[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Glendale,California91201-2349
Title of Class | Trading Symbol | Name of exchange on which registered | ||||||||
| Common Shares, $0.10 par value | PSA | New York Stock Exchange | ||||||||
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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 | ||||||||
| Guarantee of 0.875% Senior Notes due 2032 issued by Public Storage Operating Company | PSA/32 |
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| Guarantee of 0.500% Senior Notes due 2030 issued by Public Storage Operating Company | PSA/30 | New York Stock Exchange | ||||||||
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth companySecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes [X]No [ ]Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.Yes [ ]No [X]Yes ☐ No ☒ 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 [X]No [ ]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 [X]No [ ]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.[X]☒[ ]☐[ ]☐[ ]☐[ ]☐
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. [ ]
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Yes [ ]No [X]
| Yes | ☐ | No | ☒ | ||||||||
2023:
Public Storage
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| Part I | ||||||||
| Part II | ||||||||
| Part III | ||||||||
| Part IV | ||||||||
Forward Looking
technology.
context otherwise requires, references to “Public Storage” or the “Company” mean Public Storage, references to “PSA OP” mean Public Storage OP, L.P., and references to “PSOC” mean Public Storage Operating Company. References to "we," "us," and "our" mean collectively Public Storage, PSA OP, PSOC and those entities/subsidiaries owned or controlled by Public Storage, PSA OP, and PSOC.
Self-storage Operations:
Ancillary and
We generally own facilities in major markets. We believe thatour Public Storage® brand awareness, as well as the innovative improvements we have market share and concentration in major metropolitan centers,made to the customer experience described below, provide us with approximately 70% of our 2020 same-store revenues generated in the 20 Metropolitan Statistical Areas (each, an “MSA”, as defined by the U.S. Census Bureau) with the highest population levels. We believe this is a competitive advantage in acquiring and retaining customers relative to other self-storage operators, which do not have our geographic concentration and market share in the major MSAs.operators.
Recently, larger national operators (including ourselves) are offering to manage facilities owned by third parties on their platform for a fee, and Google is offering a more convenient platform for small operators to compete with larger operators in paid search bidding campaigns to drive web traffic and increase reservations. Depending upon how many smaller operators avail themselves of these management services and Google’s platform, these two developments may potentially diminish the competitive advantage we have versus smaller owner/operators.
Newly developed facilities compete with many of the facilities we own, negatively impacting our occupancies, rental rates, and rental growth, particularly as newly developed facilities fill up. The level of new construction varies in each market over time, depending upon many factors such as the cost and availability of land, construction costs, zoning limitations, and the availability of capital, as well as local demand and economic conditions. Currently, we are affected by newly developed facilities in markets such as Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Miami, Minneapolis, New York and Portland. We expect development of new self-storage facilities to continue to impact our results for the foreseeable future.
Centralized information networks: Our centralized reporting and information network enables us to identify changing market conditions and operating trends as well as analyze customer data and, oneffectively by providing customers with an automated basis, quickly change each of our individual properties’ pricing and promotions, as well as to drive marketing spending such as the relative level of bidding for various paid search terms on paid search engines.
enhanced digital experience.
•Our CallCustomer Care Center:Our callcustomer care center is staffed by skilled sales specialists.specialists and customer service representatives. Customers can reach our callcustomer care center and complete their rental over the phone by calling our advertised toll-free telephone numbers provided on search engines, from our website, the Public Storage App, or from our website.in-store kiosks. We believe giving customers the option to interact with a call centerlive agent, despite the higher marginal cost relative to a reservation made on our website, enhances our ability to close sales with potential customers.customers and results in greater satisfaction. We also have live Internet chat augmented with ChatBot capability as another channel for our customers to engage our agents, cost effectively improving customer responsiveness.
From time to time we explore expansion of our activities to other countries. Any such strategic expansion would most likely involve acquiring an interest in an existing operator’s platform. There can be no assurance that any such expansion will occur in the future or the timing thereof.
Develop new self-storage facilities and expand existing facilities:The development of new self-storage locations and the expansion of existing facilities hashave been an important source of our growth. Our operating experience in major markets and experience in stabilizing new properties providesprovide us advantages in developing new facilities. We plan to increase our development activity givenwhen we identify attractive risk adjusted return profileprofiles with yields above those of acquisitions. However, our level of development is dependent upon many factors, including the cost and availability of land, the cost and availability of construction materials and labor, zoning and permitting limitations, our cost of capital, the cost of acquiring facilities relative to developing new facilities, as well asand local demand and economic conditions.
Participate in the growth of PS Business Parks, Inc.:We hold a 42% equity interest in PSB. Our investment in PSB provides diversification into another asset type. PSB seeks to grow its asset base in its existing markets as well as increase the cash flows from its owned portfolio. As of December 31, 2020, PSB owned and operated approximately 27.7 million rentable square feet of commercial space.
Participate in the growth of Shurgard: We hold a 35% interest in Shurgard. We believe Shurgard is the largest self-storage company in Western Europe. Customer awareness and availability of self-storage is significantly lower in Europe than in the U.S. However, with more awareness and product supply, we believe there is potential for increased demand for storage space in Europe. We believe Shurgard can capitalize on potential increased demand through the development of new facilities and acquiring existing facilities. From January 1, 2018 through December 31, 2020, Shurgard acquired 17 facilities from third parties for approximately $187.7 million, and has opened six development properties at a total cost of approximately $66.9 million. At December 31, 2020, Shurgard had ten properties in their development pipeline.
We are not aware of any government regulations that have resulted or that we expect will result in compliance costs that had or will have a material effect on our capital expenditures, earnings or competitive position. See “We have significant exposure to real estate risk.” and “We are subject to new and changing legislation and regulations, including the California’s Consumer Privacy Act” in Item 1A. “Risk Factors” for further information regarding our risks related to government regulations. In addition, during public health crises, such as the COVID Pandemic, or in response to natural disasters, such as wildfires in California in recent years, our properties and our tenants have been subject to emergency government regulations that have impacted our operations and our business. See “We are subject to risks from the COVID Pandemic and we may in the future be subject to risks from other public health crises” and “We have been and may in the future be adversely impacted by emergency regulations adopted in response to significant events, such as natural disasters or public health crises, that could adversely impact our operations.” in Item 1A. “Risk Factors”.
environmentally-friendly capital initiatives and building and operating properties with a high structural resilience and low obsolescence. We accrue environmental assessments and estimated remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. Our current practice is to conduct environmental investigations in connection with property acquisitions. Although there can be no assurance, we are not aware of any environmental contamination of any of our facilities whichthat individually or in the aggregate would be material to our overall business, financial condition, or results of operations.
Impact
Duringrents we can charge our customers, wage regulations, income tax regulations including relating to REIT qualification, and property tax regulations.
The impact of the COVID Pandemicmaterial effect on our business is described more fully in “Overview” andcapital expenditures, earnings, or competitive position.
Human Capital Resources
The Company’s keycreate long-term value for our stakeholders. Our human capital management objectives are to attract, developstrategy focuses on attracting, developing, and retainretaining the highest quality talent. We seekachieve these objectives by committing to earnour employees to provide a diverse and welcoming working environment, regular and transparent communication, competitive compensation, comprehensive benefits, and opportunities for career growth and development. We believe that this approach, together with the commitmentcore principles of employees by making a strong commitment to them. While most join without experience in the self-storage industry, many find career success with us given our emphasis on training, development and promotion from within.
Doingcorporate culture, doing the right thing and upholding integrity are core valuesin all that we live by atdo, promotes employee engagement and a commitment to Public Storage and the cornerstone to our culture. Acting with the highest integrity is imperative to our success, our customer’s satisfaction and our employee’s engagement.
Storage.
At Public Storage, we
Public Storage hires based on character, skills, personality, and experience, without regard to age, gender, race, ethnicity, religion, sexual orientation, or other protected characteristic. Adherence to this practice has resulted in a diverse and inclusive employee base that reflects the diversity of customers we serve. We maintain policies regarding diversity, equal opportunity, pay-for-performance, discrimination, harassment, and labor (e.g.,(including opposition to child forced, and compulsory)compulsory labor). We also maintain a policy of requiring that diverse candidates be considered for all director-level positions and above.
Diversity is an important factor inevident at all levels of the organization. Our executive team is 25% femaleThe data in the table below reflects our employee diversity as of December 31, 2023.
proud again to be named a Great Place to Work® in 2023. We have also been recognized by Comparably, Inc. as a “Choice Employer” with an “A+” Culture Score based on employee responses across 18 culture metrics, among other recognitions.
Some examples of key programs and initiatives that are focused to attract, develop and retain our diverse workforce include:
Compensation, Health, Wellness, and Wellness
Safety
Public Storage is also committed to our employees and their overall health and well-being. We want to help them feel happy, healthy, socially connected, and purposeful. Our goal is to provide tools and resources to help empower our employees to explore what they need and to evaluate for themselves what makes sense in achieving a healthy and balanced lifestyle.
Our dedicated health and wellness website, is designed to provide educationalencourage employees to maintain a healthy and motivational content that helpbalanced lifestyle. We periodically consider employee feedback received through our employees focus on their well-being. We also host individualengagement processes in the composition and team contests to promote goal setting, action and monitoring.
Additionally, employee support programs are available with access to free counseling services through various channels (web, phone, in person), life planning tools and other discount programs for legal services, pet insurance, home and auto, and more.
The COVID-19 Pandemic
The COVID Pandemic brought varying challenges to eachdesign of our employee groups. compensation and benefits programs.
Our field operations and store protocols were quickly modified to ensure a safe workspaceself-storage facilities for our employeescustomers and employees. We conduct monthly safety trainings at all of our customers.properties and an annual safety training at our headquarters. We implemented a policy of allowing only one customer in office at a time, required mandatory face coverings,publicly disclose our employee health and installed Plexiglass protection. We also sought to reduce in person touchpoints with various initiatives, most notably our newly-launched “eRental®” program described above.
Additionally, we had a swift transition to work-from-home for our corporate and call center operations by utilizing new operating and call center technology platforms that were put in place prior to prepare for these types of situations.
We established the PS Cares Fund which was designed to support our employees that may be directly impacted by COVID-19. We provided additional incentive pay for property personnel and district managers, opened personal paid time off policies for full use and provided extended paid time to ensure employees had time off assistance when and if needed. Childcare assistance and online educational content was made available to help employees balance the need to work and care for children impacted by school closures. Additionally, mental well-being offerings were provided for those struggling during these unique times.
Training, Development and Recognition
We provide robust training programs for our new hiressafety data in our fieldannual Sustainability Report.
The majority of our workforce.new hires join Public Storage as property managers without prior experience in the self-storage industry. We are ableprovide a hands-on new employee training program that includes coaching and development. For those new hires in leadership roles, we provide property-level training that exposes our leaders to accomplish this by utilizingdaily property operations and is intended to provide them with an understanding of the fundamentals of our business and operations. We also offer numerous career development opportunities for existing employees across Public Storage, including management training programs. Many of our training and career development programs use our online learning platform that provides a one-stop shop for accessingof training courses and relevant reference materials. Public Storage employees completed more than 367,000In addition to formal training hours in 2020.
The online trainingprograms, we also offer one-on-one coaching, job shadowing, and development platform also allows usmentoring opportunities. In 2023, we introduced a leadership accelerator program specifically for high potential women and diverse employees. This program includes individual mentorship and practical experiences designed to reinforcefurther enhance our culturebench of ongoing recognition byhigh potential leaders, thereby supporting management succession planning.
Communication and Engagement
Given the geographically dispersed nature of our business, it is important for ustalent management works to ensure that employees feel they are informedgiven opportunities to grow beyond their current roles and included. responsibilities.
Employee engagement is instrumental in understandingaddressing the effectivenesseffects of climate change. Please refer to our strategies. We conduct various engagement surveys through the year to help us measure commitment, motivation and engagement, as well as gain employee feedback that helps us improve.
Sustainability Report for further information.
We have significant exposure
Sinceoperate our facilities could adversely impact our business consists primarily of acquiring, developing, and operating real estate, we are subject to risks related to the ownership and operation of real estate that could result in reduced revenues, increased expenses, increased capital expenditures, or increased borrowings, which could negatively impact our operating results, cash flow available for distribution or reinvestment, and our stock price:
Natural disasters or terrorist attacks could cause damage to our facilities, resulting in increased costs and reduced revenues. financial results.
ConsequencesWe are subject to risks from the consequences of climate change, including severe weather events, as well as the transition to a low-carbon economy and theother steps taken to prevent or mitigate climate change, could resultchange.
For example, beginning in 2026, we expect to be required to disclose our Scope 1, 2, and 3 emissions data and certain climate-related risk matters under California SB 253 and SB 261, which we expect to result in increased compliance costs. In addition, our reputation and investor relationships could be damaged as a result of our involvement with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
Development of self-storage facilities can subject
Demand for self-storage facilities may be affected by customer perceptions and factors outside of our control.
Many of our existing self-storage facilities may be at a competitive disadvantage to newly developed facilities. There is a significant level of development of new self-storage facilities, by us and other operators. These newly developed facilities are generally of high quality, with a more fresh and vibrant appearance, more amenities such as climate control, more attractive office configurations, newer elements, and a more imposing and attractive retail presence as compared to many of our existing stabilized self-storage facilities, some of which were built as much as 50 years ago. Such qualitative differentials may negatively impact our ability to compete with these facilities for new tenants and our existing tenants may move to newly developed facilities.
Our revenues and operating cash flow can be negatively impacted by reductions in employment and population levels, household and disposable income, and other general economic factors that lead to a reduction in demand for rentalself-storage space in each of the markets in which we operate.
•Risks of collective bargaining and intellectual property:bargaining: Collective bargaining, which is prevalent in certain areas in Europe, could negatively impact Shurgard’s labor costs or operations. Many of Shurgard’s employees participate in various national unions.
and selling or acquiring significant assets, are determined by its board of directors. As a result, Shurgard may be precluded from taking advantage of opportunities that we would find attractive but that we may not be able to pursue economically separately, or it could take actions that we do not agree with.
We
We own approximately 42% of the common equity of PSB,adversely impacted, and this investment has a $432.0 million book value and a $1.9 billion market value (based upon the closing trading price of PSB’s common stock) at December 31, 2020. We recognized $64.8 million in equity in earnings, and received $60.7 million in dividends, in 2020, with respect to PSB.
PSB, as an owner, operator, and developer of real estate, is subject to many of the same risks we are with respect to real estate. However, we may be exposed to other risks as a result of PSB’s ownership specifically of commercial facilities. These risks are set forth in PSB’s Form 10-K for the year ended December 31, 2020, under “Item 1A. Risk Factors.”
We are subject to risks from the COVID Pandemic and we may in the future be subject to risks from other public health crises.
Since being reported in December 2019, the COVID Pandemic has spread globally, including to every state in the United States, adversely affecting public health and economic activity. impact, our business.
•risk that we could experience a change in the move-out patterns of our long-term customers due to economic uncertainty and increases in unemployment, as a result of the COVID Pandemic. Thiswhich could lead to lower occupancies and rent “roll down” as long-term customers are replaced with new customers at lower rates; and
We believe that the degree to which the COVID Pandemic adversely impacts our business, operating results, cash flows and/or financial condition will be driven primarily by the duration, spread and severity of the pandemic itself, the speed and effectiveness of vaccine and treatment developments, as well as the duration of indirect economic impacts such as recession, dislocation in capital markets, and job loss, as well as potential longer term changes in
consumer behavior, all of which are uncertain and difficult to predict. As a result, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material. Future pandemics or public health crises could have similar impacts.
We have been and may in the future be adversely impacted by emergency regulations adopted in response to significant events, such as natural disasters or public health crises, that could adversely impact our operations.
Our use of or inability to adaptadopt and deliver new technological capabilities and enhancements in timeline with strategic requirementsobjectives, including artificial intelligence and machine learning, may put us at a competitive disadvantage; cause the organizationus to miss market competitive timing, first mover position,opportunities to innovate, achieve efficiencies, or improve the customer experience; or adversely impact our business, reputation, results of operations, and financial condition. Legislative activity in the privacy area may also result in new laws that are applicable to suffer material loss dueus and that may hinder our business, including by restricting our use of customer data or otherwise regulating the use of algorithms and automated processing in ways that could materially affect our business or lead to failed technology choicessignificant increases in the cost of compliance. In addition, the use of emerging technologies entails risks including risks relating to the possibility of intellectual property infringement or implementation.
We are heavily dependent on computer systems, telecommunicationsmisappropriation; data privacy; new or enhanced governmental or regulatory scrutiny, requirements, litigation, or other liability; ethical concerns; negative consumer perceptions as to automation and the Internet to process transactions, make payments, summarizeartificial intelligence; or other complications or liabilities that could adversely affect our business, reputation, results and manage our business. of operations, or financial results.
While we may be entitled to damages if our third-party providers fail to satisfy their security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
results could be adversely affected.
reasons.
Further information relating to cybersecurity risk management is discussed in Item 1C. “Cybersecurity” in this report.
Ourrights could lead to loss of such trademark and trade dress protection. We also own and seek to protect other intellectual property, such as propriety systems, processes, data, and other trade secrets that we have collected and developed in the course of operating our business and that we believe provides us with various competitive advantages. Our protections could be deemed generic and indistinct and lose protection. Weinadequate or we could lose rights to our other intellectual property and trade secrets. Competitor use of our trademarks and trade names could lead to likelihood of confusion, tarnishment of our brand, and loss of legal protection for our marks.
The Hughes Family could significantly influence us and take actions adverse to other shareholders.
At December 31, 2020, B. Wayne Hughes, our former Chairman and his family, which includes his daughter, Tamara Hughes Gustavson, a current member of our Board of Trustees (our “Board”), and his son, B. Wayne Hughes, Jr., a former member of the Board who retired effective December 31, 2020, (collectively, the “Hughes Family”), owned approximately 13.0% of our aggregate outstanding common shares. Our declaration of trust permits the Hughes Family to own up to 35.66% of our outstanding common shares while it generally restricts the ownership by other persons and entities to 3% of our outstanding common shares unless our Board grants an ownership waiver, as has occurred in certain cases for large mutual fund companies. Consequently, the Hughes Family may significantly influence matters submitted to a vote of our shareholders, including electing trustees, amending our organizational documents, dissolving and approving other extraordinary transactions, such as a takeover attempt, which may result in an outcome that may not be favorable to other shareholders.
take, or refrain from taking, other actions that could have the effect of delaying, deterring, or preventing a transaction or a change in control.
shares.
unidentified issues in prior periods, or changes in our circumstances, as well as share ownership limits in our articlesdeclaration of incorporationtrust that do not necessarilymay fail to ensure that our shareholder base is sufficiently diverse for us to qualify as a REIT. For any year we fail to qualify as a REIT, unless certain relief provisions apply (the granting of such relief could nonetheless result in significant excise or penalty taxes), we would not be allowed a deduction for dividends paid, we would be subject to U.S. federal corporate income tax on our taxable income, and generally we would not be allowed to elect REIT status until the fifth year after such a disqualification. In addition, for tax years beginning after December 31, 2022, we could also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the corporate alternative minimum tax and nondeductible one percent excise tax on certain stock repurchases. Any taxes, interest, and penalties incurred would reduce our cash available for distributions to shareholders and could negatively affect our stock price. However, for years in which we failed to qualify as a REIT, we would not be subject to REIT rules that require us to distribute substantially all of our taxable income to our shareholders.
Changes made by the Tax Cuts and Jobs Act, signed into law on December 22, 2017, limit our ability to deduct compensation in excess of $1 million paid to certain senior executives. This could require us to increase distributions to our shareholders in the future in order to avoid paying tax and to maintain our REIT status.certain circumstances, possibly with retroactive effect.
sales at the city, county, state, and federal level, which could materially impact our business and operations. Failure to comply with applicable laws, regulations, and policies may subject us to increased litigation and regulatory actions and negatively affect our business and operations or reputation.
In the event of an incident that jeopardizes the confidentiality, integrity, or availability of the information technology systems we use, we utilize a regularly updated information security incident response plan (IRP). The IRP is overseen by our executive Incident Response Committee (IRC), which consists of our Chief Financial and Investment Officer, Chief Administrative Officer, Chief Legal Officer, and CTO. The IRP guides our internal response to cybersecurity incidents.
| At December 31, 2023 | At December 31, 2023 | ||||||||||||||||||||||||
| Number of Storage Facilities | Number of Storage Facilities | Net Rentable Square Feet (in thousands) | |||||||||||||||||||||||
At December 31, 2020 | |||||||||||||||||||||||||
Number of Storage Facilities | Net Rentable Square Feet (in thousands) | ||||||||||||||||||||||||
| Texas | |||||||||||||||||||||||||
| Texas | |||||||||||||||||||||||||
| Texas | |||||||||||||||||||||||||
California | |||||||||||||||||||||||||
Southern | 253 | 18,661 | |||||||||||||||||||||||
Northern | 179 | 11,271 | |||||||||||||||||||||||
Texas | 315 | 24,115 | |||||||||||||||||||||||
Florida | 301 | 21,006 | |||||||||||||||||||||||
Illinois | 130 | 8,361 | |||||||||||||||||||||||
Georgia | 116 | 7,820 | |||||||||||||||||||||||
Washington | 101 | 7,042 | |||||||||||||||||||||||
North Carolina | 93 | 6,833 | |||||||||||||||||||||||
Virginia | 104 | 6,455 | |||||||||||||||||||||||
| Maryland | |||||||||||||||||||||||||
| Washington | |||||||||||||||||||||||||
Colorado | 78 | 5,739 | |||||||||||||||||||||||
| Minnesota | |||||||||||||||||||||||||
New York | 69 | 4,817 | |||||||||||||||||||||||
Minnesota | 61 | 4,721 | |||||||||||||||||||||||
Maryland | 63 | 3,878 | |||||||||||||||||||||||
| South Carolina | |||||||||||||||||||||||||
New Jersey | 58 | 3,863 | |||||||||||||||||||||||
Ohio | 55 | 3,692 | |||||||||||||||||||||||
South Carolina | 63 | 3,668 | |||||||||||||||||||||||
Michigan | 50 | 3,496 | |||||||||||||||||||||||
Arizona | 49 | 3,311 | |||||||||||||||||||||||
| Indiana | |||||||||||||||||||||||||
| Oklahoma | |||||||||||||||||||||||||
| Tennessee | |||||||||||||||||||||||||
Missouri | 41 | 2,752 | |||||||||||||||||||||||
Indiana | 40 | 2,570 | |||||||||||||||||||||||
Pennsylvania | 33 | 2,415 | |||||||||||||||||||||||
Tennessee | 37 | 2,363 | |||||||||||||||||||||||
Oregon | 40 | 2,127 | |||||||||||||||||||||||
| Nevada | |||||||||||||||||||||||||
Massachusetts | 28 | 1,976 | |||||||||||||||||||||||
Nevada | 28 | 1,915 | |||||||||||||||||||||||
Oklahoma | 23 | 1,644 | |||||||||||||||||||||||
Kansas | 21 | 1,268 | |||||||||||||||||||||||
Other states (12 states) | 119 | 7,272 | |||||||||||||||||||||||
| Other states (14 states) | |||||||||||||||||||||||||
Total (a) | 2,548 | 175,051 | |||||||||||||||||||||||
constructed facilities. Most spaces have between 25 and 400 square feet and an interior height of approximately eight to 12 feet.
PART II
Our Board has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. From the inception of the repurchase program through February 24, 2021,20, 2024, we have repurchased a total of 23,721,916 common shares (all purchased prior to 2010) at an aggregate cost of approximately $679.1 million. Our common share repurchase program does not have an expiration date and there are 11,278,084 common shares that may yet be repurchased under our repurchase program as of December 31, 2020.2023. We have no current plans to repurchase shares; however, future levels of common share repurchases will be dependent upon our available capital, investment alternatives, and the trading price of our common shares.
[Reserved] determine reported amounts of assets, liabilities, revenues, and expenses that are not readily apparent from other sources. Impairment of Long-Lived Assets: The analysis of impairment of our long-lived assets, including our real estate facilities, involves identification of indicators of impairment, including unfavorable operational results and significant cost overruns on construction, projections of future operating cash flows, and estimates of fair values, all of which require significant judgment and subjectivity. In particular, these estimates are sensitive to significant assumptions, such as the projections of future rental rates, stabilized occupancy level, future profit margin, discount rates, and capitalization rates, all of which could be affected by our expectations about future market or economic conditions. Others could come to materially different conclusions. Overview facility portfolio. Results of Operations 2022 2021 (v) a $45.5 million increase in interest expense. activities presented on our consolidated statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. Year Ended December 31, 2020 2019 2018 (Amounts in thousands, except per share data) Reconciliation of Diluted Earnings per Share to FFO per Share: Diluted Earnings per Share $ 6.29 $ 7.29 $ 8.54 Eliminate amounts per share excluded from FFO: Depreciation and amortization 3.53 3.32 3.21 Gains on sale of real estate investments and Shurgard IPO, including our equity share from investments (0.07) (0.03) (1.30) FFO per share $ 9.75 $ 10.58 $ 10.45 Computation of FFO per Share: Net income allocable to common shareholders $ 1,098,335 $ 1,272,767 $ 1,488,900 Eliminate items excluded from FFO: Depreciation and amortization 549,975 511,413 483,646 Depreciation from unconsolidated real estate investments 70,681 71,725 79,868 Depreciation allocated to noncontrolling interests and restricted share unitholders (3,850) (4,208) (3,646) Gains on sale of real estate investments and Shurgard IPO, including our equity share from investments and other (12,791) (5,896) (227,332) FFO allocable to common shares $ 1,702,350 $ 1,845,801 $ 1,821,436 Diluted weighted average common shares 174,642 174,530 174,297 FFO per share $ 9.75 $ 10.58 $ 10.45 We also present “Core FFO” and “Core FFO per The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share Year Ended December 31, Year Ended December 31, Percentage Percentage 2020 2019 Change 2019 2018 Change FFO per share $ 9.75 $ 10.58 (7.8)% $ 10.58 $ 10.45 1.2% Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments: Foreign currency exchange loss (gain) 0.56 (0.04) (0.04) (0.10) Application of EITF D-42 0.28 0.21 0.21 - Shurgard - IPO costs and casualty loss - - - 0.03 (Forfeiture)/Acceleration of share- based compensation expense due to the departure of senior executives - (0.01) (0.01) 0.18 Other items 0.02 0.01 0.01 - Core FFO per share $ 10.61 $ 10.75 (1.3)% $ 10.75 $ 10.56 1.8% — Self-Storage Operations Self-Storage Operations Summary Year Ended December 31, Year Ended December 31, Percentage Percentage 2020 2019 Change 2019 2018 Change (Dollar amounts and square footage in thousands) Revenues: Same Store facilities $ 2,436,546 $ 2,460,229 (1.0)% $ 2,460,229 $ 2,423,485 1.5% Acquired facilities 59,818 28,733 108.2% 28,733 5,167 456.1% Newly developed and expanded facilities 180,764 151,043 19.7% 151,043 122,602 23.2% Other non-same store facilities 44,502 44,547 (0.1)% 44,547 46,353 (3.9)% 2,721,630 2,684,552 1.4% 2,684,552 2,597,607 3.3% Cost of operations (a): Same Store facilities 687,828 669,763 2.7% 669,763 642,870 4.2% Acquired facilities 27,627 12,456 121.8% 12,456 2,197 467.0% Newly developed and expanded facilities 75,642 64,312 17.6% 64,312 48,858 31.6% Other non-same store facilities 16,446 15,885 3.5% 15,885 15,814 0.4% 807,543 762,416 5.9% 762,416 709,739 7.4% Net operating income (b): Same Store facilities 1,748,718 1,790,466 (2.3)% 1,790,466 1,780,615 0.6% Acquired facilities 32,191 16,277 97.8% 16,277 2,970 448.0% Newly developed and expanded facilities 105,122 86,731 21.2% 86,731 73,744 17.6% Other non-same store facilities 28,056 28,662 (2.1)% 28,662 30,539 (6.1)% Total net operating income 1,914,087 1,922,136 (0.4)% 1,922,136 1,887,868 1.8% Depreciation and amortization expense: Same Store facilities (422,461) (409,270) 3.2% (409,270) (408,972) 0.1% Acquired facilities (40,986) (24,355) 68.3% (24,355) (5,940) 310.0% Newly developed and expanded facilities (61,643) (53,844) 14.5% (53,844) (45,454) 18.5% Other non-same store facilities (28,167) (25,449) 10.7% (25,449) (23,280) 9.3% Total depreciation and amortization expense (553,257) (512,918) 7.9% (512,918) (483,646) 6.1% Net income (loss): Same Store facilities 1,326,257 1,381,196 (4.0)% 1,381,196 1,371,643 0.7% Acquired facilities (8,795) (8,078) 8.9% (8,078) (2,970) 172.0% Newly developed and expanded facilities 43,479 32,887 32.2% 32,887 28,290 16.2% Other non-same store facilities (111) 3,213 (103.5)% 3,213 7,259 (55.7)% Total net income $ 1,360,830 $ 1,409,218 (3.4)% $ 1,409,218 $ 1,404,222 0.4% Number of facilities at period end: Same Store facilities 2,221 2,221 - 2,221 2,221 - Acquired facilities 131 69 89.9% 69 25 176.0% Newly developed and expanded facilities 148 145 2.1% 145 134 8.2% Other non-same store facilities 48 48 0.0% 48 49 (2.0)% 2,548 2,483 2.6% 2,483 2,429 2.2% Net rentable square footage at period end: Same Store facilities 143,721 143,721 - 143,721 143,721 - Acquired facilities 9,882 4,762 107.5% 4,762 1,629 192.3% Newly developed and expanded facilities 17,716 16,649 6.4% 16,649 12,840 29.7% Other non-same store facilities 3,732 3,776 (1.2)% 3,776 3,857 (2.1)% 175,051 168,908 3.6% 168,908 162,047 4.2% (a) Selected Operating Data for the Same Store Facilities (2,339 facilities) Selected Operating Data for the Same Store Facilities (2,221 facilities) Year Ended December 31, Year Ended December 31, Percentage Percentage 2020 2019 Change 2019 2018 Change (Dollar amounts in thousands, except weighted average amounts) Revenues: Rental income $ 2,355,576 $ 2,353,625 0.1% $ 2,353,625 $ 2,317,577 1.6% Late charges and administrative fees 80,970 106,604 (24.0)% 106,604 105,908 0.7% Total revenues (a) 2,436,546 2,460,229 (1.0)% 2,460,229 2,423,485 1.5% Direct cost of operations (a): Property taxes 247,860 240,451 3.1% 240,451 230,035 4.5% On-site property manager payroll 125,051 121,978 2.5% 121,978 119,125 2.4% Repairs and maintenance 49,221 51,503 (4.4)% 51,503 49,917 3.2% Utilities 39,459 43,461 (9.2)% 43,461 44,762 (2.9)% Marketing 59,901 48,911 22.5% 48,911 33,249 47.1% Other direct property costs 66,646 65,331 2.0% 65,331 63,762 2.5% Total direct cost of operations 588,138 571,635 2.9% 571,635 540,850 5.7% Direct net operating income 1,848,408 1,888,594 (2.1)% 1,888,594 1,882,635 0.3% Indirect cost of operations (a): Supervisory payroll (39,291) (37,719) 4.2% (37,719) (37,114) 1.6% Centralized management costs (47,713) (49,453) (3.5)% (49,453) (49,705) (0.5)% Share based compensation (12,686) (10,956) 15.8% (10,956) (15,201) (27.9)% Net operating income 1,748,718 1,790,466 (2.3)% 1,790,466 1,780,615 0.6% Depreciation and amortization expense (422,461) (409,270) 3.2% (409,270) (408,972) 0.1% Net income $ 1,326,257 $ 1,381,196 (4.0)% $ 1,381,196 $ 1,371,643 0.7% Gross margin (before indirect costs and depreciation and amortization expense) 75.9% 76.8% (1.2)% 76.8% 77.7% (1.2)% Gross margin (before depreciation and amortization expense) 71.8% 72.8% (1.4)% 72.8% 73.5% (1.0)% Weighted average for the period: Square foot occupancy 94.5% 93.4% 1.2% 93.4% 93.0% 0.4% Realized annual rental income per (b): Occupied square foot $ 17.34 $ 17.53 (1.1)% $ 17.53 $ 17.33 1.2% Available square foot $ 16.40 $ 16.38 0.1% $ 16.38 $ 16.12 1.6% At December 31: Square foot occupancy 94.2% 91.7% 2.7% 91.7% 91.3% 0.4% Annual contract rent per occupied square foot (c) $ 17.99 $ 18.06 (0.4)% $ 18.06 $ 17.95 0.6% (a)Revenues and cost of operations do not include tenant reinsurance and merchandise The increase in realized annual rent per occupied square foot 2023. Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change (Amounts in thousands, except for per square foot amounts) Tenants moving in during the period: Average annual contract rent per square foot $ 13.63 $ 13.61 0.1% $ 13.61 $ 14.05 (3.1)% Square footage 100,878 105,731 (4.6)% 105,731 107,652 (1.8)% Promotional discounts given $ 73,150 $ 79,525 (8.0)% $ 79,525 $ 82,837 (4.0)% Tenants moving out during the period: Average annual contract rent per square foot $ 15.65 $ 16.08 (2.7)% $ 16.08 $ 16.13 (0.3)% Square footage 97,303 105,068 (7.4)% 105,068 107,164 (2.0)% Analysis of Same Store Cost of Operations costs, while the increase in 2022 is due primarily to increased property tax expense, marketing expense, other direct property costs, and centralized management costs. values. 2024. processing the facilities’ cash receipts, tenant mailings, credit card fees, eviction costs, and the cost of operating each property’s rental office. These costs increased For the Quarter Ended March 31 June 30 September 30 December 31 Entire Year (Amounts in thousands, except for per square foot amounts) Total revenues: 2020 $ 609,053 $ 596,896 $ 611,085 $ 619,512 $ 2,436,546 2019 $ 601,805 $ 615,564 $ 628,078 $ 614,782 $ 2,460,229 2018 $ 592,267 $ 603,230 $ 620,706 $ 607,282 $ 2,423,485 Total cost of operations: 2020 $ 182,842 $ 185,862 $ 178,213 $ 140,911 $ 687,828 2019 $ 175,376 $ 173,911 $ 177,996 $ 142,480 $ 669,763 2018 $ 170,158 $ 166,824 $ 168,500 $ 137,388 $ 642,870 Property taxes: 2020 $ 70,097 $ 69,913 $ 69,072 $ 38,778 $ 247,860 2019 $ 66,744 $ 67,466 $ 67,272 $ 38,969 $ 240,451 2018 $ 63,689 $ 64,373 $ 64,153 $ 37,820 $ 230,035 Repairs and maintenance: 2020 $ 12,381 $ 11,292 $ 12,579 $ 12,969 $ 49,221 2019 $ 13,745 $ 12,056 $ 13,154 $ 12,548 $ 51,503 2018 $ 12,495 $ 12,440 $ 12,188 $ 12,794 $ 49,917 Marketing: 2020 $ 14,275 $ 16,979 $ 15,572 $ 13,075 $ 59,901 2019 $ 8,981 $ 12,404 $ 14,319 $ 13,207 $ 48,911 2018 $ 7,055 $ 8,319 $ 8,444 $ 9,431 $ 33,249 REVPAF: 2020 $ 16.24 $ 16.13 $ 16.50 $ 16.72 $ 16.40 2019 $ 16.00 $ 16.41 $ 16.72 $ 16.38 $ 16.38 2018 $ 15.75 $ 16.08 $ 16.51 $ 16.15 $ 16.12 Weighted average realized annual rent per occupied square foot: 2020 $ 17.44 $ 17.11 $ 17.27 $ 17.56 $ 17.34 2019 $ 17.31 $ 17.46 $ 17.75 $ 17.60 $ 17.53 2018 $ 17.10 $ 17.14 $ 17.61 $ 17.47 $ 17.33 Weighted average occupancy levels for the period: 2020 93.1% 94.3% 95.5% 95.2% 94.5% 2019 92.5% 94.0% 94.2% 93.1% 93.4% 2018 92.1% 93.8% 93.8% 92.5% 93.0% Analysis of Market Trends Same Store Facilities Operating Trends by Market Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change (Amounts in thousands, except for weighted average data) Market (number of facilities, square footage in millions) Revenues: Los Angeles (212, 14.9) $ 381,535 $ 379,097 0.6% $ 379,097 $ 369,091 2.7% San Francisco (128, 7.9) 205,558 202,747 1.4% 202,747 198,598 2.1% New York (89, 6.2) 154,538 157,029 (1.6)% 157,029 153,980 2.0% Seattle-Tacoma (86, 5.8) 114,606 114,774 (0.1)% 114,774 113,189 1.4% Washington DC (89, 5.5) 112,739 114,483 (1.5)% 114,483 111,511 2.7% Miami (80, 5.6) 108,598 111,402 (2.5)% 111,402 113,100 (1.5)% Chicago (129, 8.1) 118,560 119,281 (0.6)% 119,281 118,056 1.0% Atlanta (99, 6.5) 83,511 87,518 (4.6)% 87,518 86,055 1.7% Dallas-Ft. Worth (101, 6.4) 83,162 84,988 (2.1)% 84,988 85,570 (0.7)% Houston (84, 5.8) 70,975 73,683 (3.7)% 73,683 76,939 (4.2)% Orlando-Daytona (72, 4.5) 60,772 62,869 (3.3)% 62,869 61,944 1.5% Philadelphia (56, 3.5) 59,666 59,120 0.9% 59,120 56,747 4.2% West Palm Beach (38, 2.5) 46,038 46,664 (1.3)% 46,664 46,230 0.9% Tampa (52, 3.5) 46,216 47,706 (3.1)% 47,706 47,797 (0.2)% Charlotte (50, 3.8) 41,006 41,781 (1.9)% 41,781 41,728 0.1% All other markets (856, 53.2) 749,066 757,087 (1.1)% 757,087 742,950 1.9% Total revenues $ 2,436,546 $ 2,460,229 (1.0)% $ 2,460,229 $ 2,423,485 1.5% Net operating income: Los Angeles $ 309,991 $ 311,049 (0.3)% $ 311,049 $ 303,648 2.4% San Francisco 163,962 162,667 0.8% 162,667 160,757 1.2% New York 108,681 111,424 (2.5)% 111,424 110,458 0.9% Seattle-Tacoma 86,874 89,440 (2.9)% 89,440 88,238 1.4% Washington DC 82,415 84,704 (2.7)% 84,704 82,859 2.2% Miami 79,472 82,910 (4.1)% 82,910 85,703 (3.3)% Chicago 62,749 63,319 (0.9)% 63,319 64,750 (2.2)% Atlanta 59,940 64,423 (7.0)% 64,423 63,188 2.0% Dallas-Ft. Worth 56,020 58,192 (3.7)% 58,192 59,575 (2.3)% Houston 43,073 45,793 (5.9)% 45,793 50,290 (8.9)% Orlando-Daytona 42,568 45,282 (6.0)% 45,282 44,965 0.7% Philadelphia 41,572 41,592 (0.0)% 41,592 39,860 4.3% West Palm Beach 32,752 34,125 (4.0)% 34,125 34,191 (0.2)% Tampa 31,290 33,421 (6.4)% 33,421 34,100 (2.0)% Charlotte 29,509 30,104 (2.0)% 30,104 31,244 (3.6)% All other markets 517,850 532,021 (2.7)% 532,021 526,789 1.0% Total net operating income $ 1,748,718 $ 1,790,466 (2.3)% $ 1,790,466 $ 1,780,615 0.6% Same Store Facilities Operating Trends by Market (Continued) Same Store Facilities Operating Trends by Market (Continued) Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change Weighted average square foot occupancy: Los Angeles 96.7% 95.2% 1.6% 95.2% 94.9% 0.3% San Francisco 96.1% 94.3% 1.9% 94.3% 94.3% 0.0% New York 95.2% 94.1% 1.2% 94.1% 94.2% (0.1)% Seattle-Tacoma 94.1% 93.0% 1.2% 93.0% 93.0% 0.0% Washington DC 94.4% 93.4% 1.1% 93.4% 92.3% 1.2% Miami 94.4% 93.0% 1.5% 93.0% 92.8% 0.2% Chicago 93.8% 92.1% 1.8% 92.1% 90.3% 2.0% Atlanta 92.8% 93.0% (0.2)% 93.0% 93.2% (0.2)% Dallas-Ft. Worth 92.9% 92.1% 0.9% 92.1% 91.4% 0.8% Houston 92.1% 90.1% 2.2% 90.1% 91.3% (1.3)% Orlando-Daytona 94.4% 94.2% 0.2% 94.2% 94.6% (0.4)% Philadelphia 96.1% 95.3% 0.8% 95.3% 94.9% 0.4% West Palm Beach 95.0% 94.0% 1.1% 94.0% 93.8% 0.2% Tampa 93.4% 92.6% 0.9% 92.6% 92.9% (0.3)% Charlotte 93.0% 91.9% 1.2% 91.9% 91.5% 0.4% All other markets 94.5% 93.6% 1.0% 93.6% 92.9% 0.8% Total weighted average square foot occupancy 94.5% 93.4% 1.2% 93.4% 93.0% 0.4% Realized annual rent per occupied square foot: Los Angeles $ 25.88 $ 25.86 0.1% $ 25.86 $ 25.23 2.5% San Francisco 26.64 26.62 0.1% 26.62 26.02 2.3% New York 25.62 26.05 (1.7)% 26.05 25.50 2.2% Seattle-Tacoma 20.33 20.42 (0.4)% 20.42 20.15 1.3% Washington DC 21.11 21.45 (1.6)% 21.45 21.21 1.1% Miami 19.77 20.36 (2.9)% 20.36 20.70 (1.6)% Chicago 14.96 15.15 (1.3)% 15.15 15.31 (1.0)% Atlanta 13.15 13.56 (3.0)% 13.56 13.27 2.2% Dallas-Ft. Worth 13.36 13.63 (2.0)% 13.63 13.82 (1.4)% Houston 12.75 13.39 (4.8)% 13.39 13.81 (3.0)% Orlando-Daytona 13.54 13.89 (2.5)% 13.89 13.64 1.8% Philadelphia 16.86 16.65 1.3% 16.65 16.04 3.8% West Palm Beach 18.51 18.72 (1.1)% 18.72 18.56 0.9% Tampa 13.70 14.10 (2.8)% 14.10 14.09 0.1% Charlotte 11.07 11.29 (1.9)% 11.29 11.32 (0.3)% All other markets 14.35 14.48 (0.9)% 14.48 14.30 1.3% Total realized rent per occupied square foot $ 17.34 $ 17.53 (1.1)% $ 17.53 $ 17.33 1.2% Same Store Facilities Operating Trends by Market (Continued) Same Store Facilities Operating Trends by Market (Continued) Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change REVPAF: Los Angeles $ 25.02 $ 24.62 1.6% $ 24.62 $ 23.95 2.8% San Francisco 25.61 25.09 2.1% 25.09 24.54 2.2% New York 24.39 24.50 (0.4)% 24.50 24.04 1.9% Seattle-Tacoma 19.13 18.99 0.7% 18.99 18.74 1.3% Washington DC 19.93 20.03 (0.5)% 20.03 19.58 2.3% Miami 18.66 18.93 (1.4)% 18.93 19.21 (1.5)% Chicago 14.04 13.95 0.6% 13.95 13.82 0.9% Atlanta 12.20 12.62 (3.3)% 12.62 12.37 2.0% Dallas-Ft. Worth 12.41 12.55 (1.1)% 12.55 12.63 (0.6)% Houston 11.75 12.06 (2.6)% 12.06 12.60 (4.3)% Orlando-Daytona 12.78 13.08 (2.3)% 13.08 12.90 1.4% Philadelphia 16.20 15.86 2.1% 15.86 15.22 4.2% West Palm Beach 17.59 17.59 0.0% 17.59 17.42 1.0% Tampa 12.80 13.06 (2.0)% 13.06 13.08 (0.2)% Charlotte 10.29 10.38 (0.9)% 10.38 10.36 0.2% All other markets 13.57 13.55 0.1% 13.55 13.29 2.0% Total REVPAF $ 16.40 $ 16.38 0.1% $ 16.38 $ 16.12 1.6% The following table summarizes operating data with respect to the Acquired Facilities: ACQUIRED FACILITIES (Continued) ACQUIRED FACILITIES Year Ended December 31, Year Ended December 31, 2020 2019 Change (a) 2019 2018 Change (a) ($ amounts in thousands, except for per square foot amounts) Revenues (b): 2018 Acquisitions $ 17,119 $ 16,029 $ 1,090 $ 16,029 $ 5,167 $ 10,862 2019 Acquisitions 31,334 12,704 18,630 12,704 - 12,704 2020 Acquisitions 11,365 - 11,365 - - - Total revenues 59,818 28,733 31,085 28,733 5,167 23,566 Cost of operations (b): 2018 Acquisitions 7,562 7,278 284 7,278 2,197 5,081 2019 Acquisitions 13,323 5,178 8,145 5,178 - 5,178 2020 Acquisitions 6,742 - 6,742 - - - Total cost of operations 27,627 12,456 15,171 12,456 2,197 10,259 Net operating income: 2018 Acquisitions 9,557 8,751 806 8,751 2,970 5,781 2019 Acquisitions 18,011 7,526 10,485 7,526 - 7,526 2020 Acquisitions 4,623 - 4,623 - - - Net operating income 32,191 16,277 15,914 16,277 2,970 13,307 Depreciation and amortization expense (40,986) (24,355) (16,631) (24,355) (5,940) (18,415) Net loss $ (8,795) $ (8,078) $ (717) $ (8,078) $ (2,970) $ (5,108) At December 31: Square foot occupancy: 2018 Acquisitions 89.8% 82.6% 8.7% 82.6% 79.6% 3.8% 2019 Acquisitions 91.7% 73.6% 24.6% 73.6% - - 2020 Acquisitions 63.5% - - - - - 77.0% 76.7% 0.4% 76.7% 79.6% (3.6)% Annual contract rent per occupied square foot: 2018 Acquisitions $ 11.59 $ 11.98 (3.3)% $ 11.98 $ 11.10 7.9% 2019 Acquisitions 11.93 12.27 (2.8)% 12.27 - - 2020 Acquisitions 12.50 - - - - - $ 12.10 $ 12.16 (0.5)% $ 12.16 $ 11.10 9.5% Number of facilities: 2018 Acquisitions 25 25 - 25 25 - 2019 Acquisitions 44 44 - 44 - 44 2020 Acquisitions 62 - 62 - - - 131 69 62 69 25 44 Net rentable square feet (in thousands): 2018 Acquisitions 1,653 1,629 24 1,629 1,629 - 2019 Acquisitions 3,154 3,133 21 3,133 - 3,133 2020 Acquisitions 5,075 - 5,075 - - - 9,882 4,762 5,120 4,762 1,629 3,133 ACQUIRED FACILITIES (Continued) As of Costs to acquire (in thousands): 2018 Acquisitions $ 181,020 2019 Acquisitions 429,850 2020 Acquisitions 796,065 $ 1,406,935 (a)Represents the percentage change with respect to square foot occupancy and annual contract rent per occupied square foot, and the absolute nominal change with respect to all other items. ezStorage portfolio revenues of $105.1 million, NOI of $82.2 million (including Direct NOI of $84.5 million), and average square footage occupancy of 86.3% for 2023. Developed and Expanded Facilities 2023. The following table summarizes operating data with respect to the Developed and Expanded Facilities: DEVELOPED AND EXPANDED FACILITIES Year Ended December 31, Year Ended December 31, 2020 2019 Change (a) 2019 2018 Change (a) ($ amounts in thousands, except for per square foot amounts) Revenues (b): Developed in 2015 $ 18,228 $ 17,630 $ 598 $ 17,630 $ 16,648 $ 982 Developed in 2016 - 2018 70,180 56,868 13,312 56,868 37,625 19,243 Developed in 2019 6,455 1,720 4,735 1,720 - 1,720 Developed in 2020 301 - 301 - - - Expansions completed before 2019 33,921 29,354 4,567 29,354 23,752 5,602 Expansions completed in 2019 or 2020 36,031 28,898 7,133 28,898 27,492 1,406 Expansions in process 15,648 16,573 (925) 16,573 17,085 (512) Total revenues 180,764 151,043 29,721 151,043 122,602 28,441 Cost of operations (b): Developed in 2015 5,720 5,842 (122) 5,842 5,712 130 Developed in 2016 - 2018 29,728 27,694 2,034 27,694 22,396 5,298 Developed in 2019 4,685 1,915 2,770 1,915 - 1,915 Developed in 2020 383 - 383 - - - Expansions completed before 2019 11,492 10,462 1,030 10,462 8,156 2,306 Expansions completed in 2019 or 2020 19,372 14,571 4,801 14,571 8,867 5,704 Expansions in process 4,262 3,828 434 3,828 3,727 101 Total cost of operations 75,642 64,312 11,330 64,312 48,858 15,454 Net operating income (loss): Developed in 2015 12,508 11,788 720 11,788 10,936 852 Developed in 2016 - 2018 40,452 29,174 11,278 29,174 15,229 13,945 Developed in 2019 1,770 (195) 1,965 (195) - (195) Developed in 2020 (82) - (82) - - - Expansions completed before 2019 22,429 18,892 3,537 18,892 15,596 3,296 Expansions completed in 2019 or 2020 16,659 14,327 2,332 14,327 18,625 (4,298) Expansions in process 11,386 12,745 (1,359) 12,745 13,358 (613) Net operating income 105,122 86,731 18,391 86,731 73,744 12,987 Depreciation and amortization expense (61,643) (53,844) (7,799) (53,844) (45,454) (8,390) Net income $ 43,479 $ 32,887 $ 10,592 $ 32,887 $ 28,290 $ 4,597 At December 31: Square foot occupancy: Developed in 2015 92.9% 90.0% 3.2% 90.0% 89.1% 1.0% Developed in 2016 - 2018 88.6% 74.1% 19.6% 74.1% 63.5% 16.7% Developed in 2019 84.6% 38.1% 122.0% 38.1% - - Developed in 2020 34.0% - - - - - Expansions completed before 2019 88.5% 75.2% 17.7% 75.2% 59.1% 27.2% Expansions completed in 2019 or 2020 72.7% 57.8% 25.8% 57.8% 83.8% (31.0)% Expansions in process 88.8% 90.9% (2.3)% 90.9% 90.7% 0.2% 82.8% 69.6% 19.0% 69.6% 69.8% (0.3)% DEVELOPED AND EXPANDED FACILITIES (Continued) Year Ended December 31, Year Ended December 31, 2020 2019 Change (a) 2019 2018 Change (a) (Amounts in thousands, except for number of facilities) Annual contract rent per occupied square foot: Developed in 2015 $ 16.10 $ 15.76 2.2% $ 15.76 $ 14.87 6.0% Developed in 2016 - 2018 13.57 13.37 1.5% 13.37 11.87 12.6% Developed in 2019 9.69 10.13 (4.3)% 10.13 - - Developed in 2020 10.08 - - - - - Expansions completed before 2019 14.72 14.98 (1.7)% 14.98 16.06 (6.7)% Expansions completed in 2019 or 2020 10.48 11.71 (10.5)% 11.71 14.55 (19.5)% Expansions in process 23.07 24.26 (4.9)% 24.26 24.60 -1.4% $ 13.30 $ 14.01 (5.1)% $ 14.01 $ 14.45 (3.0)% Number of facilities: Developed in 2015 13 13 - 13 13 - Developed in 2016 - 2018 50 50 - 50 50 - Developed in 2019 11 11 - 11 - 11 Developed in 2020 3 - 3 - - - Expansions completed before 2019 20 20 - 20 20 - Expansions completed in 2019 or 2020 39 39 - 39 39 - Expansions in process 12 12 - 12 12 - 148 145 3 145 134 11 Net rentable square feet (c): Developed in 2015 1,242 1,242 - 1,242 1,242 - Developed in 2016 - 2018 6,250 6,250 - 6,250 6,135 115 Developed in 2019 1,057 1,057 - 1,057 - 1,057 Developed in 2020 347 - 347 - - - Expansions completed before 2019 2,754 2,754 - 2,754 2,689 65 Expansions completed in 2019 or 2020 5,327 4,631 696 4,631 2,029 2,602 Expansions in process 739 715 24 715 745 (30) 17,716 16,649 1,067 16,649 12,840 3,809 As of Costs to develop: Developed in 2015 $ 119,258 Developed in 2016 - 2018 759,643 Developed in 2019 150,387 Developed in 2020 42,063 Expansions completed before 2019 (d) 159,217 Expansions completed in 2019 or 2020 (d) 319,442 $ 1,550,010 (a)Represents the percentage change with respect to square foot occupancy and annual contract rent per occupied square foot, and the absolute nominal change with respect to all other items. loss from newly developed facilities undergoing fill-up. conditions in the vicinity of each property and the level of new and existing Non-Same Store Facilities Depreciation and amortization SEC on February 21, 2023. Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change (Amounts in thousands) Revenues: Tenant reinsurance premiums $ 149,286 $ 131,913 $ 17,373 $ 131,913 $ 125,575 $ 6,338 Merchandise 29,702 30,358 (656) 30,358 31,098 (740) Third party property management 14,450 8,285 6,165 8,285 5,243 3,042 Total revenues 193,438 170,556 22,882 170,556 161,916 8,640 Cost of Operations: Tenant reinsurance 28,486 26,202 2,284 26,202 25,646 556 Merchandise 17,609 18,002 (393) 18,002 18,345 (343) Third party property management 13,824 6,532 7,292 6,532 3,353 3,179 Total cost of operations 59,919 50,736 9,183 50,736 47,344 3,392 Net operating income Tenant reinsurance 120,800 105,711 15,089 105,711 99,929 5,782 Merchandise 12,093 12,356 (263) 12,356 12,753 (397) Third party property management 626 1,753 (1,127) 1,753 1,890 (137) Total net operating income $ 133,519 $ 119,820 $ 13,699 $ 119,820 $ 114,572 $ 5,248 Tenant reinsurance premium revenue increased Cost of operations primarily includes claims paid as well as claims adjustment expenses. Claims expenses vary based upon the number of insured tenants and the volume of events due to increased claim expenses related to burglary events. Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change (Amounts in thousands) Equity in earnings: PSB $ 64,835 $ 54,090 $ 10,745 $ 54,090 $ 89,362 $ (35,272) Shurgard 15,662 15,457 205 15,457 14,133 1,324 Total equity in earnings $ 80,497 $ 69,547 $ 10,950 $ 69,547 $ 103,495 $ (33,948) For purposes of recording our equity in earnings from Shurgard, the Euro was translated at exchange rates of approximately General and administrative expense: The following table sets forth our general and administrative expense: Year Ended December 31, Year Ended December 31, 2020 2019 Change 2019 2018 Change (Amounts in thousands) Share-based compensation expense $ 19,068 $ 14,522 $ 4,546 $ 14,522 $ 54,592 $ (40,070) Costs of senior executives 2,621 2,309 312 2,309 4,822 (2,513) Development and acquisition costs 10,076 6,850 3,226 6,850 5,441 1,409 Tax compliance costs and taxes paid 7,949 5,081 2,868 5,081 5,438 (357) Legal costs 10,021 7,692 2,329 7,692 8,234 (542) Public company costs 4,975 5,007 (32) 5,007 4,712 295 Other costs 28,489 20,685 7,804 20,685 21,473 (788) Total $ 83,199 $ 62,146 $ 21,053 $ 62,146 $ 104,712 $ (42,566) Interest and other income: financial markets in 2023 as compared to 2022. dependent upon changes in the relative value of the Euro to the U.S. Dollar and the level of Euro-denominated line of credit, as well as any short-term bank loans, as bridge financing. We believe that we have significant financial flexibility to adapt to changing conditions and 2021 $ 1,851 2022 502,574 2023 19,219 2024 122,770 2025 296,952 Thereafter 1,614,563 $ 2,557,929 Capital Expenditure Requirements: Capital expenditures include general maintenance, major repairs, or replacements to elements of our facilities to keep our facilities in good operating condition and maintain their visual appeal. Capital expenditures do not include costs relating to the development of new facilities or redevelopment of existing facilities to increase their available rentable square footage. panels in 2023 and we expect to spend $120 million in 2024. our robust pipeline. Our ability to do so continues to be challenged by various constraints such as difficulty in finding projects that meet our risk-adjusted yield expectations and challenges in obtaining building permits for self-storage facilities in certain municipalities. The direct and indirect cost of our operations impose significant cash requirements. Direct operating costs include property taxes, on-site property manager payroll, repairs and maintenance, utilities, and marketing. Indirect operating costs include supervisory payroll and centralized management costs. The cash requirements from these operating costs will vary year to year based on, among other things, changes in the size of our portfolio and changes in property tax rates and assessed values, wage rates, and marketing costs in our markets. ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 2021 2022 2023 2024 2025 Thereafter Total Fixed rate debt $ 1,851 $ 502,574 $ 19,219 $ 122,770 $ 296,952 $ 1,614,563 $ 2,557,929 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ITEM 9B.Other Information PART III ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Plan Category Equity compensation plans not approved by security holders PART IV a. 1. Financial Statements 3.1 3.2 4.1 Description of 4.2 Inline XBRL Instance Inline XBRL Taxonomy Extension Schema. Filed herewith. Inline XBRL Taxonomy Extension Calculation Linkbase. Filed herewith. Inline XBRL Taxonomy Extension Definition Linkbase. Filed herewith. Inline XBRL Taxonomy Extension Label Linkbase. Filed herewith. Inline XBRL Taxonomy Extension Presentation Link. Filed herewith. Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) SEC File No. 001-33519 unless otherwise indicated. Denotes management compensatory plan agreement or arrangement. SIGNATURES Date: February By: Title Date /s/ Joseph D. Russell, Jr. Chief Executive Officer, President and Trustee (principal executive officer) February Joseph D. Russell, Jr. /s/ H. Thomas Boyle Chief Financial and Investment Officer (principal financial officer) February H. Thomas Boyle /s/ Ronald L. Havner, Jr. Chairman of the Board February Ronald L. Havner, Jr. /s/ Tamara Hughes Gustavson Trustee February Tamara Hughes Gustavson /s/ Leslie Stone Heisz Trustee February Leslie Stone Heisz /s/ Shankh S. Mitra Trustee February Shankh S. Mitra /s/ David J. Neithercut Trustee February David J. Neithercut /s/ Rebecca Owen Trustee February Rebecca Owen /s/ Kristy M. Pipes Trustee February Kristy M. Pipes /s/ Avedick B. Poladian Trustee February Avedick B. Poladian /s/ John Reyes Trustee February John Reyes Title /s/ Tariq M. Shaukat Trustee February Tariq M. Shaukat /s/ Ronald P. Spogli Trustee February Ronald P. Spogli /s/ Paul S. Williams Trustee February Paul S. Williams PUBLIC STORAGE Page References For the years ended December 31, III – Real Report of Independent Registered Public Accounting Firm Purchase Price Allocation assumed, which consisted principally of land, buildings and acquired customers in place. 20, 2024 December 31, December 31, 2020 2019 ASSETS (Unaudited) Cash and equivalents $ 257,560 $ 409,743 Real estate facilities, at cost: Land 4,375,588 4,186,873 Buildings 12,997,039 12,102,273 17,372,627 16,289,146 Accumulated depreciation (7,152,135) (6,623,475) 10,220,492 9,665,671 Construction in process 188,079 141,934 10,408,571 9,807,605 Investments in unconsolidated real estate entities 773,046 767,816 Goodwill and other intangible assets, net 204,654 205,936 Other assets 172,715 174,344 Total assets $ 11,816,546 $ 11,365,444 LIABILITIES AND EQUITY Notes payable $ 2,544,992 $ 1,902,493 Preferred shares called for redemption (Note 8) 300,000 - Accrued and other liabilities 394,655 383,284 Total liabilities 3,239,647 2,285,777 Commitments and contingencies (Note 13) Equity: Public Storage shareholders’ equity: Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 151,700 shares issued (in series) and outstanding, (162,600 at December 31, 2019), at liquidation preference 3,792,500 4,065,000 Common Shares, $0.10 par value, 650,000,000 shares authorized, 174,581,742 shares issued and outstanding (174,418,615 shares at December 31, 2019) 17,458 17,442 Paid-in capital 5,707,101 5,710,934 Accumulated deficit (914,791) (665,575) Accumulated other comprehensive loss (43,401) (64,890) Total Public Storage shareholders’ equity 8,558,867 9,062,911 Noncontrolling interests 18,032 16,756 Total equity 8,576,899 9,079,667 Total liabilities and equity $ 11,816,546 $ 11,365,444 For the Years Ended December 31, 2020 2019 2018 Revenues: Self-storage facilities $ 2,721,630 $ 2,684,552 $ 2,597,607 Ancillary operations 193,438 170,556 161,916 2,915,068 2,855,108 2,759,523 Expenses: Self-storage cost of operations 807,543 762,416 709,739 Ancillary cost of operations 59,919 50,736 47,344 Depreciation and amortization 553,257 512,918 483,646 General and administrative 83,199 62,146 104,712 Interest expense 56,283 45,641 32,542 1,560,201 1,433,857 1,377,983 Other increases (decreases) to net income: Interest and other income 22,323 26,683 24,552 Equity in earnings of unconsolidated real estate entities 80,497 69,547 103,495 Foreign currency exchange (loss) gain (97,953) 7,829 18,117 Gain on sale of real estate 1,493 341 37,903 Gain due to Shurgard public offering - - 151,616 Net income 1,361,227 1,525,651 1,717,223 Allocation to noncontrolling interests (4,014) (5,117) (6,192) Net income allocable to Public Storage shareholders 1,357,213 1,520,534 1,711,031 Allocation of net income to: Preferred shareholders - distributions (207,068) (210,179) (216,316) Preferred shareholders - redemptions (Note 8) (48,265) (32,693) - Restricted share units (3,545) (4,895) (5,815) Net income allocable to common shareholders $ 1,098,335 $ 1,272,767 $ 1,488,900 Net income per common share: Basic $ 6.29 $ 7.30 $ 8.56 Diluted $ 6.29 $ 7.29 $ 8.54 Basic weighted average common shares outstanding 174,494 174,287 173,969 Diluted weighted average common shares outstanding 174,642 174,530 174,297 For the Years Ended December 31, 2020 2019 2018 Net income $ 1,361,227 $ 1,525,651 $ 1,717,223 Adjust for foreign currency exchange loss reflected in gain on sale of real estate and gain on Shurgard public offering - - 27,207 Foreign currency exchange gain (loss) on investment in Shurgard 21,489 (830) (16,203) Total comprehensive income 1,382,716 1,524,821 1,728,227 Allocation to noncontrolling interests (4,014) (5,117) (6,192) Comprehensive income allocable to Public Storage shareholders $ 1,378,702 $ 1,519,704 $ 1,722,035 AND REDEEMABLE NONCONTROLLING INTERESTS Accumulated Total Cumulative Other Public Storage Preferred Common Paid-in Accumulated Comprehensive Shareholders’ Noncontrolling Total Shares Shares Capital Deficit Loss Equity Interests Equity Balances at December 31, 2017 $ 4,025,000 $ 17,385 $ 5,648,399 $ (675,711) $ (75,064) $ 8,940,009 $ 24,360 $ 8,964,369 Issuance of common shares in connection with share-based compensation (277,511 shares) (Note 10) - 28 12,497 - - 12,525 - 12,525 Share-based compensation expense, net of cash paid in lieu of common shares (Note 10) - - 57,589 - - 57,589 - 57,589 Contributions by noncontrolling interests - - - - - - 1,720 1,720 Net income - - - 1,717,223 - 1,717,223 - 1,717,223 Net income allocated to noncontrolling interests - - - (6,192) - (6,192) 6,192 - Distributions to equity holders: Preferred shares (Note 8) - - - (216,316) - (216,316) - (216,316) Noncontrolling interests - - - - - - (7,022) (7,022) Common shareholders and restricted share unitholders ($8.00 per share) - - - (1,396,364) - (1,396,364) - (1,396,364) Other comprehensive income (Note 2) - - - - 11,004 11,004 - 11,004 Balances at December 31, 2018 $ 4,025,000 $ 17,413 $ 5,718,485 $ (577,360) $ (64,060) $ 9,119,478 $ 25,250 $ 9,144,728 Issuance of 43,600 preferred shares (Note 8) 1,090,000 - (30,844) - - 1,059,156 - 1,059,156 Redemption of 42,000 preferred shares (Note 8) (1,050,000) - - - - (1,050,000) - (1,050,000) Issuance of common shares in connection with share-based compensation (287,734 shares) (Note 10) - 29 33,535 - - 33,564 - 33,564 Share-based compensation expense, net of cash paid in lieu of common shares (Note 10) - - 13,671 - - 13,671 - 13,671 Acquisition of noncontrolling interests - - (23,913) - - (23,913) (11,087) (35,000) Contributions by noncontrolling interests - - - - - - 4,148 4,148 Net income - - - 1,525,651 - 1,525,651 - 1,525,651 Net income allocated to noncontrolling interests - - - (5,117) - (5,117) 5,117 - Distributions to: Preferred shareholders (Note 8) - - - (210,179) - (210,179) - (210,179) Noncontrolling interests - - - - - - (6,672) (6,672) Common shareholders and restricted share unitholders ($8.00 per share) - - - (1,398,570) - (1,398,570) - (1,398,570) Other comprehensive loss (Note 2) - - - - (830) (830) - (830) Accumulated Total Cumulative Other Public Storage Preferred Common Paid-in Accumulated Comprehensive Shareholders’ Noncontrolling Total Shares Shares Capital Deficit Loss Equity Interests Equity Balances at December 31, 2019 $ 4,065,000 $ 17,442 $ 5,710,934 $ (665,575) $ (64,890) $ 9,062,911 $ 16,756 $ 9,079,667 Issuance of 49,900 preferred shares (Note 8) 1,247,500 - (39,294) - - 1,208,206 - 1,208,206 Redemption and shares called for redemption of 60,800 preferred shares (Note 8) (1,520,000) - - - - (1,520,000) - (1,520,000) Issuance of common shares in connection with share-based compensation (163,127 shares) (Note 10) - 16 12,648 - - 12,664 - 12,664 Share-based compensation expense, net of cash paid in lieu of common shares (Note 10) - - 22,845 - - 22,845 - 22,845 Acquisition of noncontrolling interests - - (32) - - (32) (1) (33) Contributions by noncontrolling interests - - - - - - 2,629 2,629 Net income - - - 1,361,227 - 1,361,227 - 1,361,227 Net income allocated to noncontrolling interests - - - (4,014) - (4,014) 4,014 - Distributions to: Preferred shareholders (Note 8) - - - (207,068) - (207,068) - (207,068) Noncontrolling interests - - - - - - (5,366) (5,366) Common shareholders and restricted share unitholders ($8.00 per share) - - - (1,399,361) - (1,399,361) - (1,399,361) Other comprehensive income (Note 2) - - - - 21,489 21,489 - 21,489 Balances at December 31, 2020 $ 3,792,500 $ 17,458 $ 5,707,101 $ (914,791) $ (43,401) $ 8,558,867 $ 18,032 $ 8,576,899 For the Years Ended December 31, 2020 2019 2018 Cash flows from operating activities: Net income $ 1,361,227 $ 1,525,651 $ 1,717,223 Adjustments to reconcile net income to net cash flows from operating activities: Gain due to Shurgard public offering - - (151,616) Gain on real estate investment sales (1,493) (341) (37,903) Depreciation and amortization 553,257 512,918 483,646 Equity in earnings of unconsolidated real estate entities (80,497) (69,547) (103,495) Distributions from cumulative equity in earnings of unconsolidated real estate entities 72,098 73,259 109,754 Foreign currency exchange loss (gain) 97,953 (7,829) (18,117) Share-based compensation expense 33,363 25,833 69,936 Other 6,994 7,690 (5,782) Total adjustments 681,675 541,983 346,423 Net cash flows from operating activities 2,042,902 2,067,634 2,063,646 Cash flows from investing activities: Capital expenditures to maintain real estate facilities (169,998) (187,303) (140,980) Development and expansion of real estate facilities (189,413) (284,682) (340,032) Acquisition of real estate facilities and intangible assets (792,266) (437,758) (181,020) Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities 24,658 11,630 91,927 Repayment of note receivable 7,509 - - Proceeds from sale of real estate investments 1,796 762 54,184 Net cash flows used in investing activities (1,117,714) (897,351) (515,921) Cash flows from financing activities: Repayments on notes payable (2,020) (1,920) (1,784) Issuance of notes payable, net of issuance costs 545,151 496,900 - Issuance of preferred shares 1,208,206 1,059,156 - Issuance of common shares 12,664 33,564 12,525 Redemption of preferred shares (1,220,000) (1,050,000) - Cash paid upon vesting of restricted share units (10,518) (12,162) (12,347) Acquisition of noncontrolling interests (33) (35,000) - Contributions by noncontrolling interests 2,629 4,148 1,720 Distributions paid to preferred shareholders, common shareholders and restricted share unitholders (1,606,429) (1,608,749) (1,612,680) Distributions paid to noncontrolling interests (5,366) (6,672) (7,022) Net cash flows used in financing activities (1,075,716) (1,120,735) (1,619,588) Net cash flows (used in) from operating, investing, and financing activities (150,528) 49,548 (71,863) Net effect of foreign exchange impact on cash and equivalents, including restricted cash (426) (13) (171) (Decrease) increase in cash and equivalents, including restricted cash $ (150,954) $ 49,535 $ (72,034) For the Years Ended December 31, 2020 2019 2018 Cash and equivalents, including restricted cash at beginning of the period: Cash and equivalents $ 409,743 $ 361,218 $ 433,376 Restricted cash included in other assets 23,811 22,801 22,677 $ 433,554 $ 384,019 $ 456,053 Cash and equivalents, including restricted cash at end of the period: Cash and equivalents $ 257,560 $ 409,743 $ 361,218 Restricted cash included in other assets 25,040 23,811 22,801 $ 282,600 $ 433,554 $ 384,019 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 $ (10,359) $ (16,558) $ (11,422) Construction or expansion of real estate facilities (32,349) (32,356) 81,157 Accrued and other liabilities 42,708 48,914 92,579 Real estate acquired in exchange for assumption of a liability (3,799) (1,817) - Liability assumed in connection with acquisition of real estate 3,799 - - Notes payable assumed in connection with acquisition of real estate - 1,817 - Preferred shares called for redemption and reclassified to liabilities 300,000 - - Preferred shares called for redemption and reclassified from equity (300,000) - - Other disclosures: Foreign currency translation adjustment: Real estate facilities, net of accumulated depreciation $ - $ - $ 203 Investments in unconsolidated real estate entities (21,489) 830 15,997 Notes payable - (7,842) (18,285) Accumulated other comprehensive gain 21,489 6,999 1,914 Consolidation and Equity Method of Accounting the future. had full knowledge of the relevant facts and circumstances of our positions. As of December 31, Our share-based compensation plans allow immediate vesting of outstanding unvested awards upon retirement (“Retirement Acceleration”) for employees who meet certain conditions. We For the Years Ended December 31, 2020 2019 2018 Weighted average common shares and equivalents outstanding: Basic weighted average common shares outstanding 174,494 174,287 173,969 Net effect of dilutive stock options - based on treasury stock method 148 243 328 Diluted weighted average common shares outstanding 174,642 174,530 174,297 For the Years Ended 2020 2019 2018 (Amounts in thousands) Operating facilities, at cost: Beginning balance $ 16,289,146 $ 15,296,844 $ 14,665,989 Capital expenditures to maintain real estate facilities 163,834 192,539 139,397 Acquisitions 781,219 421,097 169,436 Dispositions (303) (426) (25,633) Developed or expanded facilities opened for operation 138,731 379,092 348,270 Impact of foreign exchange rate changes - - (615) Ending balance 17,372,627 16,289,146 15,296,844 Accumulated depreciation: Beginning balance (6,623,475) (6,140,072) (5,700,331) Depreciation expense (528,660) (483,408) (457,029) Dispositions - 5 16,876 Impact of foreign exchange rate changes - - 412 Ending balance (7,152,135) (6,623,475) (6,140,072) Construction in process: Beginning balance 141,934 285,339 264,441 Costs incurred to develop and expand real estate facilities 188,102 235,687 362,397 Write-off of cancelled projects (3,226) - - Developed or expanded facilities opened for operation (138,731) (379,092) (348,270) Dispositions - - (2,698) Transfer from other assets - - 9,469 Ending balance 188,079 141,934 285,339 Total real estate facilities at December 31, $ 10,408,571 $ 9,807,605 $ 9,442,111 During gross proceeds, $24.3 million was allocated to the sale of the property based on its estimated fair value, resulting a net gain on sale of real estate of $17.1 million after direct transaction costs, and $15.7 million was classified as a reduction of costs to develop the acquired land included in construction in process. connection with eminent domain proceedings for $16.3 million in cash proceeds and recorded a related gain on sale of real estate of approximately $13.7 million. Our investment in Shurgard was $390.2 million and $275.8 million as of December 31, Investments in Unconsolidated Real Estate Equity in Earnings of Unconsolidated Real Estate Entities at December 31, Entities for the Year Ended December 31, 2020 2019 2020 2019 2018 PSB $ 431,963 $ 427,875 $ 64,835 $ 54,090 $ 89,362 Shurgard 341,083 339,941 15,662 15,457 14,133 Total $ 773,046 $ 767,816 $ 80,497 $ 69,547 $ 103,495 Throughout all periods presented, we shares for a cost of $112.6 million, maintaining our 35% equity interest in Shurgard. As a result of the offering, Shurgard common shares that we effectively owned increased from 31,268,459 as of December 31, 2022 to 34,132,133 as of December 31, 2023. During Approximately $11.0 million, $13.7 million, and $19.5 million of total cash distributions from Shurgard during the year ended 2023, 2022, and 2021, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows. Amounts at December 31, 2020 Coupon Effective Unamortized Book Fair Rate Rate Principal Costs Value Value ($ amounts in thousands) U.S. Dollar Denominated Unsecured Debt Notes due September 15, 2022 2.370% 2.483% $ 500,000 $ (891) $ 499,109 $ 517,419 Notes due September 15, 2027 3.094% 3.218% 500,000 (3,548) 496,452 560,833 Notes due May 1, 2029 3.385% 3.459% 500,000 (2,567) 497,433 574,833 1,500,000 (7,006) 1,492,994 1,653,085 Euro Denominated Unsecured Debt Notes due April 12, 2024 1.540% 1.540% 122,646 - 122,646 129,192 Notes due November 3, 2025 2.175% 2.175% 296,821 - 296,821 323,552 Notes due January 24, 2032 0.875% 0.978% 613,232 (5,931) 607,301 634,389 1,032,699 (5,931) 1,026,768 1,087,133 Mortgage Debt, secured by 27 real estate facilities with a net book value of $102.1 million 3.962% 3.947% 25,230 - 25,230 26,958 $ 2,557,929 $ (12,937) $ 2,544,992 $ 2,767,176 Amounts at December 31, 2019 Book Fair Value Value ($ amounts in thousands) U.S. Dollar Denominated Unsecured Debt Notes due September 15, 2022 $ 498,581 $ 505,639 Notes due September 15, 2027 495,924 520,694 Notes due May 1, 2029 497,124 531,911 1,491,629 1,558,244 Euro Denominated Unsecured Debt Notes due April 12, 2024 112,156 115,932 Notes due November 3, 2025 271,433 298,398 Notes due January 24, 2032 - - 383,589 414,330 Mortgage Debt 27,275 28,506 $ 1,902,493 $ 2,001,080 Unsecured Mortgage Debt Debt Total 2021 $ - $ 1,851 $ 1,851 2022 500,000 2,574 502,574 2023 - 19,219 19,219 2024 122,646 124 122,770 2025 296,821 131 296,952 Thereafter 1,613,232 1,331 1,614,563 $ 2,532,699 $ 25,230 $ 2,557,929 Weighted average effective rate 2.4% 3.9% 2.4% Cash paid for interest totaled At December 31, 2020 At December 31, 2019 Series Earliest Redemption Date Dividend Rate Shares Outstanding Liquidation Preference Shares Outstanding Liquidation Preference (Dollar amounts in thousands) Series V 9/20/2017 5.375% - $ - 19,800 $ 495,000 Series W 1/16/2018 5.200% - - 20,000 500,000 Series X 3/13/2018 5.200% - - 9,000 225,000 Series B 1/20/2021 5.400% - - 12,000 300,000 Series C 5/17/2021 5.125% 8,000 200,000 8,000 200,000 Series D 7/20/2021 4.950% 13,000 325,000 13,000 325,000 Series E 10/14/2021 4.900% 14,000 350,000 14,000 350,000 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 - - Series M 8/14/2025 4.125% 9,200 230,000 - - Series N 10/6/2025 3.875% 11,300 282,500 - - Series O 11/17/2025 3.900% 6,800 170,000 - - Total Preferred Shares 151,700 $ 3,792,500 162,600 $ 4,065,000 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 2020 2019 2018 Shares Amount Shares Amount Shares Amount Employee stock-based compensation and exercise of stock options (Note 10) 163,127 $ 12,664 287,734 $ 33,564 277,511 $ 12,525 years ended December 31, 2023, 2022, and 2021, respectively. For the tax year ended December 31, 2020 (unaudited) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Ordinary Income 100.00 % 100.00 % 100.00 % 100.00 % Long-Term Capital Gain 0.00 % 0.00 % 0.00 % 0.00 % Total 100.00 % 100.00 % 100.00 % 100.00 % 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 years ended December 31, During at 150% of the target options originally granted. 2020 2019 2018 Weighted Weighted Weighted Average Average Average Number Exercise Number Exercise Number Exercise of Price of Price of Price Options per Share Options per Share Options per Share Options outstanding January 1, 2,339,667 $ 204.53 2,420,922 $ 201.31 2,408,917 $ 192.12 Granted 840,000 226.58 120,000 221.12 200,000 194.29 Exercised (71,500) 175.16 (191,255) 174.55 (179,995) 69.53 Cancelled (147,000) 222.67 (10,000) 197.90 (8,000) 223.50 Options outstanding December 31, 2,961,167 $ 210.59 2,339,667 $ 204.53 2,420,922 $ 201.31 Options exercisable at December 31, 1,585,091 $ 199.54 1,501,667 $ 196.37 1,147,122 $ 178.31 2020 2019 2018 Stock option expense for the year (in 000's) (a) $ 7,613 $ 4,950 $ 17,162 Aggregate exercise date intrinsic value of options exercised during the year (in 000's) Aggregate exercise date intrinsic value of options exercised during the year (in 000's) $ 3,433 $ 11,848 $ 25,117 Average assumptions used in valuing options with the Black-Scholes method: Expected life of options in years, based upon historical experience 5 5 5 Risk-free interest rate 0.43% 2.3% 2.7% Expected volatility, based upon historical volatility 21.6% 8.9% 12.5% Expected dividend yield 3.8% 3.6% 4.1% Average estimated value of options granted during the year $ 17.79 $ 9.61 $ 13.09 2020 2019 2018 Number of Grant Date Number of Grant Date Number of Grant Date Restricted Aggregate Restricted Aggregate Restricted Aggregate Share Units Fair Value Share Units Fair Value Share Units Fair Value Restricted share units outstanding January 1, 619,150 $ 132,058 717,696 $ 151,212 799,129 $ 166,144 Granted 110,755 24,617 97,140 21,113 138,567 27,733 Vested (140,089) (28,141) (160,329) (32,714) (164,104) (30,717) Forfeited (37,028) (7,964) (35,357) (7,553) (55,896) (11,948) Restricted share units outstanding December 31, 552,788 $ 120,570 619,150 $ 132,058 717,696 $ 151,212 2020 2019 2018 Amounts for the year (in 000's, except number of shares): Fair value of vested shares on vesting date $ 31,076 $ 33,769 $ 32,317 Cash paid for taxes upon vesting in lieu of issuing common shares $ 10,518 $ 12,162 $ 12,347 Common shares issued upon vesting 91,627 96,479 97,516 Restricted share unit expense (a) $ 26,359 $ 21,662 $ 53,869 operating segments. income: For the Years Ended December 31, 2020 2019 2018 Self-Storage Segment Revenue $ 2,721,630 $ 2,684,552 $ 2,597,607 Cost of operations (807,543) (762,416) (709,739) Net operating income 1,914,087 1,922,136 1,887,868 Depreciation and amortization (553,257) (512,918) (483,646) Net income 1,360,830 1,409,218 1,404,222 Ancillary Segment Revenue 193,438 170,556 161,916 Cost of operations (59,919) (50,736) (47,344) Net operating income 133,519 119,820 114,572 Investment in PSB Segment (a) - Equity in earnings of unconsolidated entities 64,835 54,090 89,362 Investment in Shurgard Segment (a) - Equity in earnings of unconsolidated entities 15,662 15,457 14,133 Gain due to Shurgard public offering - - 151,616 Net income from Investment in Shurgard Segment 15,662 15,457 165,749 Total net income allocated to segments 1,574,846 1,598,585 1,773,905 Other items not allocated to segments: General and administrative (83,199) (62,146) (104,712) Interest and other income 22,323 26,683 24,552 Interest expense (56,283) (45,641) (32,542) Foreign currency exchange (loss) gain (97,953) 7,829 18,117 Gain on sale of real estate 1,493 341 37,903 Net income $ 1,361,227 $ 1,525,651 $ 1,717,223 We have construction commitments representing future expected payments for construction under contract totaling 2027, $2.5 million in 2028, and $48.3 million thereafter for these commitments. Self-storage facilities by market: Los Angeles 225 16,265 455 519,547 942,206 372,709 517,161 1,317,301 1,834,462 798,302 Houston 128 10,665 - 186,526 469,132 237,738 185,847 707,549 893,396 315,349 San Francisco 138 8,980 - 241,791 527,127 223,936 254,541 738,313 992,854 488,482 Dallas/Ft. Worth 124 8,969 - 176,962 437,884 132,768 178,562 569,052 747,614 306,815 Chicago 134 8,581 - 141,683 408,749 132,059 144,520 537,971 682,491 382,269 New York 96 7,011 - 277,121 586,592 205,542 283,458 785,797 1,069,255 455,571 Atlanta 106 7,138 1,713 135,099 361,503 90,812 135,461 451,953 587,414 279,284 Seattle/Tacoma 97 6,790 - 198,063 531,742 110,562 198,710 641,657 840,367 349,944 Miami 96 7,126 - 243,988 522,557 139,116 245,881 659,780 905,661 335,520 Washington DC 91 5,645 - 233,905 406,769 121,226 239,059 522,841 761,900 327,341 Orlando/Daytona 72 4,551 11,589 140,411 253,375 59,516 145,892 307,410 453,302 166,849 Denver 64 4,740 8,925 99,547 247,641 98,240 100,268 345,160 445,428 156,803 Charlotte 56 4,360 - 80,253 205,370 79,349 88,116 276,856 364,972 131,456 Minneapolis/St. Paul 61 4,721 2,174 115,112 266,840 93,719 115,277 360,394 475,671 131,684 Tampa 57 3,878 - 93,022 204,543 49,349 95,784 251,130 346,914 132,562 Philadelphia 61 4,004 - 56,991 224,104 58,839 56,012 283,922 339,934 167,192 West Palm Beach 46 3,545 - 156,788 221,479 67,459 157,496 288,230 445,726 133,996 Detroit 47 3,350 - 66,861 213,857 39,152 67,711 252,159 319,870 120,220 Phoenix 42 2,871 - 68,515 213,718 28,224 68,506 241,951 310,457 112,212 Austin 35 2,762 - 65,542 149,481 44,821 67,564 192,280 259,844 91,292 Portland 45 2,426 - 54,370 150,634 28,158 55,028 178,134 233,162 107,422 Sacramento 34 1,959 - 25,141 69,409 31,275 25,625 100,200 125,825 80,386 Raleigh 28 1,975 - 50,348 99,583 38,677 51,337 137,271 188,608 66,430 San Diego 22 2,037 - 73,713 137,796 42,682 76,223 177,968 254,191 93,801 San Antonio 28 1,791 - 27,566 76,028 27,655 27,524 103,725 131,249 70,033 Norfolk 36 2,215 - 47,728 128,986 25,014 46,843 154,885 201,728 70,288 Boston 28 1,964 - 80,843 209,495 29,287 81,409 238,216 319,625 101,407 Columbus 27 2,015 - 44,983 92,001 28,437 45,090 120,331 165,421 48,804 Oklahoma City 23 1,645 - 38,265 73,968 13,775 38,265 87,743 126,008 27,343 Baltimore 24 1,588 - 28,396 92,861 20,559 28,520 113,296 141,816 75,042 Indianapolis 26 1,697 - 31,636 74,206 17,657 32,636 90,863 123,499 48,772 St. Louis 28 1,786 - 22,463 79,356 38,025 23,106 116,738 139,844 66,546 Kansas City 25 1,647 - 14,567 56,147 35,619 14,767 91,566 106,333 62,368 Columbia 23 1,345 - 20,169 57,131 22,005 20,928 78,377 99,305 38,966 Las Vegas 21 1,355 - 25,038 68,513 11,362 24,287 80,626 104,913 50,563 Milwaukee 15 964 374 13,189 32,071 10,281 13,158 42,383 55,541 34,617 Cincinnati 18 1,051 - 17,135 46,739 23,150 17,053 69,971 87,024 32,167 Louisville 15 916 - 23,563 46,108 7,935 23,562 54,044 77,606 16,253 Jacksonville 14 841 - 11,252 27,714 12,056 11,301 39,721 51,022 33,917 Nashville/Bowling Green 17 1,108 - 18,787 35,425 30,785 18,785 66,212 84,997 31,221 Honolulu 11 807 - 54,184 106,299 14,098 55,101 119,480 174,581 68,300 Greensboro 14 845 - 13,413 35,326 13,992 15,502 47,229 62,731 27,695 Colorado Springs 14 992 - 10,588 38,237 22,564 10,585 60,804 71,389 30,357 Chattanooga 10 697 - 6,569 26,045 7,651 6,371 33,894 40,265 16,037 Hartford/New Haven 11 693 - 6,778 19,959 22,327 8,443 40,621 49,064 33,355 Savannah 12 700 - 33,094 42,465 4,118 31,766 47,911 79,677 18,038 Charleston 14 950 - 16,947 56,793 17,984 17,923 73,801 91,724 26,832 Fort Myers/Naples 11 861 - 23,298 56,012 5,537 23,533 61,314 84,847 19,964 New Orleans 9 627 - 9,205 30,832 6,667 9,373 37,331 46,704 26,365 Greensville/Spartanburg/Asheville 11 622 - 9,036 20,767 10,334 9,965 30,172 40,137 21,772 Reno 7 559 - 5,487 18,704 4,163 5,487 22,867 28,354 12,925 Birmingham 15 606 - 6,316 25,567 13,578 6,204 39,257 45,461 28,113 Salt Lake City 9 566 - 10,316 19,515 4,977 9,965 24,843 34,808 15,204 Memphis 11 645 - 19,581 29,852 9,551 20,934 38,050 58,984 21,854 Buffalo/Rochester 9 462 - 6,785 17,954 3,980 6,783 21,936 28,719 14,492 Richmond 13 650 - 18,092 40,160 5,948 17,897 46,303 64,200 20,124 Tucson 7 439 - 9,403 25,491 5,868 9,884 30,878 40,762 20,371 Cleveland/Akron 7 434 - 4,070 16,139 5,538 4,463 21,284 25,747 12,947 Wichita 7 433 - 2,017 6,691 7,350 2,130 13,928 16,058 12,067 Mobile 11 529 - 8,915 25,223 5,077 8,742 30,473 39,215 14,061 Omaha 5 430 - 8,261 23,709 3,456 8,261 27,165 35,426 4,505 Monterey/Salinas 7 329 - 8,465 24,151 4,307 8,455 28,468 36,923 22,179 Palm Springs 3 242 - 8,309 18,065 1,387 8,309 19,452 27,761 11,193 Evansville 5 326 - 2,340 14,316 1,333 2,312 15,677 17,989 4,248 Dayton 5 284 - 1,074 8,975 4,850 1,073 13,826 14,899 7,522 Augusta 7 392 - 6,213 15,979 4,081 6,213 20,060 26,273 6,765 Fort Wayne 3 168 - 349 3,594 3,194 349 6,788 7,137 5,882 Providence 3 155 - 995 11,206 3,008 995 14,214 15,209 6,866 Huntsville/Decatur 5 298 - 9,161 13,481 3,051 9,108 16,585 25,693 6,089 Shreveport 2 150 - 817 3,030 2,301 741 5,407 6,148 4,851 Springfield/Holyoke 2 144 - 1,428 3,380 1,910 1,427 5,291 6,718 4,913 Rochester 2 99 - 1,047 2,246 2,107 980 4,420 5,400 4,098 Santa Barbara 2 98 - 5,733 9,106 468 5,733 9,574 15,307 5,797 Topeka 2 94 - 225 1,419 2,090 225 3,509 3,734 3,081 Lansing 2 88 - 556 2,882 936 556 3,818 4,374 2,428 Roanoke 3 159 - 2,147 13,801 908 2,147 14,709 16,856 3,141 Flint 1 56 - 543 3,068 260 542 3,329 3,871 1,967 Joplin 1 56 - 264 904 1,014 264 1,918 2,182 1,626 Syracuse 1 55 - 545 1,279 846 545 2,125 2,670 2,032 Modesto/Fresno/Stockton 1 33 - 44 206 983 193 1,040 1,233 862 Commercial and non-operating real estate - 13,796 21,761 42,591 14,836 63,312 78,148 41,728 2,548 175,050 $25,230 $4,313,285 $9,903,429 $3,155,913 $4,375,588 $12,997,039 $17,372,627 $7,152,135 Note: Buildings and improvements are depreciated on a straight-line basis over estimated useful lives ranging generally between 5 to 25 years. In addition, disclosures of the number and square footage of our facilities are unaudited. Refer to Item12. “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters” for information about our equity compensation plans.ITEM 6.Selected Financial DataNot applicableITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsManagement’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated financial statements and notes thereto.Critical Accounting PoliciesOur MD&A discusses ourEstimatesThe preparation of consolidated financial statements which have been preparedand related disclosures in accordanceconformity with U.S. generally accepted accounting principles (“GAAP”), and are affected by our requires us to make judgments, assumptions, and estimates. The notesestimates that affect the amounts reported. On an ongoing basis, we evaluate our estimates and assumptions. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to our December 31, 2020 financial statements, primarily Note 2, summarize our significant accounting policies.We believe the following are our critical accounting policies,estimates, because they are reasonably likely to have a material impact on the portrayal of our financial condition and results, and they require us to make judgments and estimates about matters that are inherently uncertain.Income Tax Expense: We have elected to be treated asinvolve a REIT, as defined in the Code. For each taxable year in which we qualify for taxation as a REIT, we will not be subject to U.S. federal corporate income tax on our “REIT taxable income” (generally, taxable income subject to specified adjustments, including a deduction for dividends paid and excluding our net capital gain) that is distributed to our shareholders. We believe we have met these REIT requirements for all periods presented herein. Accordingly, we have recorded no U.S. federal corporate income tax expense related to our REIT taxable income.Our evaluation that we have met the REIT requirements could be incorrect, because compliance with the tax rules requires factual determinations, and circumstances we have not identified could result in noncompliance with the tax requirements in current or prior years. For any taxable year that we fail to qualify as a REIT and for which applicable statutory relief provisions did not apply, we would be taxed at the regular corporate rates on allsignificant level of our taxable income for at least that year and the ensuing four years, we could be subject to penalties and interest, and our net income would be materially different from the amounts estimated in our financial statements.In addition, certain of our consolidated corporate subsidiaries have elected to be treated as TRSs for U.S. federal corporate income tax purposes, which are taxable as regular corporations and subject to certain limitations on intercompany transactions. If tax authorities determine that amounts paid by our TRSs to us are not reasonable compared to similar arrangements among unrelated parties, we could be subject to a 100% penalty tax on the excess payments. Such a penalty tax could have a material adverse impact on our net income. In addition, we may not have identified all current facts and circumstances that may affect impairment. Any unidentified impairment loss, or change in conclusions, could have a material adverse impact on our net income.23Accrual for Uncertain and Contingent Liabilities: We accrue for certain contingent and other liabilities that have significant uncertain elements, such as property taxes, workers compensation claims, tenant reinsurance claims, as well as other legal claims and disputes involving customers, employees, governmental agencies and other third parties. We estimate such liabilities based upon many factors such as assumptions of past and future trends and our evaluation of likely outcomes. However, the estimates of known liabilities could be incorrect or we may not be aware of all such liabilities, in which case our accrued liabilities and net income could be misstated.Allocating Purchase Price for Acquired Real Estate Facilities:Facilities: We estimate the fair values of the assets and liabilities of acquired real estate facilities, which consist principally of land, buildings and buildingsacquired customers in place, for purposes of allocating the aggregate purchase price of acquired properties. The related estimation processes involve significant judgment.real estate facilities. We estimate the fair value of acquired buildings by determining the current cost to build new purpose-built self-storage facilitiesland based upon price per square foot derived from observable transactions involving comparable land in the same location, and adjusting those costssimilar locations as adjusted for the actual age, quality, condition, amenities, and configuration of the buildings acquired. We estimate the fair value of acquired land by considering the most directly comparable recently transacted land sales (“Land Comps”) and adjusting the transacted values for differentials to the acquired land such as location quality, parcel size, and date of sale in order to deriveassociated with the estimatedacquired facilities. The fair value estimate of the underlying acquired land. These adjustmentsland is sensitive to the Land Comps require significant judgment,adjustments made to the land market transactions used in the estimate, particularly when there is a low volumelack of Land Comps orrecent comparable land market data. For large portfolio acquisitions, we estimate the available Land Comps lack similarityfair value of buildings primarily using the income approach by estimating the fair value of hypothetical vacant acquired facilities and adjusting for the estimated fair value of land. For individual and small portfolio acquisitions, we estimate the fair value of buildings primarily based upon the estimated current replacement cost, which we calculate by estimating the replacement cost of new purpose-built self-storage facilities in similar geographic regions and adjusting for age, quality, amenities, and configuration associated with the buildings acquired. The fair value estimate of buildings is sensitive to assumptions used in both the income approach, such as lease-up period, future stabilized operating cash flows, capitalization rate and discount rate, and in the replacement cost approach, such as current cost adjustment, soft cost and developer profit estimates. We estimate the fair value of acquired customers in place using the income approach by estimating the foregone rent over the presumed period of time to absorb the occupied spaces as if they were vacant at the time of acquisition. The fair value estimate of the acquired customers in place is sensitive to the acquired propertyassumptions used in proximity, date of sale, or location quality.the income approach, such as market rent, lease-up period and discount rate. Others could come to materially different conclusions as to the estimated fair values of land, buildings and acquired customers in place, which would result in different depreciation and amortization expense, gains and losses on sale of real estate assets, as well as the level of land and buildings on our consolidated balance sheet.OverviewDuring a significant portion of 2020, the COVID Pandemic has resulted in cessation, severe curtailment, or impairment of business activities in most sectors of the economy in virtually all markets we operate in, due to governmental “stay at home” orders, risk mitigation procedures, closure of businesses not considered to be “essential,” as well as other direct and indirect impacts, including a rapid and dramatic increase in unemployment in the U.S. While in certain markets, initial government restrictions were eased in response to reductions in the rate of new infections, there have been increases in the rate of infection in certain markets from time to time and re-imposition of certain restrictions. These restrictions as well as public concerns about the COVID Pandemic continue to have an ongoing negative impact the economy, with unemployment continuing to be at high levels.Our self-storage facilities have been classified as “essential” businesses under all applicable business closure orders and thus remained open to all customer activity. We consider the safety of our employees and customers as our first priority, and have accordingly taken significant steps to ensure safety while keeping our services available to the public. These steps include initiating our touchless eRental® leasing platform, touchless mobile app allowing customer access to our properties, enforcing social distancing requirements in our property offices and grounds, and providing protective equipment, including face coverings, gloves, and plastic barriers.Our corporate offices as well as our call centers migrated to a “work from home” environment during the COVID Pandemic. We expect our corporate employees to return to the corporate office assuming the risk of the COVID Pandemic continues to recede. However, we expect that our call centers will remain in a “work from home”environment due to certain favorable aspects of a distributed call center team. We believe these changes have not resulted in any significant negative impacts to our operations or decision making.It is possible that stricter government restrictions, including stay at home orders, could be instituted or reinstituted in response to increases in infections, the aggregate effect of the COVID Pandemic and seasonal influenza infections, or if additional pandemics occur. We cannot estimate the extent of the COVID Pandemic’s future negative impacts.The negative impacts of the COVID Pandemic are described more fully below, as well as throughout our MD&A which follows.Our self-storage operations generate most of our net income. Ourincome, and our earnings growth is most impacted by the levellevels of organic growth inwithin our Same Store Facilities’ revenues.Facilities (as defined below) as well as within our Acquired Facilities and Newly Developed and Expanded Facilities (both as defined below). Accordingly, a significant portion of management’s time is devoted to maximizing cash flows from our existing self-storage facilities.During the years ended December 31, 2020 and 2019,2023, revenues generated by our Same Store Facilities decreased by 1.0% and increased by 1.5%4.7% ($154.0 million), respectively, as compared to the previous year. Revenue growth in each year was impacted2022, while Same Store cost of operations increased by increased competition from newly developed facilities. The decrease in revenue4.7% ($35.9 million). Demand and operating trends softened in the year ended December 31, 2020 included the negative impact caused by the COVID Pandemic including restrictions on rate increases to tenants imposed by local government due to “States of Emergency.” Our trends in revenue have improved in the lastsecond half of 2020, with revenues from our Same Store Facilities increasing 0.8% during the three months ended December 31, 20202022 continuing through 2023 as compared to the three months ended December 31, 2019. At December 31,what we experienced in 2020 as comparedand 2021, and we expect this to December 31, 2019, occupancies for our Same Store Facilities was 2.7% higher, while the contract rent per occupied foot was essentially flat, suggesting continued revenue growth into early 2021.See “Self-storage Operations – Same Store Operations” for further information with respect to our same-store operations, including potential downside risks to our expectations.In addition to managing our existing facilities for organic growth, wecontinue in 2024.We have grown and plan to continue to grow through the acquisition and development of new facilities and expandingexpansion of our existing self-storage facilities. InSince the three years ended December 31, 2020,beginning of 2021, we acquired a total of 131470 facilities with 9.938.8 million net rentable square feet from third parties for approximately $1.4 billion, and we opened newly$8.5 billion. Additionally, within our non-same store portfolio, our developed and expanded facilities include a total of 145 self-storage space forfacilities of 17.1 million net rentable square feet. For development and expansions completed by December 31, 2023, we incurred a total cost of $866.1$1.6 billion. During 2023, combined net operating income generated by our Acquired Facilities and Newly Developed and Expanded Facilities increased 28.7% ($109.4 million), as compared to 2022.On September 13, 2023, we acquired BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million adding approximately 7.9 million net rentable square feet.feet) and manages 25 self-storage facilities for third parties, for a purchase price of $2.2 billion in cash (the “Simply Acquisition”). The 127 wholly-owned facilities are geographically diversified across 18 states and located in submarkets with strong demand drivers and other desirable characteristics.In connection with the Simply Acquisition, on July 26, 2023, we completed a public offering of $2.2 billion aggregate principal amount of unsecured senior notes in various tranches and maturities.We have experienced recent inflationary impacts on our cost of operations including labor, utilities, and repairs and maintenance, and costs of development and expansion activities, and we may continue to experience such impacts in the future. We have implemented various initiatives to manage the adverse impacts, such as enhancements in operational processes and investments in technology to reduce payroll hours, achievement of economies of scale from recent acquisitions with supervisory payroll and centralized management costs allocated over a broader number of self-storage facilities, and investments in solar power and LED lights to lower utility usage.24In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed “fifth generation” facilities), we have embarked on aour multi-year Property of Tomorrow program to (i) rebrand our properties in order to developwith more pronounced, attractive, and clearly identifiable color schemes and signage, as well as to(ii) enhance the energy efficiency of our properties, and (iii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. The timing and scope ofWe expect to complete the program will evolve as the work is executed and we evaluate its impact. The cost of this program is included in “capital expenditures to maintain our real estate facilities”2024. We spent approximately $160 million on our statements of cash flow, and the program is discussed more fully in “Liquidity2023 and Capital Resources – Capital Expenditure Requirements” below.See “Liquidityexpect to spend approximately $150 million in 2024 on this effort. We have also embarked on a solar program under which we plan to install solar panels on over 1,000 of our self-storage facilities. We have completed the installations on 534 facilities through 2023. We spent approximately $51 million on the program in 2023 and Capital Resources” for further information regarding our capital requirements and anticipated sources of capitalexpect to fund such requirements.Operating resultsResults for 20202023 and 2019In 2020,2023, net income allocable to our common shareholders was $1,098.3 million$1.9 billion or $6.29$11.06 per diluted common share, compared to $1,272.8 million$4.1 billion or $7.29$23.50 per diluted common share in 20192022, representing a decrease of $174.4 million$2.2 billion or $1.00$12.44 per diluted common share. The decrease is due primarily to (i) a $105.8$2.1 billion gain on sale of our equity investment in PS Business Parks, Inc. (“PSB”) in July 2022, (ii) a $149.5 million decrease due to the impact ofincrease in foreign currency exchange gains and losses primarily associated with our Euro denominated debt, (ii)notes payable, (iii) a $40.3$79.1 million decrease in equity in earnings of unconsolidated real estate entities due to our sale of PSB in July 2022, and (iv) a $64.8 million increase in depreciation and amortizationinterest expense, (iii) a $21.1 million increase in general and administrative expense, (iv) a $15.6 million decrease due to the impact of allocations to preferred shareholders with respect to redemption of preferred shares, andpartially offset by (v) a $8.0$231.8 million decrease in self-storage net operating income.The $8.0 million decreaseincrease in self-storage net operating income and (vi) a $45.0 million increase in interest and other income.The $231.8 million increase in self-storage net operating income in 2023 as compared to 2022 is a result of a $41.7$118.2 million decrease inincrease attributable to our Same Store Facilities (as defined below), offset partially byand a $33.7$113.6 million increase inattributable to our non-Same Store Facilities (as defined below).non-same store facilities. Revenues for the Same Store Facilities decreased 1.0%increased 4.7% or $23.7$154.0 million in 20202023 as compared to 2019,2022, due primarily to reduced late charges and administrative fees.higher realized annual rent per occupied square foot, partially offset by a decline in occupancy. Cost of operations for the Same Store Facilities increased by 2.7%4.7% or $18.1$35.9 million in 20202023 as compared to 2019,2022, due primarily to a 22.5% ($11.0 million) increase in marketing expenses, a 3.1% ($7.4 million) increase inincreased property tax expense, marketing expense, and a 2.5% ($3.1 million) increase in on-siteother direct property manager payroll expense.costs. The increase in net operating income of $33.7$113.6 million for the non-Same Store Facilitiesnon-same store facilities is due primarily to the impact of facilities acquired in 20202021, 2022, and 20192023 and the fill-up of recently developed and expanded facilities.Operating resultsResults for 20192022 and 2018In 2019,2022, net income allocable to our common shareholders was $1,272.8 million$4.1 billion or $7.29$23.50 per diluted common share, compared to $1,488.9 million$1.7 billion or $8.54$9.87 per diluted common share in 20182021, representing a decreasean increase of $216.1 million$2.4 billion or $1.25$13.63 per diluted common share. The decreaseincrease is due primarily to (i) $183.1 million in aggregate gains due to Shurgard’s initial public offering and thea $2.1 billion gain on sale of our facilityequity investment in West London to Shurgard in October 2018,PSB and (ii) our $37.7 million equity share of gains recorded by PS Business Parks during 2018, (iii) a $10.3 million decrease due to the impact of foreign currency exchange gains associated with our euro denominated debt and (iv) a $32.7 million allocation to our preferred shareholders associated with our preferred share redemption activities in 2019. These impacts were offset partially by a $34.3$614.3 million increase in self-storage net operating income, (described below)partially offset by (iii) a $174.7 million increase in depreciation and amortization expense, (iv) a reduction$125.1 million decrease in general and administrative expense attributableequity in earnings of unconsolidated real estate entities due to $30.7 million in incremental share-based compensation expense in 2018 for the planned retirementsale of our former CEOequity investment in PSB, and CFO.The $34.3$614.3 million increase in self-storage net operating income in 2022 as compared to 2021 is a result of a $9.9$390.6 million increase in our Same Store Facilities and $24.4a $223.7 million increase in our non-Same Store Facilities.non-same store facilities. Revenues for the Same Store Facilities increased 1.5%15.2% or $36.7$432.2 million in 20192022 as compared to 2018,2021, due primarily to higher realized annual rent per occupiedavailable square foot.foot, partially offset by a decline in occupancy. Cost of operations for the Same Store Facilities increased by 4.2%5.7% or $26.9$41.7 million in 20192022 as compared to 2018,2021, due primarily to a 47.1% ($15.7 million) increase in marketing expenses and increased property taxes.tax expense, marketing expense, other direct property costs, and centralized management costs. The increase in net operating income of $24.4$223.7 million for the non-Same Store Facilitiesnon-same store facilities is due primarily to the impact of facilities acquired in 2019 and 20182021 and the fill-up of recently developed and expanded facilities.25Funds from Operations and Core Funds from OperationsFunds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National AssociationNareit. We believe that FFO and FFO per share are useful to REIT investors and analysts in measuring our performance because Nareit’s definition of Real Estate Investment TrustsFFO excludes items included in net income that do not relate to or are not indicative of our operating and are considered helpful measures of REIT performance by REITs and many REIT analysts.financial performance. FFO represents net income before real estate-related depreciation and amortization, which is excluded because it is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FFO also excludes gains or losses on sale of real estate assets and real estate impairment charges, which are also based upon historical costs and are impacted by historical depreciation. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financingFor the year ended December 31, 2020,2023, FFO was $9.75$16.60 per diluted common share as compared to $10.58$16.46 and $10.45$13.36 per diluted common share for the years ended December 31, 20192022 and 2018,2021, respectively, representing a decreasean increase in 20202023 of 7.8%0.9%, or $0.83$0.14 per diluted common share, as compared to 2019. The following tables reconcile diluted earnings per share to FFO per share and set forth the computation of FFO per share:2022.share,” ashare” non-GAAP measuremeasures that representsrepresent FFO and FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) EITF D-42 charges related to the redemption of preferred securities, and (iii) certain other significant non-cash and/or nonrecurring income or expense items such asprimarily representing, with respect to the periods presented below, the impact of loss contingency accruals and resolutions, casualties, transactional due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, UPREIT reorganization costs, Simply integration costs, amortization of acquired non real estate-related intangibles from the Simply Acquisition and advisory costs.our equity share of deferred tax benefits of a change in tax status, merger transaction costs, severance of a senior executive, lease termination income, and casualties from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe it isthey are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share isare not a substitutesubstitutes for net income and net income per share. Because other REITs may not compute Core FFO or Core FFO per share in the same manner as we do, may not use the same terminology or may not present such a measure,measures, Core FFO and Core FFO per share may not be comparable among REITs.26toand Core FFO per share:Year Ended December 31, Year Ended December 31, 2023 2022 Percentage Change 2022 2021 Percentage Change (Amounts in thousands, except per share data) Reconciliation of Net Income to FFO and Core FFO: Net income allocable to common shareholders $ 1,948,741 $ 4,142,288 (53.0) % $ 4,142,288 $ 1,732,444 139.1 % Eliminate items excluded from FFO: Real estate-related depreciation and amortization 962,703 881,569 881,569 709,349 Real estate-related depreciation from unconsolidated real estate investments 36,769 54,822 54,822 73,729 Real estate-related depreciation allocated to noncontrolling interests and restricted share unitholders (6,635) (6,622) (6,622) (4,415) Gains on sale of real estate investments, including our equity share from investments (17,290) (54,403) (54,403) (165,272) Gain on sale of equity investment in PS Business Parks, Inc. — (2,116,839) (2,116,839) — FFO allocable to common shares $ 2,924,288 $ 2,900,815 0.8 % $ 2,900,815 $ 2,345,835 23.7 % Eliminate the impact of items excluded from Core FFO, including our equity share from investments: Foreign currency exchange loss (gain) 51,197 (98,314) (98,314) (111,787) Preferred share redemption charge — — — 31,604 Property losses and tenant claims due to casualties — 4,817 4,817 4,909 Other items 447 (338) (338) (543) Core FFO allocable to common shares $ 2,975,932 $ 2,806,980 6.0 % $ 2,806,980 $ 2,270,018 23.7 % Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share: Diluted earnings per share $ 11.06 $ 23.50 (52.9) % $ 23.50 $ 9.87 138.1 % Eliminate amounts per share excluded from FFO: Real estate-related depreciation and amortization 5.64 5.27 5.27 4.44 Gains on sale of real estate investments, including our equity share from investments (0.10) (0.31) (0.31) (0.95) Gain on sale of equity investment in PS Business Parks, Inc. — (12.00) (12.00) — FFO per share $ 16.60 $ 16.46 0.9 % $ 16.46 $ 13.36 23.2 % Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments: Foreign currency exchange loss (gain) 0.29 (0.57) (0.57) (0.64) Preferred share redemption charge — — — 0.18 Property losses and tenant claims due to casualties — 0.03 0.03 0.03 Other items — — — — Core FFO per share $ 16.89 $ 15.92 6.1 % $ 15.92 $ 12.93 23.1 % Diluted weighted average common shares 176,143 176,280 176,280 175,568 27Analysis of Net Income by Reportable SegmentThe following discussion and analysis is presented and organized in accordance with Note 11 to our December 31, 2020 financial statements, “Segment Information.” Accordingly, refer to the table presented in Note 11 in order to reconcile such amounts to our total net income and for further information on our reportable segments.Our self-storage operations are analyzed in four groups: (i) the 2,2212,339 facilities that we have owned and operated on a stabilized basis since January 1, 20182021 (the “Same Store Facilities”), (ii) 131470 facilities we acquired after December 31, 2017since January 1, 2021 (the “Acquired facilities”Facilities”), (iii) 148145 facilities that have been newly developed or expanded, or that had commenced expansion by December 31, 20202023 (the “Newly developedDeveloped and expanded facilities”Expanded Facilities”), and (iv) 4890 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 20182021 (the “Other non-same store facilities”Non-same Store Facilities”). See Note 1114 to our December 31, 20202023 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.28Self-Storage Operations Summary Year Ended December 31, Year Ended December 31, 2023 2022 Percentage Change 2022 2021 Percentage Change (Dollar amounts and square footage in thousands) Revenues: Same Store Facilities $ 3,427,867 $ 3,273,823 4.7 % $ 3,273,823 $ 2,841,598 15.2 % Acquired Facilities 450,653 327,245 37.7 % 327,245 106,474 207.3 % Newly Developed and Expanded Facilities 262,450 230,999 13.6 % 230,999 167,119 38.2 % Other Non-Same Store Facilities 118,643 113,961 4.1 % 113,961 88,375 29.0 % 4,259,613 3,946,028 7.9 % 3,946,028 3,203,566 23.2 % Cost of operations: Same Store Facilities 802,269 766,405 4.7 % 766,405 724,748 5.7 % Acquired Facilities 144,498 109,744 31.7 % 109,744 32,705 235.6 % Newly Developed and Expanded Facilities 78,531 67,805 15.8 % 67,805 58,890 15.1 % Other Non-Same Store Facilities 36,652 36,255 1.1 % 36,255 35,687 1.6 % 1,061,950 980,209 8.3 % 980,209 852,030 15.0 % Net operating income (a): Same Store Facilities 2,625,598 2,507,418 4.7 % 2,507,418 2,116,850 18.5 % Acquired Facilities 306,155 217,501 40.8 % 217,501 73,769 194.8 % Newly Developed and Expanded Facilities 183,919 163,194 12.7 % 163,194 108,229 50.8 % Other Non-Same Store Facilities 81,991 77,706 5.5 % 77,706 52,688 47.5 % Total net operating income 3,197,663 2,965,819 7.8 % 2,965,819 2,351,536 26.1 % Depreciation and amortization expense: Same Store Facilities 528,121 501,139 5.4 % 501,139 483,219 3.7 % Acquired Facilities 323,796 280,871 15.3 % 280,871 131,998 112.8 % Newly Developed and Expanded Facilities 61,421 54,115 13.5 % 54,115 47,549 13.8 % Other Non-Same Store Facilities 56,718 52,021 9.0 % 52,021 50,662 2.7 % Total depreciation and amortization expense 970,056 888,146 9.2 % 888,146 713,428 24.5 % Net income (loss): Same Store Facilities 2,097,477 2,006,279 4.5 % 2,006,279 1,633,631 22.8 % Acquired Facilities (17,641) (63,370) (72.2) % (63,370) (58,229) 8.8 % Newly Developed and Expanded Facilities 122,498 109,079 12.3 % 109,079 60,680 79.8 % Other Non-Same Store Facilities 25,273 25,685 (1.6) % 25,685 2,026 1167.8 % Total net income $ 2,227,607 $ 2,077,673 7.2 % $ 2,077,673 $ 1,638,108 26.8 % Number of facilities at period end: Same Store Facilities 2,339 2,339 — % 2,339 2,339 — % Acquired Facilities 470 306 53.6 % 306 232 31.9 % Newly Developed and Expanded Facilities 145 134 8.2 % 134 126 6.3 % Other Non-Same Store Facilities 90 90 — % 90 90 — % 3,044 2,869 6.1 % 2,869 2,787 2.9 % Net rentable square footage at period end: Same Store Facilities 154,874 154,874 — % 154,874 154,874 — % Acquired Facilities 38,816 26,634 45.7 % 26,634 21,830 22.0 % Newly Developed and Expanded Facilities 17,101 15,366 11.3 % 15,366 14,273 7.7 % Other Non-Same Store Facilities 7,280 7,343 (0.9) % 7,343 7,342 — % 218,071 204,217 6.8 % 204,217 198,319 3.0 % 29We revised our prior period financial statements to correct the presentation of share-based compensation expense between general and administrative expense and self-storage cost of operations. As a result, we revised our statements of income for the years ended December 31, 2019 and 2018 with an increase in self-storage cost of operations of $9.8 million and $14.0 million, respectively, and a corresponding decrease to general and administrative expenses. This immaterial correction had no impact on our total expenses or net income. The correction also had no impact on our balance sheet, statements of comprehensive income, statements of equity, or cash flows as of and for the year ended December 31, 2019 and 2018.(b)Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense, which is based upon historical real estate costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. We utilize NOI in determining current property values, evaluating property performance, and in evaluating property operating trends. Direct net operating income (a subtotal within NOI) is also a non-GAAP financial measure that excludes the impact of supervisory payroll, centralized management costs and stock based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors. We believe that investors and analysts utilize NOI and direct net operating income in a similar manner. These measures areNOI is not a substitute for net income, operating cash flow, or other related financial measures, in evaluating our operating results. See Note 1114 to our December 31, 20202023 consolidated financial statements for a reconciliation of NOI to our total net income for all periods presented.Net operating income from our self-storage operations decreased 0.4% in 2020 and increased 1.8% in 2019, as compared to the previous year. The decrease in 2020 is due primarily to a reduction in Same Store net operating income due to the impact of the COVID Pandemic, partially offset by the acquisition and development of new facilities and the fill-up of unstabilized facilities.Same Store FacilitiesThe Same Store Facilities consist of facilities thatwe have been owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2018.2021. The composition of our Same Store Facilities allows us to more effectively to evaluate the ongoing performance of our self-storage portfolio in 2018, 2019,2021, 2022, and 20202023 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe theinvestors and analysts use Same Store Facilities information is used by investors and REIT analysts in a similar manner. However, because other REITs may not compute Same Store Facilities in the same manner as we do, may not use the same terminology or may not present such a measure, Same Store Facilities may not be comparable among REITs.The following table summarizes the historical operating results (for all periods presented) of these 2,2212,339 facilities (143.7(154.9 million net rentable square feet) that represent approximately 82%71% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at December 31, 2020.2023. It includes various measures and detail that we do not include in the analysis of the developed, acquired, and other non-same store facilities, due to the relative magnitude and importance of our same store facilitiesthe Same Store Facilities relative to our other self-storage facilities.30Year Ended December 31, Year Ended December 31, 2023 2022 Percentage Change 2022 2021 Percentage Change (Dollar amounts in thousands, except for per square foot data) Revenues (a): Rental income $ 3,312,597 $ 3,169,132 4.5% $ 3,169,132 $ 2,756,752 15.0% Late charges and administrative fees 115,270 104,691 10.1% 104,691 84,846 23.4% Total revenues 3,427,867 3,273,823 4.7% 3,273,823 2,841,598 15.2% Direct cost of operations (a): Property taxes 300,505 290,605 3.4% 290,605 279,142 4.1% On-site property manager payroll 126,830 123,372 2.8% 123,372 118,085 4.5% Repairs and maintenance 64,565 60,317 7.0% 60,317 54,359 11.0% Utilities 44,775 45,578 (1.8)% 45,578 42,417 7.5% Marketing 69,158 47,863 44.5% 47,863 41,446 15.5% Other direct property costs 90,990 83,615 8.8% 83,615 75,959 10.1% Total direct cost of operations 696,823 651,350 7.0% 651,350 611,408 6.5% Direct net operating income (b) 2,731,044 2,622,473 4.1% 2,622,473 2,230,190 17.6% Indirect cost of operations (a): Supervisory payroll (33,846) (36,327) (6.8)% (36,327) (38,487) (5.6)% Centralized management costs (60,861) (64,053) (5.0)% (64,053) (57,021) 12.3% Share-based compensation (10,739) (14,675) (26.8)% (14,675) (17,832) (17.7)% Net operating income 2,625,598 2,507,418 4.7% 2,507,418 2,116,850 18.5% Depreciation and amortization expense (528,121) (501,139) 5.4% (501,139) (483,219) 3.7% Net income $ 2,097,477 $ 2,006,279 4.5% $ 2,006,279 $ 1,633,631 22.8% Gross margin (before indirect costs, depreciation and amortization expense) 79.7% 80.1% (0.5)% 80.1% 78.5% 2.0% Gross margin (before depreciation and amortization expense) 76.6% 76.6% —% 76.6% 74.5% 2.8% Weighted average for the period: Square foot occupancy 93.3% 94.8% (1.6)% 94.8% 96.2% (1.5)% Realized annual rental income per (c): Occupied square foot $ 22.93 $ 21.58 6.3% $ 21.58 $ 18.49 16.7% Available square foot $ 21.38 $ 20.45 4.5% $ 20.45 $ 17.79 15.0% At December 31: Square foot occupancy 91.6% 92.3% (0.8)% 92.3% 94.7% (2.5)% Annual contract rent per occupied square foot (d) $ 23.04 $ 22.88 0.7% $ 22.88 $ 19.81 15.5% 31salessale revenues and expenses generated at the facilities. See “Ancillary Operations” below for more information.(b)Direct net operating income (“Direct NOI”), a subtotal within NOI, is a non-GAAP financial measure that excludes the impact of supervisory payroll, centralized management costs, and share-based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors.(c)Realized annual rent per occupied square foot is computed by dividing rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot (“REVPAF”) is computed by dividing rental income, before late charges and administrative fees, by the total available net rentable square feet for the period. These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency, and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.(c)(d)Annual contract rent represents the agreed upon monthly rate that is paid by our tenants in place at the time of measurement. Contract rates are initially set in the lease agreement upon move-in, and we adjust them from time to time with notice. Contract rent excludes other fees that are charged on a per-item basis, such as late charges and administrative fees, does not reflect the impact of promotional discounts, and does not reflect the impact of rents that are written off as uncollectible.Analysis of Same Store RevenueRevenues generated by our Same Store Facilities decreased by 1.0% in 2020, and increased by 1.5% in 2019, in each case as compared to the previous year. The decrease in 2020 is due to the negative impact caused by the COVID Pandemic, certain restrictions on rate increases to existing tenants imposed by local governments due to “States of Emergency”, reduced late charges and administrative fees, as well as the continued impact of increased new supply from new developments (see below).The revenue increase in 2019 was due to a 1.2% increase in realized rent per occupied foot, combined with a 0.4% increase in average occupancy. Same Store revenue growth in 2019 was lower than long-term historical averages due to softness in demand for our storage space, which has led to lower move-in rental rates for new tenants (see below). We attribute some of this softness to local economic conditions and, in some markets most notably Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Miami, Minneapolis, New York and Portland, increased supply of newly constructed self-storage facilities.Revenue StrategyWe believe a balanced occupancy and rate strategy will maximizemaximizes our revenues over time. We regularly adjust the rental rates and promotional discounts offered (generally, “$1.00 rent for the first month”), as well as our marketing efforts on the Internet and other channels to maximize revenue from new tenants to replace tenants that vacate.We typically increase rental rates to our long-term tenants (generally, those thatwho have been with us for at least a year) once per year.every six to twelve months. As a result, the number of long-term tenants we have in our facilities is an important factor in our revenue growth. The level of rate increases to long-term tenants is based upon balancingevaluating the additional revenue from the increase against the negative impact of incremental move-outs, by considering the customer’scustomers’ in-place rent and prevailing market rents, among other factors. DuringRevenues generated by our Same Store Facilities increased 4.7% and 15.2% in 2023 and 2022, respectively, in each case as compared to the year ended December 31, 2019, our primary revenue growth came from existing tenant rate increases. However, during the year ended December 31, 2020, rental rate increases were of smaller magnitude resulting from COVID Pandemic concerns and pricing regulationsprevious year. The increase in multiple markets.Realized Annual Rent per Occupied Square FootRealized2023 is due primarily to (i) a 6.3% increase in realized annual rent per occupied square foot decreased 1.1% and increased 1.2% in 2020 and 2019, respectively.Thefor 2023 as compared to 2022, partially offset by (ii) a 1.6% decrease in average occupancy for 2023 as compared to 2022. The increase in 2022 is due primarily to (i) a 16.7% increase in realized annual rent per occupied square foot for the year ended December 31, 2020 was due2022 as compared to (i) our decision2021, partially offset by (ii) a 1.5% decrease in average occupancy for 2022 as compared to temporarily curtail our tenant rate increase program for a limited period during the COVID Pandemic in response to anticipated negative economic impacts on our tenants and (ii) limitations on the magnitudeof rate increases given to existing tenants due to temporary governmental pricing limitations as a result of “State of Emergency” declarations.for the year ended December 31, 2019in 2023 as compared to 2022 was due primarily to the impact ofcumulative rate increases to existing long-term tenants.In eachtenants over the past twelve months, partially offset by a 13.9% decrease in average rates per square foot charged to new tenants moving in who replaced tenants moving out with higher rental rates. The growth rate in realized annual rent per occupied square foot has decelerated since the second half of the years ended2022 from lower move-in rates and increased promotion discounts offered in order to replace tenants that vacate. At December 31, 20202023, annual contract rent per occupied square foot was 0.7% higher as compared to December 31, 2022.Occupancy levels have gradually declined since the second half of 2022 and are returning to 2019 we had anlevels as move-out activity increased average length of stay. An increased average length of stay supports revenue growth, due to more long-term tenants who are eligible for rate increases, and a reduced requirement to replace vacating tenants with new tenants which can reduce promotional costs and increase our pricing leverage. This trend to an increased length of stay became more pronounced in 2020 due in significant part, we believe, to temporary effects resulting from the COVID Pandemic such as less consumer mobility.Occupancy LevelsOurcustomer demand softened. The weighted average square foot occupancy for our Same Store Facilities was 93.3% for 2023, representing a decrease of 1.6%, as compared to 2022. During 2023, we lowered move-in rental rates and increased promotional activity and advertising spending to increase move-in activity at our facilities, which led to a year-over-year 8.8% increase in move-in volumes that more than offset the year-over-year 5.9% increase in move-out volumes. Move-in volumes net of move-out volumes were higher in 2023 as compared to 2022, which reduced the year-over-year decline in occupancy levels increased 1.2% and 0.4% on a year over year basis during the years endedbetween December 31, 20202022 and 2019, respectively.The improvement in occupancy trends in the year ended December 31, 2020 was due primarily2023.Move-out activities from our tenants were higher in 2023 as compared to improved trends2022, returning to 2019 levels, which were not impacted by the COVID-19 pandemic. Average length of stay of our tenants remained at similar high levels in move-outs, with year over year move-outs down 7.4% in2023 as compared to 2022, which supported our revenue growth by contributing to the year ended December 31, 2020.number of tenants eligible for rental rate increases.32Demand historically has been higher in the summer months of 2023 was impacted by the lower home-moving activities due to limited housing market transaction volumes leading to less seasonality than we typically experience. Typical seasonal demand patterns returned in the winter monthssecond half of 2023 with decreased demand during the fall and as a result, rental rates charged to new tenants have typically been higher in the summer months than in the winter months. Demand fluctuates due to various local and regional factors, including the overall economy. Demand intofor our systemfacilities is also impacted by new supply of self-storage space as well asand alternatives to self-storage.Industry-wide demand from new customers for storage space at the beginning of 2024 is below the level at the beginning of 2023. We will mitigate this lower demand by continuing to support new customer move-ins with increased marketing expense, lower rental rates to new customers, and increased promotional discounting. We expect industry-wide demand from new customers to stabilize during the year due to improving macroeconomic conditions. We also anticipate fewer completions of new self-storage facilities nationally, reducing the competitive impact of new supply on customer acquisition. As a result of stabilizing new customer demand during the year, stable existing customer behavior, and lower impact from new competitive supply, we anticipate same store revenues in 2024 will be similar to those earned in 2023.Late Charges and Administrative FeesWe experienced a 24.0% year over year reduction in lateLate charges and administrative fees collected duringincreased 10.1% and 23.4% in 2023 and 2022, in each case as compared to the year ended December 31, 2020. This decrease was due primarily to reduced late charges and lien fees beginning with the onset of the COVID Pandemicprevious year. The increase in early March 2020,2023 is due to (i) an acceleration in average collections whereby a greater percentage of tenants paid their monthly rent promptly to avoid the incurrence of such feeshigher late charges collected on delinquent accounts driven by more delinquent accounts and to a lesser extent and (ii) reduced move-inhigher administrative fees resulting from higher move-in volumes. The increase in 2022 is due to lower move-ins.Bad Debt(i) higher late charges collected on delinquent accounts driven by more delinquent accounts compared to 2021 and Collection LossesDespite consumer stress and temporary delays of auctions due to logistical difficulties or governmental restrictions in year endeda lesser extent (ii) higher administrative fees charged per move-in combined with higher move-in volumes. Delinquency levels at our Same Store Facilities remain below 2019 levels at December 31, 2020, we did not experience a significant increase in bad debt from historical levels because of (i) federal government stimulus and supplements to unemployment benefits which mitigated consumer stress, and (ii) steps we took to augment our collection efforts and accelerate payment by our customers.Selected Key Statistical DataThe following table sets forth average annual contract rent per square foot and total square footage for tenants moving in and moving out during the years ended December 31, 2020, 20192023, 2022, and 2018.2021. It also includes promotional discounts, which vary based upon the move-in contractual rates, move-in volume, and percentage of tenants moving in who receive the discount.Year Ended December 31, Year Ended December 31, 2023 2022 Change 2022 2021 Change (Amounts in thousands, except for per square foot amounts) Tenants moving in during the period: Average annual contract rent per square foot $ 15.61 $ 18.12 (13.9)% $ 18.12 $ 17.08 6.1% Square footage 110,958 101,956 8.8% 101,956 97,487 4.6% Contract rents gained from move-ins $ 1,732,054 $ 1,847,443 (6.2)% $ 1,847,443 $ 1,665,078 11.0% Promotional discounts given $ 57,778 $ 52,114 10.9% $ 52,114 $ 43,433 20.0% Tenants moving out during the period: Average annual contract rent per square foot $ 21.34 $ 20.63 3.4% $ 20.63 $ 17.47 18.1% Square footage 111,882 105,663 5.9% 105,663 96,234 9.8% Contract rents lost from move-outs $ 2,387,562 $ 2,179,828 9.5% $ 2,179,828 $ 1,681,208 29.7% 33Revenue ExpectationsAt December 31, 2020, in place contractual rent was 2.3% higher on a year-over-year basis (comprised of a 2.7% increase in square foot occupancy offset partially by a 0.4% decrease in annual contract rent per occupied foot).As noted above, the COVID Pandemic resulted in reduced demand, lower rates charged to new tenants on a year over year basis, and curtailed rent increases to existing tenants during the first six months of 2020, which had continuing negative impact on revenue growth in the remainder of 2020. Notwithstanding the decrease in Same-Store revenue for all of 2020, revenue growth trends improved steadily in the last half of 2020, with increased demand for storage space, increased rates charged to new tenants moving in, decreased move-outs, and a resumption of rate increases to existing long-term tenant albeit at a lesser magnitude than in prior years. Total revenues increased 0.8% on a year over year basis in the three months ended December 31, 2020.We expect continued revenue growth during the first half of 2021 supported by increased customer demand and modest move out activity. There is more uncertainty in the level of growth during the second half of 2021 given challenging comparables over 2020 and risk that customer behavior (particularly the level of move-out activity) returns to historical levels.We expect that the impact of reduced late charges noted above will persist on a year over year basis through the quarter ending March 31, 2021.Notwithstanding our expectations, we are in a time of significant uncertainty, and there are reasonably possible circumstances and events which could result in actual future revenues being significantly lower than our expectations, including the following:Storage demand could decline or collection losses could increase due to increased recessionary circumstances, worsening of the COVID Pandemic, the potential confluence of higher seasonal influenza infections and COVID infections, or other factors.The moderation of below-trend move-outs noted above could be sudden and dramatic, and/or disproportionally involve long-term tenants with higher rental rates.It is possible that the COVID Pandemic could impact current seasonal demand trends in the short or long term, due to changes in certain factors impacting moving trends, such as potentially fewer college students living on-campus in favor of online learning or an increase in working from home reducing the necessity of moving for employment reasons.Costs of OperationsCost of operations (excluding depreciation and amortization) increased 2.7%4.7% and 5.7% in 20202023 and 2022, respectively, in each case as compared to 2019, and 4.2%the previous year. The increase in 2019 as compared to 2018,2023 is due primarily to increased property tax expense, marketing expense, and on-siteother direct property manager payroll.Property tax expense increased 3.1%3.4% and 4.1% in 20202023 and 2022, respectively, in each case as compared to 2019, and 4.5% in 2019the previous year, as compared to 2018. We expect property tax expense growtha result of approximately 5.5% in 2021 due primarily to higher assessed values and, to a lesser extent, increased tax rates. See “Risk Factors – We have exposure to increased property tax in California” for further information on our property tax with respect to our California properties.On-site property manager payroll expense increased 2.5% in 2020 as compared to 2019 and 2.4% in 2019 as compared to 2018. The increase for 2020 includes the impact of COVID Pandemic measures taken between April 1, 2020 and June 30, 2020 to keep our facilities open, including a $3.00 hourly wage increase, and enhancement of paid time off benefits, for virtually all of our property managers, offset by a 6.9% year over year decrease in hours worked due to staffing reductions from reduced move-in and move-out activity and revisions to other operational processes. We expect reductions in hours worked to continue throughout 2021.Repairs and maintenance expense decreased 4.4% in 2020 as compared to 2019 and increased 3.2% in 2019 as compared to 2018. Repair and maintenance costs include snow removal expense totaling $2.6 million, $4.1 million, and $3.7 million in 2020, 2019, and 2018, respectively. Excluding snow removal costs, repairs and maintenance decreased 1.8% in 2020 as compared to 2019 and increased 2.7% in 2019 as compared to 2018.Repairs and maintenance expense levels are dependent upon many factors such as (i) sporadic occurrences such as accidents, damage, and equipment malfunctions, (ii) short-term local supply and demand factors for material and labor, and (iii) weather conditions, which can impact costs such as snow removal, roof repairs, and HVAC maintenance and repairs. Accordingly, it is difficult to estimate future repairs and maintenance expense.Our utility expenses are comprised primarily of electricity costs, which are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Utility expense decreased 9.2% in 2020 as compared to 2019 and 2.9% in 2019 as compared to 2018. It is difficult to estimate future utility costs, because weather, temperature, and energy prices are volatile and not predictable. The decreases experienced in 2020 are due primarily to investments we are making in energy saving technology such as solar power and LED lights which generate favorable returns on investment in the form of lower utility usage. We continue to make investments in solar power and LED lights and expect a decline in utility expense throughout 2021.Marketing expense is comprised principally ofincludes Internet advertising and the operating costs of our telephone reservation center. Internet advertising expense, comprised primarily ofcomprising keyword search fees assessed on a “per click” basis, varies based upon demand for self-storage space, the quantity of people inquiring about self-storage through online search, occupancy levels, the number and aggressiveness of bidding competitors, and other factors. These factors are volatile; accordingly, Internet advertising can increase or decrease significantly in the short-term. MarketingWe increased marketing expense increased 22.5%by 44.5% and 15.5% in 20202023 and 2022, respectively, in each case as compared to 2019 and 47.1% in 2019 as compared to 2018. These increases are due primarily tothe previous year, by utilizing a higher traditional “per click” advertising onvolume of online paid search platforms as we have soughtprograms to attract more customers for our space,new tenants. We plan to continue to use internet advertising and cost per click for keyword search terms increased dueother advertising channels to more keyword bidding competition from existing self-storage owners and operators, including owners of newly developed facilities and nontraditional storage providers. To a lesser extent, the increases reflects additional spending on social media outlets as well as aggregator websites, as we believe these channels provide exposure to incremental customers at a favorable cost. We expect moderationsupport move-in volumes in the level of marketing expense growth in 2021.Other direct property costs include administrative expenses specific to each self-storage facility, such as property insurance,loss, telephone and data communication lines, business license costs, bank charges related to2.0%8.8% in 20202023 as compared to 20192022 and 2.5%10.1% in 20192022 as compared to 2018. We continue2021. These increases were due primarily to experience increasedan increase in credit card fees due toas a result of year-over-year increases in revenues, combined with a long-term trend of more customers paying with credit cards rather than cash, checks, or other methods of payment with lower transaction costs. We expect inflationary increases in other direct property costs in 2021.Supervisory payroll expense, which represents cash compensation paid to the management personnel who directly and indirectly supervise the on-site property managers, increased 4.2% in 2020 as compared to 2019 due primarily to higher headcount, and increased 1.6% in 2019 as compared to 2018 due primarily to higher wage rates. We expect inflationary increases in 2021.Centralized management costs represents administrative and cash compensation expenses for shared general corporate functions to the extent their efforts are devoted to self-storage operations. Such functions include information technology support, hardware, and software, as well as centralized administration of payroll, benefits, training, repairs and maintenance, customer service, pricing and marketing, operational accounting and finance, legal costs, and legal costs.costs from field management executives. Centralized management costs decreased 3.5%5.0% in 20202023 as compared to 20192022 and 0.5%increased 12.3% in 20192022 as compared to 2018.2021. The decrease in 20202023 was due to reduced headcount and reduced travel expenses. We expect increases inprimarily driven by achievement of economies of scale from recent acquisitions with centralized management costs allocated over a broader number of self-storage facilities including non-same store facilities. The increase in 20212022 was due primarily to increased headcount.Share-based compensation expense includes the amortization of restricted share unitsan increase in technology and stock options granted to management personnel who directly and indirectly supervise the on-sitedata team costs that support property managers, as well as those employees responsible for providing shared general corporate functions to the extent their efforts are devoted to self-storage operations. Such functions are listed above under centralized management costs. Share-based compensation expense also includes related employer taxes and varies based upon the level of grants and their related vesting and amortization periods, forfeitures, as well as the Company’s common share price on the date of each grant.Analysis of Same Store Depreciation and AmortizationDepreciation and amortization for Same Store Facilities increased 3.2% in 2020 as compared to 2019 and 0.1% in 2019 as compared to 2018. We expect modest increases in depreciation expense in 2021 due to elevated levels of capital expenditures.
34Quarterly Financial DataThe following table summarizes selected quarterly financial data with respect to the Same Store Facilities:The following table setstables set forth selected market trends in our Same Store Facilities:Same Store Facilities Operating Trends by Market As of December 31, 2023 Year Ended December 31, Number
of
FacilitiesSquare
Feet
(millions)Realized Rent per
Occupied Square FootAverage Occupancy Realized Rent per
Available Square Foot 2023 2022 Change 2023 2022 Change 2023 2022 Change Los Angeles 214 15.5 $ 35.92 $ 32.40 10.9 % 95.4 % 96.9 % (1.5) % $ 34.28 $ 31.38 9.2 % San Francisco 129 7.9 32.41 31.28 3.6 % 94.4 % 95.2 % (0.8) % 30.59 29.78 2.7 % New York 92 6.8 32.13 30.51 5.3 % 93.3 % 94.3 % (1.1) % 29.99 28.78 4.2 % Miami 86 6.2 30.10 28.09 7.2 % 93.6 % 95.6 % (2.1) % 28.16 26.86 4.8 % Seattle-Tacoma 89 6.0 26.05 25.06 4.0 % 92.6 % 94.1 % (1.6) % 24.11 23.57 2.3 % Washington DC 90 5.5 26.55 25.42 4.4 % 92.7 % 93.4 % (0.7) % 24.60 23.74 3.6 % Dallas-Ft. Worth 111 7.6 18.49 17.16 7.8 % 92.2 % 94.4 % (2.3) % 17.05 16.21 5.2 % Chicago 130 8.2 20.24 19.27 5.0 % 93.0 % 93.6 % (0.6) % 18.83 18.04 4.4 % Atlanta 102 6.7 18.01 17.26 4.3 % 90.9 % 93.7 % (3.0) % 16.37 16.18 1.2 % Houston 101 7.5 16.99 15.79 7.6 % 92.0 % 93.5 % (1.6) % 15.62 14.77 5.8 % Orlando-Daytona 69 4.4 19.65 17.96 9.4 % 93.3 % 95.9 % (2.7) % 18.34 17.22 6.5 % Philadelphia 56 3.5 21.48 20.92 2.7 % 93.0 % 94.4 % (1.5) % 19.99 19.75 1.2 % West Palm Beach 39 2.8 26.45 25.01 5.8 % 93.6 % 95.8 % (2.3) % 24.75 23.96 3.3 % Tampa 53 3.5 19.97 18.87 5.8 % 91.9 % 95.1 % (3.4) % 18.35 17.94 2.3 % Charlotte 52 3.9 16.13 14.99 7.6 % 93.0 % 95.0 % (2.1) % 15.00 14.24 5.3 % All other markets 926 58.9 18.68 17.77 5.1 % 93.3 % 94.7 % (1.5) % 17.43 16.83 3.6 % Totals 2,339 154.9 $ 22.93 $ 21.58 6.3 % 93.3 % 94.8 % (1.6) % $ 21.38 $ 20.45 4.5 %
35
Year Ended December 31, Revenues ($000's) Direct Expenses ($000's) Indirect Expenses ($000's) Net Operating Income ($000's) 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Los Angeles $ 544,762 $ 498,061 9.4 % $ 71,101 $ 64,052 11.0 % $ 10,876 $ 11,814 (7.9) % $ 462,785 $ 422,195 9.6 % San Francisco 246,744 240,098 2.8 % 38,245 35,401 8.0 % 5,936 6,680 (11.1) % 202,563 198,017 2.3 % New York 208,547 199,749 4.4 % 50,183 47,189 6.3 % 4,771 5,566 (14.3) % 153,593 146,994 4.5 % Miami 179,868 170,961 5.2 % 34,243 30,384 12.7 % 4,023 4,211 (4.5) % 141,602 136,366 3.8 % Seattle-Tacoma 149,262 145,924 2.3 % 26,996 24,710 9.3 % 3,831 4,097 (6.5) % 118,435 117,117 1.1 % Washington DC 140,686 135,483 3.8 % 28,923 27,850 3.9 % 4,029 4,140 (2.7) % 107,734 103,493 4.1 % Dallas-Ft. Worth 135,451 128,468 5.4 % 29,189 28,771 1.5 % 4,563 4,844 (5.8) % 101,699 94,853 7.2 % Chicago 159,959 152,859 4.6 % 60,448 57,285 5.5 % 5,512 5,956 (7.5) % 93,999 89,618 4.9 % Atlanta 115,727 113,863 1.6 % 23,410 22,474 4.2 % 4,479 4,795 (6.6) % 87,838 86,594 1.4 % Houston 121,981 115,142 5.9 % 31,620 31,534 0.3 % 4,262 4,637 (8.1) % 86,099 78,971 9.0 % Orlando-Daytona 83,774 78,622 6.6 % 16,429 14,883 10.4 % 3,172 3,487 (9.0) % 64,173 60,252 6.5 % Philadelphia 73,611 72,597 1.4 % 15,874 15,685 1.2 % 2,489 2,717 (8.4) % 55,248 54,195 1.9 % West Palm Beach 71,441 69,122 3.4 % 15,551 13,847 12.3 % 1,982 2,022 (2.0) % 53,908 53,253 1.2 % Tampa 66,996 65,397 2.4 % 15,097 13,574 11.2 % 2,352 2,478 (5.1) % 49,547 49,345 0.4 % Charlotte 61,705 58,424 5.6 % 11,246 9,752 15.3 % 2,073 2,413 (14.1) % 48,386 46,259 4.6 % All other markets 1,067,353 1,029,053 3.7 % 228,268 213,959 6.7 % 41,096 45,198 (9.1) % 797,989 769,896 3.6 % Totals $ 3,427,867 $ 3,273,823 4.7 % $ 696,823 $ 651,350 7.0 % $ 105,446 $ 115,055 (8.4) % $ 2,625,598 $ 2,507,418 4.7 % 36 As of December 31, 2023 Year Ended December 31, Number
of
FacilitiesSquare
Feet
(millions)Realized Rent per
Occupied Square FootAverage Occupancy Realized Rent per
Available Square Foot 2022 2021 Change 2022 2021 Change 2022 2021 Change Los Angeles 214 15.5 $ 32.40 $ 27.17 19.2 % 96.9 % 98.1 % (1.2) % $ 31.38 $ 26.66 17.7 % San Francisco 129 7.9 31.28 27.93 12.0 % 95.2 % 97.2 % (2.1) % 29.78 27.13 9.8 % New York 92 6.8 30.51 27.25 12.0 % 94.3 % 96.1 % (1.9) % 28.78 26.20 9.8 % Miami 86 6.2 28.09 22.37 25.6 % 95.6 % 97.0 % (1.4) % 26.86 21.70 23.8 % Seattle-Tacoma 89 6.0 25.06 21.84 14.7 % 94.1 % 95.2 % (1.2) % 23.57 20.79 13.4 % Washington DC 90 5.5 25.42 22.65 12.2 % 93.4 % 95.3 % (2.0) % 23.74 21.58 10.0 % Dallas-Ft. Worth 111 7.6 17.16 14.51 18.3 % 94.4 % 95.6 % (1.3) % 16.21 13.86 17.0 % Chicago 130 8.2 19.27 16.61 16.0 % 93.6 % 95.7 % (2.2) % 18.04 15.90 13.5 % Atlanta 102 6.7 17.26 14.35 20.3 % 93.7 % 96.0 % (2.4) % 16.18 13.78 17.4 % Houston 101 7.5 15.79 13.38 18.0 % 93.5 % 94.2 % (0.7) % 14.77 12.61 17.1 % Orlando-Daytona 69 4.4 17.96 14.87 20.8 % 95.9 % 95.7 % 0.2 % 17.22 14.23 21.0 % Philadelphia 56 3.5 20.92 18.55 12.8 % 94.4 % 97.1 % (2.8) % 19.75 18.02 9.6 % West Palm Beach 39 2.8 25.01 20.80 20.2 % 95.8 % 96.9 % (1.1) % 23.96 20.15 18.9 % Tampa 53 3.5 18.87 15.49 21.8 % 95.1 % 96.2 % (1.1) % 17.94 14.90 20.4 % Charlotte 52 3.9 14.99 12.41 20.8 % 95.0 % 95.9 % (0.9) % 14.24 11.90 19.7 % All other markets 926 58.9 17.77 15.34 15.8 % 94.7 % 96.1 % (1.5) % 16.83 14.74 14.2 % Totals 2,339 154.9 $ 21.58 $ 18.49 16.7 % 94.8 % 96.2 % (1.5) % $ 20.45 $ 17.79 15.0 % 37Same Store Facilities Operating Trends by Market (Continued) Year Ended December 31, Revenues ($000's) Direct Expenses ($000's) Indirect Expenses ($000's) Net Operating Income ($000's) 2022 2021 Change 2022 2021 Change 2022 2021 Change 2022 2021 Change Los Angeles $ 498,061 $ 422,050 18.0 % $ 64,052 $ 59,751 7.2 % $ 11,814 $ 11,138 6.1 % $ 422,195 $ 351,161 20.2 % San Francisco 240,098 218,105 10.1 % 35,401 34,184 3.6 % 6,680 6,847 (2.4) % 198,017 177,074 11.8 % New York 199,749 181,741 9.9 % 47,189 44,890 5.1 % 5,566 5,705 (2.4) % 146,994 131,146 12.1 % Miami 170,961 138,184 23.7 % 30,384 27,948 8.7 % 4,211 4,405 (4.4) % 136,366 105,831 28.9 % Seattle-Tacoma 145,924 128,517 13.5 % 24,710 23,684 4.3 % 4,097 4,271 (4.1) % 117,117 100,562 16.5 % Washington DC 135,483 122,902 10.2 % 27,850 26,531 5.0 % 4,140 4,079 1.5 % 103,493 92,292 12.1 % Dallas-Ft. Worth 128,468 109,607 17.2 % 28,771 26,598 8.2 % 4,844 4,972 (2.6) % 94,853 78,037 21.5 % Chicago 152,859 134,392 13.7 % 57,285 52,415 9.3 % 5,956 5,834 2.1 % 89,618 76,143 17.7 % Atlanta 113,863 96,698 17.8 % 22,474 19,236 16.8 % 4,795 4,923 (2.6) % 86,594 72,539 19.4 % Houston 115,142 97,868 17.7 % 31,534 30,179 4.5 % 4,637 4,770 (2.8) % 78,971 62,919 25.5 % Orlando-Daytona 78,622 64,982 21.0 % 14,883 13,543 9.9 % 3,487 3,284 6.2 % 60,252 48,155 25.1 % Philadelphia 72,597 66,000 10.0 % 15,685 15,105 3.8 % 2,717 2,730 (0.5) % 54,195 48,165 12.5 % West Palm Beach 69,122 58,021 19.1 % 13,847 12,218 13.3 % 2,022 2,119 (4.6) % 53,253 43,684 21.9 % Tampa 65,397 54,289 20.5 % 13,574 12,259 10.7 % 2,478 2,495 (0.7) % 49,345 39,535 24.8 % Charlotte 58,424 48,735 19.9 % 9,752 9,460 3.1 % 2,413 2,289 5.4 % 46,259 36,986 25.1 % All other markets 1,029,053 899,507 14.4 % 213,959 203,407 5.2 % 45,198 43,479 4.0 % 769,896 652,621 18.0 % Totals $ 3,273,823 $ 2,841,598 15.2 % $ 651,350 $ 611,408 6.5 % $ 115,055 $ 113,340 1.5 % $ 2,507,418 $ 2,116,850 18.5 % 38Revenue declined on a year-over-year basis for nearly all of our markets in 2020 as compared to 2019. We believe that our geographic diversification and scale across substantially all major metropolitan markets in the U.S. provides some insulation from localized economic effects and enhances the stability of our cash flows. It is difficult to predict localized trends in short-term self-storage demand and operating results. Over the long run, we believe that markets that experience population growth, high employment, and otherwise exhibit economic strength and consistency will outperform markets that do not exhibit these characteristics.Acquired FacilitiesThe Acquired Facilities represent 131470 facilities that we acquired in 2018, 2019,2021, 2022, and 2020.2023. As a result of the stabilization process and timing of when these facilities were acquired, year-over-year changes can be significant.
ACQUIRED FACILITIES Year Ended December 31, Year Ended December 31, 2023 2022 Change (a) 2022 2021 Change (a) ($ amounts in thousands, except for per square foot amounts) Revenues (b): 2021 Acquisitions $ 345,061 $ 312,300 $ 32,761 $ 312,300 $ 106,474 $ 205,826 2022 Acquisitions 50,105 14,945 35,160 14,945 — 14,945 2023 Acquisitions 55,487 — 55,487 — — — Total revenues 450,653 327,245 123,408 327,245 106,474 220,771 Cost of operations (b): 2021 Acquisitions 104,665 101,859 2,806 101,859 32,705 69,154 2022 Acquisitions 19,911 7,885 12,026 7,885 — 7,885 2023 Acquisitions 19,922 — 19,922 — — — Total cost of operations 144,498 109,744 34,754 109,744 32,705 77,039 Net operating income: 2021 Acquisitions 240,396 210,441 29,955 210,441 73,769 136,672 2022 Acquisitions 30,194 7,060 23,134 7,060 — 7,060 2023 Acquisitions 35,565 — 35,565 — — — Net operating income 306,155 217,501 88,654 217,501 73,769 143,732 Depreciation and amortization expense (323,796) (280,871) (42,925) (280,871) (131,998) (148,873) Net (loss) income $ (17,641) $ (63,370) $ 45,729 $ (63,370) $ (58,229) $ (5,141) At December 31: Square foot occupancy: 2021 Acquisitions 81.5% 83.1% (1.9)% 83.1% 79.9% 4.0% 2022 Acquisitions 82.2% 79.4% 3.5% 79.4% —% —% 2023 Acquisitions 83.1% —% —% —% —% —% 82.1% 82.5% (0.5)% 82.5% 79.9% 3.3% Annual contract rent per occupied square foot: 2021 Acquisitions $ 18.72 $ 17.81 5.1% $ 17.81 $ 15.62 14.0% 2022 Acquisitions 13.06 11.48 13.8% 11.48 — —% 2023 Acquisitions 16.78 — —% — — —% $ 17.41 $ 16.73 4.1% $ 16.73 $ 15.62 7.1% Number of facilities: 2021 Acquisitions 232 232 — 232 232 — 2022 Acquisitions 74 74 — 74 — 74 2023 Acquisitions 164 — 164 — — — 470 306 164 306 232 74 Net rentable square feet (in thousands): 2021 Acquisitions (c) 22,009 21,908 101 21,908 21,830 78 2022 Acquisitions 4,740 4,726 14 4,726 — 4,726 2023 Acquisitions 12,067 — 12,067 — — — 38,816 26,634 12,182 26,634 21,830 4,804 39As ofDecember 31, 2023Costs to acquire (in thousands): 2021 Acquisitions (c) $ 5,115,276 2022 Acquisitions 730,957 2023 Acquisitions (d) 2,674,840 $ 8,521,073
December 31, 2020(b)Revenues and cost of operations do not include tenant reinsurance orand merchandise salessale revenues and expenses generated at the facilities. See “Ancillary Operations” below for more information.(c)We believe that our economies of scalehave completed the expansion projects on facilities acquired in marketing and operations allows us to generate higher net operating income from newly acquired facilities than was achieved by the previous owners. However, it can take 12 or more months2021 for us to fully achieve the higher net operating income, or even longer in the case of an acquired facility with low occupancy levels and/or below market in place rents, and the ultimate levels of net operating income to be achieved can be affected by changes in general economic conditions. As a result, there can be no assurance that we will achieve our expectations with respect to these newly acquired facilities.The Acquired Facilities have an aggregate of approximately 9.9$26.9 million, adding 179,000 net rentable square feet including 0.8 million in Virginia, 0.7 million in each of Minnesota and Texas, 0.6 million in eachstorage space as of Florida and Ohio, 0.5 million each in Georgia, Michigan and Pennsylvania, 0.4 million in each of Colorado, Indiana, Illinois and Nebraska, 0.3 million in each of Alabama, Arizona, California, Massachusetts, Missouri, South Carolina, Tennessee and Washington and 1.0 million in other states.For 2020, the weighted average annualized yield on cost, based upon net operating income, for the 25 properties acquired in 2018 was 5.3%. The yield for the facilities acquired in 2019 is not meaningful due to the presence of unstabilized facilities. The yield for the facilities acquired in 2020 is not meaningful due to our limited ownership period.Subsequent to December 31, 2020,2023.(d)The amount includes the costs allocated to land, buildings and intangible assets associated with the 127 self-storage facilities from the Simply Acquisition.We have been active in acquiring facilities in recent years. Since the beginning of 2021, we acquired or were under contract to acquire 40 self-storagea total of 470 facilities across 18 states with 3.538.8 million net rentable square feet for $580.1 million. These include 12 newly developed$8.5 billion. During 2023, these facilities contributed net operating income of $306.2 million, consistent with our original underwritten expectations.During 2023, we acquired BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million square feet) and manages 25 self-storage facilities (1.8 million square feet) for third parties, for a purchase price of $2.2 billion in cash. Included in the 2023 Acquisition results in the table above are expected to close as theythe Simply portfolio self-storage revenues of $44.4 million, NOI of $29.4 million (including Direct NOI of $31.2 million), and average square footage occupancy of 87.7% for 2023 since the acquisition on September 13, 2023.During 2021, we acquired the ezStorage portfolio, consisting of 48 properties (4.1 million net rentable square feet) for acquisition cost of $1.8 billion. As of December 31, 2023, we have completed the expansion projects on four properties of this portfolio for $26.5 million, adding 169,000 net rentable square feet of storage space. Included in the 2021 Acquisition results in the table above are completed throughout 2021.During 2021, we acquired the All Storage portfolio, consisting of 56 properties (7.5 million net rentable square feet) for $1.5 billion. Included in the 2021 Acquisition results in the table above are All Storage portfolio revenues of $89.1 million, NOI of $59.0 million (including Direct NOI of $61.8 million), and average square footage occupancy of 77.9% for 2023.We are activelyremain active in seeking to acquire additional facilities and the environment for new acquisitions has improved. We are observing increased selling activity for both new constructed non-stabilized and stabilized properties. However, futureself-storage facilities. Future acquisition volume will depend upon whether additional owners willis likely to be motivated to market their facilities, which will in turn depend upon factors such as economic conditionsimpacted by increasing cost of capital requirements and the level of seller confidence.overall macro-economic uncertainties.40Analysis of Depreciation and Amortization of Acquired FacilitiesDepreciation and amortization with respect to the Acquired Facilities totaled $41.0 million, $24.4 million and $5.9 million for 2020, 2019, and 2018, respectively. These amounts include (i) depreciation of the acquired buildings, which is recorded generally on a straight line basis over a 25 year period, and (ii) amortization of cost allocated to the tenants in place upon acquisition of a facility, which is recorded based upon the benefit of such existing tenants to each period and thus is highest when the facility is first acquired and declines as such tenants vacate. With respect to the Acquired Facilities owned at December 31, 2020, depreciation of buildings and amortization of tenant intangibles is expected to aggregate approximately $56.5 million in the year ending December 31, 2021. There will be additional depreciation and amortization of tenant intangibles with respect to new buildings that are acquired in 2021.The developed and expanded facilities include 7757 facilities that were developed on new sites since January 1, 2015,2018, and 7188 facilities subjectexpanded to expansion ofincrease their net rentable square footage. Of these expansions, 2061 were completed at January 1, 2019, 39before 2022, 22 were completed in the 24 months ended December 31, 2020,2022 or 2023, and 12 werefive are currently in process at December 31, 2020.DEVELOPED AND EXPANDED FACILITIES Year Ended December 31, Year Ended December 31, 2023 2022 Change (a) 2022 2021 Change (a) ($ amounts in thousands, except for per square foot amounts) Revenues (b): Developed in 2018 $ 40,206 $ 36,789 $ 3,417 $ 36,789 $ 28,308 $ 8,481 Developed in 2019 18,081 16,444 1,637 16,444 11,921 4,523 Developed in 2020 7,621 6,838 783 6,838 3,405 3,433 Developed in 2021 11,134 8,333 2,801 8,333 1,602 6,731 Developed in 2022 6,893 687 6,206 687 — 687 Developed in 2023 1,032 — 1,032 — — — Expansions completed before 2022 138,629 127,290 11,339 127,290 88,168 39,122 Expansions completed in 2022 or 2023 27,698 20,914 6,784 20,914 20,400 514 Expansions in process 11,156 13,704 (2,548) 13,704 13,315 389 Total revenues 262,450 230,999 31,451 230,999 167,119 63,880 Cost of operations (b): Developed in 2018 11,662 10,742 920 10,742 9,983 759 Developed in 2019 5,608 5,622 (14) 5,622 5,240 382 Developed in 2020 1,884 1,702 182 1,702 1,679 23 Developed in 2021 3,849 3,539 310 3,539 1,546 1,993 Developed in 2022 3,563 738 2,825 738 — 738 Developed in 2023 1,638 — 1,638 — — — Expansions completed before 2022 38,885 37,502 1,383 37,502 32,945 4,557 Expansions completed in 2022 or 2023 9,644 5,805 3,839 5,805 5,370 435 Expansions in process 1,798 2,155 (357) 2,155 2,127 28 Total cost of operations 78,531 67,805 10,726 67,805 58,890 8,915 Net operating income (loss): Developed in 2018 28,544 26,047 2,497 26,047 18,325 7,722 Developed in 2019 12,473 10,822 1,651 10,822 6,681 4,141 Developed in 2020 5,737 5,136 601 5,136 1,726 3,410 Developed in 2021 7,285 4,794 2,491 4,794 56 4,738 Developed in 2022 3,330 (51) 3,381 (51) — (51) Developed in 2023 (606) — (606) — — — Expansions completed before 2022 99,744 89,788 9,956 89,788 55,223 34,565 Expansions completed in 2022 or 2023 18,054 15,109 2,945 15,109 15,030 79 Expansions in process 9,358 11,549 (2,191) 11,549 11,188 361 Net operating income 183,919 163,194 20,725 163,194 108,229 54,965 Depreciation and amortization expense (61,421) (54,115) (7,306) (54,115) (47,549) (6,566) Net income $ 122,498 $ 109,079 $ 13,419 $ 109,079 $ 60,680 $ 48,399 41DEVELOPED AND EXPANDED FACILITIES (Continued) As of December 31, As of December 31, 2023 2022 Change (a) 2022 2021 Change (a) ($ amounts in thousands, except for per square foot amounts) Square foot occupancy: Developed in 2018 86.7% 87.5% (0.9)% 87.5% 88.6% (1.2)% Developed in 2019 84.6% 87.3% (3.1)% 87.3% 87.3% —% Developed in 2020 89.4% 94.3% (5.2)% 94.3% 88.9% 6.1% Developed in 2021 81.5% 82.4% (1.1)% 82.4% 48.8% 68.9% Developed in 2022 77.7% 43.6% 78.2% 43.6% —% —% Developed in 2023 27.9% —% —% —% —% —% Expansions completed before 2022 86.4% 87.0% (0.7)% 87.0% 85.0% 2.4% Expansions completed in 2022 or 2023 70.4% 71.4% (1.4)% 71.4% 84.8% (15.8)% Expansions in process 63.4% 86.2% (26.5)% 86.2% 96.5% (10.7)% 79.3% 83.4% (4.9)% 83.4% 84.4% (1.2)% Annual contract rent per occupied square foot: Developed in 2018 $ 21.32 $ 20.84 2.3% $ 20.84 $ 17.08 22.0% Developed in 2019 18.83 18.19 3.5% 18.19 14.58 24.8% Developed in 2020 22.73 21.75 4.5% 21.75 17.67 23.1% Developed in 2021 19.78 18.04 9.6% 18.04 15.41 17.1% Developed in 2022 16.20 13.84 17.1% 13.84 — —% Developed in 2023 9.61 — —% — — —% Expansions completed before 2022 18.36 17.89 2.6% 17.89 14.92 19.9% Expansions completed in 2022 or 2023 18.88 18.72 0.9% 18.72 18.19 2.9% Expansions in process 28.66 30.93 (7.3)% 30.93 28.29 9.3% $ 18.67 $ 18.37 1.6% $ 18.37 $ 15.65 17.4% Number of facilities: Developed in 2018 18 18 — 18 18 — Developed in 2019 11 11 — 11 11 — Developed in 2020 3 3 — 3 3 — Developed in 2021 6 6 — 6 6 — Developed in 2022 8 8 — 8 — 8 Developed in 2023 11 — 11 — — — Expansions completed before 2022 61 61 — 61 61 — Expansions completed in 2022 or 2023 22 22 — 22 22 — Expansions in process 5 5 — 5 5 — 145 134 11 134 126 8 Net rentable square feet (in thousands): Developed in 2018 2,069 2,069 — 2,069 2,069 — Developed in 2019 1,057 1,057 — 1,057 1,057 — Developed in 2020 347 347 — 347 347 — Developed in 2021 681 681 — 681 681 — Developed in 2022 631 631 — 631 — 631 Developed in 2023 1,098 — 1,098 — — — Expansions completed before 2022 8,390 8,382 8 8,382 8,413 (31) Expansions completed in 2022 or 2023 2,353 1,771 582 1,771 1,216 555 Expansions in process 475 428 47 428 490 (62) 17,101 15,366 1,735 15,366 14,273 1,093 42
December 31, 2020 As ofDecember 31, 2023Costs to develop (in thousands): Developed in 2018 $ 262,187 Developed in 2019 150,387 Developed in 2020 42,063 Developed in 2021 115,632 Developed in 2022 100,089 Developed in 2023 193,766 Expansions completed before 2022 (c) 506,594 Expansions completed in 2022 or 2023 (c) 268,449 $ 1,639,167 (b)Revenues and cost of operations do not include tenant reinsurance orand merchandise sales generated at the facilities. See “Ancillary Operations” below for more information.(c)The facilities included above have an aggregate of approximately 17.7 million net rentable square feet at December 31, 2020, including 6.6 million in Texas, 2.4 million in California, 2.3 million in Florida, 1.5 million in Colorado, 1.1 million in Minnesota, 0.8 million in North Carolina, 0.7 million in Washington, 0.4 million in Missouri, 0.3 million in each of Arizona, Georgia, Michigan and South Carolina and 0.7 million in other states.(d)These amounts only include the direct cost incurred to expand and renovate these facilities, and do not include (i) the original cost to develop or acquire the facility or (ii) the lost revenue on space demolished during the construction and fill-up period.Our Developed and Expanded Facilities includes a total of 145 self-storage facilities of 17.1 million net rentable square feet. For development and expansions completed by December 31, 2023, we incurred a total cost of $1.6 billion. During 2023, Developed and Expanded Facilities contributed net operating income of $183.9 million.It typically takes at least three to four years for a newly developed or expanded self-storage facility to stabilize with respect to revenues. Physical occupancy can be achieved as early as two to three years following completion of the development or expansion through offering lower rental rates during fill-up. As a result, even after achieving high occupancy, there can still be a period of elevated revenue growth as the tenant base matures and higher rental rates are achieved.We believe that our development and redevelopment activities generate favorable risk-adjusted returns over the long run. However, in the short run, our earnings are diluted during the construction and stabilization period due to the cost of capital to fund the development cost, as well as the related construction and development overhead expenses included in general and administrative expense. We believe the level of dilution incurred in 2019expense, and 2020 will continue at similar levels in 2021.Our existing unstabilized facilities continued to fill up in terms of occupancies consistent with our general expectations during 2020, despite the impact of the COVID Pandemic, and we expect that trend to continue. Our unstabilized facilities are affected by the same market dynamics that affect our Same Store properties. Accordingly, whether we ultimately achieve our yield expectations, and the timeframe for reaching stabilized cash flows, depends largely upon the same factors affecting aggregate demand, move-ins, move-outs, and realized annual rent per occupied square foot for our Same Store Facilities as set forth under “Analysis of Same Store Revenue” above.At December 31, 2020, we had a pipeline to develop 15 new self-storage facilities and expand 23 existing self-storage facilities, which will add approximately 3.6 million net rentable square feet at a cost of $561.4 million. We have continued to add projects to our development throughout 2020, despite the impact of the COVID Pandemic. We expect to continue to seek to add projects to maintain a robust pipeline. Our ability to do so continues to be challenged by various constraints such as difficulty in finding projects that meet our risk-adjusted yield expectations, and challenges in obtaining building permits for self-storage facilities in certain municipalities.Newly Developed FacilitiesThe facilities included under “Developed in 2015” in the table above had high occupancies at December 31, 2018, but had 3.4% year over year revenue growth in 2020 which exceeds the 1.0% reduction in year over year revenue growth in the Same Store Facilities. This outperformance relative to the Same Store Facilities reflects the maturity of the existing tenant base following attainment of high occupancy, illustrating the latter stage of the stabilization process noted above. The yield on cost for these facilities, based upon the net operating income during 2020, was 10.5%.We typically underwrite new developments to stabilize at approximately an 8.0% NOI yield on cost. We believe the 2016-2018Our developed facilities in aggregate, will meet that target on stabilization, though not to the same level of yield as the 2015 developed facilities, and have thus far leased-up as expected. The occupancies of facilities developed in 2019 and 2020 have leased-upleased up as expected and are at the beginningvarious stages of their revenue stabilization periods. We expect continued growth in these in 2021 and beyond as they continue to stabilize. The actual annualized yields that we may be achievedachieve on these facilities upon stabilization will depend on many factors, including local and current marketsupply, as well assupply.The facilities under “expansions completed” represent those facilities where the impactexpansions have been completed at December 31, 2023. We incurred a total of the COVID Pandemic.We have 15$775.0 million in direct cost to expand these facilities, demolished a total of 1.3 million net rentable square feet of storage space, and built a total of 6.8 million net rentable square feet of new storage space.At December 31, 2023, we had 23 additional newly developed facilities in process,development, which will have a total of 1.42.3 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $235.6$461.4 million. We expect these facilities to open over the next 18 to 24 months.Expansions of Existing FacilitiesThe expansion of an existing facility involves the construction of new space on an existing facility, either on existing unused land or through the demolition of existing buildings in order to facilitate densification. The construction costs for an expanded facility may include, in addition to adding space, adding amenities such as climate control to existing space, improving the visual appeal of the facility, and to a much lesser extent, the replacement of existing doors, roofs, and HVAC.The return profile on the expansion of existing facilities differs from a new facility, due to a lack of land cost, and there can be less cash flow risk because we have more direct knowledge of the local demand for space on the site as compared to a new facility. However, expansions involve the demolition of existing revenue-generating space with the loss of the related revenues during the construction and fill-up period.The facilities under “completed expansions” represent those facilities where the expansions have been completed at December 31, 2020. We incurred a total of $478.7 million in direct cost to expand these facilities, demolished a total of 1.1 million net rentable square feet of storage space, and built a total of 5.2 million net rentable square feet of new storage space.The facilities under “expansions“expansion in process” represent those facilities where developmentconstruction is in process at December 31, 2020. We have a pipeline2023, and together with additional future expansion activities primarily related to our Same Store Facilities at December 31, 2023, we expect to add a total of 2.21.3 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of $325.8$304.8 million.43Analysis of Depreciation and Amortization of Developed and Expanded FacilitiesDepreciation and amortization with respect to the Developed and Expanded Facilities totaled $61.6 million, $53.8 million and $45.5 million for 2020, 2019, and 2018, respectively. These amounts represent depreciation of the developed buildings and, in the case of the expanded facilities, the legacy depreciation on the existing buildings. With respect to the Developed and Expanded Facilities completed at December 31, 2020, depreciation of buildings is expected to aggregate approximately $67.3 million in 2021. There will be additional depreciation of new buildings that are developed or expanded in 2021.Other non-same store facilitiesThe “Other non-same store facilities”Non-Same Store Facilities” represent facilities which, while not newly acquired, developed, or expanded, are not fully stabilized since January 1, 2018, due primarily to2021, including facilities undergoing fill-up as well as facilities damaged in casualty events such as hurricanes, floods, and fires.The Other non-same store facilitiesNon-Same Store Facilities have an aggregate 3.7of 7.3 million net rentable square feet, including 0.81.3 million in Texas, 0.5 million in each of Ohio and Oklahoma,Pennsylvania, 0.4 million in South Carolina,each of California, Florida, Illinois, Michigan, Minnesota, Ohio, and Washington, 0.3 million in each Floridaof Arizona, Georgia, and New York,South Carolina, 0.2 million in each of Alabama, Colorado, Missouri, and 0.9Virginia, and 1.0 million in other states.The net operating income for these facilities decreased from $30.5 million in 2018 to $28.7 million in 2019During 2023, 2022, and decreased from $28.7 million in 2019 to $28.1 million in 2020. During 2020, 2019, and 2018,2021, the average occupancy for these facilities totaled 89.2%88.1%, 86.1%90.2%, and 85.5%84.8%, respectively, and the realized rent per occupied square feetfoot totaled $12.66, $13.11,$18.51, $17.10, and $13.92,$13.96, respectively.Over the longer term, we expect the growth in operations of these facilities to be similar to that of our Same Store facilities. However, in the short run, year over year comparisons will vary due to the impact of the underlying events which resulted in these facilities being classified as non-same store.with respectexpenseDepreciation and amortization expense for Self-Storage Operations increased $81.9 million in 2023 as compared to 2022 and increased $174.7 million in 2022 as compared to 2021, due to elevated levels of capital expenditures and new facilities that are recently acquired and developed. We expect continued increases in depreciation expense in 2024 as a result of elevated levels of capital expenditures and new facilities that are acquired, developed or expanded in 2024.44The following discussion and analysis of the components of net income, including Ancillary Operations and certain items not allocated to segments, present a comparison for the year ended December 31, 2023 to the other non-same store facilities totaled $28.2 million, $25.4 millionyear ended December 31, 2022. The results of these components for the years ended December 31, 2022 compared to December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 22, under Part II, Item 7, “Management’s Discussion and $23.3 million for 2020, 2019,Analysis of Financial Condition and 2018, respectively. We expect depreciation for these facilities in 2021 to approximateResults of Operations,” which was filed with the depreciation incurred in 2020.Ancillary OperationsAncillary revenues and expenses include amounts associated with the reinsurance of policies against losses to goods stored by tenants in our self-storage facilities, in the U.S., the sale of merchandise at our self-storage facilities, and management of property owned by unrelated third party property management.parties. The following table sets forth our ancillary operations:Year Ended December 31, 2023 2022 Change (Amounts in thousands) Revenues: Tenant reinsurance premiums $ 203,503 $ 188,201 $ 15,302 Merchandise 27,511 28,303 (792) Third party property management 27,063 19,631 7,432 Total revenues 258,077 236,135 21,942 Cost of operations: Tenant reinsurance 42,366 36,830 5,536 Merchandise 17,137 17,113 24 Third party property management 26,493 18,755 7,738 Total cost of operations 85,996 72,698 13,298 Net operating income: Tenant reinsurance 161,137 151,371 9,766 Merchandise 10,374 11,190 (816) Third party property management 570 876 (306) Total net operating income $ 172,081 $ 163,437 $ 8,644 Tenant reinsurance operations:Our customers have the option of purchasing insurance from a non-affiliated insurance company to cover certain losses to their goods stored at our facilities. A wholly-owned, consolidated subsidiary of Public Storage fully reinsures such policies, and thereby assumes all risk of losses under these policies from the insurance company. The subsidiary receives reinsurance premiums, substantially equal to the premiums collected from our tenants, from the non-affiliated insurance company. Such reinsurance premiums are shown as “Tenant reinsurance premiums” in the above table.13.2%$15.3 million or 8.1% in 2020 and 5.0% in 2019 on2023 over 2022, as a year over year basis. These increases reflect higher average premiums, as well asresult of an increase in theour tenant base with respect to acquired, newly developed, and expanded facilities and the third party properties we manage, as well as the increase of tenant insurance participation at our same store facilities. Tenant insurance revenues with respect toreinsurance premium revenue generated from tenants at our Same StoreSame-Store Facilities totaled $123.5 million, $114.5were $149.8 million and $112.3$144.4 million in 2020, 2019,2023 and 2018,2022, respectively, representing a 7.9%3.7% year over year increase in 2020 and 2.0% year over year increase in 2019.2023.We expect future growth will come primarily from customers of newly acquired and developed facilities as well as additional tenantsand the increase of tenant insurance participation at our existing unstabilized self-storagesame store facilities.whichthat drive covered customer covered losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods. CostTenant reinsurance cost of operations were $28.5increased $5.5 million in 2020, $26.2 million in 2019, and $25.6 million in 2018.Merchandise sales:We sell locks, boxes, and packing supplies at our self-storage facilities and the level of sales of these items is2023, as compared to 2022, primarily impacted by the level of move-ins and other customer traffic at our self-storage facilities. We do not expect any significant changes in revenues or profitability from our merchandise sales in 2021.Third partyThird-party property management: At December 31, 2020,2023, in our third-party property management program, we manage 92managed 210 facilities for unrelated third parties, and were under contract to manage 25114 additional facilities including 24105 facilities that are currently under construction. During 2023, we added 152 facilities to the program (including 25 third-party facilities from the Simply Acquisition), acquired two facilities from the program, and had 18 properties exit the program. While we expect this business to increase in scope and size, we don’tdo not expect any significant changes in overall profitability of this business in the near term as we seek new properties to manage and are in the earlier stages of lease-upfill-up for newly managed properties.45Analysis of items not allocated to segmentsEquity in earnings of unconsolidated real estate entitiesAt December 31, 2020, we hadWe account for the equity investments in Shurgard and PSB and Shurgard which we account for on(prior to the sale of our investment in PSB) using the equity method and record our pro-rata share of the net income of these entities for each period. entities. The following table, and the discussion below, sets forth the significant components of our equity in earnings of unconsolidated real estate entities:Investment in PSB:Throughout all periods presented, we owned 7,158,354 shares of PSB common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB, representing an aggregate approximately 42% common equity interest. The limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB common stock.At December 31, 2020, PSB wholly-owned approximately 27.7 million rentable square feet of commercial space and had a 95% interest in a 395-unit apartment complex. PSB also manages commercial space that we own pursuant to property management agreements.Included in our equity earnings from PSB are (i) our equity share of gains on sale of real estate totaling $11.3 million, $4.4 million and $37.7 million for 2020, 2019, and 2018, respectively, and (ii) our equity share of preferred redemption charges totaling $4.6 million for 2019.Equity in earnings from PSB, excluding the aforementioned real estate gains and preferred redemption charges, decreased $0.7 million in 2020 as compared to 2019 due primarily to reduced net operating income from PSB’s sale of assets and increased $2.6 million in 2019 as compared to 2018 due primarily to improved property operations. See Note 4 to our December 31, 2020 financial statements for further discussion regarding PSB. PSB’s filings and selected financial information, including discussion of the factors that affect its earnings, including impacts from the COVID Pandemic, can be accessed through the SEC, and on PSB’s website, www.psbusinessparks.com. Information on this website is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K.Year Ended December 31, 2023 2022 Change (Amounts in thousands) Equity in earnings: Shurgard $ 27,897 $ 26,385 $ 1,512 PSB — 80,596 (80,596) Total equity in earnings $ 27,897 $ 106,981 $ (79,084) Investment in Shurgard: Throughout all periods presented, we effectively owned, directly and indirectly 31.3 million Shurgard common shares. On October 15, 2018, Shurgard completed an initial global offering (the “Offering”), issuing 25.0 million of its common shares to third parties at a price of €23 per share (€575 million in gross proceeds), reducing our ownership interest from 49% to approximately 35%. Following the Offering, Shurgard’s shares trade on Euronext Brussels under the “SHUR” symbol. While we did not sell any shares in the Offering, and have no current plans to do so, we recorded a gain on disposition in 2018 totaling $151.6 million as if we had sold a proportionate share of our investment in Shurgard.At December 31, 2020, Shurgard owned 241 self-storage facilities with approximately 13 million net rentable square feet. Shurgard pays us license fees for use of the “Shurgard” trademark, as described in more detail in Note 4 to our December 31, 2020 financial statements.In 2020, 2019, and 2018, Shurgard acquired six facilities, three facilities and eight facilities, respectively, for an aggregate cost of $55.6 million, $17.6 million, and $114.5 million, respectively. In 2020, Shurgard opened one newly developed facility at an aggregate cost totaling $17.2 million, and in each of 2019 and 2018, Shurgard opened two newly developed facilities at an aggregate cost totaling $22.2 million, and $19.6 million, respectively.The $0.2 million increase in our equity earnings from Shurgard from 2019 to 2020 is due to the impact of improved same store operating income offset partially by increases in tax and depreciation expense. The increase of $1.3 million from 2018 to 2019 is due to (i) a $10.1 million decrease in our equity share of depreciation expense, (ii) a $5.2 million decrease in our equity share of costs due to a casualty loss occurring in 2018 and the costs of the Offering, offset partially by (iii) a reduced average equity ownership interest during 2019 due to the Offering as well as $220 million uninvested offering proceeds, and (iv) a 5.2% reduction in average exchange rates of the U.S. Dollar to the Euro.Shurgard’s public filings and publicly reported information, including discussion of the factors that affect its earnings, including impacts from the COVID Pandemic, can be obtained on its website, https://corporate.shurgard.euand on the website of the Luxembourg Stock Exchange, http://www.bourse.lu. Information on these websites is not incorporated by reference herein and is not a part of this Annual Report on Form 10-K.1.2261.104 U.S. Dollars per Euro at December 31, 2020 (1.1222023 (1.070 at December 31, 2019)2022), and average exchange rates of 1.1411.081 for 2020, 1.1202023 and 1.054 for 2019,2022.Included in our equity earnings from Shurgard for the year ended December 31, 2022 is our equity share of gains on sale of real estate totaling $3.5 million (none for 2023). Also included were $36.8 million and 1.181$33.4 million of our share of depreciation and amortization expense for 2018.2023 and 2022, respectively.Investment in PSB: On July 20, 2022, in connection with the closing of the merger of PSB with affiliates of Blackstone Real Estate, 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.Included in our equity earnings from PSB for 2022 is our equity share of gains on sale of real estate totaling $49.1 million. Our equity share of earnings from PSB contributed $57.7 million to Core FFO in 2022. Since the sale of PSB in July 2022, we no longer recognize equity in earnings from PSB.Real estate acquisition and development expense: In 2023, 2022 and 2021, we incurred a total of $26.5 million, $28.7 million, and $12.9 million, respectively, of internal and external expenses related to our acquisition and development of real estate facilities. These amounts are net of $18.0 million, $17.4 million and $14.6 million in 2023, 2022 and 2021, respectively, in development costs that were capitalized to newly developed and redeveloped self-storage facilities. During 2023 and 2022, we wrote off $11.7 million and $7.0 million, respectively, of accumulated development costs for cancelled development and redevelopment projects. During 2023, 2022 and 2021, we recognized a total of $1.2 million, $11.2 million, and $4.0 million, respectively, of share-based compensation expense related to real estate management personnel. The year-over-year changes in 2023 and 2022 were due primarily to the absence of comparable accelerated compensation expense recognized for awards granted to real estate management personnel who are eligible for immediate vesting of their outstanding awards upon retirement.46Analysis of items not allocated to segmentsYear Ended December 31, Year Ended December 31, 2023 2022 Change 2022 2021 Change (Amounts in thousands) Share-based compensation expense $ 25,399 $ 26,661 $ (1,262) $ 26,661 $ 33,729 $ (7,068) Legal costs 3,304 4,014 (710) 4,014 6,194 (2,180) Corporate management costs 25,708 21,808 3,900 21,808 18,594 3,214 Other costs 26,221 19,189 7,032 19,189 17,449 1,740 Total $ 80,632 $ 71,672 $ 8,960 $ 71,672 $ 75,966 $ (4,294) Share-based compensationGeneral and administrative expense includes the amortization of restricted share unitsincreased $9.0 million in 2023, as compared to 2022 due primarily to an increase in other costs driven by higher spending in IT applications and stock options grantedsoftware development and costs incurred for our UPREIT reorganization and an increase in corporate management costs driven by higher payroll costs.General and administrative expense decreased $4.3 million in 2022, as compared to certain corporate employees and trustees, as well as related employer taxes. We revised our prior period financial statements2021 due primarily to correct the presentation ofa decrease in share-based compensation expense between general and administrativedriven by lower accelerated compensation expense and self-storage costrecognized for awards granted to corporate management personnel who are eligible for immediate vesting of operations. As a result, we revised our statements of income for the years ended December 31, 2019 and 2018 withtheir outstanding awards upon retirement, partially offset by an increase in self-storagecorporate management cost of operations of $9.8 million and $14.0 million, respectively, and a corresponding decrease to general and administrative expenses. This immaterial correction had no impact on our total expenses or net income. The correction also had no impact on the balance sheet, statements of comprehensive income, statements of equity, or cash flows as of and for the year ended December 31, 2019 and 2018.Share-based compensation expense, as well as related employer taxes, for management personnel who directly and indirectly supervise the on-site property managers, as well as those employees responsible for providing shared general corporate functions to the extent their efforts are devoted to self-storage operations, are included as self-storage cost of operations. See “Same Store Facilities” for further information. Share-based compensation expense varies based upon the level of grants and their related vesting and amortization periods, forfeitures, as well as the Company’s common share price on the date of each grant.In February 2018, we announced that our CEO and CFO at the time were retiring from their executive roles at the end of 2018 and would serve only as trustees of the Company. Accordingly, all remaining share-based compensation expense for these two executives was amortized through the end of 2018, resulting in approximately $30.7 million in incremental share-based compensation expense for 2018.In July 2020, our share-based compensation plans were modified to allow immediate vesting upon retirement (“Retirement Acceleration”), and to extend the exercisability of outstanding stock options up to a year after retirement, for currently outstanding and future grants. Employees are eligible for Retirement Acceleration if they meet certain conditions including length of service, age, notice of intent to retire, and facilitation of succession for their role. This modification resulted in incremental share-based compensation expense during 2020.Costs of senior executives represent the cash compensation paid to our CEO and CFO.Development and acquisition costs primarily represent internal and external expenses related to our development and acquisition of real estate facilities and varies primarily based upon the level of activities. The amounts in the above table are net of $11.8 million, $12.0 million, and $12.2 million for 2020, 2019, and 2018, respectively, in development costs that were capitalized to newly developed and redeveloped self-storage facilities.During 2020, we incurred $3.2 million in costs associated with the write-off of cancelled development projects. Development and acquisition costs are expected to remain consistent in 2021 with the amount incurred in 2019.Tax compliance costs and taxes paid include taxes paid to various state and local authorities, the internal and external costs of filing tax returns, costs associated with complying with federal and state tax laws, and maintaining our compliance with Internal Revenue Service REIT rules. Such costs vary primarily based upon the tax rates of the various states in which we do business.Legal costs include internal personnel as well as fees paid to legal firms and other third parties with respect to general corporate legal matters and risk management, and varies based upon the level of legal activity. The future level of legal costs is not determinable.Public company costs represent the incremental costs of operating as a publicly-traded company, such as internal and external investor relations expenses, stock listing and transfer agent fees, Board costs, and costs associated with maintaining compliance with applicable laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and Sarbanes-Oxley Act of 2002.Other costs represent certain professional and consulting fees, payroll, and overhead that are not attributable to our property operations. Such costs include nonrecurring and variable items, including $1.6 million in due diligence costs incurred in 2020, in connection with our non-binding proposal, which we did not proceed with, to acquire 100% of the stapled securities of National Storage REIT, as well as $5.6 million in advisory costs. The level of these costs depends upon corporate activities and initiatives and, as a result, such costs are not predictable.Our future general and administrative expenses are difficult to estimate, due to their dependence upon many factors, including those noted above.InterestThe following table sets forth our interest and other income is comprised primarily of the net income from our commercial operations, our property management operation, interestincome:Year Ended December 31, 2023 2022 Change (Amounts in thousands) Interest earned on cash balances $ 64,819 $ 20,824 $ 43,995 Commercial operations 9,531 9,846 (315) Unrealized gain on private equity investments 2,817 4,685 (1,868) Other 8,423 5,212 3,211 Total $ 85,590 $ 40,567 $ 45,023 Interest earned on cash balances and trademark license fees received from Shurgard, as well as sundry other income items that are received from time to time in varying amounts. Excluding amounts attributable to our commercial operations totaling $8.6 million, $8.9 million, and $9.9increased $44.0 million in 2020, 2019, and 2018, respectively, interest and other income decreased $4.0 million in 2020 and increased $3.1 million in 2019 on a year2023 over year basis. The decrease for 2020 includes $10.6 million of interest earned on2022 due primarily to higher average cash balances partially offset by litigation settlementsresulting from temporary cash held from the issuance of $2.2 billion unsecured senior notes on July 26, 2023 until the funding of the Simply Acquisition on September 13, 2023 and the early repayment of notes receivable. The level of other interest and income items in 2021 will be dependent upon the level of cash balances we retain,higher interest rates andin the level of sundry other income items.Interest expense: For 2020, 20192023 and 2018,2022, we incurred $59.7 million, $49.6$210.4 million and $37.3$142.4 million, respectively, of interest on our outstanding debt.notes payable. In determining interest expense, these amounts were offset by capitalized interest of $3.4 million, $3.9$9.3 million and $4.8$6.0 million during 2020, 2019,2023 and 2018,2022, respectively, associated with our development activities. The increase of interest expense in 2020, 2019, and 20182023 as compared to 2022 is due to the issuance of debt.$2.2 billion of notes payable in July 2023 and the increase of Compounded SOFR on our $700.0 million variable rate unsecured notes issued in April 2021, partially offset by the interest savings on the $500.0 million unsecured notes redeemed in August 2022. At December 31, 2020,2023, we had $2.5$9.1 billion of debtnotes payable outstanding, with ana weighted average interest rate of approximately 2.4%3.1%. On January 19, 2021, we issued, $500 million of senior notes bearing interest at an annual rate of 0.875% and maturing on February 15, 2026.Future interest expense will be dependent upon the level of outstanding debt and the amount of in-process development costs.Foreign Exchange Gain (Loss):currency exchange (loss) gain: For 2020,2023, we recorded a foreign currency translation losslosses of $98.0$51.2 million, representing primarily the changechanges in the U.S. Dollar equivalent of our Euro-denominated unsecured notes due to fluctuations in exchange rates (gains of $7.8 million and loss of $18.1$98.3 million for 2019 and 2018, respectively)2022). The Euro was translated at exchange rates of approximately 1.2261.104 U.S. Dollars per Euro at December 31, 2020, 1.1222023 and 1.070 at December 31, 2019 and 1.144 at December 31, 2018.2022. Future gains and losses on foreign currency translation will bedebtnotes payable outstanding.47Gain on Real Estate Investment Sales:sale of real estate: In 2020, 2019 and 2018,During 2023, we recorded gains oncompleted a real estate investment sales totaling $1.5transaction with a third-party, through which we sold an operating self-storage facility with a net book value of $7.1 million $0.3for gross proceeds of $40.0 million and $37.9acquired a nearby land parcel for $13.5 million. At the close of the transaction, we entered into a leaseback of the self-storage facility until we complete development of the acquired land into a self-storage facility, no later than December 31, 2026. Of the $40.0 million respectively. On October 18, 2018,in gross proceeds, $24.3 million was allocated to the sale of the property based on its estimated fair value, resulting a net gain on sale of real estate of $17.1 million after direct transaction costs, and $15.7 million was classified as a reduction of costs to develop the acquired land included in construction in process.During 2023, we also sold our propertya land parcel for $0.1 million in West London to Shurgard for $42.1 millioncash and recorded a related gain on sale of real estate of approximately $31.5$0.1 million. The remainder of theIn 2022, we recorded gains are primarilytotaling $1.5 million, in connection with the partial sale of real estate facilities pursuant to eminent domain proceedings.Income tax expense:Gain We operate as a REIT for U.S. federal income tax purposes. As a REIT, we are generally not subject to U.S. federal income taxes on our taxable income distributed to stockholders. In 2023, 2022, and 2021, we recorded income tax expense totaling $10.8 million, $14.3 million and $12.4 million, respectively, related to our taxable REIT subsidiaries and in the state and local jurisdictions in which we operate. The year-over-year changes of income tax expense in 2023 and 2022 were primarily driven by changes in state income tax, due to Shurgard Public Offering: In connection with Shurgard’s Offeringfluctuations of its common shares to the public, our equity interesttaxable income in Shurgard decreased from 49% to 35.2%. While we did not sell any of our shares in the Offering, we recorded a gain on disposition in 2018 of $151.6 million, as if we had sold a proportionate share of our investment in Shurgard.Net Income Allocable to Preferred Shareholders: Net income allocable to preferred shareholders based upon distributions totaled $207.1 million, $210.2 million,certain states where there are differences between federal and $216.3 million in 2020, 2019, and 2018, respectively. These decreases are due primarily to lower average coupon rates due to redemptions of preferred shares with the proceeds from the issuance of new series with lower market coupon rates. We also allocated $48.3 million and $32.7 million of income from our common shareholders to the holders of our preferred shares in 2020 and 2019, respectively, (none in 2018) in connection with the redemption of our preferred shares. Based upon our preferred shares outstanding at December 31, 2020, our quarterly distribution to our preferred shareholders is expected to be approximately $45.2 million.state tax laws.48Liquidity and Capital ResourcesOverview and our Sources of CapitalWhile beingoperating as a REIT allows us to minimize the payment of U.S. federal corporate income tax expense, we are required to distribute 100%at least 90% of our taxable income to our shareholders. This requirements limitsNotwithstanding this requirement, our annual operating retained cash flow increased from operations that can be$200 million to $300 million per year in recent years to approximately $700 million in 2021, $1 billion in 2022 and $480 million for 2023 after a 50% increase in annual dividend in 2023. Retained operating cash flow represents our expected cash flow provided by operating activities (including property operating costs and interest payments described below), less shareholder distributions and capital expenditures. We expect retained cash flow of approximately $450 million for 2024.Capital needs in excess of retained cash flow are met with: (i) medium and reinvested inlong-term debt, (ii) preferred equity, (iii) limited partnership interests, and (iv) common equity. We select among these sources of capital based upon relative cost, availability, the business, increasingdesire for leverage, and considering potential constraints caused by certain features of capital sources, such as debt covenants. We view our reliance upon raising capital to fund growth.Because raising capital is important to our growth, we endeavor to maintain a strong financial profile characterized by strong credit metrics, including low leverage relative to our total capitalization and operating cash flows. We are one of the highest rated REITs, as rated by major rating agencies Moody’s and Standard & Poor’s. Our senior debt hasnotes payable have an “A” credit rating by Standard & Poor’s and “A2” by Moody’s. Our credit ratings on each of our series of preferred shares are “A3” by Moody’s and “BBB+” by Standard & Poor’s. Our credit profile and ratings enableenables us to effectively access both the public and private capital markets to raise capital.WhileOn June 12, 2023, we must distributeamended our taxable income, we are nonetheless able to retain operating cash flow to the extent that our tax depreciation exceeds our maintenance capital expenditures. In recent years, we have retained approximately $200 million to $300 million per year in cash flow.Capital needs in excess of retained cash flow are met with: (i) preferred equity, (ii) medium and long-term debt, and (iii) common equity. We select among these sources of capital based upon relative cost, availability, the desire for leverage, and considering potential constraints caused by certain features of capital sources, such as debt covenants. We view our line of credit, as well as short-term bank loans, as bridge financing.We have a $500.0 million revolving line of credit, which we occasionally useincreasing the borrowing limit from $500 million to $1.5 billion. We increased the size of the revolving line of credit and its associated lender base given our increased levels of debt maturities in coming years and to serve as temporary “bridge” financing until we are able to raise longer term capital. As of December 31, 20202023 and February 24, 2021,20, 2024, there were no borrowings outstanding on the revolving line of credit,credit; however, we do have approximately $24.3$14.6 million of outstanding letters of credit, which limits our borrowing capacity to $475.7 million.$1,485.4 million as of February 20, 2024. Our line of credit matures on April 19, 2024.opportunities. Currently, market rates of interest for our debt, and market coupon rates for our preferred equity, are at historically low levelsopportunities, and we have significant access to these sources of capital. On November 17, 2020, we issued $170.0 million incapital including debt and preferred securities at a 3.900% coupon rateequity. While the costs of financing have increased recently, based on our strong credit profile and on January 19, 2021 we issued $500.0 million of unsecured senior notes at 0.875% maturing on February 15, 2026, both representing historically low financing costs to fund our growth initiatives. Based upon our substantial current liquidity relative to our capital requirements noted below, we would not expect any potential capital market dislocations to have a material impact upon our expected capital and growth plans over the next 12 months. However, if capital market conditions were to changedeteriorate significantly in thefor a long run,period of time, our access to or cost of debt and preferred equity capital could be negatively impacted and potentially affect future investment activities.LiquidityOur current and Capital Resource Analysis:expected capital resources include: (i) $370.0 million of cash as of December 31, 2023 and (ii) approximately $450 million of expected retained operating cash flow over the next twelve months. Additionally, we have $1,485.4 million available borrowing capacity on our revolving line of credit, which can be used as temporary “bridge” financing until we are able to raise longer term capital. We believe that our net cash provided by our operating activities will continue to be sufficient to enable us to meet our ongoing cash requirements for principalinterest payments on debt, maintenance capital expenditures, and distributions to our shareholders for the foreseeable future.As of December 31, 2020, we expect capital resources over the next year of approximately $1.5 billion, which exceedsdescribed below, our currently identified capital needs of approximately $1.3 billion. Our expected capital resources include: (i) $257.6 million ofcurrent committed cash as of December 31, 2020, (ii) $475.7 million of available borrowing capacity on our revolving line of credit, (iii) $496.2 million in net proceeds from the public issuance of Senior Note due 2026 on January 14, 2021, and (iv) approximately $250 million to $300 million of expected retained operating cash flow in 2021. Retained operating cash flow represents our expected cash flow provided by operating activities, less shareholder distributions and capital expenditures.Our currently identified capital needsrequirements consist primarily of (i) $580.1 million in property acquisitions currently under contract, (ii) $373.3$420.7 million of remaining spending on our current development pipeline, which will be incurred primarily in the next 18 to 24 months and (iii) $300(ii) $810 million forin scheduled principal repayments on our unsecured notes in the redemption of our Series B Preferred Shares. We have no substantial principal payments on debt until 2022. We expect our capital needsnext twelve months, which we plan to refinance as they come due in April 2024. Our cash requirements may increase over the next year as we add projects to our development pipeline and acquire additional properties. Additional potential capital needscash requirements could result from various activities including the redemption of outstanding preferred securities, repurchases of common stock, or mergersmerger and acquisition activities; however, there can be no assurance of any such activities, transpiring in the near or longer term.Toas and to the extent we determine to engage in such activities.Over the long term, to the extent that our retained operating cash flow, cash on hand, and line of credit are insufficient to fundrequirements exceed our activities,capital resources, we believe we have a variety of possibilities to raise additional capital including issuing common or preferred securities, issuing debt, and limited partnership interests, or entering into joint venture arrangements to acquire or develop facilities.49Cash RequirementsThe following summarizes our expected material cash requirements, which comprise (i) contractually obligated expenditures, including payments of principal and interest, (ii) other essential expenditures, including property operating expenses, maintenance capital expenditures and dividends paid in accordance with REIT distribution requirements, and (iii) opportunistic expenditures, including acquisitions and developments and repurchases of our securities. We expect to satisfy these cash requirements through operating cash flow and opportunistic debt and equity financings.Required Debt Repayments: As of December 31, 2020,2023, the principal outstanding on our debt totaled approximately $2.6$9.2 billion, consisting of $25.2 million of secured debt, $1.0 billion of Euro-denominated unsecured debt and $1.5$7.5 billion of U.S. Dollar denominated unsecured debt.notes payable, $1.7 billion of Euro-denominated unsecured notes payable, and $1.8 million of mortgage notes payable. Approximate principal maturities and interest payments (including $62.8 million in estimated interest on our $1.1 billion variable rate unsecured notes based on rates in effect at December 31, 2023) are as follows (amounts in thousands):Principal Interest Total 2024 $ 810,496 $ 250,656 $ 1,061,152 2025 667,247 222,674 889,921 2026 1,150,138 196,588 1,346,726 2027 500,146 184,643 684,789 2028 1,200,129 163,152 1,363,281 Thereafter 4,825,634 1,103,883 5,929,517 $ 9,153,790 $ 2,121,596 $ 11,275,386 On January 19, 2021, we completed a public offeringWe have $700 million of $500our U.S. Dollar denominated unsecured notes that mature on April 23, 2024 and €100 million aggregate principal amount of seniorour Euro denominated unsecured notes bearing interest at an annual rate of 0.875% and maturingthat mature on February 15, 2026.Our debt is well-laddered and we have no material debt maturities until September 2022.CapitalWe spent $237 million of capital expenditures totaled $163.8to maintain real estate facilities in 2023 and expect to spend approximately $180 million in 2020, and are expected to approximate $250.0 million in 2021.2024. In addition to standard capital repairs of building elements reaching the end of their useful lives, our capital expenditures in recent years have included incremental expenditures to enhance the competitive position of certain of our facilities relative to local competitors pursuant to a multi-year program. Such investments include development of more pronounced, attractive, and clearly identifiable color schemes and signage and upgrades to the configuration and layout of the offices and other customer zones to improve the customer experience. We spent approximately $160 million in 2023 and expect to spend $150 million in 2024 on this effort. In addition, we have made investmentsspent $65 million in LED lighting and the installation of solar panels.We believe that these incremental investments improve customer satisfaction, the attractiveness and competitiveness of our facilities to new and existing customers and, in the case of LED lighting and solar panels, reduce operating costs. We expect to experience capital expenditures of $250 million to $300 million per year over the next several years.Requirement to Pay Distributions: For all periods presented herein, we have elected to be treated as a REIT, as defined in the Internal Revenue Code. For each taxable year in which we qualify for taxation as a REIT, we will not be subject to U.S. federal corporate income tax on our “REIT taxable income” (generally, taxable income subject to specified adjustments, including a deduction for dividends paid and excluding our net capital gain) that is distributed to our shareholders. We believe we have met these requirements in all periods presented herein, and we expect to continue to qualify as a REIT.On February 16, 2021, our Board declared a regular common quarterly dividend of $2.00 per common share totaling approximately $350 million, which will be paid at the end of March 2021. Our consistent, long-term dividend policy has been to distribute only our taxable income. Future quarterly distributions with respect to the common shares will continue to be determined based upon our REIT distribution requirements after taking into consideration distributions to the preferred shareholders and will be funded with cash flows from operating activities.50We estimate theThe annual distribution requirementsrequirement with respect to our Preferred Sharespreferred shares outstanding at December 31, 2020, excluding the Series B Preferred Shares which were redeemed on January 20, 2021 to be2023 is approximately $180.7$194.7 million per year.We estimate we will pay approximately $5.6 million per year in distributions to noncontrolling interests outstanding at December 31, 2020.Real Estate Investment Activities: We continue to seek to acquire additional self-storage facilities from third parties. Subsequent to December 31, 2020, we acquired or were under contract to acquire 40 self-storage facilities for a total purchase price of $580.1 million. Twelve of these properties are under construction and expected to close as they are completed in 2021.We are actively seeking to acquire additional facilities. However, future acquisition volume will depend upon whether additional owners will be motivated to market their facilities, which will in turn depend upon factors such as economic conditions and the level of seller confidence.As of December 31, 2020,2023, we had development and expansion projects at a total cost of approximately $561.4$766.2 million. Costs incurred through December 31, 20202023 were $188.1$345.5 million, with the remaining cost to complete of $373.3$420.7 million expected to be incurred primarily in the next 18 to 24 months. Some of these projects are subject to contingencies such as entitlement approval. We expect to continue to seek to add projects to maintain and increaseProperty Operating Expenses:Redemption of Preferred Securities: Historically, we have taken advantage of refinancing higher coupon preferred securities with lower coupon preferred securities. In the future, we may also elect to finance the redemption of preferred securities with proceeds from the issuance of debt. As of February 24, 2021,20, 2024, we have nothree series of preferred securities that are eligible for redemption, at our option and with 30 days’ notice.notice: our 5.150% Series F Preferred Shares ($280.0 million), 5.050% Series G Preferred Shares ($300.0 million), and 5.600% Series H Preferred Shares ($285.0 million). See Note 810 to our December 31, 20202023 consolidated financial statements for the redemption dates of all of our series of preferred shares. Redemption of such preferred shares will depend upon many factors, including the rate at which we could issue replacement preferred securities. None of our preferred securities are redeemable at the option of the holders.Repurchases of Common Shares: Our Board has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. During 2020,2023, we did not repurchase any of our common shares. From the inception of the repurchase program through February 24, 2021,20, 2024, we have repurchased a total of 23,721,916 common shares at an aggregate cost of approximately $679.1 million. FutureWe have no current plans to repurchase shares; however future levels of common share repurchases will be dependent upon our available capital, investment alternatives and the trading price of our common shares.51To limit our exposure to market risk, we are capitalized primarily with preferred and common equity. Our preferred shares are redeemable at our option generally five years after issuance, but the holder has no redemption option. Our debt, which totals approximately $9.1 billion at December 31, 2023, is ourthe only market-risk sensitive portion of our capital structure, which totals approximately $2.5 billion and represents 29.7% of the bookstructure.The fair value of our equitydebt at December 31, 2020.2023 is approximately $8.6 billion. The table below summarizes the annual maturities of our debt, which had a weighted average effective rate of 3.1% at December 31, 2023. See Note 8 to our December 31, 2023 consolidated financial statements for further information regarding our debt (amounts in thousands).2024 2025 2026 2027 2028 Thereafter Total Debt $ 810,496 $ 667,247 $ 1,150,138 $ 500,146 $ 1,200,129 $ 4,825,634 $ 9,153,790 We have foreign currency exposure at December 31, 20202023 related to (i) our investment in Shurgard, with a book value of $341.1$390.2 million, and a fair value of $1.4$1.7 billion based upon the closing price of Shurgard’s stock on December 31, 2020,2023, and (ii) €842.0 million€1.5 billion ($1.01.7 billion) of Euro-denominated unsecured notes payable.Thepayable, providing a natural hedge against the fair value of our fixed rate debt at December 31, 2020 is approximately $2.8 billion. investment in Shurgard.ITEM 8. Financial Statements and Supplementary DataThe table below summarizes the annual maturities of our fixed rate debt, which had a weighted average effective rate of 2.4% at December 31, 2020. See Note 6 to our December 31, 2020 financial statements for further information regarding our fixed rate debt (amountsand supplementary data appearing on pages F-3 to F-35 are incorporated herein by reference.ITEM 9. Changes in thousands).and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.ITEM 9A. Controls and ProceduresConclusion Regarding the Effectiveness of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in accordance with SEC guidelines, and that such information is communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure based on the definition of "disclosure“of disclosure controls and procedures"procedures” in Rules 13a-15(e) and 15d-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 provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures in reaching that level of reasonable assurance. We also have investments in certain unconsolidated real estate entities, and, because we do not control these entities, our disclosure controls and procedures with respect to such entities are substantially more limited than those we maintain with respect to our consolidated subsidiaries.As of December 31, 2020,2023, 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 such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020,2023, at a reasonable assurance level.52Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee on Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.2023.The effectiveness of internal control over financial reporting as of December 31, 2020,2023, has been audited by Ernst & Young LLP, an independent registered public accounting firm. Ernst & Young LLP’s report on our internal control over financial reporting appears below.Changes in Internal Control Over Financial ReportingThere have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 20202023 to which this report relates that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
53Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Public StorageReport of Independent Registered Public Accounting FirmTo the Shareholders and Board of Trustees of Public StorageOpinion on Internal Control overOpinion on Internal Control Over Financial ReportingWe have audited Public Storage’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Public Storage (the Company) maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020 and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 24, 2021 expressed an unqualified opinion thereon. Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.We have audited Public Storage’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Public Storage (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity and redeemable noncontrolling interests and cash flows for each of the three years in the period ended December 31, 2023 and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements./s/ Ernst & Young LLPLos Angeles, CaliforniaFebruary 24, 2021
54During the three months ended December 31, 2023, no trustee or officer of the Company, nor the Company itself, adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.None.
Not applicable.55ITEM 10.Trustees, Executive Officers and Corporate GovernanceThe following is a biographical summary of the current executive officers of the Company:Joseph D. Russell, Jr., age 61,64, has served as Chief Executive Officer since January 1, 2019, and as President since July 2016. Prior to joining Public Storage, Mr. Russell was President and Chief Executive Officer of PS Business Parks, Inc. from August 2002 to July 2016. Mr. Russell has also served as a trustee of Public Storage since January 1, 2019, and as a director of PS Business Parks, Inc. since August 2003.2019. H. Thomas Boyle, age 38,40, has served as Chief Financial Officer since January 1, 2019 and Chief Investment Officer since January 1, 2023. Previously, Mr. Boyle was previously Vice President and Chief Financial Officer, Operations, since joiningfrom November 2016, when he joined the Company, in November 2016.until January 2019. Prior to joining Public Storage, Mr. Boyle served in roles of increasing responsibilities with Morgan Stanley since 2005, from analyst to his last role as Executive Director, Equity and Debt Capital Markets.Nathaniel A. Vitan, age 47, Mr. Boyle has served as Senior Vice President, Chief Legal Officer and Corporate Secretarya director of Shurgard since May 2023.April 20, 2019, and was Vice President and Chief Counsel–Litigation and Operations since joining the Company in June 2016. Prior to joining Public Storage, Mr. Vitan was Assistant General Counsel for Altria Client Services, Inc. and served as a Trial Practice and Appellate Litigation Attorney at Latham & Watkins LLP.Natalia N. Johnson, age 43,46, has served as the Chief Administrative Officer since August 4, 2020. Previously, Ms. Johnson served aswas Senior Vice President, Chief Human Resources Officer from April 25, 2018 tountil August 4, 2020, and prior to that was Senior Vice President of Human Resources, froma position she held since joining the Company in July 2016 to April 2018.2016. Prior to joining Public Storage, Ms. Johnson held a variety of senior management positions at Bank of America, including Chief Operating Officer for Mortgage Technology and Human Resources Executive for the Mortgage Business, and worked for Coca-Cola Andina and San Cristόbal Insurance. Ms. Johnson has served as a director of WillScot Mobile Mini Holdings Corp. since August 2023 and is a member of the Audit and Compensation committees.Nathaniel A. Vitan, age 50, has served as Senior Vice President, Chief Legal Officer and Corporate Secretary since April 20, 2019, and was previously Vice President and Chief Counsel–Litigation and Operations since joining the Company in June 2016 until April 2019. Prior to joining Public Storage, Mr. Vitan was Assistant General Counsel for Altria Client Services LLC from 2008 to 2016, and before then was a Trial and Appellate Practice attorney at Latham & Watkins LLP.Other information required by this item is hereby incorporated by reference to the material appearing in the Company’s Notice and Proxy Statement for the 2021its 2024 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.ITEM 11.Executive CompensationThe information required by this item is hereby incorporated by reference to the material appearing in the Company’s Notice and Proxy Statement for the 2021its 2024 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.56The following table sets forth information, as of December 31, 20202023 on the Company’s equity compensation plans:Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted averageWeighted-average exercise price of outstanding options, warrants, and rightsNumber of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (A) (B) (C) Equity compensation plans approved by security holders (a) 3,513,9553,724,762 (b) $ 210.59 (d) 220.18 (c)343,6481,364,578 (c)(d)-—-—-—Total 3,724,762 (b) $ 220.18 (c) 1,364,578 a)The Company’s stock option and stock incentiveequity compensation plans are described more fully in Note 1012 to the December 31, 20202023 financial statements. All plans werehave been approved by the Company’s shareholders.b)Includes 552,788(i) stock options to purchase 3,244,606 common shares, including performance-based stock options as to which the performance period had not ended or the Compensation Committee had not certified performance as of December 31, 2023, which stock options are reflected in the table above assuming a maximum payout, (ii) 469,387 restricted share units, that,including performance-based restricted share units as to which the performance period had not ended as of December 31, 2023, which restricted share units are reflected in the table above assuming a maximum payout, and (iii) 10,769 fully vested deferred share units. All restricted share units, if and when vested, and all deferred share units will be settled in common shares of the Company on a one for oneone-for-one basis.c)Represents the weighted average exercise price of stock options to purchase 2,857,836 common shares, excluding the performance-based stock options described in footnote (b), above. The 469,387 restricted share units would vest for no consideration.d)There arewere no securities outstanding or available for future issuance or currently outstanding under equity compensation plans not approved by the Company’s shareholders as of December 31, 2020.shareholders.d)Represents the average exercise price of 2,961,167 stock options outstanding at December 31, 2020. We also have 552,788 restricted share units outstanding at December 31, 2020 that vest for no consideration.Other information required by this item is hereby incorporated by reference to the material appearing in the Company’s Notice and Proxy Statement for the 2021its 2024 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.ITEM 13.Certain Relationships and Related Transactions and Trustee IndependenceThe information required by this item is hereby incorporated by reference to the material appearing in the Company’s Notice and Proxy Statement for the 2021its 2024 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.ITEM 14.Principal Accountant Fees and ServicesThe information required by this item is hereby incorporated by reference to the material appearing in the Company’s Notice and Proxy Statement for the 2021its 2024 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act of 1934.57ITEM 15.Exhibits and Financial Statement Schedulesa.1.Financial StatementsThe financial statements listed in the accompanying Index to Financial Statements and Schedules hereof are filed as part of this report.2.Financial Statement SchedulesThe financial statements schedules listed in the accompanying Index to Financial Statements and Schedules are filed as part of this report.3.ExhibitsSee Index to Exhibits contained herein.b.Exhibits:See Index to Exhibits contained herein.c.Financial Statement SchedulesThe financial statements listed in the accompanying Index to Consolidated Financial Statements and Schedules hereof are filed as part of this report.2.Financial Statement SchedulesThe financial statements schedules listed in the accompanying Index to Consolidated Financial Statements and Schedules are filed as part of this report.3.ExhibitsSee Index to Exhibits contained herein.b.Exhibits:See Index to Exhibits contained herein.c.Financial Statement SchedulesNot applicable.
58PUBLIC STORAGEINDEX TO EXHIBITS (1)(Items 15(a)(3) and 15(c))2.1 PUBLIC STORAGEINDEX TO EXHIBITS (1)(Items 15(a)(3) and 15(c))3.33.43.53.63.73.83.93.103.113.123.33.133.143.4 3.153.164.2Registrant’sthe Company’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. Filed herewith.herewith.10.110.210.310.4*4.310.5*10.6*10.7*10.8*10.9*10.1010.11*10.12*10.1310.1410.1510.164.410.174.510.184.610.194.710.204.84.9 594.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 10.1 10.2 10.3 10.4 6010.21*10.510.6 10.7 10.8* 10.9* 10.10* 10.11* 10.12* 10.13* 10.14* 10.15* 10.16* 10.17* 10.22*10.18*10.23*10.19*10.20* 10.24*10.25*10.21*6110.26*10.22*10.23* 10.24* 10.25* 10.26* 10.27* 21 23.1 31.1 31.2 32 97.1 101 .INS Document. Filed herewith.Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)101 .SCH 101 .CAL 101 .DEF 101 .LAB 101 .PRE 104 _ (1) * 62Pursuant to the requirements of Section 13 or 15(d) 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.4PUBLIC STORAGE 24, 2021/s/ Joseph D. Russell, Jr. Joseph D. Russell, Jr., Chief Executive Officer, President and TrusteePursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.Signature SignatureTitleDate24, 202120, 202424, 202120, 202424, 202120, 202424, 202120, 202424, 202120, 2024/s/ Michelle Millstone-ShroffTrusteeFebruary 24, 2021Michelle Millstone-Shroff24, 202120, 202424, 202120, 202424, 202120, 2024SignatureTitleDate24, 202120, 202424, 202120, 202424, 202120, 202463Signature Date 24, 202120, 202424, 202120, 202424, 202120, 2024
64INDEX TO CONSOLIDATED FINANCIAL STATEMENTSAND SCHEDULES(Item 15 (a))Auditor name: Ernst & Young LLP; Firm ID: (42); Auditor location: Los Angeles, CaliforniaConsolidated Balance Sheets as of December 31, 2023 and 2022Balance sheets as of December 31, 2020 and 2019F-32020, 20192023, 2022, and 2018:Consolidated Statements of IncomeConsolidated Statements of Comprehensive IncomeConsolidated Statements of incomeEquity and Redeemable Noncontrolling InterestsConsolidated Statements of Cash FlowsStatements of equitySchedule:F-6 – F-7Statements of cash flowsF-8 – F-9Notes to financial statementsF-10 – F-32Schedule:estateEstate and accumulated depreciationAccumulated DepreciationAll other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto.65To the Shareholders and the Board of Trustees of Public StorageOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Public Storage (the Company) as of December 31, 20202023 and 2019, and2022, the related consolidated statements of income, comprehensive income, equity and redeemable noncontrolling interests and cash flows for each of the three years in the period ended December 31, 2020,2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 20202023 and 2019,2022, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2020,2023, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 202120, 2024 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includeincluded examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.F-1Description of the Matter For the year ended December 31, 2020,2023, the Company completed the acquisition of 62 real estate164 self-storage facilities for a total purchase price of $796.1 million.$2.7 billion. As further discussed in Notes 2, 3 and 34 of the consolidated financial statements, the transactions were accounted for as asset acquisitions, and the purchase price was allocated based on a relative fair value of assets acquired and liabilities assumed.Auditing the accounting for the Company’s 20202023 acquisitions of real estateself-storage facilities was subjective because the Company, with the assistance of its external valuation specialist, must exercise a high level of management judgment in determining the estimated fair value of land, buildings and acquired customers in place. The estimated fair value of land is based upon observable transactions involving comparable land in similar locations, as adjusted for location quality, parcel size and date of sale associated with the replacement cost of acquired facilities. Determining the fair value of acquired land was difficult due to the judgment utilized by management in making adjustments to the observable transaction data used in the estimate, particularly when there is a lack of available directlyrecent comparable land market information.data. The replacement costsestimated fair value of the acquired facilitiesbuildings was based upon (i) the income approach, which included estimating the fair value of hypothetical vacant acquired buildings and adjusting for the estimated fair value of land or (ii) estimated replacement costs, which were calculated by estimating the replacement cost of building similarnew facilities in comparable marketssimilar geographic regions and adjusting those costs for the age, quality, amenities and configuration associated with the acquired facilities. Determining the replacement costfair value of the acquired buildings was difficultchallenging due to the judgment utilized by management in determining the adjustments that should be appliedassumptions utilized in the income approach and replacement cost approach. The estimated fair value of the acquired customers in place was based upon the income approach, which included estimating the forgone rent over the presumed period of time to each facility.absorb the occupied spaces if they were vacant at the time of acquisition. Determining the fair value of acquired customers in place was challenging due to the judgment utilized by management in determining the assumptions used in the income approach.How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s accounting for acquired real estateself-storage facilities, including controls over the review of assumptions underlying the purchase price allocation and accuracy of the underlying data used. For example, we tested controls over the determination of the estimated fair valuevalues of the land, buildings and building assets,acquired customers in place, including the controls over the review of the valuation models and the underlying assumptions used to develop such estimates.For the 20202023 acquisitions of real estateself-storage facilities described above, our procedures included, but were not limited to, evaluating the sensitivity of changes in significant assumptions onreading the purchase price allocation. We performedand sale agreements and other closing documents, evaluating whether the Company had appropriately determined the transaction was an asset acquisition or business combination and performing a sensitivity analysis to evaluate the impact on the Company’s financial statements resulting from changes in allocated land, building and buildingacquired customers in place values. For certain of these asset acquisitions, we also read the purchase agreements, evaluated whether the Company had appropriately determined whether the transaction was a business combination or asset acquisition, evaluated the methods and significant assumptions used by the Company assessed the reasonableness of the allocated building value, and tested the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. Additionally, for certain of these asset acquisitions, we involved our valuation specialists to assist in the assessment of the methodology utilized by the Company in additionand to performingperform corroborative analyses to assess whether the conclusionsassumptions used in the valuation and the estimated fair values were supported by observable market data. For example, our valuation specialists used independently identified data sources to evaluate management’s selected comparable land sales and replacement cost assumptions./s/ Ernst & Young LLPWe have served as the Company's auditor since 1980.Los Angeles, CaliforniaFebruary 24, 2021F-F-2PUBLIC STORAGECONSOLIDATED BALANCE SHEETS(Amounts in thousands, except share data) December 31,
2023December 31,
2022ASSETS Cash and equivalents $ 370,002 $ 775,253 Real estate facilities, at cost: Land 5,628,488 5,273,073 Buildings 21,836,750 18,946,053 27,465,238 24,219,126 Accumulated depreciation (9,423,974) (8,554,155) 18,041,264 15,664,971 Construction in process 345,453 372,992 18,386,717 16,037,963 Investments in unconsolidated real estate entities 390,180 275,752 Goodwill and other intangible assets, net 387,267 232,517 Other assets 275,050 230,822 Total assets $ 19,809,216 $ 17,552,307 LIABILITIES AND EQUITY Notes payable $ 9,103,277 $ 6,870,826 Accrued and other liabilities 598,993 514,680 Total liabilities 9,702,270 7,385,506 Commitments and contingencies (Note 15) 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 shares at December 31, 2022) at liquidation preference 4,350,000 4,350,000 Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,670,727 shares issued and outstanding (175,265,668 shares at December 31, 2022) 17,567 17,527 Paid-in capital 5,980,760 5,896,423 Accumulated deficit (267,910) (110,231) Accumulated other comprehensive loss (67,239) (80,317) Total Public Storage shareholders’ equity 10,013,178 10,073,402 Noncontrolling interests 93,768 93,399 Total equity 10,106,946 10,166,801 Total liabilities and equity $ 19,809,216 $ 17,552,307 See accompanying notes.F-3PUBLIC STORAGECONSOLIDATED STATEMENTS OF INCOME(Amounts in thousands, except per share amounts)For the Years Ended December 31, 2023 2022 2021 Revenues: Self-storage facilities $ 4,259,613 $ 3,946,028 3,203,566 Ancillary operations 258,077 236,135 212,258 4,517,690 4,182,163 3,415,824 Expenses: Self-storage cost of operations 1,061,950 980,209 852,030 Ancillary cost of operations 85,996 72,698 68,568 Depreciation and amortization 970,056 888,146 713,428 Real estate acquisition and development expense 26,451 28,744 12,923 General and administrative 80,632 71,672 75,966 Interest expense 201,132 136,319 90,774 2,426,217 2,177,788 1,813,689 Other increases (decreases) to net income: Interest and other income 85,590 40,567 12,306 Equity in earnings of unconsolidated real estate entities 27,897 106,981 232,093 Foreign currency exchange (loss) gain (51,197) 98,314 111,787 Gain on sale of real estate 17,178 1,503 13,683 Gain on sale of equity investment in PS Business Parks, Inc. — 2,128,860 — Income before income tax expense 2,170,941 4,380,600 1,972,004 Income tax expense (10,821) (14,326) (12,365) Net income 2,160,120 4,366,274 1,959,639 Allocation to noncontrolling interests (11,793) (17,127) (6,376) Net income allocable to Public Storage shareholders 2,148,327 4,349,147 1,953,263 Allocation of net income to: Preferred shareholders (194,703) (194,390) (186,579) Preferred shareholders - redemptions (Note 10) — — (28,914) Restricted share units (4,883) (12,469) (5,326) Net income allocable to common shareholders $ 1,948,741 $ 4,142,288 $ 1,732,444 Net income per common share: Basic $ 11.11 $ 23.64 $ 9.91 Diluted $ 11.06 $ 23.50 $ 9.87 Basic weighted average common shares outstanding 175,472 175,257 174,858 Diluted weighted average common shares outstanding 176,143 176,280 175,568 See accompanying notes.F-4PUBLIC STORAGECONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Amounts in thousands)For the Years Ended December 31, 2023 2022 2021 Net income $ 2,160,120 $ 4,366,274 $ 1,959,639 Foreign currency translation gain (loss) on investment in Shurgard 13,078 (26,730) (10,186) Total comprehensive income 2,173,198 4,339,544 1,949,453 Allocation to noncontrolling interests (11,793) (17,127) (6,376) Comprehensive income allocable to Public Storage shareholders $ 2,161,405 $ 4,322,417 $ 1,943,077 See accompanying notes.F-F-5PUBLIC STORAGECONSOLIDATED STATEMENTS OF EQUITY(Amounts in thousands, except share and per share amounts) Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive LossTotal
Public Storage Shareholders' EquityNoncontrolling Interests Total Equity Redeemable Noncontrolling Interests Balances at December 31, 2020 $ 3,792,500 $ 17,458 $ 5,707,101 $ (914,791) $ (43,401) $ 8,558,867 $ 18,032 $ 8,576,899 $ — Issuance of 47,300 preferred shares (Note 10) 1,182,500 — (35,045) — — 1,147,455 — 1,147,455 — Redemption of 35,000 preferred shares (Note 10) (875,000) — — — — (875,000) — (875,000) — Issuance of common shares in connection with share-based compensation (552,713 shares) (Note 12) — 55 95,805 — — 95,860 — 95,860 — Share-based compensation expense, net of cash paid in lieu of common shares (Note 12) — — 54,492 — — 54,492 — 54,492 — Acquisition of noncontrolling interests — — (686) — — (686) (6) (692) — Contributions by noncontrolling interests — — — — — — 2,451 2,451 68,170 Net income — — — 1,959,639 — 1,959,639 — 1,959,639 — Net income allocated to noncontrolling interests — — — (6,376) — (6,376) 5,906 (470) 470 Distributions to: — Preferred shareholders (Note 10) — — — (186,579) — (186,579) — (186,579) — Noncontrolling interests — — — — — — (6,271) (6,271) (391) Common shareholders and restricted share unitholders ($8.00 per share) — — — (1,402,309) — (1,402,309) — (1,402,309) — Other comprehensive loss — — — — (10,186) (10,186) — (10,186) — 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 (Note 10) 250,000 — (7,168) — — 242,832 — 242,832 — Issuance of common shares in connection with share-based compensation (283,190 shares) (Note 12) — 29 35,376 — — 35,405 — 35,405 — Retirement of common shares (151,977 shares) — (15) 15 — — — — — — Taxes paid upon net share settlement of restricted share units — — (16,827) — — (16,827) — (16,827) — Share-based compensation expense (Note 12) — — 63,360 — — 63,360 — 63,360 — Contributions by noncontrolling interests — — — — — — 6,708 6,708 15,426 Reclassification from redeemable noncontrolling interests to noncontrolling interests — — — — — — 83,826 83,826 (83,826) Net income — — — 4,366,274 — 4,366,274 — 4,366,274 — See accompanying notes.F-F-6PUBLIC STORAGESTATEMENTS OF EQUITY(Amounts in thousands, except share and per share amounts) Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive LossTotal
Public Storage Shareholders' EquityNoncontrolling Interests Total Equity Redeemable Noncontrolling Interests Net income allocated to noncontrolling interests — — — (17,127) — (17,127) 16,467 (660) 660 Distributions to: Preferred shareholders (Note 10) — — — (194,390) — (194,390) — (194,390) — Noncontrolling interests — — — — — — (33,714) (33,714) (509) Common shareholders and restricted share unitholders ($21.15 per share) — — — (3,714,572) — (3,714,572) — (3,714,572) — Other comprehensive loss — — — — (26,730) (26,730) — (26,730) — 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 (405,059 shares) (Note 12) — 40 53,346 — — 53,386 — 53,386 — Taxes paid upon net share settlement of restricted share units — — (13,950) — — (13,950) — (13,950) — Share-based compensation cost (Note 12) — — 44,941 — — 44,941 — 44,941 — Contributions by noncontrolling interests — — — — — — 3,203 3,203 — Net income — — — 2,160,120 — 2,160,120 — 2,160,120 — Net income allocated to noncontrolling interests — — — (11,793) — (11,793) 11,793 — — Distributions to: Preferred shareholders (Note 10) — — — (194,703) — (194,703) — (194,703) — Noncontrolling interests — — — — — — (14,627) (14,627) — Common shareholders and restricted share unitholders ($12.00 per share) — — — (2,111,303) — (2,111,303) — (2,111,303) — Other comprehensive income — — — — 13,078 13,078 — 13,078 — Balances at December 31, 2023 $ 4,350,000 $ 17,567 $ 5,980,760 $ (267,910) $ (67,239) $ 10,013,178 $ 93,768 $ 10,106,946 $ — See accompanying notes.F-F-7PUBLIC STORAGECONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)For the Years Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income $ 2,160,120 $ 4,366,274 $ 1,959,639 Adjustments to reconcile net income to net cash flows from operating activities: Gain on sale of equity investment in PS Business Parks, Inc. — (2,128,860) — Gain on sale of real estate (17,178) (1,503) (13,683) Depreciation and amortization 970,056 888,146 713,428 Equity in earnings of unconsolidated real estate entities (27,897) (106,981) (232,093) Distributions from cumulative equity in earnings of unconsolidated real estate entities 29,333 134,769 150,488 Unrealized foreign currency exchange loss (gain) 51,239 (97,563) (111,787) Share-based compensation expense 41,566 56,703 59,815 Other non-cash adjustments 20,508 15,207 4,883 Changes in operating assets and liabilities, excluding the impact of acquisitions: Other assets (16,365) (29,638) (44,127) Accrued and other liabilities 35,266 20,587 56,992 Net cash flows from operating activities 3,246,648 3,117,141 2,543,555 Cash flows from investing activities: Capital expenditures to maintain real estate facilities (236,572) (218,713) (136,989) Capital expenditures for property enhancements (159,939) (189,699) (103,730) Capital expenditures for energy efficiencies (LED lighting, solar) (64,626) (51,361) (29,519) Development and expansion of real estate facilities (364,445) (313,511) (281,981) Acquisition of real estate facilities and intangible assets (473,176) (757,944) (5,047,106) Acquisition of BREIT Simply Storage LLC, net of cash acquired (2,178,151) — — Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities 10,975 13,670 19,518 Contributions to unconsolidated real estate entities (112,554) — — Proceeds from sale of real estate investments 39,986 1,543 16,296 Proceeds from sale of equity investment in PS Business Parks, Inc. — 2,636,011 — Net cash flows (used in) from investing activities (3,538,502) 1,119,996 (5,563,511) Cash flows from financing activities: Issuance costs on amendment of credit facility (8,377) — — Repayments of notes payable (8,259) (513,495) (2,218) Issuance of notes payable, net of issuance costs 2,181,273 — 5,038,904 Issuance of preferred shares — 242,832 1,147,455 Issuance of common shares in connection with share-based compensation 53,131 35,271 95,860 Redemption of preferred shares — — (1,175,000) Taxes paid upon net share settlement of restricted share units (13,950) (16,827) (13,069) Acquisition of noncontrolling interests — — (692) Contributions by noncontrolling interests 3,203 1,669 2,451 Distributions paid to preferred shareholders, common shareholders and restricted share unitholders (2,305,322) (3,908,497) (1,588,888) Distributions paid to noncontrolling interests (14,627) (34,223) (6,662) Net cash flows (used in) from financing activities (112,928) (4,193,270) 3,498,141 Net cash flows (used in) from operating, investing, and financing activities (404,782) 43,867 478,185 Net effect of foreign exchange impact on cash and equivalents, including restricted cash — — 505 Net (decrease) increase in cash and equivalents, including restricted cash $ (404,782) $ 43,867 $ 478,690 See accompanying notes.F-F-8PUBLIC STORAGECONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)For the Years Ended December 31, 2023 2022 2021 Cash and equivalents, including restricted cash at beginning of the period: Cash and equivalents $ 775,253 $ 734,599 $ 257,560 Restricted cash included in other assets 29,904 26,691 25,040 $ 805,157 $ 761,290 $ 282,600 Cash and equivalents, including restricted cash at end of the period: Cash and equivalents $ 370,002 $ 775,253 $ 734,599 Restricted cash included in other assets 30,373 29,904 26,691 $ 400,375 $ 805,157 $ 761,290 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 $ (10,798) $ (9,903) $ (10,879) Capital expenditures for property enhancements (3,046) (4,502) (11,726) Capital expenditures for energy efficiencies (LED lighting, solar) (386) (855) (775) Construction or expansion of real estate facilities (68,099) (65,650) (50,051) Real estate acquired in exchange for noncontrolling interests — (19,865) (68,170) Supplemental cash flow information: Cash paid for interest, net of amounts capitalized $ 146,213 $ 127,711 $ 74,192 Cash paid for income taxes, net of refunds 11,056 11,293 12,696 F-9PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 202020231.Description of the BusinessPublic Storage (referred to herein as “the Company,” “we,” “us,” or “our”), is a Maryland real estate investment trust (“REIT”), was organized engaged in 1980. Our principal business activities include the ownership and operation of self-storage facilities whichthat offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, to the tenants at our self-storage facilities, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.On August 14, 2023, the Company completed a reorganization in which its interest in its facilities is now held through an operating partnership, Public Storage OP, L.P. (“PSA OP”) and its subsidiaries including Public Storage Operating Company (“PSOC”), formerly known as Public Storage. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT. The reorganization was accounted for as a transaction between entities under common control and there was no change in the Company’s total assets, liabilities or results of operations. Subsequent to the reorganization, the primary assets of the parent entity, Public Storage, are general partner and limited partner interests in PSA OP, which holds all of the Company’s assets through its ownership of all of the membership interests in PSOC. As of December 31, 2023, the Company owned all of the limited partnership interests of PSA OP.At December 31, 2020,2023, we have direct and indirectowned equity interests in 2,5483,044 self-storage facilities (with approximately 175.1218.1 million net rentable square feet) located in 3840 states in the United States (“U.S.”) operating under the “Public Storage”Public Storage® name, and 0.91.2 million net rentable square feet of commercial and retail space.We own 31.3 million In addition, we managed 210 facilities for third parties at December 31, 2023.At December 31, 2023, we owned a 35% common shares (an approximate 35% interest) ofequity interest in Shurgard Self Storage SALimited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owns 241owned 275 self-storage facilities (with approximately 1315 million net rentable square feet) located in 7seven Western European countries, all operating under the “Shurgard”Shurgard® name.2.Basis of Presentation and Summary of Significant Accounting PoliciesBasis of PresentationWe have prepared the accompanying 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, and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”).We revised our prior period financial statements to correct the presentation of income tax expense in the Consolidated Statements of Income. Income tax expense in the amounts of $14.3 million and $12.4 million for 2022 and 2021, respectively, previously included in general and administrative expense, has been reclassified and presented separately in the Consolidated Statements of Income to conform to the 2023 presentation. This immaterial correction had no impact on our net income. The correction also own an approximate 42% commonhad no impact on our balance sheet, statements of comprehensive income, statements of equity, interestor cash flows as of and for the years ended December 31, 2022 and 2021.Certain amounts previously reported in PS Business Parks, Inc. (“PSB”), a REIT tradedour 2022 and 2021 Consolidated Statements of Income have been reclassified to conform to the 2023 presentation, with respect to the separate presentation of real estate acquisition and development expense in the amounts of $28.7 million and $12.9 million for 2022 and 2021, respectively, previously included in general and administrative expense. The reclassifications had no impact on our net income.Certain amounts previously reported in our 2022 and 2021 Statements of Cash Flows have been reclassified to conform to the New York Stock Exchange under2023 presentation, with respect to the “PSB” symbol, which owns 27.7 million net rentable square feetseparate presentation of commercial properties, primarily multi-tenant industrial, flex,changes in operating assets and office space, locatedliabilities in 6 states.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.F-10PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 13)15) are unaudited and outside the scope of our independent registered public accounting firm’s audit of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).2.Summary of Significant Accounting PoliciesBasis of PresentationThe financial statements are presented on an accrual basis in accordance with U.S. generally accepted accounting principles (“GAAP”) as defined in the Financial Accounting Standards Board Accounting Standards Codification (the “Codification”).Certain amounts previously reported in our December 31, 2019 and 2018 financial statements have been reclassified to conform to the December 31, 2020 presentation, including revenues from our third party management activities of $8.3 million and $5.2 million for the years ended December 31, 2019 and 2018, respectively, previously reported within interest and other income; and cost of operations from our third party management activities of $6.5 million and $3.4 million for the years ended December 31, 2019 and 2018, respectively, previously reported within interest and other income. This reclassification had no impact on the our balance sheet, statements of comprehensive income, statements of equity, or cash flows as of and for the year ended December 31, 2019 and for the year ended 2018.Additionally, we revised our prior period financial statements to correct the presentation of share-based compensation expense between general and administrative expense and self-storage cost of operations. As a result, we revised our statements of income for the years ended December 31, 2019 and 2018 with an increase in self-storage cost of operations of $9.8 million and $14.0 million, respectively, and a corresponding decrease to general and administrative expenses. This immaterial correction had no impact on our total expenses or net income. The correction also had no impact on our balance sheet, statements of comprehensive income, statements of equity, or cash flows as of and for the year ended December 31, 2019 and for the year ended 2018.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020We consider entities to be Variable Interest Entities (“VIEs”) when they have insufficient equity to finance their activities without additional subordinated financial support provided by other parties, or the equity holders as a group do not have a controlling financial interest. In addition, we have general partner interests in limited partnerships along with third-party investors to develop, construct or operate self-storage facilities. As the general partner, we consider the limited partnerships to be VIEs if the limited partners lack both substantive participating rights and substantive kick-out rights. We consolidate VIEs when we have (i) the power to direct the activities most significantly impacting economic performance, and (ii) either the obligation to absorb losses or the right to receive benefits from the VIE. We have no involvement with anyPSA OP met the definition of a VIE and is consolidated by the Company as the primary beneficiary of PSA OP. All of the assets and liabilities of the Company are held by PSA OP. The total assets, primarily real estate assets, and the total liabilities of our other consolidated VIEs are not material VIEs.as of December 31, 2023. We consolidate all other entities when we control them through voting shares or contractual rights. TheWe refer to the entities we consolidate, for the period in which the reference applies, are referred to collectively as the “Subsidiaries,” and we eliminate intercompany transactions and balances.We account for our investments in entities that we do not consolidate but over which we have significant influence over using the equity method of accounting. TheseWe refer to these entities, for the periods in which the reference applies, are referred to collectively as the “Unconsolidated Real Estate Entities,” eliminatingand we eliminate intra-entity profits and losses and amortizingamortize any differences between the cost of our investment and the underlying equity in net assets against equity in earnings as if the Unconsolidated Real Estate Entity were a consolidated subsidiary.Equity in earnings of unconsolidated real estate entities presented on our income statements represents our pro-rata share of the earnings of the Unconsolidated Real Estate Entities. The dividends we receive from the Unconsolidated Real Estate Entities are reflected on our consolidated statements of cash flows as “distributions from cumulative equity in earnings of unconsolidated real estate entities” to the extent of our cumulative equity in earnings, with any excess classified as “distributions in excess of cumulative equity in earnings from unconsolidated real estate entities.”When we begin consolidating an entity, we reflect our preexisting equity interest at book value. All changes in consolidation status are reflected prospectively.Collectively, at December 31, 2020, the Company and the Subsidiaries own 2,548 self-storage facilities and 4 commercial facilities in the U.S. At December 31, 2020, the Unconsolidated Real Estate Entities are comprised of PSB and Shurgard.Use of EstimatesThe preparation of consolidated financial statements and accompanying notes reflect ourin conformity with GAAP requires us to make estimates and assumptions.assumptions that affect the amounts reported. Actual results could differ from those estimates and assumptions.Cash Equivalents and Restricted CashCash equivalents represent highly liquid financial instruments that mature within three months of acquisition such as money market funds with a rating of at least AAA by Standard & Poor’s, commercial paper that is rated A1 by Standard & Poor’s or deposits with highly rated commercial banks. Restricted cash, which represent amounts used to collateralize our insurance obligations and are restricted from general corporate use, are included in other assets.Fair ValueAs used herein, the term “fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In the absence of active markets for identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the balance sheet date.F-11PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:Level 1 Quoted prices in active markets for identical assets or liabilities at the measurement date.Level 2 Significant observable inputs other than Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.Level 3 Unobservable inputs that are supported by little or no market data for the related assets or liabilities.The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.Our financial instruments consist of cash and cash equivalents, restricted cash, other assets, other liabilities, and notes payable. Cash equivalents, restricted cash, other assets and other liabilities are stated at book value, which approximates fair value as of the balance sheet date due to the short time period to maturity.We estimate and disclose the fair value of our notes payable using Level 2 inputs by discounting the related future cash flows at a rate based upon quoted interest rates for securities that have similar characteristics such as credit quality and time to maturity.We use significant judgment to estimate fair values of real estate facilities, goodwill, and other intangible assets for the purposes of purchase price allocation or impairment analysis. In estimating their values, we consider Level 3 inputs such as market prices of land, market capitalization rates, expected returns, earnings multiples, projected levels of earnings, costs of construction, and functional depreciation.Real Estate FacilitiesWe record real estate facilities at cost. We capitalize all costs incurred to acquire, develop, construct, renovate and improve facilities as part of major repair and maintenance programs, including interest and property taxes incurred during the construction period. We expense the costs of demolition of existing facilities associated with a renovation as incurred. We allocate the net acquisition cost of acquired real estate facilities to the underlying land, buildings, and identified intangible assets based upon their respective individual estimated fair values.We expense costs associated with dispositions of real estate, as well as routine repairs and maintenance costs, as incurred. We depreciate buildings and improvements on a straight-line basis over estimated useful lives ranging generally between 5 to 25 years.When we sell a full or partial interest in a real estate facility without retaining a controlling interest following sale, we recognize a gain or loss on sale as if 100% of the property was sold at fair value. If we retain a controlling interest following the sale, we record a noncontrolling interest for the book value of the partial interest sold, and recognize additional paid-in capital for the difference between the consideration received and the partial interest at book value.Goodwill and Other Intangible AssetsIntangible assets consist of goodwill, the Shurgard® trade name, which Shurgard uses pursuant to a fee-based licensing agreement, and finite-lived assets. Goodwill and the Shurgard® trade name have indefinite lives and are not amortized. Our finite-lived assets consist primarily of (i) acquired customers in place amortized relative to the benefit of the customers in place, with such amortization reflected as depreciation and amortization expense on our income statement, (ii) property tax abatements acquired and amortized relative to the reduction in property tax paid, with such amortization reflected as self-storage cost of operations on our income statement and (iii) acquired non real estate-related contracts, with such amortization reflected as depreciation and amortization expense on our income statement.F-12PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023Evaluation of Asset ImpairmentWe evaluate our real estate and finite-lived intangible assets for impairment each quarter. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value or net proceeds from expected disposal.We evaluate our investments in unconsolidated real estate entities for impairment quarterly. We record an impairment charge to the extent the carrying amount exceeds estimated fair value, when we believe any such shortfall is other than temporary.We evaluate goodwill for impairment annually and whenever relevant events, circumstances, and other related factors indicate that it is more likely than not that the fair value of the related reporting unit is less than the carrying amount. When we conclude that it is not more likely than not that the fair value of the reporting unit is less than the aggregate carrying amount, no impairment charge is recorded and no further analysis is performed. Otherwise, we record an impairment charge 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.We evaluate other indefinite-lived intangible assets, such as the Shurgard® trade name for impairment at least annually and whenever relevant events, circumstances and other related factors indicate that it is more likely than not that the asset is impaired. When we conclude that it is not more likely than not that the asset is impaired, we do not record an impairment charge and no further analysis is performed. Otherwise, we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value.No impairments were recorded in any of our evaluations for any period presented herein.Revenue and Expense RecognitionWe recognize revenues from self-storage facilities, which primarily comprise rental income earned pursuant to month-to-month leases, as well as associated late charges and administrative fees, as earned. Promotional discounts reduce rental income over the promotional period, which is generally one month. We recognize ancillary revenues when earned.We accrue for property tax expense based upon actual amounts billed and, in some circumstances, estimates when bills or assessments have not been received from the taxing authorities. If these estimates are incorrect, the timing and amount of expense recognition could be incorrect. We expense cost of operations (including advertising expenditures), general and administrative expense, and interest expense as incurred.Foreign Currency Exchange TranslationThe local currency (primarily the Euro) is the functional currency for our interests in foreign operations. The related balance sheet amounts are translated into U.S. Dollars at the exchange rates at the respective financial statement date, while amounts on our consolidated statements of income are translated at the average exchange rates during the respective period. Cumulative translation adjustments, are included in equity as a component of accumulated other comprehensive income (loss).When financial instruments denominated in a currency other than the U.S. Dollar are expected to be settled in cash in the foreseeable future, the impact of changes in the U.S. Dollar equivalent are reflected in current earnings.At December 31, 2023, due primarily to our investment in Shurgard (Note 5) and our notes payable denominated in Euros (Note 8), our operating results and financial position are affected by fluctuations in currency exchange rates between the Euro, and to a lesser extent, other European currencies, against the U.S. Dollar. The Euro was translated at exchange rates of approximately 1.104 U.S. Dollars per Euro at December 31, 2023 (1.070 at December 31, 2022), and average exchange rates of 1.081, 1.054 and 1.183 for the years ended December 31, 2023, 2022, and 2021, respectively.F-13PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023Income TaxesWe and a subsidiary of PSOC have elected to be treated as a REIT, as defined in the Internal Revenue Code of 1986, as amended (the “Code”). For each taxable year in which we qualify for taxation as a REIT, we will not be subject to U.S. federal corporate income tax on our “REIT taxable income” (generally, taxable income subject to specified adjustments, including a deduction for dividends paid and excluding our net capital gain) that is distributed to our shareholders. We believe we have met these REIT requirements for all periods presented herein. Accordingly, we have recorded no U.S. federal corporate income tax expense related to our REIT taxable income.We have elected taxable REIT subsidiary (“TRS”) status for some of our consolidated subsidiaries. Our tenant reinsurance, merchandise, and third party management operations are conducted under these TRSs and are subject to federal corporate income tax. For these entities, deferred tax assets and liabilities for temporary differences are recognized based on the future tax consequences attributable to differences that exist between the financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as tax attributes such taxesas operating loss, capital loss and tax credits carryforwards on a taxing jurisdiction basis. Deferred tax assets and liabilities are includedmeasured using enacted tax rates expected to apply to taxable income in ancillary costthe year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of operations. We also incura change in tax rates is recognized in income and other taxes in certain states, whichthe period that includes the enactment date. Valuation allowances are includedestablished when necessary to reduce deferred tax assets to the amounts that are expected more likely than not to be realized in general and administrative expense.We recognize tax benefits of uncertain income tax positions that are subject to audit only if we believe it is more likely than not that the position would ultimately be sustained assuming the relevant taxing authoritiesPUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 20202020,2023, we had 0no tax benefits that were not recognized.Real Estate FacilitiesReal estate facilitiesWe also incur income taxes in certain state and local jurisdictions, which are recordedincluded in income tax expense in the Consolidated Statements of Income.Share-Based CompensationWe generally estimate the fair value of share-based payment awards on the date of grant. We determine the fair value of restricted share units (“RSUs”) with no market conditions based on the closing market price of the Company’s common shares on the date of grant. We value stock options with no market conditions at cost.the grant date using the Black-Scholes option-pricing model. We capitalize all costs incurred to acquire, develop, construct, renovatevalue stock options and improve facilities, including interest and property taxes incurred duringRSUs with market conditions at the construction period. We allocategrant date using a Monte-Carlo valuation simulation. Our determination of the net acquisition costfair value of acquired real estate facilities toshare-based payment awards on the underlying land, buildings, and identified intangible assets based upon their respective individual estimated fair values.Costs associated with dispositionsdate of real estate,grant using an option-pricing model or Monte-Carlo valuation simulation is affected by our stock price as well as repairsassumptions regarding a number of subjective and maintenance costs,complex variables. These variables include, but are expensednot limited to, our expected stock price volatility over the expected term of the awards. For stock options, variables also include actual and projected stock option exercise behaviors. For restricted share units and stock options with performance conditions, we adjust compensation cost each quarter as incurred. needed for any changes in the assessment of the probability that the specified performance criteria will be achieved.We depreciate buildingsamortize the grant-date fair value of awards as compensation expense over the service period, which begins on the grant date and improvementsends on the expected vesting date. For awards that are earned solely upon the passage of time and continued service, the entire cost of the award is amortized on a straight-line basis over estimated useful lives ranging generally between 5 to 25 years.When we sell a full the service period. For awards with market and/or partial interest in a real estate facility without retaining a controlling interest following sale, we recognize a gain or loss on sale as if 100% ofperformance conditions, the property was sold at fair value. If we retain a controlling interest following the sale, we record a noncontrolling interest for the book value of the partial interest sold, and recognize additional paid-in capital for the difference between the consideration received and the partial interest at book value.Other AssetsOther assets primarily consist of rents receivable from our tenants (net of an allowance for uncollectible amounts), prepaid expenses, restricted cash and right-to-use assets. At December 31, 2019, other assets included notes receivable which were amortized on the effective interest method with book value of $4.4 million at the time they were repaid during 2020, at their respective $7.5 million contractual note balance. The $3.1 million excess proceeds were recorded as interest and other income in 2020.Accrued and Other LiabilitiesAccrued and other liabilities consist primarily of rents prepaid by our tenants, trade payables, property tax accruals, accrued payroll, accrued tenant reinsurance losses, lease liabilities, and contingent loss accruals when probable and estimable. We believe the fair value of our accrued and other liabilities approximates book value, due primarily to the short period until repayment. We disclose the nature of significant unaccrued losses that are reasonably possible of occurring and, if estimable, a range of exposure.Cash Equivalents, Restricted Cash, Marketable Securities and Other Financial InstrumentsCash equivalents represent highly liquid financial instruments such as money market funds with daily liquidity or short-term commercial paper or treasury securities maturing within three months of acquisition. Cash and equivalents which are restricted from general corporate use are included in other assets. We believe that the book value of all such financial instruments for all periods presented approximates fair value, due to the short period to maturity.Fair ValueAs used herein, the term “fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Because our estimates of fair value involve considerable judgment, including determination of the factors that market participants would consider in negotiating exchange values, such estimates may be limited in their ability to reflect what would actually be realized in an actual market exchange.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020We estimate the fair value of our cash and equivalents, marketable securities, other assets, debt, and other liabilities by discounting the related future cash flows at a rate based upon quoted interest rates for securities that have similar characteristics such as credit quality and time to maturity. Such quoted interest rates are referred to generally as “Level 2” inputs.We use significant judgment to estimate fair values of investments in real estate, goodwill, and other intangible assets. In estimating their values, we consider significant unobservable inputs such as market prices of land, market capitalization rates, expected returns, earnings multiples, projected levels of earnings, costs of construction, and functional depreciation. These inputs are referred to generally as “Level 3” inputs.Currency and Credit RiskFinancial instruments that are exposed to credit risk consist primarily of cash and equivalents, certain portions of other assets including rents receivable from our tenants (net of an allowance for uncollectible receivables based upon expected losses in the portfolio) and restricted cash. Cash equivalents we invest in are either money market funds with a rating of at least AAA by Standard & Poor’s, commercial paper that is rated A1 by Standard & Poor’s or deposits with highly rated commercial banks.At December 31, 2020, due primarily to our investment in Shurgard (Note 4) and our notes payable denominated in Euros (Note 6), our operating results and financial position are affected by fluctuations in currency exchange rates between the Euro, and to a lesser extent, other European currencies, against the U.S. Dollar.Goodwill and Other Intangible AssetsIntangible assets are comprised of goodwill, the “Shurgard” trade name, and finite-lived assets.Goodwill totaled $174.6 million at December 31, 2020 and 2019. The “Shurgard” trade name, which is used by Shurgard pursuant to a fee-based licensing agreement, has a book value of $18.8 million at December 31, 2020 and 2019. Goodwill and the “Shurgard” trade name have indefinite lives and are not amortized.Our finite-lived assets are comprised primarily of (i) acquired customers in place amortized relative to the benefit of the customers in place, with such amortization reflected as depreciation and amortization expense on our income statement and (ii) property tax abatements amortized relative to the reduction in property tax paid, with such amortization reflected as self-storageindividual cost of operations on our income statement. At December 31, 2020, these intangibles had a net book valueeach vesting is amortized separately over each individual service period (the “accelerated attribution” method). For awards with performance conditions, the estimated number of $11.3 million ($12.5 million at December 31, 2019). Accumulated amortization totaled $27.3 million at December 31, 2020 ($27.5 million at December 31, 2019),stock awards that will ultimately vest requires judgment, and amortization expense of $16.1 million, $16.8 million and $16.6 million was recorded in 2020, 2019 and 2018, respectively.The estimated future amortization expense for our finite-lived intangible assets at December 31, 2020 is approximately $11.9 million in 2021, $2.6 million in 2022 and $5.6 million thereafter. During 2020, 2019 and 2018, intangibles increased $14.9 million, $18.5 million and $11.6 million, respectively, in connection with the acquisition of self-storage facilities (Note 3).Evaluation of Asset ImpairmentWe evaluate our real estate and finite-lived intangible assets for impairment each quarter. If there are indicators of impairment and we determine that the asset is not recoverable from future undiscounted cash flows to be received through the asset’s remaining life (or, if earlier, the expected disposal date), we record an impairment charge to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the carrying amount exceedsperiod estimates are revised. In amortizing share-based compensation expense, we do not estimate future forfeitures. Instead, we reverse previously amortized share-based compensation expense with respect to grants that are forfeited in the asset’s estimated fair value or net proceeds from expected disposal.F-F-14PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20202023evaluate our investmentsaccelerate amortization of compensation expense for each grant by changing the end of the service period from the original vesting date to the date an employee is expected to be eligible for Retirement Acceleration, if earlier.Recent Accounting Pronouncements Not Yet AdoptedIn November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in unconsolidated real estateinterim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is effective for impairmentfiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a quarterlyretrospective basis. Early adoption is permitted. We recordare currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. The ASU’s amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.3.Simply AcquisitionOn September 13, 2023, we acquired all the membership interests of BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million net rentable square feet) and manages 25 self-storage facilities for third parties, for a purchase price of $2.2 billion in cash, including cash acquired of $6.0 million and direct transaction costs of $9.6 million (the “Simply Acquisition”).We accounted for the Simply Acquisition as an impairment charge to the extent the carrying amount exceeds estimated fair value, when we believe any such shortfall is other than temporary.We evaluate goodwill for impairment annually and whenever relevant events, circumstances and other related factors indicate that fair value of the related reporting unit may be less than the carrying amount. If we determine thatasset acquisition because substantially all the fair value of the reporting unit exceedsgross assets acquired is concentrated in the aggregate carrying amount, no impairment charge is recorded. Otherwise, we record an impairment charge 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.We evaluate other indefinite-livedreal estate assets and intangible assets such asassociated with the “Shurgard” trade name for impairment at least annually and whenever relevant events, circumstances and other related factors indicate that the fair value is less than the carrying amount. When we conclude that it is likely that the asset is not impaired, we do not record an impairment charge and no further analysis is performed. Otherwise, we record an impairment charge to the extent the carrying amount exceeds the asset’s estimated fair value.NaN impairments were recorded in any of our evaluations for any period presented herein.Revenue and Expense RecognitionRevenues from self-storage facilities, which are primarily composed of rental income earned pursuant to month-to-month leases, as well as associated late charges and administrative fees, are recognized as earned. Promotional discounts reduce rental income over the promotional period, which is generally one month. Ancillary revenues and interest and other income are recognized when earned.We accrue for property tax expense based upon actual amounts billed and, in some circumstances, estimates when bills or assessments have not been received from the taxing authorities. If these estimates are incorrect, the timing and amount of expense recognition could be incorrect. Cost of operations (including advertising expenditures), general and administrative expense, and interest expense are expensed as incurred.Foreign Currency Exchange TranslationThe local currency (primarily the Euro) is the functional currency for our interests in foreign operations. The related balance sheet amounts are translated into U.S. Dollars at the exchange rates at the respective financial statement date, while amounts on our statements of income are translated at the average exchange rates during the respective period. When financial instruments denominated in a currency other than the U.S. Dollar are expecteddetermined to be settledsimilar in cash innature. As a result, the foreseeable future,direct transaction costs of $9.6 million were capitalized to the impactbasis of changes in the U.S. Dollar equivalent are reflected in current earnings. acquired properties.The Eurototal purchase price was translated at exchange rates of approximately 1.226 U.S. Dollars per Euro at allocated to the individual assets acquired and liabilities assumed based on their relative fair values. The total purchase price, including direct transaction costs, was allocated as follows (in thousands):Cash $ 6,032 Real estate facilities: Land 229,396 Buildings 1,762,752 Construction in process 2,922 Intangible assets: Acquired customers in place 209,516 Non real estate-related contracts 4,750 Other assets 12,046 Accrued and other liabilities (43,231) Total purchase price, including direct transaction costs $ 2,184,183 F-15PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2020 (1.122 at December 31, 2019), and average exchange rates of 1.141, 1.120 and 1.181 for the years ended December 31, 2020, 2019 and 2018, respectively. Cumulative translation adjustments, to the extent not included in cumulative net income, are included in equity as a component of accumulated other comprehensive income (loss).Comprehensive IncomeTotal comprehensive income represents net income, adjusted for changes in other comprehensive income (loss) for the applicable period, which are comprised primarily of foreign currency exchange gains and losses on our investment in Shurgard.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020Recent Accounting Pronouncements and GuidanceIn November 2018, the FASB issued ASU 2018- 19, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses," which clarified that credit losses with respect to receivables arising from operating leases are to be evaluated within the scope of the leasing standard (ASU 2016-02), rather than within the scope of ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” We adopted this new standard on its effective date for us of January 1, 2020, which did not have a material impact on our consolidated financial statements.Net Income per Common ShareNet income is allocated to (i) noncontrolling interests based upon their share of the net income of the Subsidiaries and (ii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (an “EITF D-42 allocation”), with the remaining net income allocated to each of our equity securities based upon the dividends declared or accumulated during the period, combined with participation rights in undistributed earnings.Basic and diluted net income per common share are each calculated based upon net income allocable to common shareholders presented on the face of our income statement, divided by (i) in the case of basic net income per common share, weighted average common shares, and (ii) in the case of diluted income per share, weighted average common shares adjusted for the impact, if dilutive, of stock options outstanding (Note 10). The following table reconciles from basic to diluted common shares outstanding (amounts in thousands):PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 20203.4.Real Estate FacilitiesActivity in real estate facilities during 2020, 20192023, 2022, and 20182021 is as follows:For the Years Ended December 31, 2023 2022 2021 (Amounts in thousands) Operating facilities, at cost: Beginning balance $ 24,219,126 $ 22,807,833 $ 17,372,627 Capital expenditures to maintain real estate facilities 232,048 205,169 137,428 Capital expenditures for property enhancements 163,380 194,931 116,478 Capital expenditures for energy efficiencies (LED lighting, solar) 65,026 52,216 30,294 Acquisitions 2,442,118 733,442 4,940,413 Dispositions and other (19,322) (1,704) (7,408) Developed or expanded facilities opened for operation 362,862 227,239 218,001 Ending balance 27,465,238 24,219,126 22,807,833 Accumulated depreciation: Beginning balance (8,554,155) (7,773,308) (7,152,135) Depreciation expense (881,255) (781,931) (625,968) Dispositions and other 11,436 1,084 4,795 Ending balance (9,423,974) (8,554,155) (7,773,308) Construction in process: Beginning balance 372,992 272,471 188,079 Costs incurred to develop and expand real estate facilities 356,788 336,948 302,393 Acquisitions 2,922 — — Write-off of cancelled projects and transfer to other assets (24,387) (9,188) — Developed or expanded facilities opened for operation (362,862) (227,239) (218,001) Ending balance 345,453 372,992 272,471 Total real estate facilities at December 31, $ 18,386,717 $ 16,037,963 $ 15,306,996 During 2020,2023, in addition to the Simply Acquisition, we acquired 6237 self-storage facilities (5.1(2.7 million net rentable square feet of storage space), for a total cost of $792.3$473.2 million which includes the assumption of a $3.8 million liability.in cash. Approximately $14.9$23.2 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing $138.7$362.9 million during 2020,2023, adding 1.11.7 million net rentable square feet of self-storage space.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020Included in general and administrative expense in 2020 is $3.2 million in development projects which were cancelled. Construction in process at December 31, 2020 consists2023 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.2020, our accrual2023, we wrote off $11.7 million of accumulated development costs for unpaidcancelled development and redevelopment projects in construction costs decreased $1.3 million (a $49.0 million decrease for the same period in 2019). During 2020, our accrual for capital expenditures to maintainprocess as real estate facilities decreased $6.2acquisition and development expense. We also transferred $12.7 million (a $5.2of land cost related to cancelled development projects to other assets at December 31, 2023.During 2023, we completed a real estate transaction with a third-party, through which we sold an operating self-storage facility with a net book value of $7.1 million increase for gross proceeds of $40.0 million and acquired a nearby land parcel for $13.5 million. At the same periodclose of the transaction, we entered into a leaseback of the self-storage facility until we complete development of the acquired land into a self-storage facility, no later than December 31, 2026. Of the $40.0 million in 2019).During 2019,2023, we also sold a land parcel for $0.1 million in cash and recorded a related gain on sale of real estate of $0.1 million.F-16PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023During 2022, we acquired 4474 self-storage facilities and 1 commercial facility (3.1(4.7 million net rentable square feet of storage space and 46,000 net rentable square feet of commercial space), for a total cost of $439.6$730.5 million, consisting of $437.8$710.6 million in cash and the assumption of $1.8$19.9 million in mortgage notes.partnership units in one of our subsidiaries. Approximately $18.5$24.1 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing $379.1$227.2 million during 2019,2022, adding 3.7 million net rentable square feet of self-storage space.During 2019, our accrual for unpaid construction costs decreased $49.0 million (a $22.4 million increase for the same period in 2018). During 2019, our accrual for capital expenditures to maintain real estate facilities increased $5.2 million (a $1.6 million decrease for the same period in 2018).During 2018, we acquired 25 self-storage facilities (1.6 million net rentable square feet), for a total cost of $181.0 million in cash, of which $11.6 million was allocated to intangible assets. We completed development and redevelopment activities costing $348.3 million during 2018, adding 3.01.4 million net rentable square feet of self-storage space. Construction in process at December 31, 2018 consists2022 consisted of projects to develop new self-storage facilities and redevelopexpand existing self-storage facilities. On October 18, 2018,During 2022, we soldwrote off $7.0 million of accumulated development costs for cancelled development and redevelopment projects in construction in process as real estate acquisition and development expense. We also transferred $2.2 million of land cost related to a cancelled development project to other assets at December 31, 2022.Additionally, on July 8, 2022, we acquired from PS Business Parks, Inc. (“PSB”) the commercial interests in five properties at three sites jointly occupied with certain of our propertyself-storage facilities located in West London to ShurgardMaryland and Virginia, for $42.1$47.3 million. We recognized $27.0 million and recorded a related gain on sale of real estate assets and $0.7 million of approximately $31.5 million. This gain was netintangibles for the properties acquired, representing the cost of these commercial properties that we did not have interest in through our equity investment in PSB. We recognized the remaining $19.6 million as an increase to our basis in our equity investment in PSB, which represents the elimination of our portion of the recognition of a cumulative other comprehensive loss totaling $4.8 million with respect to foreign currency translation. On October 25, 2018,gain recorded by PSB.During 2022, we sold a commercial facility for $8.7 million and recorded a related gain on sale of real estate of approximately $4.6 million. During 2018, we also sold portions of real estate facilities in connection with eminent domain proceedings for $3.4$1.5 million in cash proceeds and recorded a related gain on sale of real estate of approximately $1.8$1.5 million.During 2018,2021, we also transferred $9.5acquired 232 self-storage facilities (21.8 million net rentable square feet of storage space), for a total cost of $5.1 billion, consisting of $5.0 billion in cash and $68.2 million in partnership units in one of our subsidiaries. Approximately $174.9 million of accumulated construction costs from other assetsthe total cost was allocated to constructionintangible assets. We completed development and redevelopment activities costing $218.0 million during 2021, adding 1.6 million net rentable square feet of self-storage space. During 2021, we sold portions of real estate facilities in process.At December 31, 2020,2023, the adjusted basis of real estate facilities for U.S. federal tax purposes was approximately $11.2$18.3 billion (unaudited).F-17PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20234.5.Investments in Unconsolidated Real Estate EntitiesThe following table sets forth our investments in, and equity in earnings of the Unconsolidated Real Estate Entities (amounts in thousands):
Equity in Earnings of Unconsolidated Real Estate Entities for the Year Ended December 31, 2023 2022 2021 Shurgard $ 27,897 $ 26,385 $ 24,371 PSB — 80,596 207,722 Total $ 27,897 $ 106,981 $ 232,093 F-2023 and December 31, 2022, respectively.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTS2020Investment in PSBowned 7,158,354had a 35% equity interest in Shurgard. On November 14, 2023, Shurgard issued 8,163,265 new common shares of PSB’s common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB, representing an approximate 42% common equity interest. The limited partnership units are convertible at our option, subject to certain conditions,institutional investors. Public Storage participated on a 1-for-onepro-rata basis into PSBin the offering and acquired 2,863,674 common stock.Based upon the closing price at December 31, 2020 ($132.872023 (€44.86 per share of PSBShurgard common stock)stock, at 1.104 exchange rate of U.S. Dollars to the Euro), the shares and units we owned had a market value of approximately $1.9$1.7 billion.Our equity in earnings of PSB isShurgard comprised of our equity share of PSB’sShurgard’s net income, less amortization of the PSBShurgard Basis Differential (defined below).2020, 2019,2023, 2022, and 2018,2021, we received $3.8 million, $3.5 million, and $3.5 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark, respectively. We eliminated $1.3 million, $1.2 million, and $1.2 million of intra-entity profits and losses for 2023, 2022, and 2021, 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 2023, 2022, and 2021, we received cash dividend distributions from PSBShurgard totaling $60.7$39.0 million, $60.7$37.8 million, and $55.0$41.5 million, respectively.At December 31, 2020,2023, our pro-rata investment in PSB’sShurgard’s real estate assets included in investment in unconsolidated real estate entities exceedsexceeded our pro-rata share of the underlying amounts on PSB’sShurgard’s balance sheet by approximately $3.4$63.7 million ($4.267.8 million at December 31, 2019)2022). This differential (the “PSB“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 $0.8$4.1 million, $3.2$6.9 million, and $1.8$8.4 million during 2020, 2019,2023, 2022, and 2018,2021, respectively.PSB is a publicly held entity traded onAs of December 31, 2023, 2022, and 2021, we translated the New York Stock Exchange under the symbol “PSB”.Investment in ShurgardThroughout all periods presented, we effectively owned, directly and indirectly, 31,268,459 Shurgard common shares. On October 15, 2018, Shurgard completed an initial global offering (the “Offering”), issuing 25.0 million of its common shares to third parties at a price of €23 per share, reducing our ownership interest to approximately 35%. Following the Offering, Shurgard’s shares began to trade on Euronext Brussels under the “SHUR” symbol. We recorded a “Gain due to Shurgard public offering” of $151.6 million, as if we had sold a proportionate sharebook value of our investment in Shurgard. TheShurgard from Euro to U.S. Dollars and recorded $13.1 million other comprehensive gain, resulted in a $174.0$26.7 million increase in our investment in Shurgard and a $22.4 million reduction in other comprehensive loss, and $10.2 million other comprehensive loss, respectively.F-18PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023Investment in PSBOn July 20, 2022, in connection with respect to cumulative foreign currency translation losses for Shurgard.Based upon the closing priceof 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 2022 and 2021, we received cash distributions from PSB totaling $109.5 million and $127.3 million, respectively, which were classified within cash flows from operating activities in the Consolidated Statements of Cash flows. Since the sale of PSB in July 2022, we no longer recognize equity in earnings or receive cash distributions from PSB.Summarized financial information of PSBThe following table represents summarized financial information for PSB derived from its reported financial statements prepared under US GAAP before our basis difference adjustments for the years ended December 31, 2022 and 2021 (amounts in thousands). Due to the complete sale of our equity investment in PSB in July 2022, the summarized financial information for 2022 includes PSB's financial activities through June 30, 2022, which represents the most practical date of such reported information prior to the transaction. Summarized financial information for Shurgard is excluded in the table below.Year Ended December 31, 2022 2021 Revenues $ 223,750 $ 438,703 Costs of operations 66,701 130,896 Operating income 88,702 195,264 Gain on sale of real estate 118,801 359,875 Net Income 208,665 553,029 6.Goodwill and Other Intangible AssetsGoodwill and other intangible assets consisted of the following (amounts in thousands):At December 31, 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 995,578 (792,978) 202,600 758,106 (710,256) 47,850 Total goodwill and other intangible assets $ 1,180,245 $ (792,978) $ 387,267 $ 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 $82.7 million, $95.2 million and $76.6 million in 2023, 2022, and 2021, respectively. During 2023, 2022, and 2021, intangibles increased $237.5 million, $24.8 million, and $174.9 million, respectively, in connection with the Simply Acquisition (Note 3) and the acquisition of real estate facilities (Note 4).F-19PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023The remaining amortization expense will be recognized over a weighted average life of approximately 1.2 years. The estimated future amortization expense for our finite-lived intangible assets at December 31, 2020 (€35.50 per share of Shurgard common stock, at 1.226 exchange rate of US Dollars to the Euro), the shares we owned had a market value of approximately $1.4 billion.Our equity2023 is as follows (amounts in earnings of Shurgard is comprised of our equity share of Shurgard’s net income, plus $1.1 million, $1.0 million, and $1.3 million for 2020, 2019 and 2018, respectively, representing our equity sharePUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020Year Amount 2024 $ 116,338 2025 60,467 2026 19,129 2027 2,797 2028 377 Thereafter 3,492 Total $ 202,600 of the trademark license fees that Shurgard pays to us for the use of the “Shurgard” trademark. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.The dividends we receive from Shurgard, combined with our equity share of trademark license fees collected from Shurgard, are reflected on our statements of cash flows as “distributions from cumulative equity in earnings of unconsolidated real estate entities” to the extent of our cumulative earnings, with any excess classified as “distributions in excess of cumulative equity in earnings from unconsolidated real estate entities.” During 2020 and 2019, Shurgard paid €0.99 and €0.67, respectively, per share in dividends to its shareholders, of which our share totaled $34.9 million and $23.1 million, respectively. During 2018, Shurgard paid a cash dividend to its shareholders at the time, of which our equity share was $145.4 million.Changes in foreign currency exchange rates increased our investment in Shurgard by approximately $21.5 million in 2020 and decreased our investment in Shurgard by approximately $0.8 million and $16.0 million in 2019 and 2018, respectively.Shurgard is a publicly held entity trading on Euronext Brussels under the symbol “SHUR”.5.7.Credit FacilityWe have aOn June 12, 2023, PSOC entered into an amended revolving credit agreement (the “Credit Facility”) with a, which increased our borrowing limit from $500 million borrowing limit, which matures onto $1.5 billion and extended the maturity date from April 19, 2024.2024 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 LIBORSOFR plus 0.7%0.65% to LIBORSOFR plus 1.350%1.40% depending upon the ratio of our Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBORcredit rating (SOFR plus 0.7%0.70% at December 31, 2020)2023). We are also required to pay a quarterly facility fee ranging from 0.07%0.10% per annum to 0.25%0.30% per annum depending upon the ratio of our Total Indebtedness to our Gross Asset Value (0.07%credit rating (0.10% per annum at December 31, 2020)2023). At December 31, 20202023 and February 24, 2021,20, 2024, we had 0no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $24.3$14.6 million at December 31, 20202023 ($15.918.6 million at December 31, 2019)2022 under the previous credit facility). The Credit Facility has various customary restrictive covenants all ofwith which we were in compliance with at December 31, 2020.2023. We incurred a total of $8.4 million of issuance costs associated with the amended Credit Facility, which is classified as Other Assets on the Consolidated Balance Sheets and will be amortized as Interest Expense on the Consolidated Statement of Income through June 12, 2027.Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under the Credit Facility.F-F-20PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 202020236.8.Notes PayableOur notes payable (all of which were issued by PSOC), are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at December 31, 20202023 and 2019December 31, 2022 are set forth in the tables below:PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020 Amounts at December 31, 2023 Amounts at December 31, 2022 Coupon Rate Effective Rate Principal Unamortized Costs Book
ValueFair
ValueBook
ValueFair
Value ($ amounts in thousands) U.S. Dollar Denominated Unsecured Debt Notes due April 23, 2024 SOFR+0.47% 5.831% $ 700,000 $ (221) $ 699,779 $ 700,031 $ 699,075 $ 691,309 Notes due July 25, 2025 SOFR+0.60% 5.961% 400,000 (1,278) 398,722 400,295 — — Notes due February 15, 2026 0.875% 1.030% 500,000 (1,581) 498,419 462,362 497,678 441,849 Notes due November 9, 2026 1.500% 1.640% 650,000 (2,487) 647,513 597,131 646,643 578,899 Notes due September 15, 2027 3.094% 3.218% 500,000 (1,964) 498,036 476,394 497,508 466,029 Notes due May 1, 2028 1.850% 1.962% 650,000 (2,922) 647,078 584,520 646,401 558,197 Notes due November 9, 2028 1.950% 2.044% 550,000 (2,337) 547,663 490,758 547,182 468,509 Notes due January 15, 2029 5.125% 5.260% 500,000 (2,947) 497,053 516,899 — — Notes due May 1, 2029 3.385% 3.459% 500,000 (1,637) 498,363 477,692 498,053 456,855 Notes due May 1, 2031 2.300% 2.419% 650,000 (5,012) 644,988 562,240 644,303 530,390 Notes due November 9, 2031 2.250% 2.322% 550,000 (2,782) 547,218 469,845 546,866 443,514 Notes due August 1, 2033 5.100% 5.207% 700,000 (5,552) 694,448 725,753 — — Notes due August 1, 2053 5.350% 5.442% 600,000 (7,983) 592,017 628,413 — — 7,450,000 (38,703) 7,411,297 7,092,333 5,223,709 4,635,551 Euro Denominated Unsecured Debt Notes due April 12, 2024 1.540% 1.540% 110,372 — 110,372 109,380 107,035 104,344 Notes due November 3, 2025 2.175% 2.175% 267,116 — 267,116 261,083 259,039 246,119 Notes due September 9, 2030 0.500% 0.640% 772,607 (7,488) 765,119 638,177 740,634 566,204 Notes due January 24, 2032 0.875% 0.978% 551,862 (4,322) 547,540 455,895 530,317 396,297 1,701,957 (11,810) 1,690,147 1,464,535 1,637,025 1,312,964 Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.7 million4.398% 4.398% 1,833 — 1,833 1,733 10,092 9,568 $ 9,153,790 $ (50,513) $ 9,103,277 $ 8,558,601 $ 6,870,826 $ 5,958,083 Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under each series of unsecured notes.U.S. Dollar Denominated Unsecured NotesOn April 12, 2019,July 26, 2023, we completed a public offering of $400 million, $500 million, $700 million, and $600 million aggregate principal amount of unsecured senior notes bearing interest at an annual rate of Compounded SOFR + 0.60% (reset quarterly), 5.125%, 5.100%, and 5.350%, respectively, and maturing on July 25, 2025, January 15, 2029, August 1, 2033, and August 1, 2053, respectively. Interest on the 2025 notes is payable quarterly, commencing on October 25, 2023. Interest on the 2029 notes is payable semi-annually, commencing on January 15, 2024. Interest on the 2033 notes and 2053 notes is payable semi-annually, commencing on February 1, 2024. In connection with the offering, we incurred a total of $18.7 million in costs.F-21PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023On August 15, 2022, the Company redeemed its 2.370% Senior Notes due September 15, 2022, with an aggregate principal amount of $500.0 million.On January 19, 2021, we completed a public offering of $500 million in aggregate principal amount of senior notes bearing interest at an annual rate of 3.385%0.875% and maturing on February 15, 2026. Interest on the senior notes is payable semi-annually, commencing on August 15, 2021. In connection with the offering, we incurred $3.8 million in costs.On April 23, 2021, we completed a public offering of $700 million, $650 million, and $650 million aggregate principal amount of senior notes bearing interest at an annual rate of the Compounded SOFR plus 0.47% (reset quarterly and at 4.36% as of December 31, 2022), 1.850%, and 2.300%, respectively, and maturing on April 23, 2024, May 1, 2029.2028, and May 1, 2031, respectively. Interest on the 2024 notes is payable quarterly, commencing on July 23, 2021. Interest on the 2028 notes and 2031 notes is payable semi-annually, commencing on November 1, 2021. In connection with the offering, we incurred a total of $3.1$13.7 million in costs.On November 9, 2021, we completed a public offering of $650 million, $550 million, and $550 million aggregate principal amount of senior notes bearing interest at an annual rate of 1.500%, 1.950%, and 2.250%, respectively, and maturing on November 9, 2026, November 9, 2028, and November 9, 2031, respectively. Interest on the senior notes is payable semi-annually, commencing on May 9, 2022. In connection with the offering, we incurred a total of $11.3 million in costs.The U.S. Dollar denominated unsecured notes issued on April 12, 2019 along with notes previously issued in 2017 are referred to hereinafter as the(the “U.S. Dollar Denominated Notes.”The U.S. Dollar Denominated NotesUnsecured Notes”) have various financial covenants all ofwith which we were in compliance with at December 31, 2020.2023. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 8%16% at December 31, 2020)2023) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 38x17x for the twelve months ended December 31, 2020)2023) as well as covenants limiting the amount we can encumber our properties with mortgage debt.Euro Denominated Unsecured NotesOur Euro denominated unsecured notes (the “Euro Notes”) consist of 3 tranches,four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, for $264.3 million in net proceeds upon converting the Euros to U.S. Dollars, (ii) €100.0 million issued to institutional investors on April 12, 2016, for $113.6 million in net proceeds upon converting the Euros to U.S. Dollars and (iii) €500.0 million issued in a public offering on January 24, 2020, for $545.2and (iv) €700.0 million issued in net proceeds upon converting the Euros to U.S. Dollars.a public offering on September 9, 2021. Interest is payable semi-annually on the notes issued November 3, 2015 and April 12, 2016, and annually on the notes issued January 24, 2020. The2020 and 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“Foreign currency exchange (loss) gain” on our income statement (a loss(losses of $98.0$51.6 million for 2020,2023, as compared to gains of $7.8 million and $18.1$99.2 million for 20192022 and 2018, respectively)$111.8 million for 2021).Mortgage NotesOurWe assumed our non-recourse mortgage debt was assumed 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.During 2019, we assumed a mortgage note with a contractual value of $1.8 million and an interest rate of 3.9%, which approximated market rate, in connection with the acquisition of a real estate facility.At December 31, 2020,2023, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.2%3.9% and 7.1%, and mature between JanuarySeptember 1, 20222028 and July 1, 2030.At December 31, 2020,2023, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):F-F-22PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20202023 Unsecured Debt Mortgage Debt Total 2024 $ 810,372 $ 124 $ 810,496 2025 667,116 131 667,247 2026 1,150,000 138 1,150,138 2027 500,000 146 500,146 2028 1,200,000 129 1,200,129 Thereafter 4,824,469 1,165 4,825,634 $ 9,151,957 $ 1,833 $ 9,153,790 Weighted average effective rate 3.1% 4.4% 3.1% $52.7$155.5 million, $48.3$133.8 million, and $36.3$77.7 million for 2020, 20192023, 2022, and 2018,2021, respectively. Interest capitalized as real estate totaled $3.4$9.3 million, $3.9$6.0 million, and $4.8$3.5 million for 2020, 20192023, 2022, and 2018,2021, respectively.7.9.Noncontrolling InterestsThere are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At December 31, 2020, the noncontrolling interests represent (i) third-party equity interests in2023, certain of these subsidiaries owning 21 operating self-storage facilities and 5 self-storage facilities that are under construction and (ii) 231,978have issued 499,966 partnership units held byto third-parties in a subsidiary that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the optionrequest of the unitholder (collectively, the “Noncontrolling Interests”). unitholder.10.Shareholders’ EquityPreferred SharesAt December 31, 2020, the Noncontrolling Interests cannot require us to redeem their interests, other than pursuant to a liquidation of the subsidiary.During 2020, 20192023 and 2018, we allocated a total of $4.0 million, $5.1 million and $6.2 million, respectively, of income to these interests; and we paid $5.4 million, $6.7 million and $7.0 million, respectively, in distributions to these interests.During 2019, we acquired noncontrolling interests for an aggregate of $35.0 million in cash, of which $11.1 million was allocated to Noncontrolling Interests, with the remainder allocated to Paid-in Capital. During 2020, 2019 and 2018, Noncontrolling Interests contributed $2.6 million, $4.1 million and $1.7 million, respectively, to our subsidiaries.8.Shareholders’ EquityPreferred SharesAt December 31, 2020 and 2019,2022, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding: At December 31, 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 F-F-23PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 202020236six 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 2two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At December 31, 2020,2023, 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.In 2020, we redeemed our Series V, Series WDuring 2022 and Series X Preferred Shares, at par, for a total of $1.22 billion in cash, before payment of accrued dividends.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020On December 14, 2020, we called for redemption of, and on January 20, 2021, we redeemed our 5.40% Series B Preferred Shares, at par. The liquidation value (at par)issued the following series of $300.0 million was reclassified as a liability at December 31, 2020. We recorded a $9.9 million allocation of income from our common shareholders to the holders of our Preferred Shares in 2020 in connection with this redemption.In 2020, we issued an aggregate 49.9 million depositary shares, each representing 0.001 of a share of our Series L, Series M, Series N and Series O Preferred Shares at an issuance price of $25.00 per depositarydepository share for a total of $1.25 billion in gross proceeds, and we incurred $39.3 million in issuance costs.In 2019, we redeemed our Series U, Series Y, Series Z and Series A Preferred Shares, at par, for a total of $1.05 billion in cash, before payment of accrued dividends.In 2019, we issued an aggregate 43.6 million depositary shares,with each depository share representing 0.001 of a share of our Series H, Series I, Series J and Series KPreferred Share (none in 2023) (amounts in thousands):Year Series Shares Gross Proceeds Issuance Costs 2022 S 10,000 $ 250,000 $ 7,168 2021 P, Q and R 47,300 1,182,500 35,045 During 2021, we redeemed the following series of Preferred Shares at an issuance price of $25.00 per depositary share, for a total of $1.09 billionpar (none in gross proceeds,2023 and we incurred $30.8 million2022) (amounts in issuance costs.In 2020thousands):Year Series Aggregate Redemption Amount Allocation of Income to Preferred Shares Holders in Connection with Redemption 2021 C, D and E $ 875,000 $ 28,914 Common SharesDuring 2023, 2022, and 2019, we recorded $48.3 million and $32.7 million, respectively, in EITF D-42 allocations of income from our common shareholders to the holders of our Preferred Shares in connection with redemptions of Preferred Shares, including the redemption of our Series B Preferred Shares as noted above.Common SharesDuring 2020, 2019 and 2018,2021, activity with respect to the issuance of our common shares was as follows (dollar amounts in thousands):2023 2022 2021 Shares Amount Shares Amount Shares Amount Employee stock-based compensation and exercise of stock options (Note 12) 405,059 $ 53,386 283,190 $ 35,405 552,713 $ 95,860 Our Board previously authorized the repurchase from time to time of up to 35.0 million of our common shares on the open market or in privately negotiated transactions. Through December 31, 2020,2023, we repurchased approximately 23.7 million shares pursuant to this authorization; NaNnone of which were repurchased during the three years ended December 31, 2020.2023.F-24At PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20202023On February 4, 2023, our Board declared a 50% increase in our 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. Common share dividends paid, including amounts paid to our restricted share unitholders and 2019, we had 3,513,955deferred share unitholders, totaled $2.111 billion ($12.00 per share), $3.714 billion ($21.15 per share), and 2,958,817, respectively,$1.402 billion ($8.00 per share) for the years ended December 31, 2023, 2022, and 2021, respectively. Included in common share dividends paid during 2022 is $2.3 billion of a special cash dividend (“Special Dividend”) of $13.15 per common shares reservedshare paid on August 4, 2022 in connection with the sale of our share-based incentive plans (see Note 10),equity investment in PSB on July 20, 2022. Preferred share dividends totaled $194.7 million, $194.4 million and 231,978 shares reserved$186.6 million for the conversion of partnership units owned by Noncontrolling Interests.The unaudited characterization of dividends for U.S. federal corporate income tax purposes is made based upon earnings and profits of the Company, as defined by the Code. Common share dividends including amounts paid to our restricted share unitholders totaled $1.399 billion ($8.00 per share), $1.399 billion ($8.00 per share) and $1.396 billion ($8.00 per share) for the years ended December 31, 2020, 2019 and 2018, respectively. Preferred share dividends totaled $207.1 million, $210.2 million and $216.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 20202020,2023, distributions for the common shares and all the various series of preferred shares were classified as follows:2023 (unaudited) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Ordinary Dividends 100.00 % 100.00 % 100.00 % 100.00 % Capital Gain Distributions 0.00 % 0.00 % 0.00 % 0.00 % Total 100.00 % 100.00 % 100.00 % 100.00 % The ordinary income dividends distributed for the tax year ended December 31, 20202023 are not qualified dividends under the Internal Revenue Code,Code; however, they are subject to the 20% deduction under IRS Section 199A.9.11.Related Party TransactionsB. Wayne Hughes, our former Chairman and his family, including his daughterAt December 31, 2023, Tamara Hughes Gustavson, a current member of theour Board, held less than a 0.1% equity interest in, and his son B. Wayne Hughes, Jr.,is a former membermanager of, the Board who retired effective December 31, 2020, collectively own approximately 13.0% of our common shares outstanding at December 31, 2020.At December 31, 2020, Tamara Hughes Gustavson and her adult children owned and controlled 64a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s direct ownershipadult children owned the remaining equity interest in these properties is less than 1.0%.the limited liability company. These facilities operate under the “Public Storage”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 0no 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”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 $1.6$2.1 million, $1.5$2.2 million and $1.3$2.1 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively. Our right to continue receiving these premiums may be qualified. 10.12.Share-Based CompensationUnder 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, as well as restricted share units (“RSUs”), to trustees, officers,deferred share units (“DSUs”), and key employees.Stockunrestricted common shares issued in lieu of trustee compensation.On April 26, 2021, the Company’s Shareholders approved the 2021 Equity and Performance-Based Incentive Compensation Plan (“2021 Plan”), which authorized an additional three million shares available for future issuance of equity-based awards. As of December 31, 2023, there were a total of 1,364,578 shares reserved for granting of future options and RSUs are considered “granted” and “outstanding” as the terms are used herein, when (i) the Company and the recipient reach a mutual understanding of the key terms of the award, (ii) the award has been authorized, and (iii) the recipient is affected by changes in the market price of our stock.We amortize the grant-date fair value ofstock awards including grants to nonemployee service providers, as compensation expense over the service period, which begins on the grant date and ends on the expected vesting date. For awards that are earned solely upon the passage of time and continued service, the entire cost of the award is amortized on a straight-line basis over the service period. For awards with performance conditions, the individual cost of each vesting is amortized separately over each individual service period (the “accelerated attribution” method).PUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020Modifications to the terms of awards that were probable of vesting before the modification (“Type I Modifications”) are recorded prospectively, with remaining unamortized grant-date fair value at the time of modification amortized over the remaining service period. Modifications of awards which were considered improbable of vesting before the modification (“Type III Modifications”) are accounted for as a cancellation of the original award and a new grant under the revised terms.In July 2020, our share-based compensation plans were modified to allow immediate vesting upon retirement (“Retirement Acceleration”), and to extend the exercisability of outstanding stock options up to a year after retirement, for currently outstanding and future grants. Prior to the modification, unvested awards were forfeited, and outstanding vested stock options were cancelled, upon retirement. Employees are eligible for Retirement Acceleration if they meet certain conditions including length of service, age, notice of intent to retire, and facilitation of succession for their role.This modification results in accelerating amortization of compensation expense for each grant by changing the end of the service period from the original vesting date to the date an employee is expected to be eligible for Retirement Acceleration, if earlier. As a result, the Company2021 Plan.We recorded $5.7 million in accelerated compensation expense during 2020, with such amounts included in the amounts disclosed below under “Stock Options” and “Restricted Share Units.”The Codification previously stipulated that grants to nonemployee service providers (other than to trustees, where equity method treatment was permitted) were accounted for on the liability method, with expenses adjusted each period based upon changes in fair value. Recent changes in the Codification allows such grants to be accounted for on the equity award method, with compensation expense based upon grant date fair value. While we have no such grants to any such individuals for any periods presented, we will account for any future grants to nonemployee service providers based upon the equity award method.In amortizing share-based compensation expense we do not estimate future forfeituresassociated with our equity awards in advance. Instead, we reverse previously amortizedthe various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $2.4 million, $4.1 million, and $3.9 million share-based compensation expense with respect to grants that are forfeited in the period the employee terminates employment.In February 2018, we announced that our Chief Executive Officer and Chief Financial Officer at the time were retiring from their executive roles at the end of 2018 and would then serve onlycost was capitalized as Trustees of the Company. Pursuant to our share-based compensation plans, their unvested grants will continue to vest over the original vesting periods during their service as Trustees. For financial reporting, the end of the service periodsreal estate facilities for previous stock option and RSU grants for these executives changed from (i) the various vesting dates to (ii) December 31, 2018 when they retired. Accordingly, all remaining share-based compensation expense for these 2 executives was amortized in the year ended December 31, 2018.2023, 2022, and 2021, respectively.F-25PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2023See also “net income per common share”For Years Ended December 31, 2023 2022 2021 (Amounts in thousands) Self-storage cost of operations $ 13,636 $ 17,950 $ 20,544 Ancillary cost of operations 1,289 888 1,561 Real estate acquisition and development expense 1,242 11,204 4,031 General and administrative 25,399 26,661 33,729 Total $ 41,566 $ 56,703 $ 59,865 Included in share-based compensation is $3.2 million, $14.9 million and $15.9 million for the years ended December 31, 2023, 2022, and 2021, respectively, of Retirement Acceleration as discussed in Note 2 for further discussion regarding the impact of RSUs2.Stock OptionsWe have service-based and performance-based stock options on our net income per common share and income allocated to common shareholders.Stock Optionsthehave an exercise price is 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 awardawards in cash. We useFor the Black-Scholes option valuation model to estimate the fair value of our stock options.Outstanding stock option grants are included on a one-for-one basis in our diluted weighted average shares, to the extent dilutive, after applying the treasury stock method (based upon the average common share price during the period) to assumed exercise proceeds and measured but unrecognized compensation.2023, 2022, and 2021, we incurred share-based compensation cost for outstanding stock options of $14.9 million, $19.9 million and $25.1 million, respectively.PUBLIC STORAGENOTES TO FINANCIAL STATEMENTS20202020, 770,0002023, we granted 60,000 stock options in connection with non-management trustee compensation. 117,168 stock options were grantedawarded during 2023 where 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.During 2022, 77,683 stock options were awarded where vesting is dependent upon meeting certain market conditions over the three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. 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.During 2021, 245,000 stock options were awarded where vesting is dependent upon meeting certain performance targets with respect to 2020,over the three-year period from January 1, 2021 and 2022. As ofthrough December 31, 2020, these2023, which are considered performance conditions, with continued service-based vesting through the first quarter of 2026. These awards contain a relative Total Shareholder Return modifier that will adjust the payout based on relative performance as compared to the market. These performance targets are expected to bewere met at 100% achievement. These options are included in the grants during 2020 and in options outstanding125% achievement at December 31, 2020, and $3.0 million in related compensation expense2023. With the relative Total Shareholder Return modifier measured through December 31, 2023, the total payout was recorded during 2020.The stock options outstanding at December 31, 20202023 have an aggregate intrinsic value (the excess, if any, of each option’s market value over the exercise price) of approximately $63.2$249.3 million and remaining average contractual lives of approximately sixfive years. TheTotal compensation cost related to nonvested stock options that has not yet been recognized is $14.7 million and is expected to be recognized as compensation cost over approximately two years on average. Exercisable stock options have an aggregate intrinsic value of exercisable stock optionsapproximately $183.1 million at December 31, 2020 amounted to2023 and remaining average contractual lives of approximately $52.3 million. Approximately 1,240,000 of the stock options outstanding at four years.F-26PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2020, have an exercise price of more than $225. Included in our stock options exercisable at December 31, 2020, are 16,667 stock options which expire through June 30, 2021, with an average exercise price per share of $115.96.2023Additional information with respect to stock options during 2020, 20192023, 2022, and 20182021 is as follows:Service-Based Performance-Based Total Number of Options Weighted Average Exercise Price per Share Number of Options Weighted Average Exercise Price per Share Number of Options Weighted Average Exercise Price per Share Options outstanding January 1, 2021 2,231,167 $ 204.60 730,000 $ 228.94 2,961,167 $ 210.59 Granted (a) 140,000 248.54 420,000 229.53 560,000 234.29 Exercised (471,216) (203.30) — — (471,216) (203.30) Cancelled — — (10,000) (228.94) (10,000) (228.94) Options outstanding December 31, 2021 1,899,951 $ 208.16 1,140,000 $ 229.16 3,039,951 $ 216.04 Granted (b) 65,000 398.97 138,933 299.88 203,933 331.46 Special dividend adjustment (c) 62,512 N/A 41,836 N/A 104,348 N/A Exercised (173,422) (189.95) (10,327) (221.68) (183,749) (191.74) Cancelled — — — — — — Options outstanding December 31, 2022 (d) 1,854,041 $ 209.53 1,310,442 $ 229.39 3,164,483 $ 217.75 Granted (e) 60,000 286.81 180,423 265.46 240,425 270.79 Exercised (272,250) (167.15) (34,401) (221.68) (306,651) (173.26) Cancelled (12,049) (293.81) (34,987) (229.34) (47,036) (245.86) Options outstanding December 31, 2023 1,629,742 $ 218.83 1,421,477 $ 234.16 3,051,221 $ 225.97 Options exercisable at December 31, 2023 1,475,764 $ 210.75 507,766 $ 221.68 1,983,530 $ 213.55 2023 2023 2022 2021 Aggregate exercise date intrinsic value of options exercised during the year (in 000's) $ 35,662 $ 27,210 $ 44,613 Average assumptions used in valuing options with the Black-Scholes method: Average assumptions used in valuing options with the Black-Scholes method: Expected life of options in years Expected life of options in years Expected life of options in years 6 6 5 Risk-free interest rate Risk-free interest rate 3.5% 2.9% 0.8% Expected volatility, based upon historical volatility Expected volatility, based upon historical volatility 24.4% 22.9% 24.1% Expected dividend yield Expected dividend yield 4.2% 2.0% 2.9% Average assumptions used in valuing options with market conditions with the Monte-Carlo simulation method: Average assumptions used in valuing options with market conditions with the Monte-Carlo simulation method: Average assumptions used in valuing options with market conditions with the Monte-Carlo simulation method: Expected life of options in years Expected life of options in years Expected life of options in years 7 7 5 Risk-free interest rate 3.5% 1.8% 0.9% Expected volatility, based upon historical volatility 23.8% 22.6% 26.5% Expected dividend yield 4.1% 2.3% 2.9% Average estimated value of options granted during the year Average estimated value of options granted during the year $ 56.86 $ 87.57 $ 62.66 (a) AmountsAmount granted for 2020 include $0.3 millionperformance-based stock options includes 180,000 options for performance adjustments above target for options granted in connection with the Retirement Acceleration. Amounts2020.(b) Amount granted for 2018 include $8.1 million,performance-based stock options includes 61,250 options for performance adjustments above target for options granted in connection with the acceleration of amortization on grants discussed above. Of the total expense recorded, $2.8 million, $2.2 million and $2.1 million for 2020, 2019 and 2018,2021.F-F-27PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20202023respectively, was allocated(c) On August 4, 2022, we paid a Special Dividend of $13.15 per common share to costshareholders of operations, withrecord as of August 1, 2022. Stock options that were outstanding at the remainder allocatedtime of the Special Dividend were adjusted pursuant to generalthe anti-dilution provisions of the Company’s applicable equity and administrativeperformance-based incentive compensation plans that provide for equitable adjustments in the event of an extraordinary cash dividend. The anti-dilution adjustments proportionately increased the number of outstanding stock options and reduced the exercise prices of outstanding stock options by a conversion rate of 1.03275, resulting in an increase of 104,348 stock options outstanding. The adjustments did not result in incremental share-based compensation expense.(d) The weighted average exercise price of options outstanding at December 31, 2022 reflect the adjusted exercise price post the anti-dilution adjustment on August 3, 2022.(e) Amount granted for performance-based stock options includes 63,257 options for payout adjustments based on Total Shareholder Return modifier for options granted in 2021.Restricted Share UnitsWe 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. The grantee receives dividends for each outstanding RSU equal to the per-share dividends received by our common shareholders. We expense any dividends previously paid upon forfeiture of the related RSU. Upon vesting, the grantee receives new common shares equal to the number of vested RSUs, less common shares withheld in exchange for tax deposits made by the Company to satisfy the grantee’s statutory tax liabilities arising from the vesting.The fair value of our RSUs is determined based upon the applicable closing trading price of our common shares.The fair value of our RSUs outstanding atFor the years ended December 31, 2020 was approximately $127.7 million. 2023, 2022, and 2021, we incurred share-based compensation cost for RSUs of $28.2 million, $39.9 million, and $37.6 million, respectively.Among the 115,185 RSUs granted during 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.During 2022, 21,985 RSUs were awarded where vesting is dependent upon meeting certain market conditions over a three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. The amount of these RSUs that are earned and vested, if any, will be based, in addition to continued employment requirements, on the Company's relative total shareholder return over the three-year period as compared to the weighted average total shareholder return of the specified peer groups and can result in grantees earning up to 200% of the target RSUs originally granted.During 2021, 37,000 RSUs were awarded where vesting is dependent upon meeting certain performance targets for 2021, which are considered performance conditions, with continued service-based vesting through the first quarter of 2026. As of December 31, 2023, these targets were met at 125% achievement.Remaining compensation expensecost related to RSUs outstanding at December 31, 20202023 totals approximately $76.9$72.5 million and is expected to be recognized as compensation expense over the next 4three years on average. The following tables set forth relevant information with respect to restricted shares (dollar amounts in thousands):F-28Service-Based Performance-Based Total Number of Restricted Share Units Weighted-Average Grant-Date Fair Value Number of Restricted Share Units Weighted-Average Grant-Date Fair Value Number of Restricted Share Units Weighted-Average Grant-Date Fair Value Restricted share units outstanding January 1, 2021 552,788 $ 218.11 — $ — 552,788 $ 218.11 Granted (a) 143,068 336.06 46,250 275.12 189,318 321.17 Vested (138,420) (216.63) — — (138,420) (216.63) Forfeited (32,864) (221.32) — — (32,864) (221.32) Restricted share units outstanding December 31, 2021 524,572 $ 249.90 46,250 $ 275.12 570,822 $ 251.95 Granted 51,575 293.43 21,985 465.11 73,560 344.74 Vested (146,138) (240.71) — — (146,138) (240.71) Forfeited (22,197) (256.50) — — (22,197) (256.50) Restricted share units outstanding December 31, 2022 407,812 $ 258.34 68,235 $ 336.33 476,047 $ 269.52 Granted 77,974 296.19 37,211 295.61 115,185 296.01 Vested (132,909) (245.19) (9,250) (275.12) (142,159) (247.13) Forfeited (30,229) (266.60) (2,183) (300.86) (32,412) (268.91) Restricted share units outstanding December 31, 2023 322,648 $ 272.14 94,013 $ 327.06 416,661 $ 284.53 2023 2023 2022 2021 Fair value of vested shares on vesting date Fair value of vested shares on vesting date Average assumptions used in valuing restricted share units with market conditions with the Monte-Carlo simulation method: Average assumptions used in valuing restricted share units with market conditions with the Monte-Carlo simulation method: Average assumptions used in valuing restricted share units with market conditions with the Monte-Carlo simulation method: Time from the valuation date to the end of the performance period Time from the valuation date to the end of the performance period Time from the valuation date to the end of the performance period Risk-free interest rate Risk-free interest rate Risk-free interest rate Expected volatility, based upon historical volatility Expected volatility, based upon historical volatility Expected volatility, based upon historical volatility Expected dividend yield Expected dividend yield Expected dividend yield (a)AmountsAmount granted for 2020, 2019performance-based RSUs includes 9,250 RSUs for performance adjustments above target for RSUs granted in 2021.Trustee Deferral ProgramNon-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 2018 include approximately $1.3 million, $1.2 millionconverted into a number of shares or units based on the applicable closing price of our common shares on such date. During 2023, we granted 2,085 DSUs and $1.1 million,884 unrestricted common shares. During 2023, 867 previously granted DSUs were settled in common shares. A total of 10,769 DSUs were outstanding at December 31, 2023 (9,551 at December 31, 2022).F-29PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 202313.Net Income per Common ShareWe 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. Stock options representing 375,577 common shares were excluded from the computation of diluted earnings per share for 2023, as compared to 147,344 common shares for 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 year ended December 31, 2023, 2022, and 2021, respectively in employer taxes incurred upon vesting. Amounts for 2020 include $5.4 million, in connection with the Retirement Acceleration as discussed above. Amounts for 2018 include $22.6 million, in connection with the acceleration of amortization on grants to our CEO and CFO as discussed above. Of the total expense recorded, $12.1 million, $9.9 million and $14.3 million for 2020, 2019 and 2018, respectively, was allocated to cost of operations, with the remainder allocated to general and administrative expense.(in thousands, except per share amounts):For the Years Ended December 31, 2023 2022 2021 Numerator for basic and dilutive net income per common share – net income allocable to common shareholders $ 1,948,741 $ 4,142,288 $ 1,732,444 Denominator for basic net income per share - weighted average common shares outstanding 175,472 175,257 174,858 Net effect of dilutive stock options - based on treasury stock method 671 1,023 710 Denominator for dilutive net income per share - weighted average common shares outstanding 176,143 176,280 175,568 Net income per common share: Basic $ 11.11 $ 23.64 $ 9.91 Dilutive $ 11.06 $ 23.50 $ 9.87 F-30PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 202311.14.Segment InformationOur reportableoperating segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker (“CODM”). We organize our segmentsmaker.Self-Storage OperationsPUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020based primarily upon the nature of the underlying products and services, as well as the drivers of profitability growth. The net income for eachSelf-Storage Operations reportable segment includedreflects the aggregated rental operations from the self-storage facilities we own through the following operating segments: (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 are in conformity with GAAP and our significant accounting policies as denoted in Note 2. The amounts not attributable to reportable segments are aggregated under “other items not allocated to segments.”Following is a description of and basis for presentation for each of our reportable segments.Self-Storage OperationsThe Self-Storage Operations segment reflectssets forth the rental operations from all self-storage facilities we own. Our CODM reviews the net operating incomeNet Operating Income (“NOI”) of this segment, which represents the related revenues less cost of operations (prior to depreciation expense), in assessing performance and making resource allocation decisions. The presentation in the tables below sets forth the NOI of thisreportable segment, as well as the related depreciation expense for this segment, which while reviewed by our CODM and included in net income, is not considered by the CODM in assessing performance and decision making.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 OperationsThe Ancillary Operations segment reflects the combined operations of our tenant reinsurance, merchandise sales, and third party property management activities.Investment in PSBThis segment represents our approximate 42% equity interest in PSB, a publicly-traded REIT that owns, operates, acquires and develops commercial properties, primarily multi-tenant flex, office, and industrial space. PSB has a separate management team and board of directors that makes its financing, capital allocation, and other significant decisions. In making resource allocation decisions with respect to our investment in PSB, the CODM reviews PSB’s net income, which is detailed in PSB’s periodic filings with the SEC. The segment presentation in the tables below includes our equity earnings from PSB.Investment in ShurgardThis segment represents our approximate 35% equity interest in Shurgard, a publicly held company which owns and operates self-storage facilities located in 7 countries in Western Europe. Shurgard has a separate management team and board of trustees that makes its financing, capital allocation, and other significant decisions. In making resource allocation decisions with respect to our investment in Shurgard, the CODM reviews Shurgard’s net income. The segment presentation below includes our equity earnings from Shurgard.Presentation of Segment InformationThe following tables reconciletable reconciles NOI (as applicable) and net income of eachattributable to our reportable segment to our consolidated net income (amounts in thousands):For the Years Ended December 31, 2023 2022 2021 (amounts in thousands) Self-Storage Operations Reportable Segment Revenue $ 4,259,613 $ 3,946,028 $ 3,203,566 Cost of operations (1,061,950) (980,209) (852,030) Net operating income 3,197,663 2,965,819 2,351,536 Depreciation and amortization (970,056) (888,146) (713,428) Net income 2,227,607 2,077,673 1,638,108 Ancillary Operations Revenue 258,077 236,135 212,258 Cost of operations (85,996) (72,698) (68,568) Net operating income 172,081 163,437 143,690 Total net income allocated to segments 2,399,688 2,241,110 1,781,798 Other items not allocated to segments: Real estate acquisition and development expense (26,451) (28,744) (12,923) General and administrative (80,632) (71,672) (75,966) Interest and other income 85,590 40,567 12,306 Interest expense (201,132) (136,319) (90,774) Equity in earnings of unconsolidated real estate entities 27,897 106,981 232,093 Foreign currency exchange (loss) gain (51,197) 98,314 111,787 Gain on sale of real estate 17,178 1,503 13,683 Gain on sale of equity investment in PS Business Parks, Inc. — 2,128,860 — Income tax expense (10,821) (14,326) (12,365) Net income $ 2,160,120 $ 4,366,274 $ 1,959,639 F-F-31PUBLIC STORAGENOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20202023(a)See Note 4 for a reconciliation of these amounts to our total Equity in Earnings of Unconsolidated Real Estate Entities on our income statements.12.Recent Accounting Pronouncements and GuidanceIn February 2016, the FASB issued ASU 2016-02, Leases, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified-retrospective approach to adoption and became effective for interim and annual periods beginning on January 1, 2019. In July 2018, the FASB further amended this standard to allow for a new transition method that offers the option to use the effective date as the date of initial application and not adjust the comparative-period financial information. We adopted the new standard effective January 1, 2019, using the new transition method, recording a total of $38.7 million in right of use assets, reflected in other assets, and substantially the same amount in lease liabilities, reflected in accrued and other liabilities, for leases where we are the lessee (principally ground leases and office leases). We also reclassified related intangible assets totaling $5.6 million to other assets. The lease liabilities are recognizedPUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020based on the present value of the remaining lease payments for each operating lease using each respective remaining lease term and a corresponding estimated incremental borrowing rate. We estimated the incremental borrowing rate primarily by reference to average yield spread on debt issuances by companies of a similar credit rating as us, and the treasury yields as of January 1, 2019. We had no material amount of leases covered by the standard where we are the lessor (principally our storage leases) because substantially all of such leases are month to month. For leases where we are the lessee or the lessor, we applied (i) the package of practical expedients to not reassess prior conclusions related to contracts that are or that contain leases, lease classification and initial direct costs, (ii) the hindsight practical expedient to determine the lease term and in assessing impairment of the right of use assets, and (iii) the easement practical expedient to not assess whether existing or expired land easements that were not previously accounted for as leases under ASC 840 are or contain a lease under this new standard. In addition, for leases where we are the lessee, we also elected to (a) not apply the new standard to our leases with an original term of 12 months or less, and (b) not separate lease and associated non-lease components.13.15.Commitments and ContingenciesContingent LossesWe are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote.Insurance and Loss ExposureWe carry property, earthquake, general liability, employee medical insurance, and workers compensation coverage through internationally recognized insurance carriers, subject to deductibles. Our deductible for general liability is $2.0 million per occurrence. Our annual deductible for property loss is $25.0 million per occurrence. This deductible decreases to $5.0 million once we reach $35.0 million in aggregate losses for occurrences that exceed $5.0 million. Insurance carriers’ aggregate limits on these policies of $75.0 million for property losses and $102.0 million for general liability losses are higher than estimates of maximum probable losses that could occur from individual catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple catastrophic events, these limits could be exceeded.We reinsure a program that provides insurance to our customers from an independent third-party insurer. This program covers customer claims for losses to goods stored at our facilities as a result of specific named perils (earthquakes are not covered by this program), up to a maximum limit of $5,000 per storage unit. We reinsure all risks in this program, but purchase insurance to cover this exposure for a limit of $15.0 million for losses in excess of $5.0 million per occurrence. We are subject to licensing requirements and regulations in severalall states. Customers participate in the program at their option. At December 31, 2020,2023, there were approximately 990,0001.3 million certificates held by our self-storage customers, representing aggregate coverage of approximately $3.9$6.2 billion.
CommitmentsPUBLIC STORAGENOTES TO FINANCIAL STATEMENTSDecember 31, 2020Construction Commitments$105.0$164.8 million at December 31, 2020.2023. We expect to pay approximately $95.2$149.3 million in 20212024 and $9.8$15.5 million in 20222025 for these construction commitments.14.Subsequent EventsSubsequent toWe have future contractual payments on land, equipment and office space under various lease commitments totaling $65.4 million at December 31, 2020, we acquired or were under contract2023. We expect to acquire 40 self-storage facilities across 18 states with 3.5 million net rentable square feet, for $580.1 million.On January 19, 2021, we completed a public offering of $500 million aggregate principal amount of senior notes bearing interest at an annual rate of 0.875% and maturing on February 15, 2026. Interest on the senior notes is payable semi-annually, commencing August 15, 2021. In connection with the offering, we incurred a total of $3.8pay approximately $4.0 million in costs.On January 20, 2021, we redeemed our 5.4% Series B Preferred Shares, at par, for a totaleach of $3002024, 2025, and 2026, $2.6 million in cash before payment of accrued dividends.F-F-32PUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATIONPUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATION(Amounts in thousands, except number of properties)Net2020Initial CostCostsGross Carrying AmountNo. ofRentableEncum-Buildings &SubsequentAt December 31, 2020AccumulatedDescriptionFacilitiesSq. FeetbrancesLandImprovementsto AcquisitionLandBuildingsTotalDepreciationInitial Cost Description Description Description No. of
FacilitiesNet
Rentable
Square Feet2023Encum-brancesLand Buildings &
ImprovementsCosts
Subsequent
to AcquisitionLand Buildings Total Accumulated
DepreciationLos Angeles Los Angeles Dallas/Ft. Worth Chicago Washington DC Atlanta Orlando/Daytona Minneapolis/St. Paul Philadelphia Tampa Baltimore Portland Oklahoma City West Palm Beach San Antonio Raleigh Indianapolis Norfolk Columbia Columbus Kansas City Boston St. Louis Las Vegas Nashville/Bowling Green F-F-33PUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATIONPUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATION(Amounts in thousands, except number of properties)Net2020Initial CostCostsGross Carrying AmountNo. ofRentableEncum-Buildings &SubsequentAt December 31, 2020AccumulatedDescriptionFacilitiesSq. FeetbrancesLandImprovementsto AcquisitionLandBuildingsTotalDepreciationInitial Cost Description Description Description No. of
FacilitiesNet
Rentable
Square Feet2023Encum-brancesLand Buildings &
ImprovementsCosts
Subsequent
to AcquisitionLand Buildings Total Accumulated
DepreciationMemphis Cincinnati Mobile Colorado Springs Fort Myers/Naples Greensville/Spartanburg/Asheville Louisville Richmond Greensboro Birmingham Charleston Chattanooga Salt Lake City New Orleans Savannah Omaha Cleveland/Akron Augusta Buffalo/Rochester Boise Evansville Huntsville/Decatur Dayton Fort Wayne Providence Lansing Roanoke Flint F-F-34PUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATIONPUBLIC STORAGESCHEDULE III - REAL ESTATEAND ACCUMULATED DEPRECIATION(Amounts in thousands, except number of properties)Net2020Initial CostCostsGross Carrying AmountNo. ofRentableEncum-Buildings &SubsequentAt December 31, 2020AccumulatedDescriptionFacilitiesSq. FeetbrancesLandImprovementsto AcquisitionLandBuildingsTotalDepreciationInitial Cost Gross Carrying Amount At December 31, 2023 Description No. of
FacilitiesNet
Rentable
Square Feet2023Encum-brancesLand Buildings &
ImprovementsCosts
Subsequent
to AcquisitionLand Buildings Total Accumulated
DepreciationRochester 3 155 — 2,142 10,787 3,799 2,075 14,653 16,728 4,719 Shreveport 2 150 — 817 3,030 3,476 741 6,582 7,323 5,329 Springfield/Holyoke 2 144 — 1,428 3,380 2,599 1,427 5,980 7,407 5,330 Santa Barbara 2 98 — 5,733 9,106 1,183 5,733 10,289 16,022 7,172 Topeka 2 94 — 225 1,419 2,167 225 3,586 3,811 3,342 Joplin 1 56 — 264 904 1,067 264 1,971 2,235 1,738 Syracuse 1 55 — 545 1,279 1,413 545 2,692 3,237 2,155 Modesto/Fresno/Stockton 1 33 — 44 206 1,399 193 1,456 1,649 1,167 Commercial and non-operating real estate — 13,194 26,143 136,325 13,348 162,314 175,662 69,331 3,044 218,071 $ 1,833 $ 5,542,781 $ 17,177,947 $ 4,744,510 $ 5,628,488 $ 21,836,750 $ 27,465,238 $ 9,423,974 F-F-35