UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ 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: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)

Maryland	95-3551121
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
701 Western Avenue, Glendale, California	91201-2349
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080.

Former name, former address and former fiscal, if changed since last report: N/A

Securities registered pursuant to Section 12b of the Act:

Title of Class	Trading Symbol	Name of each exchange on which registered
Common Shares, $0.10 par value	PSA	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value	PSAPrF	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value	PSAPrG	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value	PSAPrH	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value	PSAPrI	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value	PSAPrJ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value	PSAPrK	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value	PSAPrL	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value	PSAPrM	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value	PSAPrN	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value	PSAPrO	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value	PSAPrP	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value	PSAPrQ	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value	PSAPrR	New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value	PSAPrS	New York Stock Exchange
0.875% Senior Notes due 2032	PSA32	New York Stock Exchange
0.500% Senior Notes due 2030	PSA30	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 at least 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
☒	☐	☐	☐	☐

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

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of July 28, 2023:

Common Shares of beneficial interest, $0.10 par value per share – 175,829,466 shares

PUBLIC STORAGE

INDEX

PART I	FINANCIAL INFORMATION	Pages
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Equity and Redeemable Noncontrolling Interests	4-7
	Consolidated Statements of Cash Flows	8-9
	Condensed Notes to Consolidated Financial Statements	10-23
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24-52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4.	Controls and Procedures	53
PART II	OTHER INFORMATION (Items 3, 4 and 5 are not applicable)
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6.	Exhibits	54

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Cash and equivalents	$	651,665	$	775,253
Real estate facilities, at cost:
Land	5,315,098		5,273,073
Buildings	19,365,416		18,946,053
	24,680,514		24,219,126
Accumulated depreciation	(8,966,878)		(8,554,155)
	15,713,636		15,664,971
Construction in process	449,931		372,992
	16,163,567		16,037,963
Investments in unconsolidated real estate entities	276,778		275,752
Goodwill and other intangible assets, net	212,022		232,517
Other assets	256,294		230,822
Total assets	$	17,560,326	$	17,552,307
LIABILITIES AND EQUITY
Notes payable	$	6,894,167	$	6,870,826
Accrued and other liabilities	507,588		514,680
Total liabilities	7,401,755		7,385,506
Commitments and contingencies (Note 14)
Equity:
Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 at December 31, 2022) at liquidation preference	4,350,000		4,350,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,492,886 shares issued and outstanding (175,265,668 shares at December 31, 2022)	17,549		17,527
Paid-in capital	5,940,945		5,896,423
Accumulated deficit	(167,404)		(110,231)
Accumulated other comprehensive loss	(75,146)		(80,317)
Total Public Storage shareholders’ equity	10,065,944		10,073,402
Noncontrolling interests	92,627		93,399
Total equity	10,158,571		10,166,801
Total liabilities and equity	$	17,560,326	$	17,552,307

See accompanying notes.

1

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues:
Self-storage facilities	$	1,056,120	$	973,286	$	2,088,304	$	1,890,301
Ancillary operations	63,650		58,759		125,698		115,189
	1,119,770		1,032,045		2,214,002		2,005,490
Expenses:
Self-storage cost of operations	257,678		237,989		526,293		483,483
Ancillary cost of operations	22,202		17,210		41,878		32,725
Depreciation and amortization	222,133		218,708		443,783		440,836
General and administrative	25,434		28,831		50,978		51,900
Interest expense	38,079		32,941		74,180		66,065
	565,526		535,679		1,137,112		1,075,009
Other increases (decreases) to net income:
Interest and other income	18,452		10,279		37,086		13,658
Equity in earnings of unconsolidated real estate entities	9,565		48,525		15,560		91,949
Foreign currency exchange (loss) gain	(1,096)		101,723		(27,956)		137,100
Net income	581,165		656,893		1,101,580		1,173,188
Allocation to noncontrolling interests	(3,136)		(3,043)		(5,843)		(5,395)
Net income allocable to Public Storage shareholders	578,029		653,850		1,095,737		1,167,793
Allocation of net income to:
Preferred shareholders	(48,673)		(48,673)		(97,351)		(97,038)
Restricted share units	(1,097)		(1,796)		(2,539)		(3,250)
Net income allocable to common shareholders	$	528,259	$	603,381	$	995,847	$	1,067,505
Net income per common share:
Basic	$	3.01	$	3.44	$	5.68	$	6.09
Diluted	$	3.00	$	3.42	$	5.65	$	6.05
Basic weighted average common shares outstanding	175,484		175,229		175,428		175,200
Diluted weighted average common shares outstanding	176,212		176,312		176,181		176,325

See accompanying notes.

2

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	581,165	$	656,893	$	1,101,580	$	1,173,188
Foreign currency translation gain (loss) on investment in Shurgard	1,302		(18,835)		5,171		(25,630)
Total comprehensive income	582,467		638,058		1,106,751		1,147,558
Allocation to noncontrolling interests	(3,136)		(3,043)		(5,843)		(5,395)
Comprehensive income allocable to Public Storage shareholders	$	579,331	$	635,015	$	1,100,908	$	1,142,163

See accompanying notes.

3

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended June 30, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at March 31, 2023	$	4,350,000	$	17,547	$	5,923,564	$	(168,952)	$	(76,448)	$	10,045,711	$	92,337	$	10,138,048
Issuance of common shares in connection with share-based compensation (26,664 shares)	—		2		5,003		—		—		5,005		—		5,005
Taxes withheld upon net share settlement of restricted share units	—		—		(464)		—		—		(464)		—		(464)
Share-based compensation expense	—		—		12,842		—		—		12,842		—		12,842
Contributions by noncontrolling interests	—		—		—		—		—		—		729		729
Net income	—		—		—		581,165		—		581,165		—		581,165
Net income allocated to noncontrolling interests	—		—		—		(3,136)		—		(3,136)		3,136		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(48,673)		—		(48,673)		—		(48,673)
Noncontrolling interests	—		—		—		—		—		—		(3,575)		(3,575)
Common shareholders and restricted share unitholders ($3.00 per share) (Note 9)	—		—		—		(527,808)		—		(527,808)		—		(527,808)
Other comprehensive income	—		—		—		—		1,302		1,302		—		1,302
Balances at June 30, 2023	$	4,350,000	$	17,549	$	5,940,945	$	(167,404)	$	(75,146)	$	10,065,944	$	92,627	$	10,158,571

See accompanying notes.

4

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended June 30, 2022

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balances at March 31, 2022	$	4,350,000	$	17,521	$	5,827,674	$	(436,101)	$	(60,382)	$	9,698,712	$	20,549	$	9,719,261	$	83,826
Issuance of common shares in connection with share-based compensation (26,824 shares)	—		3		3,450		—		—		3,453		—		3,453		—
Taxes withheld upon net share settlement of restricted share units	—		—		(1,636)		—		—		(1,636)		—		(1,636)		—
Share-based compensation expense	—		—		19,144		—		—		19,144		—		19,144		—
Contributions by noncontrolling interests	—		—		—		—		—		—		5,346		5,346		—
Reclassification from redeemable noncontrolling interests to noncontrolling interests	—		—		—		—		—		—		83,826		83,826		(83,826)
Net income	—		—		—		656,893		—		656,893		—		656,893		—
Net income allocated to noncontrolling interests	—		—		—		(3,043)		—		(3,043)		3,043		—		—
Distributions to:
Preferred shareholders	—		—		—		(48,673)		—		(48,673)		—		(48,673)		—
Noncontrolling interests	—		—		—		—		—		—		(19,142)		(19,142)		—
Common shareholders and restricted share unitholders ($2.00 per share)	—		—		—		(351,289)		—		(351,289)		—		(351,289)		—
Other comprehensive loss	—		—		—		—		(18,835)		(18,835)		—		(18,835)		—
Balances at June 30, 2022	$	4,350,000	$	17,524	$	5,848,632	$	(182,213)	$	(79,217)	$	9,954,726	$	93,622	$	10,048,348	$	—

See accompanying notes.

5

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Six Months Ended June 30, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at December 31, 2022	$	4,350,000	$	17,527	$	5,896,423	$	(110,231)	$	(80,317)	$	10,073,402	$	93,399	$	10,166,801
Issuance of common shares in connection with share-based compensation (227,218 shares) (Note 11)	—		22		30,162		—		—		30,184		—		30,184
Taxes withheld upon net share settlement of restricted share units (Note 11)	—		—		(9,396)		—		—		(9,396)		—		(9,396)
Share-based compensation cost (Note 11)	—		—		23,756		—		—		23,756		—		23,756
Contributions by noncontrolling interests	—		—		—		—		—		—		733		733
Net income	—		—		—		1,101,580		—		1,101,580		—		1,101,580
Net income allocated to noncontrolling interests	—		—		—		(5,843)		—		(5,843)		5,843		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(97,351)		—		(97,351)		—		(97,351)
Noncontrolling interests	—		—		—		—		—		—		(7,348)		(7,348)
Common shareholders and restricted share unitholders ($6.00 per share) (Note 9)	—		—		—		(1,055,559)		—		(1,055,559)		—		(1,055,559)
Other comprehensive income	—		—		—		—		5,171		5,171		—		5,171
Balances at June 30, 2023	$	4,350,000	$	17,549	$	5,940,945	$	(167,404)	$	(75,146)	$	10,065,944	$	92,627	$	10,158,571

See accompanying notes.

6

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Six Months Ended June 30, 2022

(Amounts in thousands, except share and per share amounts)

(Unaudited)

	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balances at December 31, 2021	$	4,100,000	$	17,513	$	5,821,667	$	(550,416)	$	(53,587)	$	9,335,177	$	20,112	$	9,355,289	$	68,249
Issuance of 10,000 preferred shares	250,000		—		(7,168)		—		—		242,832		—		242,832		—
Issuance of common shares in connection with share-based compensation (104,808 shares)	—		11		11,549		—		—		11,560		—		11,560		—
Taxes withheld upon net settlement of restricted share units	—		—		(12,210)		—		—		(12,210)		—		(12,210)		—
Share-based compensation cost	—		—		34,794		—		—		34,794		—		34,794		—
Contributions by noncontrolling interests	—		—		—		—		—		—		6,137		6,137		15,426
Reclassification from redeemable noncontrolling interests to noncontrolling interests	—		—		—		—		—		—		83,826		83,826		(83,826)
Net income	—		—		—		1,173,188		—		1,173,188		—		1,173,188		—
Net income allocated to noncontrolling interests	—		—		—		(5,395)		—		(5,395)		4,735		(660)		660
Distributions to:
Preferred shareholders	—		—		—		(97,038)		—		(97,038)		—		(97,038)		—
Noncontrolling interests	—		—		—		—		—		—		(21,188)		(21,188)		(509)
Common shareholders and restricted share unitholders ($4.00 per share)	—		—		—		(702,552)		—		(702,552)		—		(702,552)		—
Other comprehensive loss	—		—		—		—		(25,630)		(25,630)		—		(25,630)		—
Balances at June 30, 2022	$	4,350,000	$	17,524	$	5,848,632	$	(182,213)	$	(79,217)	$	9,954,726	$	93,622	$	10,048,348	$	—

See accompanying notes.

7

PUBLIC STORAGE

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	$	1,101,580	$	1,173,188
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	443,783		440,836
Equity in earnings of unconsolidated real estate entities	(15,560)		(91,949)
Distributions from cumulative equity in earnings of unconsolidated real estate entities	17,329		46,593
Unrealized foreign currency exchange loss (gain)	27,845		(136,818)
Share-based compensation expense	21,794		30,856
Other	6,658		3,970
Changes in operating assets and liabilities:
Other assets	(19,419)		(6,198)
Accrued and other liabilities	(4,717)		(6,705)
Net cash flows from operating activities	1,579,293		1,453,773
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities	(105,056)		(104,836)
Capital expenditures for property enhancements	(67,319)		(83,329)
Capital expenditures for energy efficiencies (LED lighting, solar)	(25,850)		(24,308)
Development and expansion of real estate facilities	(161,435)		(156,463)
Acquisition of real estate facilities and intangible assets	(190,778)		(231,417)
Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	3,165		4,537
Net cash flows used in investing activities	(547,273)		(595,816)
Cash flows from financing activities:
Issuance costs on amendment of credit facility	(8,377)		—
Repayments on notes payable	(8,200)		(472)
Issuance of preferred shares	—		242,832
Issuance of common shares in connection with share-based compensation	30,057		11,492
Taxes paid upon net share settlement of restricted share units	(9,396)		(12,210)
Contributions by noncontrolling interests	733		1,698
Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(1,152,555)		(799,502)
Distributions paid to noncontrolling interests	(7,348)		(21,697)
Net cash flows used in financing activities	(1,155,086)		(577,859)
Net (decrease) increase in cash and equivalents, including restricted cash	$	(123,066)	$	280,098

See accompanying notes.

8

PUBLIC STORAGE

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 beginning of the period:
Cash and equivalents	$	775,253	$	734,599
Restricted cash included in other assets	29,904		26,691
	$	805,157	$	761,290
Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents	$	651,665	$	1,013,886
Restricted cash included in other assets	30,426		27,502
	$	682,091	$	1,041,388
Supplemental schedule of non-cash investing and financing activities:
Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities	$	(6,405)	$	(7,706)
Capital expenditures for property enhancements	(3,446)		(6,268)
Capital expenditures for energy efficiencies (LED lighting, solar)	(1,177)		(1,822)
Construction or expansion of real estate facilities	(57,850)		(48,682)
Real estate acquired in exchange for noncontrolling interests	—		(19,865)

See accompanying notes.

9

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

1.Description of the Business

Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”), a Maryland real estate investment trust that has elected to be taxed as a real estate investment trust (“REIT”), was organized in 1980. Our principal business activities include the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.

At June 30, 2023, we had direct and indirect equity interests in 2,888 self-storage facilities (with approximately 206.0 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.2 million net rentable square feet of commercial and retail space.

At June 30, 2023, we owned a 35% common equity interest in Shurgard Self Storage Limited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 266 self-storage facilities (with approximately 15 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Certain amounts previously reported in our June 30, 2022 Statements of Cash Flows have been reclassified to conform to the June 30, 2023 presentation, with respect to the separate presentation of changes in operating assets and liabilities in the cash flows from operating activities section and major types of capital expenditures in the cash flows from investing activities section. The reclassifications did not affect the subtotals for cash flows from operating, investing or financing activities.

Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Summary of Significant Accounting Policies

There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

10

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

3.Real Estate Facilities

Activity in real estate facilities during the six months ended June 30, 2023 is as follows:

	Six Months Ended June 30, 2023
	(Amounts in thousands)
Operating facilities, at cost:
Beginning balance	$	24,219,126
Capital expenditures to maintain real estate facilities	96,352
Capital expenditures for property enhancements	70,986
Capital expenditures for energy efficiencies (LED lighting, solar)	27,206
Acquisitions	185,903
Dispositions and other	(3,448)
Developed or expanded facilities opened for operation	84,389
Ending balance	24,680,514
Accumulated depreciation:
Beginning balance	(8,554,155)
Depreciation expense	(415,358)
Dispositions and other	2,635
Ending balance	(8,966,878)
Construction in process:
Beginning balance	372,992
Costs incurred to develop and expand real estate facilities	163,670
Write-off of cancelled projects	(2,342)
Developed or expanded facilities opened for operation	(84,389)
Ending balance	449,931
Total real estate facilities at June 30, 2023	$	16,163,567

During the six months ended June 30, 2023, we acquired 16 self-storage facilities (1.2 million net rentable square feet of storage space), for a total cost of $190.8 million in cash. Approximately $4.9 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing $84.4 million during the six months ended June 30, 2023, adding 0.6 million net rentable square feet of self-storage space. Construction in process at June 30, 2023 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.

11

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

4.Investments in Unconsolidated Real Estate Entities

The following tables set forth our investments in, and equity in earnings of, the Unconsolidated Real Estate Entities (amounts in thousands):

	Investments in Unconsolidated Real Estate Entities at
	June 30, 2023		December 31, 2022
Shurgard	$	276,778	$	275,752

	Equity in Earnings of Unconsolidated Real Estate Entities for the
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
PSB	$	—	$	40,124	$	—	$	77,010
Shurgard	9,565		8,401		15,560		14,939
Total	$	9,565	$	48,525	$	15,560	$	91,949

Investment in PSB

On July 20, 2022, in connection with the closing of the merger of PS Business Parks, Inc. (“PSB”) with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our 41% common equity interest in PSB in its entirety. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion during the third quarter of 2022.

During the six months ended June 30, 2022, we received cash distributions from PSB totaling $30.4 million. Since the sale of PSB in July 2022, we no longer recognize equity in earnings or receive cash distributions from PSB.

Investment in Shurgard

Throughout all periods presented, we effectively owned, directly and indirectly 31,268,459 Shurgard common shares, representing a 35% equity interest in Shurgard.

Based upon the closing price at June 30, 2023 (€41.83 per share of Shurgard common stock, at 1.089 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.4 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). During the six months ended June 30, 2023 and 2022, we received $1.9 million and $1.7 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark, respectively. We eliminated $0.7 million and $0.6 million of intra-entity profits and losses for the six months ended June 30, 2023 and 2022, respectively, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.

During the six months ended June 30, 2023 and 2022, we received cash dividend distributions from Shurgard totaling $19.8 million and $20.1 million, respectively. Approximately $3.2 million and $4.5 million of total cash distributions from Shurgard during the six months ended June 30, 2023 and 2022, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows.

At June 30, 2023, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately $64.7 million ($67.8 million at December 31, 2022). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $3.1 million and $4.1 million during the six months ended June 30, 2023 and 2022, respectively.

12

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

As of June 30, 2023 and 2022, we translated the book value of our investment in Shurgard from Euro to U.S. Dollars and recorded $5.2 million other comprehensive income and $25.6 million other comprehensive loss during the six months ended June 30, 2023 and 2022, respectively.

5.Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (amounts in thousands):

	At June 30, 2023						At December 31, 2022
	Gross Book Value		Accumulated Amortization		Net Book Value		Gross Book Value		Accumulated Amortization		Net Book Value
Goodwill	$	165,843	$	—	$	165,843	$	165,843	$	—	$	165,843
Shurgard® Trade Name	18,824		—		18,824		18,824		—		18,824
Finite-lived intangible assets, subject to amortization	762,981		(735,626)		27,355		758,106		(710,256)		47,850
Total goodwill and other intangible assets	$	947,648	$	(735,626)	$	212,022	$	942,773	$	(710,256)	$	232,517

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $10.8 million and $25.4 million for the three and six months ended June 30, 2023, respectively, and $24.3 million and $58.2 million for the same periods in 2022. During the six months ended June 30, 2023, intangibles increased $4.9 million, in connection with the acquisition of real estate facilities (Note 3).

The estimated future amortization expense for our finite-lived intangible assets at June 30, 2023 is as follows (amounts in thousands):

Year	Amount
Remainder of 2023	$	15,335
2024	6,621
Thereafter	5,399
Total	$	27,355

6.Credit Facility

On June 12, 2023, we entered into an amended revolving credit agreement (the “Credit Facility”), which increases our borrowing limit from $500 million to $1.5 billion and extends the maturity date from April 19, 2024 to June 12, 2027. We have the option to further extend the maturity date by up to one additional year with additional extension fees up to 0.125% of the extended commitment amount. Amounts drawn on the Credit Facility bear annual interest at rates ranging from SOFR plus 0.65% to SOFR plus 1.40% depending upon our credit rating (SOFR plus 0.70% at June 30, 2023). We are also required to pay a quarterly facility fee ranging from 0.10% per annum to 0.30% per annum depending upon our credit rating (0.10% per annum at June 30, 2023). At June 30, 2023 and August 2, 2023, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $16.7 million at June 30, 2023 ($18.6 million at December 31, 2022 under the previous credit facility). The Credit Facility has various customary restrictive covenants with which we were in compliance at June 30, 2023. We incurred a total of $8.4 million of issuance costs associated with the amended Credit Facility, which is classified as Other Assets on the Consolidated Balance Sheets and will be amortized as Interest Expense on the Consolidated Statement of Income through June 12, 2027.

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PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

7.Notes Payable

Our notes payable are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at June 30, 2023 and December 31, 2022 are set forth in the tables below:

			Amounts at June 30, 2023
	Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book  Value		Fair  Value
			($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024	SOFR+0.47%	5.519%	$	700,000	$	(573)	$	699,427	$	699,210
Notes due February 15, 2026	0.875%	1.030%	500,000		(1,951)		498,049		448,134
Notes due November 9, 2026	1.500%	1.640%	650,000		(2,922)		647,078		582,127
Notes due September 15, 2027	3.094%	3.218%	500,000		(2,228)		497,772		466,373
Notes due May 1, 2028	1.850%	1.962%	650,000		(3,260)		646,740		564,513
Notes due November 9, 2028	1.950%	2.044%	550,000		(2,578)		547,422		471,981
Notes due May 1, 2029	3.385%	3.459%	500,000		(1,792)		498,208		461,929
Notes due May 1, 2031	2.300%	2.419%	650,000		(5,355)		644,645		541,477
Notes due November 9, 2031	2.250%	2.322%	550,000		(2,957)		547,043		451,002
			5,250,000		(23,616)		5,226,384		4,686,746
Euro Denominated Unsecured Debt
Notes due April 12, 2024	1.540%	1.540%	108,853		—		108,853		106,422
Notes due November 3, 2025	2.175%	2.175%	263,440		—		263,440		249,402
Notes due September 9, 2030	0.500%	0.640%	761,973		(8,051)		753,922		588,775
Notes due January 24, 2032	0.875%	0.978%	544,266		(4,590)		539,676		408,797
			1,678,532		(12,641)		1,665,891		1,353,396
Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.8 million	4.428%	4.428%	1,892		—		1,892		1,710
			$	6,930,424	$	(36,257)	$	6,894,167	$	6,041,852

14

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

	Amounts at
	December 31, 2022
	Book Value		Fair Value
	($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024	699,075		691,309
Notes due February 15, 2026	497,678		441,849
Notes due November 9, 2026	646,643		578,899
Notes due September 15, 2027	497,508		466,029
Notes due May 1, 2028	646,401		558,197
Notes due November 9, 2028	547,182		468,509
Notes due May 1, 2029	498,053		456,855
Notes due May 1, 2031	644,303		530,390
Notes due November 9, 2031	546,866		443,514
	5,223,709		4,635,551
Euro Denominated Unsecured Debt
Notes due April 12, 2024	107,035		104,344
Notes due November 3, 2025	259,039		246,119
Notes due September 9, 2030	740,634		566,204
Notes due January 24, 2032	530,317		396,297
	1,637,025		1,312,964
Mortgage Debt	10,092		9,568
	$	6,870,826	$	5,958,083

U.S. Dollar Denominated Unsecured Notes

The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at June 30, 2023. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 13% at June 30, 2023) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 24x for the twelve months ended June 30, 2023) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Notes

Our Euro denominated unsecured notes (the “Euro Notes”) consist of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €100.0 million issued to institutional investors on April 12, 2016, (iii) €500.0 million issued in a public offering on January 24, 2020, and (iv) €700.0 million issued in a public offering on September 9, 2021. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.

We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange (loss) gain” on our income statement (losses of $1.1 million and $28.2 million for the three and six months ended June 30, 2023, respectively, as compared to gains of $102.9 million and $138.2 million for the three and six months ended June 30, 2022, respectively).

Mortgage Notes

We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.

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PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

At June 30, 2023, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.9% and 7.1%, and mature between September 1, 2028 and July 1, 2030.

At June 30, 2023, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

	Unsecured Debt		Mortgage Debt		Total
Remainder of 2023	$	—	$	60	$	60
2024	808,853		124		808,977
2025	263,440		131		263,571
2026	1,150,000		138		1,150,138
2027	500,000		146		500,146
Thereafter	4,206,239		1,293		4,207,532
	$	6,928,532	$	1,892	$	6,930,424
Weighted average effective rate	2.3%		4.4%		2.3%

Cash paid for interest totaled $73.7 million and $66.0 million for the six months ended June 30, 2023 and 2022, respectively. Interest capitalized as real estate totaled $3.8 million and $2.6 million for the six months ended June 30, 2023 and 2022, respectively.

8.Noncontrolling Interests

There are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At June 30, 2023, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the request of the unitholder.

16

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

9.Shareholders’ Equity

Preferred Shares

At June 30, 2023 and December 31, 2022, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

				At June 30, 2023			At December 31, 2022
Series	Earliest Redemption Date	Dividend Rate		Shares Outstanding	Liquidation Preference		Shares Outstanding	Liquidation Preference
				(Dollar amounts in thousands)
Series F	6/2/2022	5.150	%	11,200	$	280,000	11,200	$	280,000
Series G	8/9/2022	5.050	%	12,000	300,000		12,000	300,000
Series H	3/11/2024	5.600	%	11,400	285,000		11,400	285,000
Series I	9/12/2024	4.875	%	12,650	316,250		12,650	316,250
Series J	11/15/2024	4.700	%	10,350	258,750		10,350	258,750
Series K	12/20/2024	4.750	%	9,200	230,000		9,200	230,000
Series L	6/17/2025	4.625	%	22,600	565,000		22,600	565,000
Series M	8/14/2025	4.125	%	9,200	230,000		9,200	230,000
Series N	10/6/2025	3.875	%	11,300	282,500		11,300	282,500
Series O	11/17/2025	3.900	%	6,800	170,000		6,800	170,000
Series P	6/16/2026	4.000	%	24,150	603,750		24,150	603,750
Series Q	8/17/2026	3.950	%	5,750	143,750		5,750	143,750
Series R	11/19/2026	4.000	%	17,400	435,000		17,400	435,000
Series S	1/13/2027	4.100	%	10,000	250,000		10,000	250,000
Total Preferred Shares				174,000	$	4,350,000	174,000	$	4,350,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At June 30, 2023, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.

Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.

Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.

Dividends

On February 4, 2023, our Board of Trustees declared a 50% increase in its regular common quarterly dividend from $2.00 to $3.00 per share. The distribution equates to an annualized increase to the Company’s regular common dividend from $8.00 to $12.00 per share.

17

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Common share dividends paid, including amounts paid to our restricted share unitholders and deferred share unitholders, totaled $527.6 million ($3.00 per share) and $351.3 million ($2.00 per share) for the three months ended June 30, 2023 and 2022, respectively, and $1.06 billion ($6.00 per share) and $702.5 million ($4.00 per share) for the six months ended June 30, 2023 and 2022, respectively. Preferred share dividends paid totaled $48.7 million for each of the three months ended June 30, 2023 and 2022, and $97.4 million and $97.0 million for the six months ended June 30, 2023 and 2022, respectively.

10.Related Party Transactions

At June 30, 2023, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children owned the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $1.1 million for each of the six months ended June 30, 2023 and 2022.

11.Share-Based Compensation

Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred share units (“DSUs”), and unrestricted common shares issued in lieu of trustee compensation.

We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.6 million and $1.3 million share-based compensation cost was capitalized as real estate facilities for the three and six months ended June 30, 2023, respectively, as compared to $1.1 million and $2.1 million for the same periods of 2022, respectively.

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Amounts in thousands)
Self-storage cost of operations	$	3,428	$	4,673	$	7,352	$	9,537
Ancillary cost of operations	323		221		640		487
General and administrative	8,198		12,034		13,802		20,832
Total	$	11,949	$	16,928	$	21,794	$	30,856

Included in share-based compensation is $1.6 million and $2.1 million during the three and six months ended June 30, 2023, respectively, as compared to $5.3 million and $9.5 million for the same periods in 2022, respectively, in connection with retirement acceleration as discussed in Note 2 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

As of June 30, 2023, there was $89.5 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.

18

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Stock Options

We have service-based and performance-based stock options outstanding. Performance-based stock options outstanding vest upon meeting certain performance conditions or market conditions. Stock options generally vest over 3 to 5 years, expire 10 years after the grant date, and have an exercise price equal to the closing trading price of our common shares on the grant date. New shares are issued for options exercised. Employees cannot require the Company to settle their awards in cash.

During the six months ended June 30, 2023, 177,168 stock options were granted, 174,569 options were exercised, and 41,307 options were forfeited. A total of 3,125,775 stock options were outstanding at June 30, 2023 (3,164,483 at December 31, 2022).

During the six months ended June 30, 2023, we granted 60,000 stock options in connection with non-management trustee compensation. For the remaining 117,168 stock options granted during the six months ended June 30, 2023, vesting is dependent upon meeting certain market conditions over the three-year period from March 15, 2023 through March 14, 2026, with continued service-based vesting through the first quarter of 2028. These stock options require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning up to 200% of the target options originally granted.

For the three and six months ended June 30, 2023, we incurred share-based compensation cost for outstanding stock options of $4.6 million and $7.8 million, respectively, as compared to $7.7 million and $11.6 million for the same periods in 2022.

Restricted Share Units

We have service-based and performance-based RSUs outstanding, which generally vest over 5 to 8 years from the grant date. Performance-based RSUs outstanding vest upon meeting certain performance conditions or market conditions. Upon vesting, the grantee receives new common shares equal to the number of vested RSUs, less common shares withheld to satisfy the grantee’s statutory tax liabilities arising from the vesting.

During the six months ended June 30, 2023, 38,895 RSUs were granted, 18,193 RSUs were forfeited and 70,848 RSUs vested. The vesting resulted in the issuance of 51,350 common shares. A total of 425,901 RSUs were outstanding at June 30, 2023 (476,047 at December 31, 2022).

Among the 38,895 RSUs granted during the six months ended June 30, 2023, 37,211 RSUs were awarded where vesting is dependent upon meeting certain market conditions over a three-year period from March 15, 2023 through March 14, 2026, with continued service-based vesting through the first quarter of 2028. These RSUs require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning up to 200% of the target RSUs originally granted.

Also included in the RSUs granted during the six months ended June 30, 2023 are 1,684 service-based RSUs.

For the three and six months ended June 30, 2023, we incurred share-based compensation cost for RSUs of $7.7 million and $14.9 million, respectively, as compared to $10.1 million and $20.9 million for the same periods in 2022.

Trustee Deferral Program

Non-management trustees may elect to receive all or a portion of their cash retainers in cash, unrestricted common shares, or fully-vested DSUs to be settled at a specified future date. Unrestricted common shares and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the six months ended June 30, 2023, we granted 1,018 DSUs and 432 unrestricted common shares. During the six months ended June 30, 2023, 867 previously granted DSUs were settled in common shares.

19

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

12. Net Income per Common Share

We allocate net income to (i) noncontrolling interests based upon their contractual rights in the respective subsidiaries or for participating noncontrolling interests based upon their participation in both distributed and undistributed earnings of the Company, (ii) preferred shareholders, for distributions paid or payable, (iii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (a “preferred share redemption charge”), and (iv) RSUs, for non-forfeitable dividends paid and adjusted for participation rights in undistributed earnings of the Company.

We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options outstanding for diluted net income per common share. Potentially dilutive stock options representing 321,070 common shares were excluded from the computation of diluted earnings per share for the three and six months ended June 30, 2023, as compared to 142,683 common shares for the same periods in 2022, because their effect would have been antidilutive.

The following table reconciles the numerators and denominators of the basic and diluted net income per common shares computation for the three and six months ended June 30, 2023 and 2022, respectively (in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	$	528,259	$	603,381	$	995,847	$	1,067,505
Denominator for basic net income per share - weighted average common shares outstanding	175,484		175,229		175,428		175,200
Net effect of dilutive stock options - based on treasury stock method	728		1,083		753		1,125
Denominator for dilutive net income per share - weighted average common shares outstanding	176,212		176,312		176,181		176,325
Net income per common share:
Basic	$	3.01	$	3.44	$	5.68	$	6.09
Dilutive	$	3.00	$	3.42	$	5.65	$	6.05

20

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

13.Segment Information

Our operating segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker.

Self-Storage Operations

The Self-Storage Operations reportable segment reflects the aggregated rental operations from the self-storage facilities we own from (i) Same Store Facilities, (ii) Acquired Facilities, (iii) Developed and Expanded Facilities, and (iv) Other Non-Same Store Facilities. The presentation in the table below sets forth the Net Operating Income (“NOI”) of this reportable segment, as well as the related depreciation expense. For all periods presented, substantially all of our real estate facilities, goodwill and other intangible assets, other assets, and accrued and other liabilities are associated with the Self-Storage Operations reportable segment.

Ancillary Operations

The Ancillary Operations reflects the combined operations of our tenant reinsurance, merchandise sales, and third party property management operating segments.

Presentation of Segment Information

The following table reconciles NOI and net income attributable to our reportable segment to our consolidated net income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(amounts in thousands)
Self-Storage Operations Reportable Segment
Revenue	$	1,056,120	$	973,286	$	2,088,304	$	1,890,301
Cost of operations	(257,678)		(237,989)		(526,293)		(483,483)
Net operating income	798,442		735,297		1,562,011		1,406,818
Depreciation and amortization	(222,133)		(218,708)		(443,783)		(440,836)
Net income	576,309		516,589		1,118,228		965,982
Ancillary Operations
Revenue	63,650		58,759		125,698		115,189
Cost of operations	(22,202)		(17,210)		(41,878)		(32,725)
Net operating income	41,448		41,549		83,820		82,464
Total net income allocated to segments	617,757		558,138		1,202,048		1,048,446
Other items not allocated to segments:
General and administrative	(25,434)