39

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.

We hold a BBB/Stable rating from S&P, which has been upgraded to BBB+/Stable in July 2023, 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 June 30, 2023, we had a total of 909 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $17,521,761 and our total asset value was calculated as $22,702,422 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 June 30, 2023, we had approximately $7.5 billion in total face value of debt, of which approximately $2.0 billion was subject to variable interest rates (excluding debt with interest rate swaps). If SOFR were to increase or decrease by 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 $20.1 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.

40

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.

41

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, which could materially affect our business, financial condition and results of operations. Other than as set forth below, there 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, and the risk factors described in the “Risk Factors” section in our Quarterly Report on Form 10-Q for the period ended March 31, 2023. The risks described below and in our Annual Report on Form 10-K 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.

We may be unable to integrate the operations of Life Storage successfully with ours and realize the anticipated synergies and other benefits of the merger or do so within the anticipated time frame.

Until the completion of the merger, Life Storage and Extra Space operated as independent public companies with respective independent operating partnerships. We expect 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 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 merger, which would result in the anticipated benefits of the merger 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 merger; and

•performance shortfalls as a result of the diversion of management’s attention caused by completing the merger 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 merger, or could otherwise adversely affect our business and financial results.

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

None.

42

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.    OTHER INFORMATION

During the three months ended June 30, 2023, none of our officers or directors adopted 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.”

43

ITEM 6.    EXHIBITS

Exhibit Number	Exhibit Description	Incorporated by Reference			Filed Herewith
		Form	Date	Number
2.1	Agreement and Plan of Merger, dated as of April 2, 2023, by and among Extra Space Storage Inc., Extra Space Storage LP, Eros Merger Sub, LLC, Eros OP Merger Sub, LLC, Life Storage, Inc. and Life Storage LP.	8-K	April 3, 2023	2.1
2.2	Amendment to Agreement and Plan of Merger, dated as of May 18, 2023, by and among Extra Space Storage Inc., Extra Space Storage LP, Eros Merger Sub, LLC, Eros OP Merger Sub, LLC, Life Storage, Inc. and Life Storage LP.	8-K	May 19, 2023	2.1
4.1	Fifth Supplemental Indenture, dated as of June 16, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	June 16, 2023	4.2
4.2	Base Indenture, dated as of June 20, 2016, among Life Storage, Inc., Life Storage LP and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.2 to the Current Report on Form 10-K filed by Life Storage Inc. on February 24, 2023).	8-K	July 25, 2023	4.1
4.3	Sixth Supplemental Indenture, dated as of July 25, 2023, among Life Storage LP, as issuer, Life Storage LLC, as parent guarantor, and Computershare Trust Company, N.A., as trustee.	8-K	July 25, 2023	4.2
4.4	Sixth Supplemental Indenture, dated as of July 25, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	July 25, 2023	4.4
4.5	Seventh Supplemental Indenture, dated as of July 25, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	July 25, 2023	4.5
4.6	Eighth Supplemental Indenture, dated as of July 25, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	July 25, 2023	4.6
4.7	Ninth Supplemental Indenture, dated as of July 25, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	July 25, 2023	4.7
4.8	Tenth Supplemental Indenture, dated as of July 25, 2023, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., ESS Holdings Business Trust I and ESS Holdings Business Trust II, as guarantors, and Computershare Trust Company, N.A., as trustee, including the form of the Notes and the Guarantee.	8-K	July 25, 2023	4.8
22.1	Issuer and Guarantors of Guaranteed Securities				X

44

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X
101	The 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
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).	X

45

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: August 9, 2023	/s/ Joseph D. Margolis
	Joseph D. Margolis
	Chief Executive Officer (Principal Executive Officer)
Date: August 9, 2023	/s/ P. Scott Stubbs
	P. Scott Stubbs
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

46

EX-22.1

Exhibit 22.1

Issuer and Guarantors of Guaranteed Securities

The following entities are included in the Obligated Group, as defined in the Annual Report on Form 10-K of Extra Space Storage Inc. to which this document is being filed as an exhibit, for the 3.900% Senior Notes due 2029, the 2.550% Senior Notes due 2031, the 2.350% Senior Notes due 2032 and the 5.700% Senior Notes due 2028 (collectively, the "Notes"). The guarantors have fully and unconditionally guaranteed the Notes on a joint and several basis.

Name of Issuer or Guarantor	Reported as Issuer or Guarantor	State of Incorporation or Organization
Extra Space Storage LP	Issuer	Delaware
Extra Space Storage Inc.	Parent Guarantor	Maryland
ESS Holdings Business Trust I	Subsidiary Guarantor	Massachusetts
ESS Holdings Business Trust II	Subsidiary Guarantor	Massachusetts

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joseph D. Margolis, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Extra Space Storage Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2023	By:	/s/ Joseph D. Margolis
	Name:	Joseph D. Margolis
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, P. Scott Stubbs, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Extra Space Storage Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2023	By:	/s/ P. Scott Stubbs
	Name:	P. Scott Stubbs
	Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of Extra Space Storage Inc. (the “Company”), hereby certifies to his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Joseph D. Margolis
Name:	Joseph D. Margolis
Title:	Chief Executive Officer
Date:	August 9, 2023

The undersigned, the Chief Financial Officer of Extra Space Storage Inc. (the “Company”), hereby certifies to his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ P. Scott Stubbs
Name:	P. Scott Stubbs
Title:	Executive Vice President and Chief Financial Officer
Date:	August 9, 2023

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 02, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-32269
Entity Registrant Name	EXTRA SPACE STORAGE INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	20-1076777
Entity Address, Address Line One	2795 East Cottonwood Parkway, Suite 300
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84121
City Area Code	801
Local Phone Number	365-4600
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	EXR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		211,276,502
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001289490
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets:
Real estate assets, net	$ 10,017,351	$ 9,997,978
Real estate assets - operating lease right-of-use assets	220,090	221,725
Investments in unconsolidated real estate entities	747,775	582,412
Investments in debt securities and notes receivable	891,190	858,049
Cash and cash equivalents	50,644	92,868
Other assets, net	438,403	414,426
Total assets	12,365,453	12,167,458
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net	1,273,448	1,288,555
Unsecured term loans, net	2,248,840	2,340,116
Unsecured senior notes, net	3,695,200	2,757,791
Revolving lines of credit	275,250	945,000
Operating lease liabilities	228,343	229,035
Cash distributions in unconsolidated real estate ventures	69,183	67,352
Accounts payable and accrued expenses	212,416	171,680
Other liabilities	327,366	289,655
Total liabilities	8,330,046	8,089,184
Commitments and contingencies
Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.01 par value, 500,000,000 shares authorized, 135,058,897 and 133,921,020 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,351	1,339
Additional paid-in capital	3,383,303	3,345,332
Accumulated other comprehensive income	47,065	48,798
Accumulated deficit	(175,941)	(135,872)
Total Extra Space Storage Inc. stockholders' equity	3,255,778	3,259,597
Noncontrolling interest represented by Preferred Operating Partnership units, net	222,940	261,502
Noncontrolling interests in Operating Partnership, net and other noncontrolling interests	556,689	557,175
Total noncontrolling interests and equity	4,035,407	4,078,274
Total liabilities, noncontrolling interests and equity	$ 12,365,453	$ 12,167,458

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000	50,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	135,058,897	133,921,020
Common stock, outstanding (in shares)	135,058,897	133,921,020

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Property rental	$ 440,747	$ 408,044	$ 874,709	$ 787,852
Tenant reinsurance	48,433	46,427	96,137	90,224
Management fees and other income	22,206	20,517	43,590	40,474
Total revenues	511,386	474,988	1,014,436	918,550
Expenses:
Property operations	114,637	104,252	231,803	207,794
Tenant reinsurance	9,482	7,537	18,571	14,579
Transaction related costs	0	1,465	0	1,465
General and administrative	34,842	31,251	69,605	61,013
Depreciation and amortization	79,086	69,067	157,576	136,973
Total expenses	238,047	213,572	477,555	421,824
Gain on real estate transactions	0	14,249	0	14,249
Income from operations	273,339	275,665	536,881	510,975
Interest expense	(86,372)	(47,466)	(166,471)	(90,004)
Interest income	21,077	15,060	40,515	34,049
Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense	208,044	243,259	410,925	455,020
Equity in earnings and dividend income from unconsolidated real estate entities	13,254	10,190	23,559	19,287
Income tax expense	(5,986)	(5,615)	(10,294)	(8,756)
Net income	215,312	247,834	424,190	465,551
Net income allocated to Preferred Operating Partnership noncontrolling interests	(2,254)	(4,491)	(4,508)	(8,824)
Net income allocated to Operating Partnership and other noncontrolling interests	(10,648)	(11,213)	(20,968)	(21,018)
Net income attributable to common stockholders	$ 202,410	$ 232,130	$ 398,714	$ 435,709
Earnings per common share
Basic (in dollars per share)	$ 1.50	$ 1.73	$ 2.96	$ 3.24
Diluted (in dollars per share)	$ 1.50	$ 1.73	$ 2.95	$ 3.24
Weighted average number of shares
Basic (in shares)	134,832,232	134,192,540	134,672,672	134,186,426
Diluted (in shares)	143,529,817	142,737,909	143,337,522	141,600,206
Cash dividends paid per common share (in dollars per share)	$ 1.62	$ 1.50	$ 3.24	$ 3.00

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 215,312	$ 247,834	$ 424,190	$ 465,551
Other comprehensive income:
Change in fair value of interest rate swaps	12,599	20,113	(1,911)	71,762
Total comprehensive income	227,911	267,947	422,279	537,313
Less: comprehensive income attributable to noncontrolling interests	13,517	16,719	25,298	33,503
Comprehensive income attributable to common stockholders	$ 214,394	$ 251,228	$ 396,981	$ 503,810

XML

Condensed Consolidated Statement of Noncontrolling Interests and Equity - USD ($) $ in Thousands	Total	Series D Units	Redemption of Operating Partnership units for cash	Redemption of Operating Partnership units for cash Series B Units	Redemption Of Units For Common Stock Series A Units	Redemption Of Units For Common Stock Series D Units	Noncontrolling Interest - Preferred Operating Partnership	Noncontrolling Interest - Preferred Operating Partnership Series D Units	Noncontrolling Interest - Preferred Operating Partnership Redemption of Operating Partnership units for cash Series B Units	Noncontrolling Interest - Preferred Operating Partnership Redemption Of Units For Common Stock Series A Units	Noncontrolling Interest - Preferred Operating Partnership Redemption Of Units For Common Stock Series D Units	Noncontrolling Interest - Operating Partnership	Noncontrolling Interest - Operating Partnership Redemption of Operating Partnership units for cash	Noncontrolling Interest - Other	Common Stock	Common Stock Redemption Of Units For Common Stock Series A Units	Common Stock Redemption Of Units For Common Stock Series D Units	Additional Paid-in Capital	Additional Paid-in Capital Redemption of Operating Partnership units for cash	Additional Paid-in Capital Redemption Of Units For Common Stock Series A Units	Additional Paid-in Capital Redemption Of Units For Common Stock Series D Units	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance, beginning of period at Dec. 31, 2021	$ 3,785,976						$ 259,110					$ 410,053		$ 317	$ 1,339			$ 3,285,948				$ (42,546)	$ (128,245)
Balance, beginning of period (in shares) at Dec. 31, 2021															133,922,305
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)															180,800
Issuance of common stock in connection with share based compensation	9,789														$ 2			9,787
Restricted stock grants cancelled (in shares)															(7,901)
Redemption of operating partnership units			$ (3,504)	$ (4,500)					$ (4,500)				$ (1,125)						$ (2,379)
Operating Partnership units in conjunction with business combinations (in shares)	16,000	$ 6,000						$ 6,000				16,000
Issuance of common stock in conjunction with acquisitions (in shares)															186,766
Issuance of common stock in conjunction with acquisitions	40,963														$ 2			40,961
Repurchase of common stock, net of offering costs (in shares)															381,786
Repurchase of common stock, net of offering costs	(63,008)														$ (4)								(63,004)
Net income	465,551						8,824					21,018											435,709
Other comprehensive income	71,762						433					3,228										68,101
Distributions to Operating Partnership units held by noncontrolling interests	(28,238)						(8,636)					(19,602)
Dividends paid on common stock	(403,551)																						(403,551)
Balance, end of period at Jun. 30, 2022	3,893,240						261,231					429,572		317	$ 1,339			3,334,317				25,555	(159,091)
Balance, end of period (in shares) at Jun. 30, 2022															133,900,184
Balance, beginning of period at Dec. 31, 2021	$ 3,785,976						259,110					410,053		317	$ 1,339			3,285,948				(42,546)	(128,245)
Balance, beginning of period (in shares) at Dec. 31, 2021															133,922,305
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock, net of offering costs (in shares)	(381,786)
Repurchase of common stock, net of offering costs	$ (63,008)
Balance, end of period at Dec. 31, 2022	$ 4,078,274						261,502					556,095		1,080	$ 1,339			3,345,332				48,798	(135,872)
Balance, end of period (in shares) at Dec. 31, 2022	133,921,020														133,921,020
Balance, beginning of period at Mar. 31, 2022	$ 3,878,164						256,051					411,581		317	$ 1,343			3,329,608				6,457	(127,193)
Balance, beginning of period (in shares) at Mar. 31, 2022															134,251,076
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)															38,016
Issuance of common stock in connection with share based compensation	5,245																	5,245
Restricted stock grants cancelled (in shares)															(7,122)
Redemption of operating partnership units			$ (832)	$ (1,125)					$ (1,125)				$ (296)						$ (536)
Operating Partnership units in conjunction with business combinations (in shares)	16,000	$ 6,000						$ 6,000				16,000
Repurchase of common stock, net of offering costs (in shares)															(381,786)
Repurchase of common stock, net of offering costs	(63,008)														$ (4)								(63,004)
Net income	247,834						4,491					11,213											232,130
Other comprehensive income	20,113						120					895										19,098
Distributions to Operating Partnership units held by noncontrolling interests	(14,127)						(4,306)					(9,821)
Dividends paid on common stock	(201,024)																						(201,024)
Balance, end of period at Jun. 30, 2022	3,893,240						261,231					429,572		317	$ 1,339			3,334,317				25,555	(159,091)
Balance, end of period (in shares) at Jun. 30, 2022															133,900,184
Balance, beginning of period at Dec. 31, 2022	$ 4,078,274						261,502					556,095		1,080	$ 1,339			3,345,332				48,798	(135,872)
Balance, beginning of period (in shares) at Dec. 31, 2022	133,921,020														133,921,020
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)															143,387
Issuance of common stock in connection with share based compensation	$ 12,439														$ 2			12,437
Taxes paid upon settlement of share based compensation (in shares)															(7,660)
Taxes paid upon net settlement of share based compensation	(7,543)																	(7,543)
Restricted stock grants cancelled (in shares)															(3,855)
Redemption of Operating Partnership units (in shares)																851,698	154,307
Redemption of operating partnership units					$ (5,316)	$ 0				$ (16,339)	$ (22,064)					$ 8	$ 2			$ 11,015	$ 22,062
Noncontrolling interest in consolidated joint venture	$ 2,100													2,100
Repurchase of common stock, net of offering costs (in shares)	0
Net income	$ 424,190						4,508					21,069		(101)									398,714
Other comprehensive income	(1,911)											(178)										(1,733)
Distributions to Operating Partnership units held by noncontrolling interests	(28,043)						(4,667)					(23,376)
Dividends paid on common stock	(438,783)																						(438,783)
Balance, end of period at Jun. 30, 2023	$ 4,035,407						222,940					553,610		3,079	$ 1,351			3,383,303				47,065	(175,941)
Balance, end of period (in shares) at Jun. 30, 2023	135,058,897														135,058,897
Balance, beginning of period at Mar. 31, 2023	$ 4,032,701						222,940					554,015		2,413	$ 1,350			3,376,458				35,081	(159,556)
Balance, beginning of period (in shares) at Mar. 31, 2023															135,007,280
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)															53,823
Issuance of common stock in connection with share based compensation	6,940														$ 1			6,939
Taxes paid upon settlement of share based compensation (in shares)															(573)
Taxes paid upon net settlement of share based compensation	(94)																	(94)
Restricted stock grants cancelled (in shares)															(1,633)
Noncontrolling interest in consolidated joint venture	709													709
Net income	215,312						2,254					10,691		(43)									202,410
Other comprehensive income	12,599											615										11,984
Distributions to Operating Partnership units held by noncontrolling interests	(13,965)						(2,254)					(11,711)
Dividends paid on common stock	(218,795)																						(218,795)
Balance, end of period at Jun. 30, 2023	$ 4,035,407						$ 222,940					$ 553,610		$ 3,079	$ 1,351			$ 3,383,303				$ 47,065	$ (175,941)
Balance, end of period (in shares) at Jun. 30, 2023	135,058,897														135,058,897

XML

Condensed Consolidated Statement of Noncontrolling Interests and Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends paid on common stock (in dollars per share)	$ 1.62	$ 1.50	$ 3.24	$ 3.00

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 424,190	$ 465,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	157,576	136,973
Amortization of deferred financing costs	5,470	3,933
Non-cash lease expense	942	939
Compensation expense related to stock-based awards	12,439	9,787
Accrual of interest income added to principal of debt securities and notes receivable	(16,200)	(19,235)
Gain on real estate transactions	0	(14,249)
Distributions from unconsolidated real estate ventures	7,594	6,204
Changes in operating assets and liabilities:
Other assets	(28,129)	15,789
Accounts payable and accrued expenses	36,234	28,646
Other liabilities	29,411	6,049
Net cash provided by operating activities	629,527	640,387
Cash flows from investing activities:
Acquisition of real estate assets	(127,416)	(438,287)
Cash paid for business combination	0	(157,301)
Development and redevelopment of real estate assets	(37,244)	(29,256)
Proceeds from sale of real estate assets and investments in real estate ventures	1,046	39,367
Investment in unconsolidated real estate entities	(171,126)	(76,339)
Return of investment in unconsolidated real estate ventures	0	342
Issuance and purchase of notes receivable	(124,103)	(204,930)
Principal payments received from notes receivable	46,466	223,773
Proceeds from sale of notes receivable	60,696	82,115
Purchase of equipment and fixtures	(5,905)	(9,512)
Net cash used in investing activities	(357,586)	(570,028)
Cash flows from financing activities:
Proceeds from notes payable and revolving lines of credit	2,479,592	1,948,657
Principal payments on notes payable and revolving lines of credit	(3,246,378)	(1,915,531)
Proceeds from issuance of public bonds, net	950,000	400,000
Deferred financing costs	(28,151)	(6,713)
Repurchase of common stock	0	(63,008)
Redemption of Operating Partnership units held by noncontrolling interests	0	(3,504)
Redemption of Preferred Units for cash	(5,000)	(4,500)
Dividends paid on common stock	(438,783)	(403,551)
Distributions to noncontrolling interests	(28,043)	(28,237)
Net cash used in financing activities	(316,763)	(76,387)
Net decrease in cash, cash equivalents, and restricted cash	(44,822)	(6,028)
Cash, cash equivalents, and restricted cash, beginning of the period	97,735	76,194
Cash, cash equivalents, and restricted cash, end of the period	52,913	70,166
Cash and cash equivalents	50,644	58,729
Restricted cash	2,269	11,437
Total	52,913	70,166
Supplemental schedule of cash flow information
Interest paid	150,459	82,381
Income taxes paid	1,910	9,116
Redemption of Operating Partnership units held by noncontrolling interests for common stock
Noncontrolling interests in Operating Partnership	116,336	0
Common stock and paid-in capital	(11,336)	0
Noncontrolling interests in Operating Partnership Note Receivable Payoff	(100,000)	0
OP Unit Redemption - Cash Proceeds	(5,000)	0
Acquisition and establishment of operating lease right of use assets and lease liabilities
Real estate assets - operating lease right-of-use assets	0	1,689
Operating lease liabilities	0	(1,689)
Acquisitions of real estate assets
Real estate assets, net	0	48,535
Value of equity issued	0	(40,965)
Net Liabilities Assumed	0	0
Investment in unconsolidated real estate ventures	0	(747)
Accrued construction costs and capital expenditures
Acquisition of real estate assets	4,503	987
Accounts payable and accrued expenses	(4,503)	(987)
Redemption of Preferred Operating Partnership units for common stock
Preferred Operating Partnership units	33,403	0
Additional paid-in capital	(33,403)	0
Preferred OP Units
Issuance of OP and Preferred OP units in conjunction with business combination
OP units issued	0	(6,000)
Common OP Units
Issuance of OP and Preferred OP units in conjunction with business combination
OP units issued	$ 0	$ (16,000)

XML

Organization

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

ORGANIZATION

Extra Space Storage Inc. (the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“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 June 30, 2023, the Company had direct and indirect equity interests in 1,460 stores. In addition, the Company managed 978 stores for third parties, bringing the total number of stores which it owns and/or manages to 2,438. These stores are located in 41 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.

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

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 six months ended June 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. As of June 30, 2023, the Company has converted all of its LIBOR-indexed debt and derivatives to SOFR-based indexes (effective with the respective instrument’s next reset date for certain instruments). For all derivatives in hedge accounting relationships, the elective relief in Topic 848 that allows for the continuation of hedge accounting throughout the transition process was utilized.

XML

Fair Value Disclosures

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Disclosures

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 June 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 June 30, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	Quoted 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	$	—	$	51,235	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of June 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.

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 June 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. Goodwill 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 June 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.

The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated:

	June 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	1,889	$	1,900	$	95,965	$	101,900
Fixed rate notes receivable	$	1,571	$	1,625	$	5,191	$	5,241
Fixed rate debt	$	5,005,056	$	5,540,970	$	4,320,014	$	4,762,196

XML

Real Estate Assets

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate Assets

REAL ESTATE ASSETSThe components of real estate assets are summarized as follows:

	June 30, 2023		December 31, 2022
Land	$	2,371,918	$	2,356,746
Buildings, improvements and other intangibles	9,579,378		9,425,468
Right of use asset - finance lease	141,861		136,259
Intangible assets - tenant relationships	152,735		152,775
Intangible lease rights	12,943		12,943
	12,258,835		12,084,191
Less: accumulated depreciation and amortization	(2,295,568)		(2,138,524)
Net operating real estate assets	9,963,267		9,945,667
Real estate under development/redevelopment	54,084		52,311
Real estate assets, net	$	10,017,351	$	9,997,978

XML

Other Assets

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

OTHER ASSETS

The components of other assets are summarized as follows:

	June 30, 2023		December 31, 2022
Goodwill	$	170,811	$	170,811
Receivables, net	99,971		85,937
Prepaid expenses and deposits	67,078		50,318
Equipment and fixtures, net	42,657		42,808
Fair value of interest rate swaps	51,235		54,839
Deferred line of credit financing costs, net	4,382		4,846
Restricted cash	2,269		4,867
	$	438,403	$	414,426

XML

Earnings Per Common Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Common Share

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, 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 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.

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 June 30, 2023 and 2022 was $150.45 and $185.25, 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 June 30,		For the Six Months Ended June 30,
	2023	2022	2023	2022
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	223,118	183,807	218,259	183,342
Series D Units	—	—	—	1,074,933
	223,118	183,807	218,259	1,258,275

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.

The computation of earnings per common share is as follows for the periods presented:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to common stockholders	$	202,410	$	232,130	$	398,714	$	435,709
Earnings and dividends allocated to participating securities	(323)		(313)		(627)		(601)
Earnings for basic computations	202,087		231,817		398,087		435,108
Earnings and dividends allocated to participating securities	323		—		627		—
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,441		15,201		24,569		24,978
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	—		(572)		—		(1,144)
Net income for diluted computations	$	214,851	$	246,446	$	423,283	$	458,942
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	134,832,232		134,192,540		134,672,672		134,186,426
OP Units	7,214,649		6,545,104		7,214,649		6,533,010
Series A Units	—		875,480		—		875,480
Series D Units	1,257,366		1,119,641		1,233,178		—
Unvested restricted stock awards included for treasury stock method	221,380		—		212,723		—
Shares related to dilutive stock options	4,190		5,144		4,300		5,290
Average number of common shares outstanding - diluted	143,529,817		142,737,909		143,337,522		141,600,206
Earnings per common share
Basic	$	1.50	$	1.73	$	2.96	$	3.24
Diluted	$	1.50	$	1.73	$	2.95	$	3.24

XML

Acquisitions and Dispositions

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Acquisitions and Dispositions

ACQUISITIONS AND DISPOSITIONS

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three and six months ended June 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
Period	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q2 2023	3	32,888		—		—		26		—		32,914
Q1 2023	1	13,111		—		—		6		—		13,117
Total 2023	4	$	45,999	$	—	$	—	$	32	$	—	$	46,031
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	29	$	406,843	$	6,823	$	747	$	1,085	$	40,965	$	456,463

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.

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
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, 2022		For the Year Ended December 31, 2021
	Pro Forma		Pro Forma
Total revenues	$	1,930,816	$	1,592,021

XML

Investments in Unconsolidated Real Estate Entities

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Real Estate Entities

INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIESInvestments 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 indirect subsidiary of SmartStop Self Storage REIT, Inc. 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.

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.

Net investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:

	Number of Stores	Equity Ownership %	Excess Profit % (1)	June 30,		December 31,
				2023		2022
PRISA Self Storage LLC	84	4%	4%	$	8,487	$	8,596
Storage Portfolio II JV LLC	36	10%	30%	(7,628)		(7,200)
Storage Portfolio IV JV LLC	32	10%	30%	48,511		49,139
Storage Portfolio I LLC	24	34%	49%	(42,000)		(41,372)
PR II EXR JV LLC	23	25%	25%	109,014		110,172
ESS-CA TIVS JV LP	16	55%	60%	29,938		30,778
VRS Self Storage, LLC	16	45%	54%	(15,922)		(15,399)
ARA-EXR JV LLC	12	10%	30%	18,982		19,137
ESS-NYFL JV LP	11	16%	24%	11,031		11,332
Extra Space Northern Properties Six LLC	10	10%	35%	(3,633)		(3,382)
Alan Jathoo JV LLC	9	10%	10%	7,313		7,414
ESS Bristol Investments LLC	8	10%	30%	2,017		2,110
ESS - BGO Atlanta GA JV LLC	8	20%	35%	35,185		30,467
ESS - BGO Storage JV I LLC	6	20%	35%	22,781		7,466
Storage Portfolio V JV LLC	6	10%	30%	9,416		9,517
PR EXR Self Storage, LLC	5	25%	40%	57,984		58,476
Storage Portfolio III JV LLC	5	10%	30%	5,419		5,467
Other unconsolidated real estate ventures	12	20-50%	20-50%	31,697		32,342
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Strategic Storage Trust VI, Inc. Preferred Stock (3)	n/a	n/a	n/a	150,000		—
Net Investments in and Cash distributions in unconsolidated real estate entities	323			$	678,592	$	515,060

(1)    Includes pro-rata equity ownership share and maximum potential promoted interest.

(2)    In October 2019, the Company invested $200,000 in shares of convertible preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") with a dividend rate of 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 Trust VI, Inc. ("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 Trust VI, Inc.. 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.

During the six months ended June 30, 2023, the Company contributed a total of $20,686 of cash to its joint ventures, for its pro-rata portion of the purchase price of five operating stores.

XML

Investments in Debt Securities and Notes Receivable

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments in Debt Securities and Notes Receivable

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, L.P. ("NexPoint Investment") and receivables due to the Company under its bridge loan program. Information about these balances is as follows:

	June 30, 2023		December 31, 2022
Debt securities - NexPoint Preferred Stock	$	300,000	$	300,000
Notes Receivable - Bridge Loans	540,355		491,879
Dividends and Interest Receivable	50,835		66,170
	$	891,190	$	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 initial dividend rates of 8.5%. If the investment is not retired after six years, the preferred dividends increase annually.

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 a portion of the mortgage receivables. During the six months ended June 30, 2023 the Company sold a total principal amount of $60,696 of its mortgage bridge loans receivable to third parties for a total of $60,696 in cash and closed on $104,120 in new bridge loans.

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.

XML

Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

DEBT

In June 2023, the Operating Partnership executed a public bond issuance by selling $450.0 million principal amount of 5.500% Senior Notes due 2030 (the "Notes Due 2030"). Interest on the Notes Due 2030 is paid semi-annually in arrears on January 1 and July 1 of each year. The Notes Due 2030 will mature on July 1, 2030, and the Operating Partnership may redeem the Notes Due 2030 at its option and sole discretion at any time prior to May 1, 2030 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 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 Partnership may redeem the Notes Due 2028, the Notes Due 2029, the Notes Due 2030, 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 and the Notes Due 2030 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.

The components of term debt are summarized as follows:

Term Debt	June 30, 2023		December 31, 2022		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	404,336	$	521,820	2.67% - 4.56%		April 2025 - February 2030
Secured variable-rate (1)	883,052		772,604			6.14% - 6.59%	August 2023 - September 2030
Unsecured fixed-rate	5,136,633		4,240,376		2.35% - 5.70%		January 2025 - March 2032
Unsecured variable-rate	848,367		884,624			6.14% - 6.19%	January 2024 - January 2028
Total	7,272,388		6,419,424
Less: Unamortized debt issuance costs	(54,900)		(32,962)
Total	$	7,217,488	$	6,386,462
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Adjusted Term SOFR and Adjusted Daily Simple SOFR.

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at June 30, 2023:

2023	$	332,680
2024	335,000
2025	707,289
2026	809,508
2027	869,713
Thereafter	4,218,198
	$	7,272,388

On June 22, 2023, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”), which increased the commitment of the revolving credit facility to $1,940.0 million and extended maturity to June 2027. In connection with entering into the Credit Agreement, the Company paid off Tranche 5 and added the Tranche 8 term loan, maturing June 2024, which allowed the Company to draw up to $1,000.0 million in connection with the Life Storage merger. Tranche 8 was undrawn as of June 30, 2023, but was fully drawn on July 20, 2023, in connection with the closing of the merger with Life Storage, Inc. (“Life Storage”).

As of June 30, 2023, the terms of the Credit Agreement are as follows:

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,940,000	June 2027
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 (2)	—		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
Tranche 8 Term Loan Facility (3)	$	1,000,000	June 2024
	$	4,865,000
(1) Term loan amounts have been fully drawn as of June 30, 2023.
(2) The Tranche 5 Term Loan was paid off prior to maturity as part of the June 2023 recast.
(3) The Tranche 8 Term Loan was undrawn as of June 30, 2023, but was fully drawn on July 20, 2023.

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 June 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 (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 2.2% per annum and the applicable base rate margin ranging from 0.00% to 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 June 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. As of June 30, 2023, the interest rates for the tranches are Adjusted Term SOFR/Adjusted Daily Simple SOFR ("ASOFR") + 0.95% and ASOFR + 1.25%, 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 June 30, 2023
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	23,250	$	140,000	6.44%	7/1/2026	SOFR plus 1.35%
Credit Line 2 (3)(4)	252,000		1,940,000		6.04%	6/22/2027	ASOFR plus 0.95%
	$	275,250	$	2,080,000
(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 was extended to June 22, 2027 with two six-month extensions available.
(4) Basis Rate as of June 30, 2023. Rate is subject to change based on our investment grade rating.

As of June 30, 2023, the Company’s percentage of fixed-rate debt to total debt was 73.4%. The weighted average interest rates of the Company’s fixed and variable-rate debt were 3.8% and 6.4%, respectively. The combined weighted average interest rate was 4.5%.

XML

Derivatives

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

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 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 six months ended June 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 $34,219 will be reclassified as an increase to interest income.

The Company held 17 derivative financial instruments which had a total combined notional amount of $1,666,265 as of June 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
Derivatives designated as hedging instruments:	June 30, 2023		December 31, 2022
Other assets	$	51,235	$	54,839
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 June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Three Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	23,628	$	14,358	Interest expense	$	11,033	$	(5,755)

	Gain (loss) recognized in OCI for the Six Months Ended June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Six Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	18,065	$	57,099	Interest expense	$	19,984	$	(14,667)

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 June 30, 2023, the Company did not have any net liability positions in the fair value of derivatives.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

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

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.

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 six months ended June 30, 2023, no shares were repurchased. As of June 30, 2023, the Company had remaining authorization to repurchase shares with an aggregate value up to $336,992

XML

Noncontrolling Interest Represented by Preferred Operating Partnership Units

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Noncontrolling Interest Represented by Preferred Operating Partnership Units

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 June 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:

	June 30, 2023		December 31, 2022
Series A Units	$	—	$	16,498
Series B Units	33,568		33,568
Series D Units	189,372		211,436
	$	222,940	$	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.

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.

On January 25, 2023, the redemption obligation for all outstanding Series A Units was satisfied, at the Company’s option, in $5,000 cash, 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 June 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 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 June 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 $189,372, 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 units valued at $6,000 in connection with the acquisition of Bargold.

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% ownership interest in the Operating Partnership as of June 30, 2023. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.0% are held by certain former owners of assets acquired by the Operating Partnership. As of June 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 June 30, 2023, the ten-day average closing price of the Company's common stock was $145.79 and there were 7,214,649 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on June 30, 2023 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,051,824 in cash consideration to redeem the units.

OP Unit activity is summarized as follows for the periods presented:

	For the Six Months Ended June 30,
	2023		2022
OP Units redeemed for cash	—		18,028
Cash paid for OP Units redeemed	$	—	$	3,504
OP Units issued in conjunction with business combination and acquisitions	—		91,743

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 seven consolidated joint ventures as of June 30, 2023. One joint venture owns one operating store and the other six joint ventures each have a property under development. The voting interest of each third-party owner is between 2.0% and 31.0%.

XML

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests

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 June 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:

	June 30, 2023		December 31, 2022
Series A Units	$	—	$	16,498
Series B Units	33,568		33,568
Series D Units	189,372		211,436
	$	222,940	$	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.

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.

On January 25, 2023, the redemption obligation for all outstanding Series A Units was satisfied, at the Company’s option, in $5,000 cash, 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 June 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 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 June 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 $189,372, 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 units valued at $6,000 in connection with the acquisition of Bargold.

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% ownership interest in the Operating Partnership as of June 30, 2023. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.0% are held by certain former owners of assets acquired by the Operating Partnership. As of June 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 June 30, 2023, the ten-day average closing price of the Company's common stock was $145.79 and there were 7,214,649 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on June 30, 2023 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,051,824 in cash consideration to redeem the units.

OP Unit activity is summarized as follows for the periods presented:

	For the Six Months Ended June 30,
	2023		2022
OP Units redeemed for cash	—		18,028
Cash paid for OP Units redeemed	$	—	$	3,504
OP Units issued in conjunction with business combination and acquisitions	—		91,743

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 seven consolidated joint ventures as of June 30, 2023. One joint venture owns one operating store and the other six joint ventures each have a property under development. The voting interest of each third-party owner is between 2.0% and 31.0%.

XML

Segment Information

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Information

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 June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Self-Storage Operations	$	440,747	$	408,044	$	874,709	$	787,852
Tenant Reinsurance	48,433		46,427		96,137		90,224
Total segment revenues	$	489,180	$	454,471	$	970,846	$	878,076
Operating expenses:
Self-Storage Operations	$	114,637	$	104,252	$	231,803	$	207,794
Tenant Reinsurance	9,482		7,537		18,571		14,579
Total segment operating expenses	$	124,119	$	111,789	$	250,374	$	222,373
Net operating income:
Self-Storage Operations	$	326,110	$	303,792	$	642,906	$	580,058
Tenant Reinsurance	38,951		38,890		77,566		75,645
Total segment net operating income:	$	365,061	$	342,682	$	720,472	$	655,703
Other components of net income:
Management fees and other income	$	22,206	$	20,517	$	43,590	$	40,474
Transaction related costs	—		(1,465)		—		(1,465)
General and administrative expense	(34,842)		(31,251)		(69,605)		(61,013)
Depreciation and amortization expense	(79,086)		(69,067)		(157,576)		(136,973)
Gain on real estate transactions	—		14,249		—		14,249
Interest expense	(86,372)		(47,466)		(166,471)		(90,004)
Interest income	21,077		15,060		40,515		34,049
Equity in earnings and dividend income from unconsolidated real estate entities	13,254		10,190		23,559		19,287
Income tax expense	(5,986)		(5,615)		(10,294)		(8,756)
Net income	$	215,312	$	247,834	$	424,190	$	465,551

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIESAs of June 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.

As of June 30, 2023, the Company was under agreement to acquire 11 stores at a total purchase price of $125,245. Four stores are scheduled to close in 2023 and seven stores are scheduled to close in 2024. Additionally, the Company is under agreement to acquire three stores with joint venture partners, for a total investment of $9,864. Two stores are 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.

XML

Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTSOn July 20, 2023, the Company closed its merger with Life Storage, Inc. in an all-stock transaction (the "Life Storage 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 partnership unit) of Life Storage they owned for an estimated total consideration of $11,600,000, based on the Company's closing share price on July 19, 2023. At closing, the Company retired $1,200,000 in balances on Life Storage's line of credit which included $375,000 which Life Storage used to pay off its private placement notes in connection with the closing. The Company also paid off and/or defeased $32,000 in secured loans. On July 25, 2023, the Company completed an obligor exchange of Life Storage's various Senior Notes totaling $2,400,000. Remaining Life Storage senior note balances which were not exchanged total $48,900 and no longer have any financial reporting requirements or covenants. Following the merger, the combined company owned and/or managed over 3,500 locations and over 264.0 million net rentable square feet.

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income attributable to common stockholders	$ 202,410	$ 232,130	$ 398,714	$ 435,709

XML

Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

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 six months ended June 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

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. As of June 30, 2023, the Company has converted all of its LIBOR-indexed debt and derivatives to SOFR-based indexes (effective with the respective instrument’s next reset date for certain instruments). For all derivatives in hedge accounting relationships, the elective relief in Topic 848 that allows for the continuation of hedge accounting throughout the transition process was utilized.

XML

Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	Quoted 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	$	—	$	51,235	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

Schedule of Fair Value of Financial Instruments

The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated:

	June 30, 2023				December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	1,889	$	1,900	$	95,965	$	101,900
Fixed rate notes receivable	$	1,571	$	1,625	$	5,191	$	5,241
Fixed rate debt	$	5,005,056	$	5,540,970	$	4,320,014	$	4,762,196

XML

Real Estate Assets (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of Components of Real Estate Assets

The components of real estate assets are summarized as follows:

	June 30, 2023		December 31, 2022
Land	$	2,371,918	$	2,356,746
Buildings, improvements and other intangibles	9,579,378		9,425,468
Right of use asset - finance lease	141,861		136,259
Intangible assets - tenant relationships	152,735		152,775
Intangible lease rights	12,943		12,943
	12,258,835		12,084,191
Less: accumulated depreciation and amortization	(2,295,568)		(2,138,524)
Net operating real estate assets	9,963,267		9,945,667
Real estate under development/redevelopment	54,084		52,311
Real estate assets, net	$	10,017,351	$	9,997,978

XML

Other Assets (Tables)

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Other Assets

The components of other assets are summarized as follows:

	June 30, 2023		December 31, 2022
Goodwill	$	170,811	$	170,811
Receivables, net	99,971		85,937
Prepaid expenses and deposits	67,078		50,318
Equipment and fixtures, net	42,657		42,808
Fair value of interest rate swaps	51,235		54,839
Deferred line of credit financing costs, net	4,382		4,846
Restricted cash	2,269		4,867
	$	438,403	$	414,426

XML

Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Antidilutive Shares Excluded from Computation of Earnings Per Share

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 June 30,		For the Six Months Ended June 30,
	2023	2022	2023	2022
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	223,118	183,807	218,259	183,342
Series D Units	—	—	—	1,074,933
	223,118	183,807	218,259	1,258,275

Schedule of Computation of Earnings Per Common Share

The computation of earnings per common share is as follows for the periods presented:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to common stockholders	$	202,410	$	232,130	$	398,714	$	435,709
Earnings and dividends allocated to participating securities	(323)		(313)		(627)		(601)
Earnings for basic computations	202,087		231,817		398,087		435,108
Earnings and dividends allocated to participating securities	323		—		627		—
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,441		15,201		24,569		24,978
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	—		(572)		—		(1,144)
Net income for diluted computations	$	214,851	$	246,446	$	423,283	$	458,942
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	134,832,232		134,192,540		134,672,672		134,186,426
OP Units	7,214,649		6,545,104		7,214,649		6,533,010
Series A Units	—		875,480		—		875,480
Series D Units	1,257,366		1,119,641		1,233,178		—
Unvested restricted stock awards included for treasury stock method	221,380		—		212,723		—
Shares related to dilutive stock options	4,190		5,144		4,300		5,290
Average number of common shares outstanding - diluted	143,529,817		142,737,909		143,337,522		141,600,206
Earnings per common share
Basic	$	1.50	$	1.73	$	2.96	$	3.24
Diluted	$	1.50	$	1.73	$	2.95	$	3.24

XML

Acquisitions and Dispositions (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of Operating Properties Acquired

All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

												Total
Period	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q2 2023	3	32,888		—		—		26		—		32,914
Q1 2023	1	13,111		—		—		6		—		13,117
Total 2023	4	$	45,999	$	—	$	—	$	32	$	—	$	46,031
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	29	$	406,843	$	6,823	$	747	$	1,085	$	40,965	$	456,463

Fair Values of Assets Acquired and Liabilities Assumed

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

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	$	179,302

Revenues and Earnings of Acquired Company

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

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

XML

Investments in Unconsolidated Real Estate Entities (Tables)

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Schedule of investments in unconsolidated real estate ventures

Net investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:

	Number of Stores	Equity Ownership %	Excess Profit % (1)	June 30,		December 31,
				2023		2022
PRISA Self Storage LLC	84	4%	4%	$	8,487	$	8,596
Storage Portfolio II JV LLC	36	10%	30%	(7,628)		(7,200)
Storage Portfolio IV JV LLC	32	10%	30%	48,511		49,139
Storage Portfolio I LLC	24	34%	49%	(42,000)		(41,372)
PR II EXR JV LLC	23	25%	25%	109,014		110,172
ESS-CA TIVS JV LP	16	55%	60%	29,938		30,778
VRS Self Storage, LLC	16	45%	54%	(15,922)		(15,399)
ARA-EXR JV LLC	12	10%	30%	18,982		19,137
ESS-NYFL JV LP	11	16%	24%	11,031		11,332
Extra Space Northern Properties Six LLC	10	10%	35%	(3,633)		(3,382)
Alan Jathoo JV LLC	9	10%	10%	7,313		7,414
ESS Bristol Investments LLC	8	10%	30%	2,017		2,110
ESS - BGO Atlanta GA JV LLC	8	20%	35%	35,185		30,467
ESS - BGO Storage JV I LLC	6	20%	35%	22,781		7,466
Storage Portfolio V JV LLC	6	10%	30%	9,416		9,517
PR EXR Self Storage, LLC	5	25%	40%	57,984		58,476
Storage Portfolio III JV LLC	5	10%	30%	5,419		5,467
Other unconsolidated real estate ventures	12	20-50%	20-50%	31,697		32,342
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Strategic Storage Trust VI, Inc. Preferred Stock (3)	n/a	n/a	n/a	150,000		—
Net Investments in and Cash distributions in unconsolidated real estate entities	323			$	678,592	$	515,060

(1)    Includes pro-rata equity ownership share and maximum potential promoted interest.

(2)    In October 2019, the Company invested $200,000 in shares of convertible preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") with a dividend rate of 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 Trust VI, Inc. ("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 Trust VI, Inc.. 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.

XML

Investments in Debt Securities and Notes Receivable (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments in Debt Securities and Bridge Loans Receivable

Information about these balances is as follows:

	June 30, 2023		December 31, 2022
Debt securities - NexPoint Preferred Stock	$	300,000	$	300,000
Notes Receivable - Bridge Loans	540,355		491,879
Dividends and Interest Receivable	50,835		66,170
	$	891,190	$	858,049

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Components of Debt

The components of term debt are summarized as follows:

Term Debt	June 30, 2023		December 31, 2022		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	404,336	$	521,820	2.67% - 4.56%		April 2025 - February 2030
Secured variable-rate (1)	883,052		772,604			6.14% - 6.59%	August 2023 - September 2030
Unsecured fixed-rate	5,136,633		4,240,376		2.35% - 5.70%		January 2025 - March 2032
Unsecured variable-rate	848,367		884,624			6.14% - 6.19%	January 2024 - January 2028
Total	7,272,388		6,419,424
Less: Unamortized debt issuance costs	(54,900)		(32,962)
Total	$	7,217,488	$	6,386,462
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Adjusted Term SOFR and Adjusted Daily Simple SOFR.

Schedule of Maturities of Notes Payable

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at June 30, 2023:

2023	$	332,680
2024	335,000
2025	707,289
2026	809,508
2027	869,713
Thereafter	4,218,198
	$	7,272,388

Schedule of Information on Lines of Credit

As of June 30, 2023, the terms of the Credit Agreement are as follows:

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,940,000	June 2027
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 (2)	—		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
Tranche 8 Term Loan Facility (3)	$	1,000,000	June 2024
	$	4,865,000
(1) Term loan amounts have been fully drawn as of June 30, 2023.
(2) The Tranche 5 Term Loan was paid off prior to maturity as part of the June 2023 recast.
(3) The Tranche 8 Term Loan was undrawn as of June 30, 2023, but was fully drawn on July 20, 2023.

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 June 30, 2023
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	23,250	$	140,000	6.44%	7/1/2026	SOFR plus 1.35%
Credit Line 2 (3)(4)	252,000		1,940,000		6.04%	6/22/2027	ASOFR plus 0.95%
	$	275,250	$	2,080,000
(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 was extended to June 22, 2027 with two six-month extensions available.
(4) Basis Rate as of June 30, 2023. Rate is subject to change based on our investment grade rating.

XML

Derivatives (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of balance sheet classification and fair value of entity's derivative financial 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
Derivatives designated as hedging instruments:	June 30, 2023		December 31, 2022
Other assets	$	51,235	$	54,839
Other liabilities	$	—	$	73

Schedule of information relating to gain (loss) recognized on swap agreements

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 June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Three Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	23,628	$	14,358	Interest expense	$	11,033	$	(5,755)

	Gain (loss) recognized in OCI for the Six Months Ended June 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Six Months Ended June 30,
Type	2023		2022			2023		2022
Swap Agreements	$	18,065	$	57,099	Interest expense	$	19,984	$	(14,667)

XML

Noncontrolling Interest Represented by Preferred Operating Partnership Units (Tables)

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Balances of OP Units

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:

	June 30, 2023		December 31, 2022
Series A Units	$	—	$	16,498
Series B Units	33,568		33,568
Series D Units	189,372		211,436
	$	222,940	$	261,502

XML

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests (Tables)

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interest

OP Unit activity is summarized as follows for the periods presented:

	For the Six Months Ended June 30,
	2023		2022
OP Units redeemed for cash	—		18,028
Cash paid for OP Units redeemed	$	—	$	3,504
OP Units issued in conjunction with business combination and acquisitions	—		91,743

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Financial Information of Business Segments

Financial information for the Company’s business segments is set forth below:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Self-Storage Operations	$	440,747	$	408,044	$	874,709	$	787,852
Tenant Reinsurance	48,433		46,427		96,137		90,224
Total segment revenues	$	489,180	$	454,471	$	970,846	$	878,076
Operating expenses:
Self-Storage Operations	$	114,637	$	104,252	$	231,803	$	207,794
Tenant Reinsurance	9,482		7,537		18,571		14,579
Total segment operating expenses	$	124,119	$	111,789	$	250,374	$	222,373
Net operating income:
Self-Storage Operations	$	326,110	$	303,792	$	642,906	$	580,058
Tenant Reinsurance	38,951		38,890		77,566		75,645
Total segment net operating income:	$	365,061	$	342,682	$	720,472	$	655,703
Other components of net income:
Management fees and other income	$	22,206	$	20,517	$	43,590	$	40,474
Transaction related costs	—		(1,465)		—		(1,465)
General and administrative expense	(34,842)		(31,251)		(69,605)		(61,013)
Depreciation and amortization expense	(79,086)		(69,067)		(157,576)		(136,973)
Gain on real estate transactions	—		14,249		—		14,249
Interest expense	(86,372)		(47,466)		(166,471)		(90,004)
Interest income	21,077		15,060		40,515		34,049
Equity in earnings and dividend income from unconsolidated real estate entities	13,254		10,190		23,559		19,287
Income tax expense	(5,986)		(5,615)		(10,294)		(8,756)
Net income	$	215,312	$	247,834	$	424,190	$	465,551

XML

Organization (Detail)	Jun. 30, 2023 store state
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating storage facilities in which the entity has equity interests (in stores)	1,460
Number of stores owned by franchisees and third parties	978
Number of operating stores owned and/or managed	2,438
Number of states in which operating storage facilities are located | state	41

XML

Fair Value Disclosures - Assets and Liabilities on a Recurring Basis (Detail) - Recurring Basis $ in Thousands	Jun. 30, 2023 USD ($)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	$ 0
Other liabilities	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	51,235
Other liabilities	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	0
Other liabilities	$ 0

XML

Fair Value Disclosures - Additional Information (Detail)	Jun. 30, 2023 store
Fair Value Disclosures [Abstract]
Number of operating stores held-for-sale	0

XML

Fair Value Disclosures - Schedule of Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value
Fair Value of Financial Instruments [Line Items]
Notes receivable from Preferred and Common Operating Partnership unit holders	$ 1,889	$ 95,965
Fixed rate notes receivable	1,571	5,191
Fixed rate debt	5,005,056	4,320,014
Carrying Value
Fair Value of Financial Instruments [Line Items]
Notes receivable from Preferred and Common Operating Partnership unit holders	1,900	101,900
Fixed rate notes receivable	1,625	5,241
Fixed rate debt	$ 5,540,970	$ 4,762,196

XML

Real Estate Assets - Schedule of Components of Real Estate Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Real Estate [Abstract]
Land	$ 2,371,918	$ 2,356,746
Buildings, improvements and other intangibles	9,579,378	9,425,468
Right of use asset - finance lease	141,861	136,259
Intangible assets - tenant relationships	152,735	152,775
Intangible lease rights	12,943	12,943
Gross operating real estate assets	12,258,835	12,084,191
Less: accumulated depreciation and amortization	(2,295,568)	(2,138,524)
Net operating real estate assets	9,963,267	9,945,667
Real estate under development/redevelopment	54,084	52,311
Real estate assets, net	$ 10,017,351	$ 9,997,978

XML

Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Goodwill	$ 170,811	$ 170,811
Receivables, net	99,971	85,937
Prepaid expenses and deposits	67,078	50,318
Equipment and fixtures, net	42,657	42,808
Fair value of interest rate swaps	51,235	54,839
Deferred line of credit financing costs, net	4,382	4,846
Restricted cash	2,269	4,867	$ 11,437	$ 5,068
Other assets, net	$ 438,403	$ 414,426

XML

Earnings Per Common Share - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Average share price (in dollars per share)	$ 150.45	$ 185.25
Series A Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exchangeable preferred operating partnership units settled in cash, minimum	$ 101,700

XML

Earnings Per Common Share - Antidilutive Shares (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	223,118	183,807	218,259	1,258,275
Series B Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	223,118	183,807	218,259	183,342
Series D Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	0	0	0	1,074,933

XML

Earnings Per Common Share - Schedule of Computation (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income attributable to common stockholders	$ 202,410	$ 232,130	$ 398,714	$ 435,709
Earnings and dividends allocated to participating securities	(323)	(313)	(627)	(601)
Earnings for basic computations	202,087	231,817	398,087	435,108
Earnings for basic computations
Earnings and dividends allocated to participating securities	323	0	627	0
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,441	15,201	24,569	24,978
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	0	(572)	0	(1,144)
Net income for diluted computations	$ 214,851	$ 246,446	$ 423,283	$ 458,942
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	134,832,232	134,192,540	134,672,672	134,186,426
OP Units (in shares)	7,214,649	6,545,104	7,214,649	6,533,010
Unvested restricted stock awards included for treasury stock method (in shares)	221,380	0	212,723	0
Shares related to exchangeable senior notes and dilutive stock options (in shares)	4,190	5,144	4,300	5,290
Average number of common shares outstanding - diluted (in shares)	143,529,817	142,737,909	143,337,522	141,600,206
Earnings per common share
Basic (in dollars per share)	$ 1.50	$ 1.73	$ 2.96	$ 3.24
Diluted (in dollars per share)	$ 1.50	$ 1.73	$ 2.95	$ 3.24
Series A Units
Weighted average common shares outstanding:
Series A Units (in shares)	0	875,480	0	875,480
Series D Units
Weighted average common shares outstanding:
Series A Units (in shares)	1,257,366	1,119,641	1,233,178	0

XML

Acquisitions and Dispositions - Store Acquisitions (Detail) storage_unit in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023 USD ($) store	Mar. 31, 2023 USD ($) store	Jun. 30, 2022 USD ($) store	Mar. 31, 2022 USD ($) store	Jun. 30, 2023 USD ($) store	Jun. 30, 2022 USD ($) store	Jun. 01, 2022 storage_unit
Business Acquisition [Line Items]
Number of Stores | store	3	1	15	14	4	29
Cash Paid	$ 32,888	$ 13,111	$ 220,933	$ 185,910	$ 45,999	$ 406,843
Finance Lease Liability	0	0	6,823	0	0	6,823
Investments in Real Estate Ventures	0	0	0	747	0	747
Net Liabilities/ (Assets) Assumed	26	6	811	274	32	1,085
Value of Equity Issued	0	0	0	40,965	0	40,965
Total	$ 32,914	$ 13,117	$ 228,567	$ 227,896	$ 46,031	$ 456,463
Bargold
Business Acquisition [Line Items]
Number of storage units | storage_unit							17
Occupancy rate							97.00%

XML

Acquisitions and Dispositions - Other Investments (Details) storage_unit in Thousands, $ in Thousands		12 Months Ended
	Jun. 01, 2022 USD ($) storage_unit	Dec. 31, 2022 USD ($)	Jun. 30, 2023 USD ($)
Fair values of assets acquired and liabilities assumed
Goodwill		$ 170,811	$ 170,811
Bargold
Business Acquisition [Line Items]
Number of storage units | storage_unit	17
Occupancy rate	97.00%
Bargold
Business Acquisition [Line Items]
Purchase price	$ 179,300
Fair values of assets acquired and liabilities assumed
Cash and cash equivalents	175
Fixed assets	6,411
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	179,302
Pro forma information
Total revenues		9,374
Net income from operations		$ 1,718
Bargold | Developed technology
Fair values of assets acquired and liabilities assumed
Intangible assets	500
Bargold | Trademarks
Fair values of assets acquired and liabilities assumed
Intangible assets	500
Bargold | Customer relationships
Fair values of assets acquired and liabilities assumed
Intangible assets	$ 1,870

XML

Acquisitions and Dispositions - Pro Forma Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract]
Total revenues	$ 1,930,816	$ 1,592,021

XML

Investments in Unconsolidated Real Estate Entities (Details) $ in Thousands	1 Months Ended		6 Months Ended
	May 31, 2023 USD ($)	Oct. 31, 2019 USD ($)	Jun. 30, 2023 USD ($) property store	Dec. 31, 2022 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			323
Investment balance			$ 678,592	$ 515,060
Purchase price			$ 20,686
Number of joint venture stores purchased | store			5
PRISA Self Storage LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			84
Equity Ownership %			4.00%
Excess Profit %			4.00%
Investment balance			$ 8,487	8,596
Storage Portfolio II JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			36
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ (7,628)	(7,200)
Storage Portfolio IV JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			32
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ 48,511	49,139
Storage Portfolio I LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			24
Equity Ownership %			34.00%
Excess Profit %			49.00%
Investment balance			$ (42,000)	(41,372)
PR II EXR JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			23
Equity Ownership %			25.00%
Excess Profit %			25.00%
Investment balance			$ 109,014	110,172
ESS-CA TIVS JV LP
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			16
Equity Ownership %			55.00%
Excess Profit %			60.00%
Investment balance			$ 29,938	30,778
VRS Self Storage, LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			16
Equity Ownership %			45.00%
Excess Profit %			54.00%
Investment balance			$ (15,922)	(15,399)
ESS-NYFL JV LP
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			11
Equity Ownership %			16.00%
Excess Profit %			24.00%
Investment balance			$ 11,031	11,332
Extra Space Northern Properties Six LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			10
Equity Ownership %			10.00%
Excess Profit %			35.00%
Investment balance			$ (3,633)	(3,382)
Alan Jathoo JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			9
Equity Ownership %			10.00%
Excess Profit %			10.00%
Investment balance			$ 7,313	7,414
ESS Bristol Investments LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			8
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ 2,017	2,110
ARA-EXR JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			12
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ 18,982	19,137
ESS - BGO Atlanta GA JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			8
Equity Ownership %			20.00%
Excess Profit %			35.00%
Investment balance			$ 35,185	30,467
ESS - BGO Storage JV I LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			6
Equity Ownership %			20.00%
Excess Profit %			35.00%
Investment balance			$ 22,781	7,466
Storage Portfolio V JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			6
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ 9,416	9,517
PR EXR Self Storage, LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			5
Equity Ownership %			25.00%
Excess Profit %			40.00%
Investment balance			$ 57,984	58,476
Storage Portfolio III JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			5
Equity Ownership %			10.00%
Excess Profit %			30.00%
Investment balance			$ 5,419	5,467
Other unconsolidated real estate ventures
Schedule of Equity Method Investments [Line Items]
Number of Stores | property			12
Investment balance			$ 31,697	32,342
Other unconsolidated real estate ventures | Minimum
Schedule of Equity Method Investments [Line Items]
Equity Ownership %			20.00%
Excess Profit %			20.00%
Other unconsolidated real estate ventures | Maximum
Schedule of Equity Method Investments [Line Items]
Equity Ownership %			50.00%
Excess Profit %			50.00%
SmartStop Self Storage REIT, Inc. Preferred Stock
Schedule of Equity Method Investments [Line Items]
Investment balance		$ 200,000	$ 200,000	200,000
Investment, preferred dividend rate		6.25%
Period after which preferred stock dividend is subject to increase		5 years
Investment redemption restriction period		5 years
Strategic Storage Trust VI, Inc. Preferred Stock
Schedule of Equity Method Investments [Line Items]
Investment balance			$ 150,000	$ 0
Investment in shares	$ 150,000
Dividend rate, percentage	8.35%
Dividend rate increase, threshold	5 years
Redemption period	3 years

XML

Investments in Debt Securities and Notes Receivable - Schedule (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Held-to-maturity Securities [Line Items]
Dividends and Interest Receivable	$ 50,835	$ 66,170
Investments in debt securities and notes receivable	891,190	858,049
Notes Receivable-Bridge Loans
Schedule of Held-to-maturity Securities [Line Items]
Notes Receivable - Bridge Loans	540,355	491,879
JCAP Series A Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Debt securities - NexPoint Preferred Stock	$ 300,000	$ 300,000

XML

Investments in Debt Securities and Notes Receivable - Additional Information (Details) $ in Thousands	1 Months Ended		6 Months Ended
	Dec. 31, 2022 USD ($) shares	Nov. 30, 2020 USD ($) extension_option shares	Jun. 30, 2023 USD ($) extension_option	Jun. 30, 2022 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 300,000
Debt securities, term		6 years
Debt securities, extension option | extension_option		2
Debt securities, extension term		1 year
Debt securities, period after which preferred dividends increase annually		6 years
Bridge loans, extension option | extension_option			2
Bridge loans, extension term			1 year
Proceeds from sale of notes receivable			$ 60,696	$ 82,115
Payments for issuance/purchase of notes receivable			$ 124,103	$ 204,930
Minimum
Schedule of Held-to-maturity Securities [Line Items]
Loan to value ratio			700
Maximum
Schedule of Held-to-maturity Securities [Line Items]
Loan to value ratio			800
Notes Receivable-Bridge Loans
Schedule of Held-to-maturity Securities [Line Items]
Bridge loans, original maturities			3 years
Principle amount sold			$ (60,696)
Proceeds from sale of notes receivable			60,696
Payments for issuance/purchase of notes receivable			$ 104,120
JCAP Series A Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 200,000
Investment in debt securities (in shares) | shares		200,000
Debt securities, dividend rate		8.50%
JCAP Series B Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 100,000
Investment in debt securities (in shares) | shares		100,000
JCAP Series D Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Shares exchanged (in shares) | shares	300,000
Shares exchanged, value	$ 300,000

XML

Debt - Additional Information (Details) $ in Thousands		6 Months Ended
	Jun. 30, 2023 USD ($) extension_option	Jun. 30, 2023 USD ($) extension_option	Jul. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	May 31, 2021 USD ($)
Debt Instrument [Line Items]
Weighted average interest rate	4.50%	4.50%
Fixed rate to total debt percentage	73.40%	73.40%
Fixed rate debt	3.80%	3.80%
Variable rate debt	6.40%	6.40%
Senior Notes
Debt Instrument [Line Items]
Redemption price		100.00%
Senior Notes | Senior Notes Due 2030
Debt Instrument [Line Items]
Principal amount of notes issued	$ 450,000	$ 450,000
Debt stated interest rate	5.50%	5.50%
Senior Notes | Senior Notes Due 2028
Debt Instrument [Line Items]
Principal amount of notes issued				$ 500,000
Debt stated interest rate				5.70%
Senior Notes | Senior Notes Due 2029
Debt Instrument [Line Items]
Principal amount of notes issued				$ 400,000
Debt stated interest rate				3.90%
Senior Notes | Senior Notes Due 2032
Debt Instrument [Line Items]
Principal amount of notes issued					$ 600,000
Debt stated interest rate					2.35%
Senior Notes | Senior Notes Due 2031
Debt Instrument [Line Items]
Principal amount of notes issued						$ 450,000
Debt stated interest rate						2.55%
Line of Credit
Debt Instrument [Line Items]
Number of extensions available | extension_option	2	2
Extension term		6 months
Capacity	$ 4,865,000	$ 4,865,000
Line of Credit | Tranche 8 Term Loan Facility
Debt Instrument [Line Items]
Extension term		1 year
Capacity	$ 1,000,000	$ 1,000,000
Line of Credit | Unsecured Debt Tranche One
Debt Instrument [Line Items]
Capacity			$ 175,000
Line of Credit | Unsecured Debt Tranche Two
Debt Instrument [Line Items]
Capacity			$ 425,000
Line of Credit | Base rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.00%
Line of Credit | Base rate | Investment grade election | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		0.00%
Line of Credit | Base rate | Investment grade election | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		1.20%
Line of Credit | Federal funds rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.50%
Line of Credit | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate		1.00%
Line of Credit | SOFR | Investment grade election | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		0.70%
Line of Credit | SOFR | Investment grade election | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		2.20%
Line of Credit | Adjusted SOFR | Unsecured Debt Tranche One
Debt Instrument [Line Items]
Basis spread on variable rate	0.95%
Line of Credit | Adjusted SOFR | Unsecured Debt Tranche Two
Debt Instrument [Line Items]
Basis spread on variable rate	1.25%

XML

Debt - Schedule of Components of Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Variable Rate	4.50%
Notes Payable
Debt Instrument [Line Items]
Total	$ 7,272,388	$ 6,419,424
Less: Unamortized debt issuance costs	(54,900)	(32,962)
Total	7,217,488	6,386,462
Notes Payable | Secured notes payable
Debt Instrument [Line Items]
Fixed rate notes payable	404,336	521,820
Variable rate notes payable	$ 883,052	772,604
Notes Payable | Secured notes payable | Minimum
Debt Instrument [Line Items]
Fixed Rate	2.67%
Variable Rate	6.14%
Notes Payable | Secured notes payable | Maximum
Debt Instrument [Line Items]
Fixed Rate	4.56%
Variable Rate	6.59%
Notes Payable | Unsecured notes payable
Debt Instrument [Line Items]
Fixed rate notes payable	$ 5,136,633	4,240,376
Variable rate notes payable	$ 848,367	$ 884,624
Notes Payable | Unsecured notes payable | Minimum
Debt Instrument [Line Items]
Fixed Rate	2.35%
Variable Rate	6.14%
Notes Payable | Unsecured notes payable | Maximum
Debt Instrument [Line Items]
Fixed Rate	5.70%
Variable Rate	6.19%

XML

Debt - Schedule of Maturities of Notes Payable (Details) - Notes Payable - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
2023	$ 332,680
2024	335,000
2025	707,289
2026	809,508
2027	869,713
Thereafter	4,218,198
Total	$ 7,272,388	$ 6,419,424

XML

Debt - Schedule of Credit Agreement (Details) - Line of Credit $ in Thousands	Jun. 30, 2023 USD ($)
Line of Credit Facility [Line Items]
Debt Capacity	$ 4,865,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt Capacity	1,940,000
Tranche 1 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	400,000
Tranche 2 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	425,000
Tranche 3 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	245,000
Tranche 4 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	255,000
Tranche 5 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	0
Tranche 6 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	175,000
Tranche 7 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	425,000
Tranche 8 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	$ 1,000,000

XML

Debt - Schedule of Information on Lines of Credit (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) extension_option	Dec. 31, 2022 USD ($)	Jul. 31, 2022 USD ($)
Debt Instrument [Line Items]
Amount Drawn	$ 275,250,000	$ 945,000,000
Line of Credit
Debt Instrument [Line Items]
Capacity	$ 4,865,000,000
Number of extensions available | extension_option	2
Extension term	6 months
Line of Credit | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Lines Of Credit
Debt Instrument [Line Items]
Amount Drawn	$ 275,250,000
Capacity	2,080,000,000
Credit Line 1
Debt Instrument [Line Items]
Amount Drawn	23,250,000
Capacity	$ 140,000,000
Interest Rate	6.44%
Number of extensions available | extension_option	1
Extension term	1 year
Credit Line 1 | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	1.35%
Credit Line 2
Debt Instrument [Line Items]
Amount Drawn	$ 252,000,000
Capacity	$ 1,940,000,000
Interest Rate	6.04%
Number of extensions available | extension_option	2
Extension term	6 months
Credit Line 2 | ASOFR
Debt Instrument [Line Items]
Basis spread on variable rate	0.95%
Unsecured Debt Tranche One | Line of Credit
Debt Instrument [Line Items]
Capacity			$ 175,000,000
Unsecured Debt Tranche Two | Line of Credit
Debt Instrument [Line Items]
Capacity			$ 425,000,000

XML

Derivatives - Additional Information (Detail) $ in Thousands	Jun. 30, 2023 USD ($) derivative
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Amount reclassified as an increase to interest income	$ (34,219)
Number of derivative financial instruments | derivative	17
Combined notional amount	$ 1,666,265

XML

Derivatives - Schedule of Balance Sheet Classification and Fair Value of Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other assets
Derivative [Line Items]
Other assets	$ 51,235	$ 54,839
Other liabilities
Derivative [Line Items]
Other liabilities	$ 0	$ 73

XML

Derivatives - Gain (Loss) Recognized on Swap Agreements (Detail) - Swap Agreements - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative [Line Items]
Gain (loss) recognized in OCI	$ 23,628	$ 14,358	$ 18,065	$ 57,099
Gain (loss) reclassified from OCI	$ 11,033	$ (5,755)	$ 19,984	$ (14,667)

XML

Stockholders' Equity (Detail)			3 Months Ended	6 Months Ended		7 Months Ended	12 Months Ended
	Jan. 07, 2022 USD ($) store shares	Aug. 09, 2021 USD ($) sales_agent	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Aug. 08, 2021 USD ($) shares	Dec. 31, 2022 USD ($) shares	Oct. 15, 2020 USD ($)
Class of Stock [Line Items]
Issuance of common stock in conjunction with acquisitions (in shares) | shares	186,766
Number of stores acquired through issuance of common stock | store	2
Issuance of common stock in conjunction with acquisitions	$ 40,965,000				$ 40,963,000
Number of sales agents | sales_agent		10
Share repurchase program, authorized amount								$ 400,000,000
Repurchase of common stock, net of offering costs			$ 63,008,000		$ 63,008,000		$ 63,008,000
Repurchase of common stock (in shares) | shares				0			381,786
Share repurchase program, remaining authorization				$ 336,992,000
At the Market Equity Distribution Agreement
Class of Stock [Line Items]
Aggregate offering price of common shares		$ 800,000,000
Shares issued (in shares) | shares						585,685
Net proceeds						$ 66,617,000

XML

Noncontrolling Interest Represented by Preferred Operating Partnership Units - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands						1 Months Ended		6 Months Ended	24 Months Ended
	Jan. 25, 2023	Jan. 03, 2023	Jun. 01, 2022	May 10, 2022	Jun. 25, 2007	Oct. 31, 2014	Jun. 30, 2007	Jun. 30, 2023	Dec. 31, 2014	Dec. 31, 2022
Noncontrolling Interest [Line Items]
Preferred units outstanding (in shares)								7,214,649
Other receivables										$ 100,000
Note receivable interest rate								5.00%
Series A Units
Noncontrolling Interest [Line Items]
Fixed priority return on preferred OP units, amount						$ 101,700	$ 101,700
Fixed priority return on preferred OP units, stated return rate							2.30%
Fixed priority return on preferred OP units, liquidation value							$ 115,000
Preferred units outstanding (in shares)						875,480		0
Redemption of operating partnership units	$ 5,000
Redemption of operating partnership units for common stock (in shares)	851,698
Series B Units
Noncontrolling Interest [Line Items]
Preferred units outstanding (in shares)									1,342,727
Redemption of operating partnership units				$ 1,125
Liquidation value (in dollars per share)									$ 25.00
Fixed liquidation value									$ 33,568
Annual rate of return percentage									6.00%
Redemption of Operating Partnership units (in shares)				45,000
Series D Units
Noncontrolling Interest [Line Items]
Redemption of operating partnership units for common stock (in shares)		154,307
Liquidation value (in dollars per share)								$ 25.00
Fixed liquidation value								$ 189,372
Fixed liquidation value (in shares)								7,566,828
Issuance of units (in shares)			240,000
Redemption of Operating Partnership units (in shares)		890,594,000
Issuance of units			$ 6
Series D Units | Minimum
Noncontrolling Interest [Line Items]
Annual rate of return percentage								3.00%
Series D Units | Maximum
Noncontrolling Interest [Line Items]
Annual rate of return percentage								5.00%
Operating Partnership Holders of A Units | Series A Units
Noncontrolling Interest [Line Items]
Maximum number of preferred OP units converted prior to the maturity date of the loan (in shares)						114,500
Other receivables					$ 100,000
Note receivable interest rate					2.10%
Notes reduction	$ 100,000

XML

Noncontrolling Interest Represented by Preferred Operating Partnership Units - Balances of OP Units (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	$ 222,940	$ 261,502
Series A Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	0	16,498
Series B Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	33,568	33,568
Series D Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	$ 189,372	$ 211,436

XML

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests - Additional Information (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($) joint_venture $ / shares shares	Dec. 31, 2022 USD ($)
Noncontrolling Interest [Line Items]
Note receivable interest rate	5.00%
Period used as a denomination to determine the average closing price of common stock	10 days
Ten day average closing stock price (in dollars per share) | $ / shares	$ 145.79
Preferred units outstanding (in shares) | shares	7,214,649
Consideration to be paid on redemption of common OP units	$ 1,051,824
Number of consolidated joint ventures | joint_venture	7
Noncontrolling Interest - Operating Partnership
Noncontrolling Interest [Line Items]
Loan receivable, reduction of noncontrolling interests	$ 1,900	$ 1,900
Common Stock
Noncontrolling Interest [Line Items]
OP units conversion ratio	1
Noncontrolling Interest - Operating Partnership
Noncontrolling Interest [Line Items]
Ownership interest held	94.00%
Ownership interest held by joint venture partner	6.00%
Other noncontrolling interests | Minimum
Noncontrolling Interest [Line Items]
Ownership interest held by joint venture partner	2.00%
Other noncontrolling interests | Maximum
Noncontrolling Interest [Line Items]
Ownership interest held by joint venture partner	31.00%

XML

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests - Schedule of OP Unit Activity (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022
Noncontrolling Interest [Abstract]
OP Units redeemed for cash (in shares)	0	18,028
Cash paid for OP Units redeemed	$ 0	$ 3,504
OP Units issued in conjunction with acquisitions (in units)	0	91,743

XML

Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

Segment Information - Schedule of Financial Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Revenues:	$ 511,386	$ 474,988	$ 1,014,436	$ 918,550
Operating expenses:	238,047	213,572	477,555	421,824
Net operating income:	273,339	275,665	536,881	510,975
Management fees and other income	22,206	20,517	43,590	40,474
Transaction related costs	0	(1,465)	0	(1,465)
General and administrative expense	(34,842)	(31,251)	(69,605)	(61,013)
Depreciation and amortization expense	(79,086)	(69,067)	(157,576)	(136,973)
Gain on real estate transactions	0	14,249	0	14,249
Interest expense	(86,372)	(47,466)	(166,471)	(90,004)
Interest income	21,077	15,060	40,515	34,049
Equity in earnings and dividend income from unconsolidated real estate entities	13,254	10,190	23,559	19,287
Income tax expense	(5,986)	(5,615)	(10,294)	(8,756)
Net income	215,312	247,834	424,190	465,551
Operating Segments
Segment Reporting Information [Line Items]
Revenues:	489,180	454,471	970,846	878,076
Operating expenses:	124,119	111,789	250,374	222,373
Net operating income:	365,061	342,682	720,472	655,703
Self-Storage Operations | Operating Segments
Segment Reporting Information [Line Items]
Revenues:	440,747	408,044	874,709	787,852
Operating expenses:	114,637	104,252	231,803	207,794
Net operating income:	326,110	303,792	642,906	580,058
Tenant Reinsurance | Operating Segments
Segment Reporting Information [Line Items]
Revenues:	48,433	46,427	96,137	90,224
Operating expenses:	9,482	7,537	18,571	14,579
Net operating income:	$ 38,951	$ 38,890	$ 77,566	$ 75,645

XML

Commitments and Contingencies (Detail) $ in Thousands	Jun. 30, 2023 USD ($) store
Commitment to acquire stores
Other Commitments [Line Items]
Number of real estate properties to be acquired	11
Purchase price | $	$ 125,245
Commitment to acquire stores, scheduled to close in current fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired	4
Commitment to acquire stores, scheduled to close in next fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired	7
Commitment to acquire stores with joint venture partners
Other Commitments [Line Items]
Number of real estate properties to be acquired	3
Purchase price | $	$ 9,864
Commitment to acquire stores with joint venture partners, scheduled to close in current fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired	2
Commitment to acquire stores with joint venture partners, scheduled to close in next fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired	1

XML

Subsequent Events (Details) $ in Thousands, sqft in Millions			6 Months Ended
	Jul. 25, 2023 USD ($)	Jul. 20, 2023 USD ($) location sqft	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Subsequent Event [Line Items]
Repayments of debt			$ 3,246,378	$ 1,915,531
Subsequent Event | Life Storage, Inc
Subsequent Event [Line Items]
Repayments of debt		$ 375,000
Subsequent Event | Senior Notes, Assumed From Life Storage | Senior Notes
Subsequent Event [Line Items]
Repayments of debt	$ 2,400,000
Total	$ 48,900
Life Storage, Inc | Subsequent Event
Subsequent Event [Line Items]
Equity interest issued conversion ratio		0.00895
Equity interests issued		$ 11,600,000
Combined number of locations | location		3,500
Combined rentable square feet | sqft		264.0
Life Storage, Inc | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Liabilities assumed		$ 1,200,000
Life Storage, Inc | Subsequent Event | Secured Debt
Subsequent Event [Line Items]
Liabilities assumed		$ 32,000