UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)


Maryland						95-3551121
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

701 Western Avenue, Glendale, California						91201-2349
(Address of principal executive offices)						(Zip Code)

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

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

Securities registered pursuant to Section 12b of the Act:

Title of Class

Trading Symbol

Name of each exchange on which registered

Common Shares, $0.10 par value

PSA

~~New York Stock Exchange~~

~~Depositary Shares Each Representing 1/1,000 of a 4.900% Cum Pref Share, Series E, $0.01 par value~~

~~PSAPrE~~

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value

PSAPrF

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value

PSAPrG

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value

PSAPrH

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value

PSAPrI

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value

PSAPrJ

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value

PSAPrK

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value

PSAPrL

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value

PSAPrM

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value

PSAPrN

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value

PSAPrO

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value

PSAPrP

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value

PSAPrQ

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value

PSAPrR

New York Stock Exchange

Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value

PSAPrS

New York Stock Exchange

0.875% Senior Notes due 2032

PSA32

New York Stock Exchange

0.500% Senior Notes due 2030

PSA30

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

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

Large accelerated filer

Accelerated
filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒

☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of ~~October 28, 2021:~~August 1, 2022:

Common Shares of beneficial interest, $0.10 par value per share – ~~175,354,560~~175,541,870 shares

PUBLIC STORAGE

INDEX


PART I	FINANCIAL INFORMATION	Pages

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets ~~at September 30, 2021 and December 31, 2020~~	1

	Consolidated Statements of Income ~~for the Three and Nine Months Ended September 30, 2021 and 2020~~	2

	Consolidated Statements of Comprehensive Income ~~for the Three and Nine Months Ended September 30, 2021 and 2020~~	3

	Consolidated Statements of Equity ~~for the Three~~ and ~~Nine Months Ended September 30, 2021 and 2020~~Redeemable Noncontrolling Interests	4-7

	Consolidated Statements of Cash Flows ~~for the Nine Months Ended September 30, 2021 and 2020~~	8-9

	Condensed Notes to Consolidated Financial Statements	10~~-27~~-22

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2823~~-58~~-49

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5950

Item 4.	Controls and Procedures	5950

PART II	OTHER INFORMATION (Items 3, 4 and 5 are not applicable)

Item 1.	Legal Proceedings	6051

Item 1A.	Risk Factors	6051

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6051

Item 6.	Exhibits	6051

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS	(Unaudited)				ASSETS

Cash and equivalents	Cash and equivalents	$	958,247	$	257,560	Cash and equivalents	$	1,013,886	$	734,599
Real estate facilities, at cost:	Real estate facilities, at cost:					Real estate facilities, at cost:
Land	Land	4,864,520		4,375,588		Land	5,175,744		5,134,060
Buildings	Buildings	15,592,003		12,997,039		Buildings	18,139,804		17,673,773
		20,456,523		17,372,627			23,315,548		22,807,833
Accumulated depreciation	Accumulated depreciation	(7,598,496)		(7,152,135)		Accumulated depreciation	(8,150,113)		(7,773,308)
		12,858,027		10,220,492			15,165,435		15,034,525
Construction in process	Construction in process	228,379		188,079		Construction in process	380,060		272,471
		13,086,406		10,408,571			15,545,495		15,306,996

Investments in unconsolidated real estate entities	Investments in unconsolidated real estate entities	779,272		773,046		Investments in unconsolidated real estate entities	845,894		828,763
Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	258,949		204,654		Goodwill and other intangible assets, net	249,744		302,894
Other assets	Other assets	201,812		172,715		Other assets	207,832		207,656
Total assets	Total assets	$	15,284,686	$	11,816,546	Total assets	$	17,862,851	$	17,380,908

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY

Notes payable	Notes payable	$	5,773,190	$	2,544,992	Notes payable	$	7,340,904	$	7,475,279
Preferred shares called for redemption (Note 8)		—		300,000

Accrued and other liabilities	Accrued and other liabilities	474,198		394,655		Accrued and other liabilities	473,599		482,091
Total liabilities	Total liabilities	6,247,388		3,239,647		Total liabilities	7,814,503		7,957,370

Commitments and contingencies (Note 12)		0		0
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)	0		0

Redeemable noncontrolling interests						Redeemable noncontrolling interests	—		68,249

Equity:	Equity:					Equity:
Public Storage shareholders’ equity:	Public Storage shareholders’ equity:					Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 160,600 shares issued (in series) and outstanding, (151,700 at December 31, 2020) at liquidation preference		4,015,000		3,792,500
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,048,260 shares issued and outstanding (174,581,742 shares at December 31, 2020)		17,505		17,458
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (164,000 at December 31, 2021) at liquidation preference						Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (164,000 at December 31, 2021) at liquidation preference	4,350,000		4,100,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,239,263 shares issued and outstanding (175,134,455 shares at December 31, 2021)						Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,239,263 shares issued and outstanding (175,134,455 shares at December 31, 2021)	17,524		17,513
Paid-in capital	Paid-in capital	5,808,943		5,707,101		Paid-in capital	5,848,632		5,821,667
Accumulated deficit	Accumulated deficit	(771,114)		(914,791)		Accumulated deficit	(182,213)		(550,416)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(52,980)		(43,401)		Accumulated other comprehensive loss	(79,217)		(53,587)
Total Public Storage shareholders’ equity	Total Public Storage shareholders’ equity	9,017,354		8,558,867		Total Public Storage shareholders’ equity	9,954,726		9,335,177
Noncontrolling interests	Noncontrolling interests	19,944		18,032		Noncontrolling interests	93,622		20,112
Total equity	Total equity	9,037,298		8,576,899		Total equity	10,048,348		9,355,289
Total liabilities and equity		$	15,284,686	$	11,816,546
Total liabilities, redeemable noncontrolling interests and equity						Total liabilities, redeemable noncontrolling interests and equity	$	17,862,851	$	17,380,908

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

Revenues:	Revenues:									Revenues:
Self-storage facilities	Self-storage facilities	$	840,510	$	683,949	$	2,333,850	$	2,022,692	Self-storage facilities	$	973,286	$	776,993	$	1,890,301	$	1,493,340
Ancillary operations	Ancillary operations	54,421		50,596		157,658		143,840		Ancillary operations	58,759		52,322		115,189		103,237
		894,931		734,545		2,491,508		2,166,532			1,032,045		829,315		2,005,490		1,596,577

Expenses:	Expenses:									Expenses:
Self-storage cost of operations	Self-storage cost of operations	216,999		209,179		631,699		637,229		Self-storage cost of operations	237,989		202,595		483,483		414,700
Ancillary cost of operations	Ancillary cost of operations	19,735		15,174		52,044		44,081		Ancillary cost of operations	17,210		15,991		32,725		32,309
Depreciation and amortization	Depreciation and amortization	188,552		138,333		508,139		411,851		Depreciation and amortization	218,708		172,728		440,836		319,587
General and administrative	General and administrative	31,682		18,262		78,996		53,234		General and administrative	28,831		27,740		51,900		47,314
Interest expense	Interest expense	23,736		14,282		60,980		42,048		Interest expense	32,941		21,994		66,065		37,244
		480,704		395,230		1,331,858		1,188,443			535,679		441,048		1,075,009		851,154

Other increases (decreases) to net income:	Other increases (decreases) to net income:									Other increases (decreases) to net income:
Interest and other income	Interest and other income	3,356		7,192		9,321		18,976		Interest and other income	10,279		3,113		13,658		5,965
Equity in earnings of unconsolidated real estate entities	Equity in earnings of unconsolidated real estate entities	32,860		21,240		81,382		62,863		Equity in earnings of unconsolidated real estate entities	48,525		29,066		91,949		48,522
Foreign currency exchange gain (loss)	Foreign currency exchange gain (loss)	40,906		(41,900)		73,584		(52,250)		Foreign currency exchange gain (loss)	101,723		(12,707)		137,100		32,678
Gain on sale of real estate	Gain on sale of real estate	279		—		13,683		1,117		Gain on sale of real estate	—		3,991		—		13,404
Net income	Net income	491,628		325,847		1,337,620		1,008,795		Net income	656,893		411,730		1,173,188		845,992
Allocation to noncontrolling interests	Allocation to noncontrolling interests	(1,537)		(980)		(4,067)		(2,849)		Allocation to noncontrolling interests	(3,043)		(1,304)		(5,395)		(2,530)
Net income allocable to Public Storage shareholders	Net income allocable to Public Storage shareholders	490,091		324,867		1,333,553		1,005,946		Net income allocable to Public Storage shareholders	653,850		410,426		1,167,793		843,462
Allocation of net income to:	Allocation of net income to:									Allocation of net income to:
Preferred shareholders	Preferred shareholders	(46,237)		(53,892)		(138,500)		(158,849)		Preferred shareholders	(48,673)		(46,183)		(97,038)		(92,263)
Preferred shareholders - redemptions (Note 8)		—		(23,313)		(16,989)		(38,382)
Preferred shareholders - redemptions										Preferred shareholders - redemptions	—		(16,989)		—		(16,989)
Restricted share units	Restricted share units	(1,527)		(746)		(3,678)		(2,546)		Restricted share units	(1,796)		(1,005)		(3,250)		(2,151)
Net income allocable to common shareholders	Net income allocable to common shareholders	$	442,327	$	246,916	$	1,174,386	$	806,169	Net income allocable to common shareholders	$	603,381	$	346,249	$	1,067,505	$	732,059
Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	2.53	$	1.41	$	6.72	$	4.62	Basic	$	3.44	$	1.98	$	6.09	$	4.19
Diluted	Diluted	$	2.52	$	1.41	$	6.70	$	4.62	Diluted	$	3.42	$	1.97	$	6.05	$	4.18

Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	174,926		174,503		174,787		174,481		Basic weighted average common shares outstanding	175,229		174,824		175,200		174,718
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	175,806		174,626		175,398		174,606		Diluted weighted average common shares outstanding	176,312		175,547		176,325		175,194

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

Net income	Net income	$	491,628	$	325,847	$	1,337,620	$	1,008,795	Net income	$	656,893	$	411,730	$	1,173,188	$	845,992
Foreign currency exchange (loss) gain on investment in Shurgard	Foreign currency exchange (loss) gain on investment in Shurgard	(6,898)		10,792		(9,579)		2,546		Foreign currency exchange (loss) gain on investment in Shurgard	(18,835)		3,259		(25,630)		(2,681)
Total comprehensive income	Total comprehensive income	484,730		336,639		1,328,041		1,011,341		Total comprehensive income	638,058		414,989		1,147,558		843,311
Allocation to noncontrolling interests	Allocation to noncontrolling interests	(1,537)		(980)		(4,067)		(2,849)		Allocation to noncontrolling interests	(3,043)		(1,304)		(5,395)		(2,530)
Comprehensive income allocable to Public Storage shareholders	Comprehensive income allocable to Public Storage shareholders	$	483,193	$	335,659	$	1,323,974	$	1,008,492	Comprehensive income allocable to Public Storage shareholders	$	635,015	$	413,685	$	1,142,163	$	840,781

See accompanying notes.

PUBLIC STORAGE

~~STATEMENT~~CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended ~~September~~June 30, 2022

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

(Unaudited)


	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests

Balances at March 31, 2022	$	4,350,000	$	17,521	$	5,827,674	$	(436,101)	$	(60,382)	$	9,698,712	$	20,549	$	9,719,261	$	83,826


Issuance of common shares in connection with share-based compensation (26,824 shares)	—		3		3,450		—		—		3,453		—		3,453		—
Taxes withheld upon net share settlement of restricted share units	—		—		(1,636)		—		—		(1,636)		—		(1,636)		—
Share-based compensation expense	—		—		19,144		—		—		19,144		—		19,144		—

Contributions by noncontrolling interests	—		—		—		—		—		—		5,346		5,346		—
Reclassification from redeemable noncontrolling interests to noncontrolling interests	—		—		—		—		—		—		83,826		83,826		(83,826)
Net income	—		—		—		656,893		—		656,893		—		656,893		—
Net income allocated to noncontrolling interests	—		—		—		(3,043)		—		(3,043)		3,043		—		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(48,673)		—		(48,673)		—		(48,673)		—
Noncontrolling interests	—		—		—		—		—		—		(19,142)		(19,142)		—
Common shareholders and restricted share unitholders ($2.00 per share) (Note 9)	—		—		—		(351,289)		—		(351,289)		—		(351,289)		—
Other comprehensive loss	—		—		—		—		(18,835)		(18,835)		—		(18,835)		—
Balances at June 30, 2022	$	4,350,000	$	17,524	$	5,848,632	$	(182,213)	$	(79,217)	$	9,954,726	$	93,622	$	10,048,348	$	—

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended June 30, 2021

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

(Unaudited)

Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss Total
Public Storage Shareholders' Equity Noncontrolling Interests Total Equity
Balances at June 30, 2021 $ 3,871,250 $ 17,486 $ 5,764,672 $ (863,742) $ (46,082) $ 8,743,584 $ 19,519 $ 8,763,103
Issuance of 5,750 preferred shares (Note 8) 143,750 — (4,777) — — 138,973 — 138,973
Issuance of common shares in connection with share-based compensation (183,823 shares) — 19 33,795 — — 33,814 — 33,814
Share-based compensation expense, net of cash paid in lieu of common shares — — 15,253 — — 15,253 — 15,253
Contributions by noncontrolling interests — — — — — — 594 594
Net income — — — 491,628 — 491,628 — 491,628
Net income allocated to noncontrolling interests — — — (1,537) — (1,537) 1,537 —
Distributions to:
Preferred shareholders (Note 8) — — — (46,237) — (46,237) — (46,237)
Noncontrolling interests — — — — — — (1,706) (1,706)
Common shareholders and restricted share unitholders ($2.00 per share) (Note 8) — — — (351,226) — (351,226) — (351,226)
Other comprehensive loss (Note 2) — — — — (6,898) (6,898) — (6,898)
Balances at September 30, 2021 $ 4,015,000 $ 17,505 $ 5,808,943 $ (771,114) $ (52,980) $ 9,017,354 $ 19,944 $ 9,037,298

~~See accompanying notes.~~

~~PUBLIC STORAGE~~

~~STATEMENT OF EQUITY~~

~~Three Months Ended September 30, 2020~~

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

~~(Unaudited)~~

Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss Total
Public Storage Shareholders' Equity Noncontrolling Interests Total Equity
Balances at June 30, 2020 $ 4,135,000 $ 17,450 $ 5,702,466 $ (789,089) $ (73,136) $ 8,992,691 $ 17,507 $ 9,010,198
Issuance of 9,200 preferred shares (Note 8) 230,000 — (5,429) — — 224,571 — 224,571
Redemption of 29,000 preferred shares (Note 8) (725,000) — — — — (725,000) — (725,000)
Issuance of common shares in connection with share-based compensation (13,152 shares) — 1 1,818 — — 1,819 — 1,819
Share-based compensation expense, net of cash paid in lieu of common shares — — 8,115 — — 8,115 — 8,115
Contributions by noncontrolling interests — — — — — — 858 858
Net income — — — 325,847 — 325,847 — 325,847
Net income allocated to noncontrolling interests — — — (980) — (980) 980 —
Distributions to:
Preferred shareholders (Note 8) — — — (53,892) — (53,892) — (53,892)
Noncontrolling interests — — — — — — (1,418) (1,418)
Common shareholders and restricted share unitholders ($2.00 per share) (Note 8) — — — (349,836) — (349,836) — (349,836)
Other comprehensive income (Note 2) — — — — 10,792 10,792 — 10,792
Balances at September 30, 2020 $ 3,640,000 $ 17,451 $ 5,706,970 $ (867,950) $ (62,344) $ 8,434,127 $ 17,927 $ 8,452,054


	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests

Balances at March 31, 2021	$	3,792,500	$	17,465	$	5,715,254	$	(877,931)	$	(49,341)	$	8,597,947	$	19,368	$	8,617,315	$	—
Issuance of 24,150 preferred shares	603,750		—		(17,412)		—		—		586,338		—		586,338		—
Redemption and shares called for redemption of 21,000 preferred shares	(525,000)		—		—		—		—		(525,000)		—		(525,000)		—
Issuance of common shares in connection with share-based compensation (213,433 shares)	—		21		42,874		—		—		42,895		—		42,895		—
Share-based compensation expense, net of cash paid in lieu of common shares	—		—		23,956		—		—		23,956		—		23,956		—

Contributions by noncontrolling interests	—		—		—		—		—		—		385		385		—
Net income	—		—		—		411,730		—		411,730		—		411,730		—
Net income allocated to noncontrolling interests	—		—		—		(1,304)		—		(1,304)		1,304		—		—
Distributions to:
Preferred shareholders	—		—		—		(46,183)		—		(46,183)		—		(46,183)		—
Noncontrolling interests	—		—		—		—		—		—		(1,538)		(1,538)		—
Common shareholders and restricted share unitholders ($2.00 per share)	—		—		—		(350,054)		—		(350,054)		—		(350,054)		—
Other comprehensive income	—		—		—		—		3,259		3,259		—		3,259		—
Balances at June 30, 2021	$	3,871,250	$	17,486	$	5,764,672	$	(863,742)	$	(46,082)	$	8,743,584	$	19,519	$	8,763,103	$	—

See accompanying notes.

PUBLIC STORAGE

~~STATEMENT~~CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022

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

(Unaudited)

Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss Total
Public Storage Shareholders' Equity Noncontrolling Interests Total Equity
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 29,900 preferred shares (Note 8) 747,500 — (22,189) — — 725,311 — 725,311
Redemption and shares called for redemption of 21,000 preferred shares (Note 8) (525,000) — — — — (525,000) — (525,000)
Issuance of common shares in connection with share-based compensation (466,518 shares) (Note 10) — 47 81,365 — — 81,412 — 81,412
Share-based compensation expense, net of cash paid in lieu of common shares (Note 10) — — 42,698 — — 42,698 — 42,698
Acquisition of noncontrolling interests — — (32) — — (32) (1) (33)
Contributions by noncontrolling interests — — — — — — 2,359 2,359
Net income — — — 1,337,620 — 1,337,620 — 1,337,620
Net income allocated to noncontrolling interests — — — (4,067) — (4,067) 4,067 —
Distributions to:
Preferred shareholders (Note 8) — — — (138,500) — (138,500) — (138,500)
Noncontrolling interests — — — — — — (4,513) (4,513)
Common shareholders and restricted share unitholders ($6.00 per share) (Note 8) — — — (1,051,376) — (1,051,376) — (1,051,376)
Other comprehensive loss (Note 2) — — — — (9,579) (9,579) — (9,579)
Balances at September 30, 2021 $ 4,015,000 $ 17,505 $ 5,808,943 $ (771,114) $ (52,980) $ 9,017,354 $ 19,944 $ 9,037,298


	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balances at December 31, 2021	$	4,100,000	$	17,513	$	5,821,667	$	(550,416)	$	(53,587)	$	9,335,177	$	20,112	$	9,355,289	$	68,249
Issuance of 10,000 preferred shares (Note 9)	250,000		—		(7,168)		—		—		242,832		—		242,832		—

Issuance of common shares in connection with share-based compensation (104,808 shares) (Note 11)	—		11		11,549		—		—		11,560		—		11,560		—
Taxes withheld upon net share settlement of restricted share units (Note 11)	—		—		(12,210)		—		—		(12,210)		—		(12,210)		—
Share-based compensation expense (Note 11)	—		—		34,794		—		—		34,794		—		34,794		—

Contributions by noncontrolling interests	—		—		—		—		—		—		6,137		6,137		15,426
Reclassification from redeemable noncontrolling interests to noncontrolling interests													83,826		83,826		(83,826)
Net income	—		—		—		1,173,188		—		1,173,188		—		1,173,188		—
Net income allocated to noncontrolling interests	—		—		—		(5,395)		—		(5,395)		4,735		(660)		660
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(97,038)		—		(97,038)		—		(97,038)		—
Noncontrolling interests	—		—		—		—		—		—		(21,188)		(21,188)		(509)
Common shareholders and restricted share unitholders ($4.00 per share) (Note 9)	—		—		—		(702,552)		—		(702,552)		—		(702,552)		—
Other comprehensive loss	—		—		—		—		(25,630)		(25,630)		—		(25,630)		—
Balances at June 30, 2022	$	4,350,000	$	17,524	$	5,848,632	$	(182,213)	$	(79,217)	$	9,954,726	$	93,622	$	10,048,348	$	—

See accompanying notes.

PUBLIC STORAGE

~~STATEMENT~~CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021

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

(Unaudited)

Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss Total
Public Storage Shareholders' Equity Noncontrolling Interests Total Equity

Balances at December 31, 2019 $ 4,065,000 $ 17,442 $ 5,710,934 $ (665,575) $ (64,890) $ 9,062,911 $ 16,756 $ 9,079,667
Issuance of 31,800 preferred shares (Note 8) 795,000 — (21,259) — — 773,741 — 773,741
Redemption of 48,800 preferred shares (Note 8) (1,220,000) — — — — (1,220,000) — (1,220,000)
Issuance of common shares in connection with share-based compensation (93,455 shares) — 9 5,496 — — 5,505 — 5,505
Share-based compensation expense, net of cash paid in lieu of common shares — — 11,831 — — 11,831 — 11,831
Acquisition of noncontrolling interests — — (32) — — (32) (1) (33)
Contributions by noncontrolling interests — — — — — — 2,291 2,291
Net income — — — 1,008,795 — 1,008,795 — 1,008,795
Net income allocated to noncontrolling interests — — — (2,849) — (2,849) 2,849 —
Distributions to:
Preferred shareholders (Note 8) — — — (158,849) — (158,849) — (158,849)
Noncontrolling interests — — — — — — (3,968) (3,968)
Common shareholders and restricted share unitholders ($6.00 per share) (Note 8) — — — (1,049,472) — (1,049,472) — (1,049,472)
Other comprehensive income (Note 2) — — — — 2,546 2,546 — 2,546
Balances at September 30, 2020 $ 3,640,000 $ 17,451 $ 5,706,970 $ (867,950) $ (62,344) $ 8,434,127 $ 17,927 $ 8,452,054


	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests

Balances at December 31, 2020	$	3,792,500	$	17,458	$	5,707,101	$	(914,791)	$	(43,401)	$	8,558,867	$	18,032	$	8,576,899	$	—
Issuance of 24,150 preferred shares	603,750		—		(17,412)		—		—		586,338		—		586,338		—
Redemption and shares called for redemption of 21,000 preferred shares	(525,000)		—		—		—		—		(525,000)		—		(525,000)		—
Issuance of common shares in connection with share-based compensation (282,695 shares)	—		28		47,570		—		—		47,598		—		47,598		—
Share-based compensation expense, net of cash paid in lieu of common shares	—		—		27,445		—		—		27,445		—		27,445		—
Acquisition of noncontrolling interests	—		—		(32)		—		—		(32)		(1)		(33)		—
Contributions by noncontrolling interests	—		—		—		—		—		—		1,765		1,765		—
Net income	—		—		—		845,992		—		845,992		—		845,992		—
Net income allocated to noncontrolling interests	—		—		—		(2,530)		—		(2,530)		2,530		—		—
Distributions to:
Preferred shareholders	—		—		—		(92,263)		—		(92,263)		—		(92,263)		—
Noncontrolling interests	—		—		—		—		—		—		(2,807)		(2,807)		—
Common shareholders and restricted share unitholders ($4.00 per share)	—		—		—		(700,150)		—		(700,150)		—		(700,150)		—
Other comprehensive loss	—		—		—		—		(2,681)		(2,681)		—		(2,681)		—
Balances at June 30, 2021	$	3,871,250	$	17,486	$	5,764,672	$	(863,742)	$	(46,082)	$	8,743,584	$	19,519	$	8,763,103	$	—

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	1,337,620	$	1,008,795	Net income	$	1,173,188	$	845,992
Adjustments to reconcile net income to net cash flows from operating activities:	Adjustments to reconcile net income to net cash flows from operating activities:					Adjustments to reconcile net income to net cash flows from operating activities:
Gain on sale of real estate	Gain on sale of real estate	(13,683)		(1,117)		Gain on sale of real estate	—		(13,404)
Depreciation and amortization	Depreciation and amortization	508,139		411,851		Depreciation and amortization	440,836		319,587
Equity in earnings of unconsolidated real estate entities	Equity in earnings of unconsolidated real estate entities	(81,382)		(62,863)		Equity in earnings of unconsolidated real estate entities	(91,949)		(48,522)
Distributions from cumulative equity in earnings of unconsolidated real estate entities	Distributions from cumulative equity in earnings of unconsolidated real estate entities	59,251		52,499		Distributions from cumulative equity in earnings of unconsolidated real estate entities	46,593		43,747
Foreign currency exchange (gain) loss		(73,584)		52,250
Unrealized foreign currency exchange gain						Unrealized foreign currency exchange gain	(136,818)		(32,678)
Share-based compensation expense	Share-based compensation expense	47,647		21,535		Share-based compensation expense	30,856		32,672
Other	Other	30,712		47,390		Other	(8,933)		(16,939)
Total adjustments	Total adjustments	477,100		521,545		Total adjustments	280,585		284,463
Net cash flows from operating activities	Net cash flows from operating activities	1,814,720		1,530,340		Net cash flows from operating activities	1,453,773		1,130,455
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures to maintain real estate facilities	Capital expenditures to maintain real estate facilities	(169,103)		(132,969)		Capital expenditures to maintain real estate facilities	(212,473)		(90,644)
Development and expansion of real estate facilities	Development and expansion of real estate facilities	(201,527)		(132,476)		Development and expansion of real estate facilities	(156,463)		(135,180)
Acquisition of real estate facilities and intangible assets	Acquisition of real estate facilities and intangible assets	(2,845,284)		(282,417)		Acquisition of real estate facilities and intangible assets	(231,417)		(2,518,358)
Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	8,765		10,803		Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	4,537		8,765
Repayment of note receivable		—		7,509
Proceeds from sale of real estate investments	Proceeds from sale of real estate investments	16,070		1,399		Proceeds from sale of real estate investments	—		15,713
Net cash flows used in investing activities	Net cash flows used in investing activities	(3,191,079)		(528,151)		Net cash flows used in investing activities	(595,816)		(2,719,704)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayments on notes payable	Repayments on notes payable	(1,585)		(1,505)		Repayments on notes payable	(472)		(1,053)
Issuance of notes payable, net of issuance costs	Issuance of notes payable, net of issuance costs	3,300,160		545,151		Issuance of notes payable, net of issuance costs	—		2,482,529
Issuance of preferred shares	Issuance of preferred shares	725,311		773,741		Issuance of preferred shares	242,832		586,338
Issuance of common shares		81,412		5,505
Issuance of common shares in connection with share-based compensation						Issuance of common shares in connection with share-based compensation	11,492		47,598
Redemption of preferred shares	Redemption of preferred shares	(825,000)		(1,220,000)		Redemption of preferred shares	—		(500,000)
Cash paid upon vesting of restricted share units		(10,438)		(9,704)
Taxes paid upon net share settlement of restricted share units						Taxes paid upon net share settlement of restricted share units	(12,210)		(9,013)
Acquisition of noncontrolling interests	Acquisition of noncontrolling interests	(33)		(33)		Acquisition of noncontrolling interests	—		(33)
Contributions by noncontrolling interests	Contributions by noncontrolling interests	2,359		2,291		Contributions by noncontrolling interests	1,698		1,765
Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(1,189,876)		(1,208,321)		Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(799,502)		(792,413)
Distributions paid to noncontrolling interests	Distributions paid to noncontrolling interests	(4,513)		(3,968)		Distributions paid to noncontrolling interests	(21,697)		(2,807)
Net cash flows provided by financing activities		2,077,797		(1,116,843)
Net cash flows (used in) from financing activities						Net cash flows (used in) from financing activities	(577,859)		1,812,911
Net cash flows from operating, investing, and financing activities	Net cash flows from operating, investing, and financing activities	701,438		(114,654)		Net cash flows from operating, investing, and financing activities	280,098		223,662
Net effect of foreign exchange impact on cash and equivalents, including restricted cash	Net effect of foreign exchange impact on cash and equivalents, including restricted cash	313		(192)		Net effect of foreign exchange impact on cash and equivalents, including restricted cash	—		173
Increase (decrease) in cash and equivalents, including restricted cash		$	701,751	$	(114,846)
Increase in cash and equivalents, including restricted cash						Increase in cash and equivalents, including restricted cash	$	280,098	$	223,835

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2021		2020			2022		2021

Cash and equivalents, including restricted cash at beginning of the period:	Cash and equivalents, including restricted cash at beginning of the period:					Cash and equivalents, including restricted cash at beginning of the period:
Cash and equivalents	Cash and equivalents	$	257,560	$	409,743	Cash and equivalents	$	734,599	$	257,560
Restricted cash included in other assets	Restricted cash included in other assets	25,040		23,811		Restricted cash included in other assets	26,691		25,040
		$	282,600	$	433,554		$	761,290	$	282,600

Cash and equivalents, including restricted cash at end of the period:	Cash and equivalents, including restricted cash at end of the period:					Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents	Cash and equivalents	$	958,247	$	293,955	Cash and equivalents	$	1,013,886	$	480,810
Restricted cash included in other assets	Restricted cash included in other assets	26,104		24,753		Restricted cash included in other assets	27,502		25,625
		$	984,351	$	318,708		$	1,041,388	$	506,435

Supplemental schedule of non-cash investing and financing activities:	Supplemental schedule of non-cash investing and financing activities:					Supplemental schedule of non-cash investing and financing activities:

Costs incurred during the period remaining unpaid at period end for:	Costs incurred during the period remaining unpaid at period end for:					Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities	Capital expenditures to maintain real estate facilities	$	(18,243)	$	(9,434)	Capital expenditures to maintain real estate facilities	$	(15,796)	$	(13,728)
Construction or expansion of real estate facilities	Construction or expansion of real estate facilities	(39,305)		(34,715)		Construction or expansion of real estate facilities	(48,682)		(41,345)
Accrued and other liabilities		57,548		44,149

Real estate acquired in exchange for noncontrolling interests						Real estate acquired in exchange for noncontrolling interests	(19,865)		—

Preferred shares called for redemption and reclassified to liabilities						Preferred shares called for redemption and reclassified to liabilities	—		325,000

See accompanying notes.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022

~~(unaudited)~~(Unaudited)

1.Description of the Business

Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”), a Maryland real estate investment trust (“REIT”), was organized in 1980. Our principal business activities include the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, ~~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.

At ~~September~~June 30, ~~2021,~~2022, we ~~have~~had direct and indirect equity interests in ~~2,678~~2,807 self-storage facilities (with approximately ~~186.4~~200.1 million net rentable square feet) located in 39 states in the United States (“U.S.”) operating under the Public Storage® name, and 0.9 million net rentable square feet of commercial and retail space.

~~We own an approximate~~At June 30, 2022, we owned a 35% common equity interest in Shurgard Self Storage SA (“Shurgard”), a public company traded on Euronext Brussels under the “SHUR” symbol, which ~~owns 247~~owned 256 self-storage facilities (with approximately 1314 million net rentable square feet) located in 7 Western European countries, all operating under the Shurgard® name. We also ~~own an approximate 42%~~owned a 41% common equity interest in PS Business Parks, Inc. (“PSB”), a REIT traded on the New York Stock Exchange under the “PSB” symbol, which ~~owns 28~~owned 27 million net rentable square feet of commercial properties, primarily multi-tenant industrial, flex, and office space, located in 6 states.

~~Disclosures~~Refer to Note 15. Subsequent Events for information regarding PSB’s closed merger transaction with affiliates of Blackstone Real Estate ("Blackstone") on July 20, 2022, which resulted in the ~~number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 12) are unaudited and outside the scope~~sale of our ~~independent registered public accounting firm’s review of our financial statements~~41% common equity interest in ~~accordance with the standards of the Public Company Accounting Oversight Board (U.S.).~~PSB in its entirety.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited ~~financial statements~~Consolidated Financial Statements and related ~~notes~~Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

~~Certain amounts previously reported in~~Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our ~~September 30, 2020~~independent registered public accounting firm’s review of our financial statements ~~have been reclassified to conform to~~in accordance with the ~~September 30, 2021 presentation, including revenues and cost operations from our third party management activities~~standards of ~~$3.9 million and $3.8 million, respectively, for~~ the three months ended September 30, 2020, and $10.5 million and $10.0 million, respectively, for the nine months ended September 30, 2020, previously reported within interest and other income. This reclassification had no impact on our balance sheet, statements of comprehensive income, statements of equity, or cash flows as of andPublic Company Accounting Oversight Board (U.S.).

Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~

~~Additionally, we corrected our prior period financial statement presentation~~2022 are not necessarily indicative of share-based compensation expense and dividends paid on restricted share units (“RSUs”) between general and administrative expense and self-storage cost of operations. As a result, we revised our statements of incomethe results that may be expected for the three and nine months ended September 30, 2020 with an increase in self-storage cost of operations of $3.1 million and $9.4 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 three and nine months ended September 30, 2020.year ending December 31, 2022.

Summary of Significant Accounting Policies

~~Consolidation~~There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and ~~Equity Method~~Summary of Significant Accounting

~~We consider entities~~ Policies, in Notes 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~~Consolidated Financial Statements included in Item 8 of Part II of the ~~equity holders as a group do not have a controlling financial interest. We consolidate VIEs when we have (i)~~Company's Annual Report on Form 10-K for the ~~power to direct the~~year ended December 31, 2021.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2021~~

~~(unaudited)~~

~~activities most significantly impacting economic performance, and (ii) either the obligation to absorb losses or the right to receive benefits from the VIE. At~~ June 30, 2021, we were the primary beneficiary of, and therefore consolidated through contractual rights, 3 limited liability companies that were considered VIEs, which owned 48 self-storage properties acquired on April 28, 2021 known as the ezStorage portfolio. During the third quarter of 2021, we became the sole member of these 3 limited liability companies and therefore consolidated them through our voting interests. Accordingly, we have no involvement with any material VIEs as of September 30, 2021. We consolidate all other entities when we control them through voting shares or contractual rights. We refer to the entities we consolidate, for the period in which the reference applies, collectively as the “Subsidiaries,” and we eliminate intercompany transactions and balances.2022

We account for our investments in entities that we do not consolidate but over which we have significant influence using the equity method of accounting. We refer to these entities, for the periods in which the reference applies, collectively as the “Unconsolidated Real Estate Entities,” and we eliminate intra-entity profits and losses and amortize 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 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.”

~~Use of Estimates~~

~~The financial statements and accompanying notes reflect our estimates and assumptions. Actual results could differ from those estimates and assumptions.~~

~~Income Taxes~~

We 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.

Our tenant reinsurance, merchandise, and third party management operations are subject to corporate income tax and such taxes are included in ancillary cost of operations. We also incur income and other taxes in certain states, which are included 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 authorities had full knowledge of the relevant facts and circumstances of our positions. As of September 30, 2021, we had no tax benefits that were not recognized.

~~Real Estate Facilities~~

We record real estate facilities at cost. We capitalize all costs incurred to acquire, develop, construct, renovate and improve facilities, 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 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

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

~~recognize additional paid-in capital for the difference between the consideration received and the partial interest at book value.~~

~~Other Assets~~

Other assets primarily consist of right-of-use assets, prepaid costs and expenses, restricted cash, reinsurance premium receivables, and rent receivables from our tenants (net of an allowance for uncollectible amounts).

~~Accrued and Other Liabilities~~

Accrued and other liabilities consist primarily of property tax accruals, trade and construction payables, rents prepaid by our tenants, lease liabilities, accrued tenant reinsurance losses, and accrued payroll. 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 Instruments~~

Cash 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 Value~~

As 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.

We 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 Risk~~

Financial 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 September 30, 2021, 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 Assets~~

~~Intangible assets consist of goodwill, the Shurgard® trade name, and finite-lived assets.~~

Goodwill totaled $165.8 million at September 30, 2021 ($165.8 million at December 31, 2020). The Shurgard® trade name, which Shurgard uses pursuant to a fee-based licensing agreement, has a book value of

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

~~$18.8 million at September 30, 2021 and December 31, 2020. 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 and (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. At September 30, 2021, these intangibles had a net book value of $74.4 million ($20.1 million at December 31, 2020). Accumulated amortization totaled $59.4 million at September 30, 2021 ($27.3 million at December 31, 2020). A total of $23.3 million and $49.0 million in amortization expense was recorded in the three and nine months ended September 30, 2021, respectively, and $3.0 million and $12.0 million in the same periods in 2020.

The estimated future amortization expense for our finite-lived intangible assets at September 30, 2021 is approximately $18.7 million in the remainder of 2021, $39.1 million in 2022 and $16.6 million thereafter. During the nine months ended September 30, 2021, intangibles increased $103.3 million in connection with the acquisition of self-storage facilities (Note 3).

~~Evaluation of Asset Impairment~~

We 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 fair value of the related reporting unit may be less than the carrying amount. If we determine that the fair value of the reporting unit exceeds 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-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 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.

~~No impairments were recorded in any of our evaluations for any period presented herein.~~

~~Revenue and Expense Recognition~~

We 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 Translation~~

The 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. 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).

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

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. The Euro was translated at exchange rates of approximately 1.159 U.S. Dollars per Euro at September 30, 2021 (1.226 at December 31, 2020), and average exchange rates of 1.179 and 1.168 for the three months ended September 30, 2021 and 2020, respectively, and average exchange rates of 1.196 and 1.124 for the nine months ended September 30, 2021 and 2020, respectively.

~~Comprehensive Income~~

Total comprehensive income represents net income, adjusted for changes in other comprehensive income (loss) for the applicable period, which primarily comprised of foreign currency translation gains and losses on our investment in Shurgard.

~~Net Income per Common Share~~

We allocate net income 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 “preferred share redemption charge”), 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.

We calculate basic and diluted net income per common share 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):

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Weighted average common shares and equivalents outstanding:
Basic weighted average common shares outstanding 174,926 174,503 174,787 174,481
Net effect of dilutive stock options - based on treasury stock method 880 123 611 125
Diluted weighted average common shares outstanding 175,806 174,626 175,398 174,606

(Unaudited)

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

3.Real Estate Facilities

Activity in real estate facilities during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 is as follows:

~~Nine~~Six Months Ended
~~September~~ June 30, ~~2021~~2022

(Amounts in thousands)

Operating facilities, at cost:

Beginning balance

~~17,372,627~~22,807,833

Capital expenditures to maintain real estate facilities

~~177,641~~205,558

Acquisitions

~~2,741,952~~246,274

Dispositions

~~(6,783)~~(383)

Developed or expanded facilities opened for operation

~~171,086~~56,266

Ending balance

~~20,456,523~~23,315,548

Accumulated depreciation:

Beginning balance

~~(7,152,135)~~(7,773,308)

Depreciation expense

~~(450,757)~~(376,986)

Dispositions

~~4,396~~181

Ending balance

~~(7,598,496)~~(8,150,113)

Construction in process:

Beginning balance

~~188,079~~272,471

Costs incurred to develop and expand real estate facilities

~~211,386~~163,855

Developed or expanded facilities opened for operation

~~(171,086)~~(56,266)

Ending balance

~~228,379~~380,060

Total real estate facilities at ~~September~~June 30, ~~2021~~2022

~~13,086,406~~15,545,495

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we acquired ~~126~~20 self-storage facilities ~~(10,295,000~~(1.5 million net rentable square feet of storage space), for a total cost of ~~$2.8 billion~~$251.3 million, consisting $231.4 million in ~~cash.~~cash and $19.9 million in partnership units in our subsidiary. Approximately ~~$103.3~~$5.0 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing ~~$171.1~~$56.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, adding ~~1.2~~0.4 million net rentable square feet of self-storage space. Construction in process at ~~September~~June 30, ~~2021~~2022 consists of projects to develop new self-storage facilities and expand existing self-storage facilities.

During the nine months ended September 30, 2021, our accrual for unpaid construction costs increased $7.4 million (a $2.9 million increase for the same period in 2020). During the nine months ended September 30, 2021, our accrual for capital expenditures to maintain real estate facilities increased $7.9 million (a $6.9 million decrease for the same period in 2020).

During the nine months ended September 30, 2021, we sold portions of real estate facilities in connection with eminent domain proceedings for $16.1 million in cash proceeds and recorded a related gain on sale of real estate of approximately $13.7 million.

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

4.Investments in Unconsolidated Real Estate Entities

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


		Investments in Unconsolidated Real Estate Entities at					Investments in Unconsolidated Real Estate Entities at
		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021

PSB	PSB	$	451,336	$	431,963	PSB	$	563,041	$	515,312
Shurgard	Shurgard	327,936		341,083		Shurgard	282,853		313,451
Total	Total	$	779,272	$	773,046	Total	$	845,894	$	828,763

Equity in Earnings of Unconsolidated Real Estate Entities for the
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
PSB $ 27,110 $ 16,548 $ 62,494 $ 51,513
Shurgard 5,750 4,692 18,888 11,350
Total $ 32,860 $ 21,240 $ 81,382 $ 62,863
PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)


	Equity in Earnings of Unconsolidated Real Estate Entities for the
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

PSB	$	40,124	$	20,908	$	77,010	$	35,384
Shurgard	8,401		8,158		14,939		13,138
Total	$	48,525	$	29,066	$	91,949	$	48,522

Investment in PSB

Throughout all periods presented, we owned 7,158,354 shares of PSB’s common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB, representing ~~an approximate 42%~~a 41% common equity ~~interest.~~interest as of June 30, 2022 (41% as of December 31, 2021). The limited partnership units ~~are~~were convertible at our option, subject to certain conditions, on a 1-for-one basis into PSB common stock.

Based upon the closing price at ~~September~~June 30, ~~2021~~2022 ($~~156.74~~187.15 per share of PSB common stock), the shares and units we owned had a market value of approximately ~~$2.3~~$2.7 billion.

~~Our equity in earnings of PSB comprised our equity share of PSB’s net income, less amortization of the PSB Basis Differential (defined below).~~

During each of the ~~nine month periods~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we received cash distributions from PSB totaling ~~$45.6~~$30.4 million.

~~At September~~As of June 30, 2021, our pro-rata investment in PSB’s real estate assets included in investment in unconsolidated real estate entities exceeds our pro-rata share of the underlying amounts on PSB’s balance sheet by approximately $2.8 million ($3.4 million at December 31, 2020). This differential (the “PSB Basis Differential”) is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $0.6 million during each of the nine month periods ended September 30, 2021 and 2020.

2022, PSB iswas a publicly held entity traded on the New York Stock Exchange under the symbol “PSB”.

Refer to Note 15. Subsequent Events for information regarding PSB’s closed merger transaction with Blackstone on July 20, 2022, which resulted in the sale of our 41% common equity interest in PSB in its entirety.

Investment in Shurgard

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

Based upon the closing price at ~~September~~June 30, ~~2021~~2022 (€~~47.35~~44.45 per share of Shurgard common stock, at ~~1.159~~1.045 exchange rate of US Dollars to the Euro), the shares we owned had a market value of approximately ~~$1.7~~$1.5 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). We eliminated ~~$0.9~~$0.6 million ~~and $0.8 million~~of intra-entity profits and losses for each of the ~~nine month periods~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020, respectively,~~2021, representing our equity share of

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

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~~ During the six months ended June 30, 2022 and 2021, we received cash 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 equity in earnings, with any excess classified as “distributions in excess of cumulative equity in earnings from unconsolidated real estate entities.” Shurgard paid €0.57 per share and €0.50 per share in dividends to its shareholders during the nine months ended September 30, 2021 and 2020, respectively, of which our share totaled $21.5totaling $20.1 million and ~~$17.0~~$21.5 million, respectively.

At ~~September~~June 30, ~~2021,~~2022, our ~~pro-rata~~ investment in Shurgard’s real estate assets included in investment in unconsolidated real estate entities exceeds our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately ~~$75.8~~$70.6 million ($~~83.1~~74.7 million at December 31, ~~2020)~~2021). This differential (the “Shurgard Basis Differential”) includes our cost basis adjustment in Shurgard’s real estate assets net of related deferred income taxes. The real estate assets basis differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately ~~$7.3~~$4.1 million and ~~$9.5~~$4.4 million during the ~~nine month periods~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020, respectively.~~

~~As of September 30,~~ 2021, and 2020, we translated the book value of our investment in Shurgard from Euro to U.S. Dollar and recorded $9.6 million other comprehensive loss and $2.5 million other comprehensive income during the nine month periods ended September 30, 2021 and 2020, respectively.

Shurgard is a publicly held entity trading on Euronext Brussels under the symbol “SHUR”.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

5.Goodwill and Other Intangible Assets

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


	At June 30, 2022						At December 31, 2021
	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	195,114		(130,037)		65,077		198,180		(79,953)		118,227
Total goodwill and other intangible assets	$	379,781	$	(130,037)	$	249,744	$	382,847	$	(79,953)	$	302,894

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $24.3 million and $58.2 million for the three and six months ended June 30, 2022, respectively, and $19.6 million and $25.7 million in the same periods in 2021. During the six months ended June 30, 2022, intangibles increased $5.0 million, in connection with the acquisition of self-storage facilities (Note 3).

The estimated future amortization expense for our finite-lived intangible assets at June 30, 2022 is as follows (amounts in thousands):


Year	Amount
Remainder of 2022	$	31,787
2023	25,857
Thereafter	7,433
Total	$	65,077

6.Credit Facility

We have a revolving credit agreement (the “Credit Facility”) with a $500 million borrowing limit that matures on April 19, 2024. Amounts drawn on the Credit Facility bear annual interest at rates ranging from LIBOR plus 0.7% to LIBOR plus 1.350% depending upon the ratio of our Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBOR plus 0.75% at ~~September~~June 30, ~~2021)~~2022). We are also required to pay a quarterly facility fee ranging from 0.07% per annum to 0.25% per annum depending upon the ratio of our Total Indebtedness to our Gross Asset Value (0.10% per annum at ~~September~~June 30, ~~2021)~~2022). At ~~September~~June 30, ~~2021~~2022 and ~~November 1, 2021,~~August 4, 2022, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling ~~$21.2~~$18.5 million at ~~September~~June 30, ~~2021~~2022 ($~~24.3~~21.2 million at December 31, ~~2020)~~2021). The Credit Facility has various customary restrictive covenants, with which we were in compliance at ~~September~~June 30, ~~2021.~~2022.

1713

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022

~~(unaudited)~~(Unaudited)

6.7.Notes Payable

Our notes payable are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are set forth in the tables below:

Amounts at September 30, 2021
Coupon Rate Effective Rate Principal Unamortized Costs Book
Value Fair
Value
($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due September 15, 2022 2.370% 2.483% $ 500,000 $ (495) $ 499,505 $ 509,800
Notes due April 23, 2024 SOFR+0.47% 0.596% 700,000 (1,804) 698,196 704,200
Notes due February 15, 2026 0.875% 1.030% 500,000 (3,246) 496,754 493,515
Notes due September 15, 2027 3.094% 3.218% 500,000 (3,152) 496,848 546,757
Notes due May 1, 2028 1.850% 1.962% 650,000 (4,446) 645,554 653,619
Notes due May 1, 2029 3.385% 3.459% 500,000 (2,334) 497,666 549,252
Notes due May 1, 2031 2.300% 2.419% 650,000 (6,554) 643,446 658,400
4,000,000 (22,031) 3,977,969 4,115,543
Euro Denominated Unsecured Debt
Notes due April 12, 2024 1.540% 1.540% 115,896 — 115,896 120,868
Notes due November 3, 2025 2.175% 2.175% 280,484 — 280,484 303,644
Notes due September 9, 2030 0.500% 0.640% 811,272 (10,010) 801,262 795,777
Notes due January 24, 2032 0.875% 0.978% 579,480 (5,528) 573,952 581,103
1,787,132 (15,538) 1,771,594 1,801,392
Mortgage Debt, secured by 27 real estate facilities with a net book value of $96.6 million
3.905% 3.903% 23,627 — 23,627 24,939
$ 5,810,759 $ (37,569) $ 5,773,190 $ 5,941,874


		Amounts at							Amounts at June 30, 2022
		December 31, 2020					Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book Value		Fair Value
		Book Value		Fair Value
		($ amounts in thousands)							($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt	U.S. Dollar Denominated Unsecured Debt					U.S. Dollar Denominated Unsecured Debt
Notes due September 15, 2022	Notes due September 15, 2022	$	499,109	$	517,419	Notes due September 15, 2022	2.370%	2.483%	$	500,000	$	(99)	$	499,901	$	499,889
Notes due April 23, 2024						Notes due April 23, 2024	SOFR+0.47%	0.679%	700,000		(1,276)		698,724		677,948
Notes due February 15, 2026						Notes due February 15, 2026	0.875%	1.030%	500,000		(2,692)		497,308		446,501
Notes due November 9, 2026						Notes due November 9, 2026	1.500%	1.640%	650,000		(3,792)		646,208		586,313
Notes due September 15, 2027	Notes due September 15, 2027	496,452		560,833		Notes due September 15, 2027	3.094%	3.218%	500,000		(2,756)		497,244		473,901
Notes due May 1, 2028						Notes due May 1, 2028	1.850%	1.962%	650,000		(3,938)		646,062		563,957
Notes due November 9, 2028						Notes due November 9, 2028	1.950%	2.044%	550,000		(3,059)		546,941		475,398
Notes due May 1, 2029	Notes due May 1, 2029	497,433		574,833		Notes due May 1, 2029	3.385%	3.459%	500,000		(2,102)		497,898		464,411
Notes due May 1, 2031						Notes due May 1, 2031	2.300%	2.419%	650,000		(6,040)		643,960		546,666
Notes due November 9, 2031						Notes due November 9, 2031	2.250%	2.322%	550,000		(3,309)		546,691		455,568
		1,492,994		1,653,085					5,750,000		(29,063)		5,720,937		5,190,552

Euro Denominated Unsecured Debt	Euro Denominated Unsecured Debt					Euro Denominated Unsecured Debt
Notes due April 12, 2024	Notes due April 12, 2024	122,646		129,192		Notes due April 12, 2024	1.540%	1.540%	104,503		—		104,503		102,948
Notes due November 3, 2025	Notes due November 3, 2025	296,821		323,552		Notes due November 3, 2025	2.175%	2.175%	252,911		—		252,911		249,888
Notes due September 9, 2030						Notes due September 9, 2030	0.500%	0.640%	731,521		(9,169)		722,352		574,244
Notes due January 24, 2032	Notes due January 24, 2032	607,301		634,389		Notes due January 24, 2032	0.875%	0.978%	522,515		(5,126)		517,389		407,562
		1,026,768		1,087,133					1,611,450		(14,295)		1,597,155		1,334,642

Mortgage Debt		25,230		26,958
Mortgage Debt, secured by 11 real estate facilities with a net book value of $65.3 million						Mortgage Debt, secured by 11 real estate facilities with a net book value of $65.3 million	3.876%	3.895%	22,812		—		22,812		23,066

		$	2,544,992	$	2,767,176				$	7,384,262	$	(43,358)	$	7,340,904	$	6,548,260

1814

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022

~~(unaudited)~~(Unaudited)


	Amounts at
	December 31, 2021
	Book Value		Fair Value
	($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due September 15, 2022	$	499,637	$	506,362
Notes due April 23, 2024	698,372		700,314
Notes due February 15, 2026	496,939		488,141
Notes due November 9, 2026	645,773		649,996
Notes due September 15, 2027	496,980		535,206
Notes due May 1, 2028	645,724		649,221
Notes due November 9, 2028	546,701		548,241
Notes due May 1, 2029	497,743		545,580
Notes due May 1, 2031	643,617		656,546
Notes due November 9, 2031	546,512		551,932
	5,717,998		5,831,539

Euro Denominated Unsecured Debt
Notes due April 12, 2024	113,431		117,526
Notes due November 3, 2025	274,518		295,256
Notes due September 9, 2030	784,287		769,561
Notes due January 24, 2032	561,761		551,842
	1,733,997		1,734,185

Mortgage Debt	23,284		24,208

	$	7,475,279	$	7,589,932

U.S. Dollar Denominated Unsecured Notes

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 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 Secured Overnight Financing Rate (“SOFR”) + 0.47% (reset quarterly and at 0.495% as of September 30, 2021), 1.85% and 2.30%, respectively, and maturing on April 23, 2024, May 1, 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 $13.7 million in costs.

The U.S. Dollar Denominated Unsecured Notes have various financial covenants, with which we were in compliance at ~~September~~June 30, ~~2021.~~2022. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately ~~14%~~15% at ~~September~~June 30, ~~2021)~~2022) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately ~~33x~~26x for the twelve months ended ~~September~~June 30, ~~2021)~~2022) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Notes

Our Euro denominated unsecured notes (the “Euro Notes”) consist of 4 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,~~ (iii) €500.0 million issued in a public offering on January 24, 2020, ~~for $545.2 million in net proceeds upon converting the Euros to U.S. Dollars,~~ and (iv) €700.0 million issued in a public offering on September 9, 2021 for $817.6 million in net proceeds upon converting the Euros to U.S. Dollars. 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 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 currency exchange gain (loss)” on our income statement (gains of ~~$40.9~~$102.9 million and ~~$73.6~~$138.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to losses of ~~$41.9~~$12.7 million and ~~$52.3~~gains of $32.7 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021, respectively).

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

Mortgage Notes

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

At ~~September~~June 30, ~~2021,~~2022, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.2% and 7.1%, and mature between ~~January~~November 1, 2022 and July 1, 2030.

At ~~September~~June 30, ~~2021,~~2022, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~


		Unsecured Debt		Mortgage Debt		Total			Unsecured Debt		Mortgage Debt		Total

Remainder of 2021		$	—	$	251	$	251
2022		500,000		2,574		502,574
Remainder of 2022								Remainder of 2022	$	500,000	$	2,011	$	502,011
2023	2023	—		19,219		19,219		2023	—		19,219		19,219
2024	2024	815,896		124		816,020		2024	804,503		124		804,627
2025	2025	280,484		131		280,615		2025	252,911		131		253,042
2026								2026	1,150,000		138		1,150,138
Thereafter	Thereafter	4,190,752		1,328		4,192,080		Thereafter	4,654,036		1,189		4,655,225
		$	5,787,132	$	23,627	$	5,810,759		$	7,361,450	$	22,812	$	7,384,262
Weighted average effective rate	Weighted average effective rate	1.8%		3.9%		1.8%		Weighted average effective rate	1.8%		3.9%		1.9%

Cash paid for interest totaled ~~$49.8~~$66.0 million and ~~$40.2~~$32.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Interest capitalized as real estate totaled $2.6 million and ~~$2.5~~$1.7 million for the ~~nine month periods~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

7.8.Noncontrolling Interests

~~At September 30, 2021, the~~We have noncontrolling interests ~~represent (i) third-party equity interests in~~related to several subsidiaries ~~owning 24 operating self-storage facilities and 5 self-storage facilities that are under construction and (ii) 231,978~~we consolidate of which we do not own 100% of the equity. At June 30, 2022, certain of these subsidiaries have issued 498,107 partnership units ~~held by~~to third-parties ~~in a subsidiary~~ that are convertible on a 1-for-one basis (subject to certain limitations) into common shares of the Company at the option of the unitholder (collectively, the “Noncontrolling Interests”). At September 30, 2021, the Noncontrolling Interests cannot require us to redeem their interests, other than pursuant to a liquidation of the subsidiary.

~~During the nine months ended September 30, 2021 and 2020, we allocated~~unitholder. These include a total of ~~$4.1~~54,137 partnership units of $19.9 million ~~and $2.8 million, respectively,~~issued to third-parties in connection with our acquisition of ~~income to these interests; and we paid $4.5 million and $4.0 million, respectively,~~self-storage properties in ~~distributions to these interests.~~

~~During~~ the ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020, Noncontrolling Interests contributed $2.4~~2022.

At March 31, 2022, we had 254,833 partnership units of $83.8 million ~~and $2.3~~classified as redeemable noncontrolling interests outside of total equity in our consolidated balance sheets, because the unitholders of these partnership units had the right to require redemption of their partnership units in cash if common shares of the Company were not publicly listed. In the second quarter of 2022, the related partnership agreements were amended with such cash redemption feature removed from these partnership units. We therefore reclassified $83.8 million ~~respectively,~~from redeemable noncontrolling interests to ~~our subsidiaries.~~noncontrolling interests in total equity during the three months ended June 30, 2022.

2016

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2021~~2022

~~(unaudited)~~(Unaudited)

8.9.Shareholders’ Equity

Preferred Shares

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:


					At September 30, 2021			At December 31, 2020							At June 30, 2022			At December 31, 2021
Series	Series	Earliest Redemption Date	Dividend Rate		Shares Outstanding	Liquidation Preference		Shares Outstanding	Liquidation Preference		Series	Earliest Redemption Date	Dividend Rate		Shares Outstanding	Liquidation Preference		Shares Outstanding	Liquidation Preference

					(Dollar amounts in thousands)										(Dollar amounts in thousands)
Series C		5/17/2021	5.125	%	—	$	—	8,000	$	200,000
Series D		7/20/2021	4.950	%	—	—		13,000	325,000
Series E		10/14/2021	4.900	%	14,000	350,000		14,000	350,000
Series F	Series F	6/2/2022	5.150	%	11,200	280,000		11,200	280,000		Series F	6/2/2022	5.150	%	11,200	$	280,000	11,200	$	280,000
Series G	Series G	8/9/2022	5.050	%	12,000	300,000		12,000	300,000		Series G	8/9/2022	5.050	%	12,000	300,000		12,000	300,000
Series H	Series H	3/11/2024	5.600	%	11,400	285,000		11,400	285,000		Series H	3/11/2024	5.600	%	11,400	285,000		11,400	285,000
Series I	Series I	9/12/2024	4.875	%	12,650	316,250		12,650	316,250		Series I	9/12/2024	4.875	%	12,650	316,250		12,650	316,250
Series J	Series J	11/15/2024	4.700	%	10,350	258,750		10,350	258,750		Series J	11/15/2024	4.700	%	10,350	258,750		10,350	258,750
Series K	Series K	12/20/2024	4.750	%	9,200	230,000		9,200	230,000		Series K	12/20/2024	4.750	%	9,200	230,000		9,200	230,000
Series L	Series L	6/17/2025	4.625	%	22,600	565,000		22,600	565,000		Series L	6/17/2025	4.625	%	22,600	565,000		22,600	565,000
Series M	Series M	8/14/2025	4.125	%	9,200	230,000		9,200	230,000		Series M	8/14/2025	4.125	%	9,200	230,000		9,200	230,000
Series N	Series N	10/6/2025	3.875	%	11,300	282,500		11,300	282,500		Series N	10/6/2025	3.875	%	11,300	282,500		11,300	282,500
Series O	Series O	11/17/2025	3.900	%	6,800	170,000		6,800	170,000		Series O	11/17/2025	3.900	%	6,800	170,000		6,800	170,000
Series P	Series P	6/16/2026	4.000	%	24,150	603,750		—	—		Series P	6/16/2026	4.000	%	24,150	603,750		24,150	603,750
Series Q	Series Q	8/17/2026	3.950	%	5,750	143,750		—	—		Series Q	8/17/2026	3.950	%	5,750	143,750		5,750	143,750
Series R											Series R	11/19/2026	4.000	%	17,400	435,000		17,400	435,000
Series S											Series S	1/13/2027	4.100	%	10,000	250,000		—	—
Total Preferred Shares	Total Preferred Shares				160,600	$	4,015,000	151,700	$	3,792,500	Total Preferred Shares				174,000	$	4,350,000	164,000	$	4,100,000

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 6 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 2 additional members to serve on our ~~board~~Board of ~~trustees~~Trustees (our “Board”) until the arrearage has been cured. At ~~September~~June 30, ~~2021,~~2022, 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 December 2020, we called for redemption of, and on~~On January 20, 2021, we redeemed our 5.400% Series B Preferred Shares, at par. The liquidation value (at par) of $300.0 million was reclassified as a liability at December 31, 2020, and is not included in the table above. We recorded a $9.9 million allocation of income from our common shareholders to the holders of our Preferred Shares in the year ended December 31, 2020 in connection with this redemption.

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

~~On June 16, 2021,~~13, 2022, we issued ~~approximately 24.2~~10.0 million depositary shares, each representing 0.001 of a share of our ~~4.000%~~4.100% Series PS Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of ~~$603.8~~$250.0 million in gross proceeds, and we incurred ~~$17.4~~$7.2 million in issuance costs.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021, we redeemed our 5.125% Series C Preferred Shares, at par. We recorded a $6.4 million allocation of income from our common shareholders to the holders of our Preferred Shares in the nine months ended September 30, 2021 in connection with this redemption.2022

On July 20, 2021, we redeemed our 4.950% Series D Preferred Shares, at par. We recorded a $10.6 million allocation of income from our common shareholders to the holders of our Preferred Shares in the nine months ended September 30, 2021 in connection with this redemption.(Unaudited)

On August 17, 2021, we issued approximately 5.8 million depositary shares, each representing 0.001 of a share of our 3.950% Series Q Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $143.8 million in gross proceeds, and we incurred $4.8 million in issuance costs.

On June 17, 2020, we issued 22.6 million depositary shares, each representing 0.001 of a share of our 4.625% Series L Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $565.0 million in gross proceeds, and we incurred $15.8 million in issuance costs.

On July 10, 2020, we redeemed our 5.375% Series V Preferred Shares, at par. We recorded a $15.1 million allocation of income from our common shareholders to the holders of our Preferred Shares in the nine months ended September 30, 2020 in connection with this redemption.

On August 14, 2020, we issued 9.2 million depositary shares, each representing 0.001 of a share of our 4.125% Series M Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $230.0 million in gross proceeds, and we incurred $5.4 million in issuance costs.

On September 30, 2020, we redeemed our 5.200% Series W and Series X Preferred Shares, at par. We recorded a $23.3 million allocation of income from our common shareholders to the holders of our Preferred Shares in the three and nine months ended September 30, 2020 in connection with these redemptions.

Dividends

Common share dividends paid, including amounts paid to our restricted share unitholders, totaled ~~$351.2~~$351.3 million ($2.00 per share) and ~~$349.8~~$350.1 million ($2.00 per share) for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$1.05 billion~~$702.5 million ($~~6.00~~4.00 per share) and $700.2 million ($4.00 per share) for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Preferred share dividends paid totaled ~~$46.2~~$48.7 million and ~~$53.9~~$46.2 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$138.5~~$97.0 million and ~~$158.8~~$92.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

9.10.Related Party Transactions

At ~~September~~June 30, ~~2021,~~2022, Tamara Hughes Gustavson, a current member of ~~the~~our Board, held less than a 0.1% equity interest in, and ~~her adult children owned and controlled~~is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. NaN of Ms. ~~Gustavson’s direct ownership~~Gustavson's adult 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® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately ~~$1.5~~$1.1 million and ~~$1.1~~$1.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

~~10.~~11.Share-Based Compensation

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

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

~~We consider~~unrestricted common stock ~~options and RSUs “granted” and “outstanding” as the terms are used herein, when (i) the Company and the recipient reach a mutual understanding~~issued in lieu 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 of awards, 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).trustee compensation.

We recorded share-based compensation expense associated with ~~stock options and RSUs~~our equity awards in the various expense categories in the ~~Statement~~Consolidated Statements of Income as set forth in the following table. In addition, ~~$0.8~~$1.1 million and ~~$3.1~~$2.1 million share-based compensation cost was capitalized as real estate facilities for the three and ~~nine~~six months ended ~~September~~June 30, 2022, respectively, as compared to $1.1 million and $2.2 million for the same periods of 2021, respectively.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(Amounts in thousands)									(Amounts in thousands)

Self-storage cost of operations	Self-storage cost of operations	$	4,506	$	3,488	$	16,272	$	10,550	Self-storage cost of operations	$	4,673	$	5,401	$	9,537	$	11,766
Ancillary cost of operations	Ancillary cost of operations	343		—		1,394		—		Ancillary cost of operations	221		393		487		779
General and administrative	General and administrative	9,746		5,278		30,019		11,080		General and administrative	12,034		12,864		20,832		20,544
Total	Total	$	14,595	$	8,766	$	47,685	$	21,630	Total	$	16,928	$	18,658	$	30,856	$	33,089

~~In July 2020, we modified our~~Included in share-based compensation ~~plans~~is $5.3 million and $9.5 million during the three and six months ended June 30, 2022, respectively, as compared to ~~allow immediate vesting upon~~$7.2 million and $11.0 million for the same periods in 2021, of retirement ~~(“Retirement Acceleration”), and~~acceleration as discussed in Note 2 to ~~extend~~our Consolidated Financial Statements included in our Annual Report on Form 10-K for the ~~exercisability~~year ended December 31, 2021.

As of ~~outstanding stock options up~~June 30, 2022, there was $111.3 million of total unrecognized compensation cost related 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.

share-based compensation arrangements. 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~~cost is expected to be ~~eligible for Retirement Acceleration, if earlier. As~~recognized over a ~~result, the Company recorded $4.8 million and $15.8 million in accelerated compensation expense during the~~weighted-average period of three ~~and nine months ended September~~years.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2021, respectively, as compared to $2.6 million for each of the three and nine months ended September 30, 2020, respectively.~~2022

During the three months ended March 31, 2021, the Company depleted the available shares under the 2016 Equity and Performance-Based Incentive Compensation Plan resulting in $4.8 million of award expense classified as a liability as of March 31, 2021. On April 26, 2021, the Company’s Shareholders approved the 2021 Equity and Performance-Based Incentive Compensation Plan, which authorizes an additional 3000000 shares available for future issuance. Consequently, awards previously classified as a liability were revalued as of April 26, 2021 and reclassified to equity.(Unaudited)

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 period the employee terminates employment.

Stock Options

~~Stock~~We have service-based, performance-based and market-based stock options outstanding, which generally vest over 3 to 5 years, expire 10 years after the grant date, and have an exercise price equal to the closing trading price of our common shares on the grant date. New shares are issued for options exercised. Employees cannot require the Company to settle their award in cash. ~~We use the Black-Scholes option valuation model to estimate the fair value of our performance-based and non-performance based 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.

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

For the three and nine months ended September 30, 2021, we recorded share-based compensation expense for outstanding stock options of $5.5 million and $20.5 million, respectively, as compared to $0.8 million and $3.2 million for the same periods in 2020. The amounts for the three and nine months ended September 30, 2021 includes $0.4 million and $4.9 million, respectively, as compared to $0.1 million for each of the same periods in 2020, in connection with the Retirement Acceleration as discussed above.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021, 385,000~~2022, 142,683 stock options were ~~awarded, 411,467~~granted, 54,466 options were exercised, and ~~10,000~~no options were forfeited. In addition, we expect an incremental ~~175,000~~61,250 stock options to be paid out based on the estimated achievement of performance ~~targets.~~targets on our multi-year performance-based stock options granted during the six months ended June 30, 2021. A total of ~~3,099,700~~3,189,418 stock options were outstanding at ~~September~~June 30, ~~2021, (2,961,167~~2022 (3,039,951 at December 31, ~~2020) and have an average exercise price of $216.45.~~2021).

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we ~~incurred share-based compensation expense of $1.1 million~~granted 65,000 stock options in connection with non-management trustee compensation. For the ~~initial 15,000~~remaining 77,683 stock ~~option awards issued to each of~~options granted during the ~~5 trustees who joined our Board in January 2021.~~

~~During the nine~~six months ended ~~September~~June 30, ~~2021, 245,000 stock options were awarded where~~2022, vesting is dependent upon meeting certain ~~performance targets~~market conditions over the three-year period from January 1, 2022 through December 31, 2024, with ~~respect to 2021, 2022, and 2023.~~continued service-based vesting through the first quarter of 2027. These ~~awards contain a~~stock options require relative ~~Total Shareholder Return modifier that will adjust~~achievement of the ~~payout based on relative performance~~Company’s total shareholder return as compared to the ~~market. As~~weighted average total shareholder return of ~~September 30, 2021, these targets are expected~~specified peer groups and can result in grantees earning up to ~~be met at 100% achievement. These~~200% of the target options ~~resulted in $5.7 million in related compensation expense during~~originally granted.

For the ~~nine~~three and six months ended ~~September~~June 30, ~~2021.~~

~~During the nine months ended September 30, 2020, 770,000~~2022, we incurred share-based compensation cost for outstanding stock options ~~were awarded where vesting is dependent upon meeting certain performance targets with respect~~of $7.7 million and $11.6 million, respectively, as compared to ~~2020, 2021,~~$10.6 million and ~~2022. As of September 30, 2021, these targets are expected to be met at 125% achievement, an increase from 100% as of December 31, 2020, resulting~~$15.0 million for the same periods in ~~$9.6 million in related compensation expense during the nine months ended September 30,~~ 2021.

Restricted Share Units

We have service-based, performance-based and market-based RSUs outstanding, which generally vest over 5 to 8 years from the grant date. 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.~~

During the ~~nine~~six months ended ~~September~~June 30, ~~2021, 78,040~~2022, 26,579 RSUs were granted, ~~26,414~~13,552 RSUs were forfeited and ~~81,193~~69,515 RSUs vested. ~~In addition, we expect an incremental 9,250 RSUs to be paid out based on the estimated achievement of performance targets.~~ The vesting resulted in the issuance of ~~54,914~~50,147 common shares. ~~In addition, tax deposits totaling $10.4 million ($9.7 million for the same period in 2020) were made on behalf of employees in exchange for 26,279 common shares withheld upon vesting.~~ A total of ~~532,471~~514,334 RSUs were outstanding at ~~September~~June 30, ~~2021 (552,788~~2022 (570,822 at December 31, ~~2020)~~2021). ~~During~~

Included in the ~~nine~~RSUs granted during the six months ended ~~September~~June 30, ~~2021, 37,000~~2022 are 21,985 RSUs ~~were awarded~~ where vesting is dependent upon meeting certain ~~performance targets for 2021. As~~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 ~~September 30, 2021, these targets are expected to be met at 125% achievement.~~2027. These RSUs ~~resulted~~require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of the specified peer groups and can result in ~~$4.6 million~~grantees earning up to 200% of the target RSUs originally granted.

Also included in ~~related compensation expense~~the RSUs granted during the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 are 4,594 service-based RSUs.

~~A total of $10.0 million and $30.2 million in RSU cost was recorded for~~For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we incurred share-based compensation cost for RSUs of $10.1 million and $20.9 million, respectively, as compared to ~~$8.0~~$8.8 million and ~~$18.4~~$19.8 million for the same periods in ~~2020. The amount~~2021.

Trustee Deferral Program

Non-management trustees may elect to receive all or a portion of their cash retainers in cash, shares of unrestricted common stock, or fully-vested DSUs to be settled at a specified future date. Shares of unrestricted stock and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the six months ended June 30, 2022, we granted 1,095 DSUs and 195 shares of unrestricted common stock.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

12. Net Income per Common Share

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

We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options outstanding for diluted net income per common share. Potentially dilutive stock options representing 142,683 shares of common stock were excluded from the computation of diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 includes $4.4 million~~2022, because their effect would have been antidilutive.

The following table reconciles the numerators and ~~$10.9 million, respectively, as compared to $2.5 million for each~~denominators of the ~~same periods in 2020, in connection with~~basic and diluted net income per common shares computation for the ~~Retirement Acceleration as discussed above.~~three and six months ended June 30, 2022 and 2021, respectively (in thousands, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	$	603,381	$	346,249	$	1,067,505	$	732,059

Denominator for basic net income per share - weighted average common shares outstanding	175,229		174,824		175,200		174,718
Net effect of dilutive stock options - based on treasury stock method	1,083		723		1,125		476
Denominator for dilutive net income per share - weighted average common shares outstanding	176,312		175,547		176,325		175,194

Net income per common share:
Basic	$	3.44	$	1.98	$	6.09	$	4.19
Dilutive	$	3.42	$	1.97	$	6.05	$	4.18

~~11.~~

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

13.Segment Information

Our ~~reportable~~operating 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 segments based primarily upon the nature of the underlying products and services, as well as the drivers of profitability growth. The net income for each reportable segment included in the table below are in conformity with GAAP and our

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

~~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.~~maker.

Self-Storage Operations

The Self-Storage Operations reportable segment reflects the aggregated rental operations from ~~all~~the self-storage facilities we ~~own. Our CODM reviews the net operating income (“NOI”) of this segment, which represents the related revenues less cost of operations (prior to depreciation expense), in assessing performance~~own from (i) Same Store Facilities, (ii) Acquired Facilities, (iii) Developed and ~~making resource allocation decisions.~~Expanded Facilities, and (iv) Other Non-Same Store Facilities. The presentation in the ~~tables~~table below sets forth the ~~NOI~~Net Operating Income ("NOI") of this reportable 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 Operations

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

~~Investment in PSB~~

This 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 Shurgard~~

This 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.

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

operating segments.

Presentation of Segment Information

The following table reconciles NOI ~~(as applicable)~~ and net income ~~of each~~attributable to our reportable segment to our consolidated net income:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

		(amounts in thousands)									(amounts in thousands)
Self-Storage Segment
Self-Storage Operations Reportable Segment										Self-Storage Operations Reportable Segment
Revenue	Revenue	$	840,510	$	683,949	$	2,333,850	$	2,022,692	Revenue	$	973,286	$	776,993	$	1,890,301	$	1,493,340
Cost of operations	Cost of operations	(216,999)		(209,179)		(631,699)		(637,229)		Cost of operations	(237,989)		(202,595)		(483,483)		(414,700)
Net operating income	Net operating income	623,511		474,770		1,702,151		1,385,463		Net operating income	735,297		574,398		1,406,818		1,078,640
Depreciation and amortization	Depreciation and amortization	(188,552)		(138,333)		(508,139)		(411,851)		Depreciation and amortization	(218,708)		(172,728)		(440,836)		(319,587)
Net income	Net income	434,959		336,437		1,194,012		973,612		Net income	516,589		401,670		965,982		759,053

Ancillary Segment
Ancillary Operations										Ancillary Operations
Revenue	Revenue	54,421		50,596		157,658		143,840		Revenue	58,759		52,322		115,189		103,237
Cost of operations	Cost of operations	(19,735)		(15,174)		(52,044)		(44,081)		Cost of operations	(17,210)		(15,991)		(32,725)		(32,309)
Net operating income	Net operating income	34,686		35,422		105,614		99,759		Net operating income	41,549		36,331		82,464		70,928

Investment in PSB Segment (a) - Equity in earnings of unconsolidated entities		27,110		16,548		62,494		51,513

Investment in Shurgard Segment (a) - Equity in earnings of unconsolidated entities		5,750		4,692		18,888		11,350

Total net income allocated to segments	Total net income allocated to segments	502,505		393,099		1,381,008		1,136,234		Total net income allocated to segments	558,138		438,001		1,048,446		829,981

Other items not allocated to segments:	Other items not allocated to segments:									Other items not allocated to segments:
General and administrative	General and administrative	(31,682)		(18,262)		(78,996)		(53,234)		General and administrative	(28,831)		(27,740)		(51,900)		(47,314)
Interest and other income	Interest and other income	3,356		7,192		9,321		18,976		Interest and other income	10,279		3,113		13,658		5,965
Interest expense	Interest expense	(23,736)		(14,282)		(60,980)		(42,048)		Interest expense	(32,941)		(21,994)		(66,065)		(37,244)
Equity in earnings of unconsolidated real estate entities										Equity in earnings of unconsolidated real estate entities	48,525		29,066		91,949		48,522
Foreign currency exchange gain (loss)	Foreign currency exchange gain (loss)	40,906		(41,900)		73,584		(52,250)		Foreign currency exchange gain (loss)	101,723		(12,707)		137,100		32,678
Gain on sale of real estate	Gain on sale of real estate	279		—		13,683		1,117		Gain on sale of real estate	—		3,991		—		13,404
Net income	Net income	$	491,628	$	325,847	$	1,337,620	$	1,008,795	Net income	$	656,893	$	411,730	$	1,173,188	$	845,992

~~(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.~~

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

14. Commitments and Contingencies

Contingent Losses

We 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 Exposure

We 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

~~PUBLIC STORAGE~~

~~NOTES TO FINANCIAL STATEMENTS~~

~~September 30, 2021~~

~~(unaudited)~~

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 several states. Customers participate in the program at their option. At ~~September~~June 30, ~~2021,~~2022, there were approximately ~~1.1~~1.2 million certificates held by our self-storage customers, representing aggregate coverage of approximately ~~$4.7~~$5.5 billion.

Commitments

We have construction commitments representing future expected payments for construction under contract totaling ~~$134.1~~$267.5 million at ~~September~~June 30, ~~2021.~~2022. We expect to pay approximately ~~$38.3~~$155.7 million in the remainder of ~~2021, $93.9~~2022, $106.1 million in ~~2022~~2023 and ~~$1.9~~$5.7 million in ~~2023~~2024 for these construction commitments.

We have future contractual payments on land, equipment and office space under various lease commitments totaling ~~$66.3~~$64.9 million at ~~September~~June 30, ~~2021.~~2022. We expect to pay approximately ~~$0.7~~$1.4 million in the remainder of ~~2021,~~2022, $3.1 ~~million in 2022, $3.0 million in 2023, $2.9~~ million in each of 2023, 2024 and 2025, $3.0 million in 2026 and ~~$53.7~~$51.2 million thereafter for these commitments.

~~13.~~15. Subsequent Events

Subsequent to ~~September~~June 30, ~~2021,~~2022, we acquired or were under contract to acquire ~~107~~24 self-storage facilities across 1610 states with ~~11.8~~1.7 million net rentable square feet, for ~~$2.3 billion, including~~$257.4 million. Additionally, on July 8, 2022, we acquired the ~~issuance~~commercial interests of PSB at 3 sites, totaling 5 properties, jointly occupied with our self-storage facilities located in Maryland and Virginia, for $47.0 million.

On April 24, 2022, PSB entered into an Agreement and Plan of Merger whereby affiliates of Blackstone agreed to acquire all outstanding shares of PSB's common stock for $187.50 per share in cash. On July 20, 2022, PSB announced that it completed the merger transaction with Blackstone. Each share of PSB common stock and each common unit of partnership ~~units~~interest we held in PSB were converted into the right to receive the merger consideration of ~~approximately $80.0 million. These include~~$187.50 per share or unit and a ~~portfolio~~$0.22 prorated quarterly cash dividend per share or unit, for a total of ~~56 properties (7.5~~$187.72 per share or unit. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a $2.1 billion gain on the sale of our equity investment in PSB in the Consolidated Statement of Income for the third quarter of 2022.

In connection with the sale of our equity investment in PSB, on July 22, 2022, our Board of Trustees declared a special cash dividend of $13.15 per common share. The special dividend is payable on August 4, 2022 to shareholders of record as of August 1, 2022.

On July 26, 2022, the Company called for redemption on August 15, 2022 its 2.370% Senior Notes, with an aggregate outstanding principal amount of $500.0 million, net rentable square feet) currently operated under the brand name of All Storage that we are under contract to purchase for $1.5 billion in cash. The acquisition, which is subject to the satisfaction of customary closing conditions, is expected to close in 2 separate tranches, with 7 self-storage facilities closing in November 2021 and 49 self-storage facilities closing in December 2021.

due September 15, 2022.

2722

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to our ~~2021~~2022 outlook and all underlying assumptions, our expected acquisition, disposition, development and redevelopment activity, supply and demand for our self-storage facilities, information relating to operating trends in our markets, expectations regarding operating expenses, including property tax changes, our strategic priorities, expectations with respect to financing activities, rental rates, cap rates and yields, leasing expectations, our credit ratings, and all other statements other than statements of historical fact. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this document, other than statements of historical fact, are forward-looking statements ~~which~~that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions.

These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the Securities and Exchange Commission (the “SEC”) on February ~~24, 2021~~22, 2022 and in our other filings with the SEC ~~including:~~

•~~general risks associated with the ownership and operation of real estate, including~~including. These include changes in demand ~~risk related to development, expansion, and acquisition~~for our facilities, impacts of ~~self-storage facilities, potential liability for environmental contamination,~~ natural disasters, ~~and~~ adverse changes in laws and regulations including governing property tax, ~~real estate,~~evictions, rental rates, minimum wage levels, and ~~zoning;~~

•~~risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current~~insurance, adverse economic ~~conditions and the economic health of our customers;~~

•~~risks associated with~~effects from the COVID-19 ~~Pandemic (the “COVID Pandemic”)~~pandemic, international military conflicts, or similar events ~~including but not limited to illness~~ impacting public health and/or ~~death~~economic activity, increases in the costs of our ~~employees or customers, negative~~primary customer acquisition channels, adverse impacts to ~~the economic environment~~us and ~~to self-storage~~our customers that could reduce the demand for self-storage or reduce our ability to collect rent, and/or potential regulatory actions to (i) close our facilities if we were determined not to be an “essential business” or for other reasons, (ii) limit our ability to increase rent or otherwise limit the rent we can charge, or (iii) limit our ability to collect rent or evict delinquent tenants;

•~~the risk that there could be an out-migration of population~~ from certain high-cost major markets, if it is determined that the ability to “work from home,” which has become more prominent during the COVID Pandemic, could allow certain workers to live in less expensive localities, which could negatively impact the occupancies and revenues of our properties in such major high-cost markets;

•the risk that more jurisdictions will reinstitute COVID Pandemic restrictions, which were previously eased, in response to increases in infections, including as a result of variants such as the Delta variant, or if additional pandemics occur;

•the 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 resulting from changes in macro environment, which could lead to lower occupancies and rent “roll down” as long-term customers are replaced with new customers at lower rates;

•~~the risk of negative impacts on the cost and availability of debt and equity capital as a result of the COVID Pandemic, which could have a material impact upon our capital and growth plans;~~

•~~the risk that the COVID Pandemic could adversely impact our ability to retain and hire employees, including as a result of vaccine or testing mandates;~~

•~~the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives;~~

•~~the risk that our existing self-storage facilities may be at a disadvantage in competing with newly developed facilities with more visual and customer appeal;~~

•~~risks related to increased reliance on Google and Sparefoot as customer acquisition channels;~~

•difficulties in our ability to successfully evaluate, finance, integrate into our existing operations, and manage properties that we acquire directly or through the acquisition of entities that own and operate self-storage facilities, or to consummate announced acquisitions in the expected timeframe or at all;

•~~risks associated with international operations including, but not limited to,~~inflation, unfavorable foreign currency rate fluctuations, changes in ~~tax laws, and local and global economic uncertainty that could adversely affect our earnings and cash flows;~~

•~~risks related to our participation in joint ventures;~~

•the impact of the legal and regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing environmental issues, taxes, our tenant reinsurance business, and labor, including risks related to the impact of new laws and regulations;

•risks of increased tax expense associated either with a possible failure by us to qualify as a real estate investment trust (“REIT”), or with challenges to the determination of taxable income for our taxable REIT subsidiaries;

•risks due to ballot initiatives or other actions that could remove the protections of Proposition 13 with respect to our real estate and result in substantial increases in our assessed values and property tax bills in California;

•~~changes in United States (“U.S.”)~~ federal or state tax laws related to the taxation of REITs, and ~~other corporations;~~

•security breaches, including ransomware, or a failure of our networks, systems or ~~technology could adversely impact our operations or our business, customer, and employee relationships or result in fraudulent payments;~~

•~~risks associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance, and workers compensation liabilities;~~

•~~difficulties in raising capital at a reasonable cost;~~

•~~delays and cost overruns on our projects to develop new facilities or expand our existing facilities;~~

•~~difficulties in our ability to hire and retain skilled management and staff;~~

•~~ineffective succession planning for our CEO, executive management and our other key employees;~~

•~~ongoing litigation and other legal and regulatory actions that may divert management’s time and attention, require us to pay damages and expenses, or restrict the operation of our business; and~~

•~~economic uncertainty due to the impact of war or terrorism.~~technology.

These forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements. All of our forward-looking statements, including those in this report, are qualified in their entirety by this cautionary statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether because of new information, new estimates, or other factors, events or circumstances after the date of these forward-looking statements, except when expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this report, or which management may make orally or in writing from time to time, neither as predictions of future events nor guarantees of future performance.

Critical Accounting ~~Policies~~Estimates

The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make judgments, assumptions, and estimates 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 determine reported amounts of assets, liabilities, revenues, and expenses that are not readily apparent from other sources.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, there were no material changes to our critical accounting ~~policies and~~ estimates as compared to the critical accounting ~~policies and~~ estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Overview

Our self-storage operations generate most of our net income and our earnings growth is ~~most~~ impacted by the ~~level~~levels of ~~organic~~ growth within our Same Store ~~Facilities.~~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 facility portfolio.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, revenues generated by our Same Store Facilities ~~(as defined below)~~ increased ~~14.0%~~by 15.9% ($108.4 million) and ~~9.4%~~15.9% ($210.5 million), respectively, as compared to the same periods in 2021, while Same Store cost of operations ~~decreased.~~increased by 7.6% ($12.7 million) and 5.5% ($19.2 million), respectively. Demand and operating trends ~~have continued to improve,~~remained strong, leading to increases in our self-storage rental rates ~~in all markets~~ while maintaining high levels of occupancy. Our operating trends have benefited from our ability to reduce labor costs through technology improvements and reduced need for Internet marketing. At September 30, 2021, contract rent per occupied foot was 10.7% higher and square foot occupancy was 1.2% higher for our Same Store Facilities as compared to September 30, 2020, suggesting continued revenue growth during the remainder of 2021.

In addition to managing our existing facilities for organic growth, we have grown and plan to continue to grow through the acquisition and development of new facilities and expansion of our existing self-storage facilities. Since the beginning of ~~2019,~~2020, we acquired a total of ~~232~~314 facilities with ~~18.5~~28.4 million net rentable square feet for ~~$4.1 billion, and within~~$6.2 billion. In our non-same store portfolio, we also have developed and expanded self-storage ~~space~~facilities of 16.9 million net rentable square feet for a total cost of ~~$1.6 billion, adding 17.0 million~~$1.4 billion. During the three and six months ended June 30, 2022, net ~~rentable square feet.~~operating income generated by our Acquired Facilities and Newly Developed and Expanded Facilities increased 121.5% ($59.9 million) and 165.1% ($127.8 million), respectively, as compared to the same periods in 2021.

~~On April 28, 2021,~~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 ~~part~~enhancements in operational processes and investments in technology to reduce payroll hours, achievement of ~~our portfolio growth, we acquired the ezStorage portfolio consisting~~economies of ~~48 properties (4.1 million net rentable square feet) for $1.8 billion. These properties are located in submarkets~~scale from recent acquisitions with ~~strong demand drivers and other desirable characteristics across Washington DC, Virginia, and Maryland.~~

~~Subsequent to September 30, 2021, we are under contract to acquire the All Storage portfolio consisting~~supervisory payroll allocated over a broader number of 56 properties (7.5 million net rentable square feet) for $1.5 billion. These properties are located in submarkets with strong demand drivers and other desirable characteristics across Dallas-Ft. Worth (52 properties) and Oklahoma City. The acquisition, which is subject to the satisfaction of customary closing conditions, is expected to close in two separate tranches, with seven self-storage facilities, ~~closing~~and investments in ~~November 2021~~solar power and ~~49 self-storage facilities closing in December 2021.~~LED lights to lower utility usage.

Our strong financial profile continues to enable effective access to capital markets in order to support our ~~growth, and during~~growth. During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we raised ~~an aggregate of $3.3 billion in three public debt offerings and $747.5~~$250 million in ~~two~~a public ~~offerings~~offering of our preferred shares.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed facilities), we have embarked on aour multi-year Property of Tomorrow program to (i) rebrand our properties ~~to include~~with 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 of~~We expect to complete the program ~~will evolve as~~by the ~~work is executed and we~~end of 2025. We expect to spend approximately ~~$120.0~~$180 million ~~in 2021~~over 2022 on this effort.

On April 24, 2022, PSB entered into an Agreement and Plan of Merger whereby affiliates of Blackstone agreed to acquire all outstanding shares of PSB's common stock for $187.50 per share in cash. On July 20, 2022, PSB announced that it completed the merger transaction with Blackstone. Each share of PSB common stock and each common unit of partnership interest we held in PSB were converted into the right to receive the merger consideration of $187.50 per share or unit and a $0.22 prorated quarterly cash dividend per share or unit, for a total of $187.72 per share or unit. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a $2.1 billion gain on the sale of our equity investment in PSB in the Consolidated Statement of Income for the third quarter of 2022.

Results of Operations

Operating Results for the Three Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021

For the three months ended ~~September~~June 30, ~~2021,~~2022, net income allocable to our common shareholders was ~~$442.3~~$603.4 million or ~~$2.52~~$3.42 per diluted common share, compared to ~~$246.9~~$346.2 million or ~~$1.41~~$1.97 per diluted common share in ~~2020~~2021, representing an increase of ~~$195.4~~$257.2 million or ~~$1.11~~$1.45 per diluted common share. The increase is due primarily to (i) a ~~$148.7~~$160.9 million increase in self-storage net operating income, ~~(described below),~~ (ii) a ~~$82.8~~$114.4 million increase ~~due to the impact of~~in foreign currency exchange gains ~~and losses~~primarily associated with our Euro denominated ~~debt,~~notes payable, (iii) a ~~$23.3~~$21.1 million increase ~~due~~in our equity share of gains on sale of real estate recorded by our unconsolidated real estate entities, and (iv) a $17.0 million decrease in allocations to ~~the impact of the~~preferred shareholders with respect to redemption of preferred shares, ~~in the three months ended September 30, 2020,~~ partially offset by ~~(iv)~~(v) a ~~$50.2~~$46.0 million increase in depreciation and amortization expense and (vi) a $10.9 million increase in interest expense.

The ~~$148.7~~$160.9 million increase in self-storage net operating income in the three months ended June 30, 2022 as compared to the same period in 2021 is a result of a ~~$96.2~~$95.7 million increase inattributable to our Same Store Facilities ~~(as defined below),~~ and a ~~$52.5~~$65.2 million increase inattributable to our ~~Non-Same Store Facilities (as defined below).~~non-same store facilities. Revenues for the Same Store Facilities increased ~~14.0%~~15.9% or ~~$87.8~~$108.4 million in the three months ended ~~September~~June 30, ~~2021~~2022 as compared to ~~2020,~~2021, due primarily to higher realized annual rent per available square ~~foot and weighted average square foot~~

~~occupancy.~~foot. Cost of operations for the Same Store Facilities ~~decreased~~increased by ~~4.6%~~7.6% or ~~$8.5~~$12.7 million in the three months ended ~~September~~June 30, ~~2021~~2022 as compared to ~~2020,~~2021, due primarily to ~~a 43.3% ($7.0 million) decrease in marketing expenses, an 8.4% ($2.6 million) decrease in~~increased property tax expense, on-site property manager payroll expense, marketing expense, other direct property costs, and ~~a change in property tax timing contributing to a 2.7% ($2.0 million) decrease in property tax expense.~~centralized management costs. The increase in net operating income of ~~$52.5~~$65.2 million for the ~~Non-Same Store Facilities~~non-same store facilities is due primarily to the impact of facilities acquired in ~~2020 and~~ 2021 and the fill-up of recently developed and expanded facilities.

Operating Results for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net income allocable to our common shareholders was ~~$1,174.4~~$1,067.5 million or ~~$6.70~~$6.05 per diluted common share, compared to ~~$806.2~~$732.1 million or ~~$4.62~~$4.18 per diluted common share in ~~2020~~2021, representing an increase of ~~$368.2~~$335.4 million or ~~$2.08~~$1.87 per diluted common share. The increase is due primarily to (i) a ~~$316.7~~$328.2 million increase in self-storage net operating income, ~~(described below),~~ (ii) a ~~$125.8~~$104.4 million increase ~~due to the impact of~~in foreign currency exchange gains ~~and losses~~primarily associated with our Euro denominated ~~debt,~~notes payable, (iii) a $44.7 million increase in our equity share of gains on sale of real estate recorded by our unconsolidated real estate entities, and (iv) a $17.0 million decrease in allocations to preferred shareholders with respect to redemption of preferred shares, partially offset by ~~(iii)~~(v) a ~~$96.3~~$121.2 million increase in depreciation and amortization expense and ~~(iv)~~(vi) a ~~$25.8~~$28.8 million increase in ~~general and administrative expense due primarily to increased share-based compensation~~interest expense.

The ~~$316.7~~$328.2 million increase in self-storage net operating income in the six months ended June 30, 2022 as compared to the same period in 2021 is a result of a ~~$216.9~~$191.3 million increase inattributable to our Same Store Facilities ~~(as defined below),~~ and a ~~$99.8~~$136.9 million increase inattributable to our ~~Non-Same Store Facilities (as defined below).~~non-same store facilities. Revenues for the Same Store Facilities increased ~~9.4%~~15.9% or ~~$175.2~~$210.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to ~~2020,~~2021, due primarily to higher realized annual rent per available square ~~foot and weighted average square foot occupancy.~~foot. Cost of operations for the Same Store Facilities ~~decreased~~increased by ~~7.4%~~5.5% or ~~$41.7~~$19.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to ~~2020,~~2021, due primarily to ~~(i) a 19.5% ($20.0 million) decrease in~~increased property tax expense, on-site property manager payroll ~~(ii) a 37.1% ($18.0 million) decrease in marketing expenses~~expense, other direct property costs, and ~~(iii) a change in property tax timing contributing to our 6.2% ($13.4 million) decrease in property tax expense.~~centralized management costs. The increase in net operating income of ~~$99.8~~$136.9 million for the ~~Non-Same Store Facilities~~non-same store facilities is due primarily to the impact of facilities acquired in ~~2020 and~~ 2021 and the fill-up of recently developed and expanded facilities.

Funds from Operations and Core Funds from Operations

Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents net income before 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 financing 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.

For the three months ended ~~September~~June 30, ~~2021,~~2022, FFO was ~~$3.61~~$4.58 per diluted common share as compared to ~~$2.28~~$2.99 per diluted common share for the same period in ~~2020,~~2021, representing an increase of ~~58.3%~~53.2%, or ~~$1.33~~$1.59 per diluted common share.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, FFO was ~~$9.69~~$8.41 per diluted common share as compared to ~~$7.18~~$6.07 per diluted common share for the same period in ~~2020,~~2021, representing an increase of ~~35.0%~~38.6%, or ~~$2.51~~$2.34 per diluted common share.

~~The following tables reconcile diluted earnings per share to FFO per share and set forth the computation of FFO per share:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
(Amounts in thousands, except per share data)
Reconciliation of Diluted Earnings per Share to FFO per Share:
Diluted Earnings per Share $ 2.52 $ 1.41 $ 6.70 $ 4.62
Eliminate amounts per share excluded from FFO:
Depreciation and amortization 1.17 0.88 3.17 2.63
Gains on sale of real estate investments, including our equity share from investments (0.08) (0.01) (0.18) (0.07)
FFO per share $ 3.61 $ 2.28 $ 9.69 $ 7.18
Computation of FFO per Share:
Net income allocable to common shareholders $ 442,327 $ 246,916 $ 1,174,386 $ 806,169
Eliminate items excluded from FFO:
Depreciation and amortization 187,611 137,526 505,218 409,484
Depreciation from unconsolidated real estate investments 19,209 17,492 54,485 52,607
Depreciation allocated to noncontrolling interests and restricted share unitholders (1,318) (954) (3,413) (2,853)
Gains on sale of real estate investments, including our equity share from investments (12,572) (3,174) (31,156) (12,415)
FFO allocable to common shares $ 635,257 $ 397,806 $ 1,699,520 $ 1,252,992
Diluted weighted average common shares 175,806 174,626 175,398 174,606
FFO per share $ 3.61 $ 2.28 $ 9.69 $ 7.18

We also present “Core FFO” and “Core FFO per share,” a non-GAAP ~~measure~~measures that ~~represents~~represent FFO and FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other non-cash and/or nonrecurring income or expense items primarily representing, with respect to the periods presented below, ~~the impact~~unrealized gain on private equity investments and our equity share of ~~loss contingency accruals,~~merger transaction costs, severance of a senior executive, and casualties ~~transactional due diligence, and advisory costs~~from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe ~~it is~~they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share isare not ~~a substitute~~substitutes 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.

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The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share toand Core FFO per share:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		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	$	603,381	$	346,249	74.3	%	$	1,067,505	$	732,059	45.8	%
Eliminate items excluded from FFO:
Depreciation and amortization	217,373		171,738				438,168		317,607
Depreciation from unconsolidated real estate investments	17,566		17,343				34,386		35,276
Depreciation allocated to noncontrolling interests and restricted share unitholders	(1,533)		(1,124)				(3,190)		(2,095)
Gains on sale of real estate investments, including our equity share from investments	(29,306)		(9,197)				(53,184)		(18,584)
FFO allocable to common shares	$	807,481	$	525,009	53.8	%	$	1,483,685	$	1,064,263	39.4	%
Eliminate the impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss	(101,723)		12,707				(137,100)		(32,678)
Preferred share redemption charge	—		16,989				—		16,989

Other items	(1,781)		(2,194)				766		(2,543)
Core FFO allocable to common shares	$	703,977	$	552,511	27.4	%	$	1,347,351	$	1,046,031	28.8	%

Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:
Diluted Earnings per share	$	3.42	$	1.97	73.6	%	$	6.05	$	4.18	44.7	%
Eliminate amounts per share excluded from FFO:
Depreciation and amortization	1.32		1.07				2.66		2.00
Gains on sale of real estate investments, including our equity share from investments	(0.16)		(0.05)				(0.30)		(0.11)
FFO per share	$	4.58	$	2.99	53.2	%	$	8.41	$	6.07	38.6	%
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss	(0.58)		0.07				(0.78)		(0.19)
Preferred share redemption charge	—		0.10				—		0.10

Other items	(0.01)		(0.01)				0.01		(0.01)
Core FFO per share	$	3.99	$	3.15	26.7	%	$	7.64	$	5.97	28.0	%

Diluted weighted average common shares	176,312		175,547				176,325		175,194

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 Percentage Change 2021 2020 Percentage Change
FFO per share $ 3.61 $ 2.28 58.3 % $ 9.69 $ 7.18 35.0 %
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss (0.23) 0.24 (0.42) 0.30
Preferred share redemption charge — 0.13 0.10 0.22
Property losses and tenant claims due to casualties 0.03 — 0.03 —
Other items 0.01 (0.02) (0.01) (0.02)
Core FFO per share $ 3.42 $ 2.63 30.0 % $ 9.39 $ 7.68 22.3 %

Analysis of Net Income ~~by Reportable Segment~~

The following discussion and analysis is presented and organized in accordance with Note 11 to our September 30, 2021 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.

- Self-Storage Operations

Our self-storage operations are analyzed in four groups: (i) the ~~2,274~~2,282 facilities that we have owned and operated on a stabilized basis since January 1, ~~2019~~2020 (the “Same Store Facilities”), (ii) ~~232~~314 facilities we acquired ~~after December 31, 2018~~since January 1, 2020 (the “Acquired ~~facilities”~~Facilities”), (iii) ~~139~~145 facilities that have been newly developed or expanded, or that ~~we expect to~~will commence expansion by December 31, ~~2021~~2022 (the “Newly ~~developed~~Developed and ~~expanded facilities”~~Expanded Facilities”), and (iv) 3366 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, ~~2019~~2020 (the “Other ~~non-same store facilities”~~Non-same Store Facilities”). See Note 1113 to our ~~September~~June 30, ~~2021~~2022 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

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Self-Storage Operations
Summary Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Percentage Change 2021 2020 Percentage Change
(Dollar amounts and square footage in thousands)
Revenues:
Same Store facilities $ 716,050 $ 628,286 14.0 % $ 2,042,832 $ 1,867,663 9.4 %
Acquired facilities 62,187 11,001 465.3 % 124,751 28,103 343.9 %
Newly developed and expanded facilities 55,100 38,375 43.6 % 145,960 108,449 34.6 %
Other non-same store facilities 7,173 6,287 14.1 % 20,307 18,477 9.9 %
840,510 683,949 22.9 % 2,333,850 2,022,692 15.4 %
Cost of operations (a):
Same Store facilities 175,609 184,068 (4.6) % 523,323 565,057 (7.4) %
Acquired facilities 20,064 4,880 311.1 % 45,918 13,630 236.9 %
Newly developed and expanded facilities 19,059 17,735 7.5 % 55,572 51,016 8.9 %
Other non-same store facilities 2,267 2,496 (9.2) % 6,886 7,526 (8.5) %
216,999 209,179 3.7 % 631,699 637,229 (0.9) %
Net operating income (b):
Same Store facilities 540,441 444,218 21.7 % 1,519,509 1,302,606 16.7 %
Acquired facilities 42,123 6,121 588.2 % 78,833 14,473 444.7 %
Newly developed and expanded facilities 36,041 20,640 74.6 % 90,388 57,433 57.4 %
Other non-same store facilities 4,906 3,791 29.4 % 13,421 10,951 22.6 %
Total net operating income 623,511 474,770 31.3 % 1,702,151 1,385,463 22.9 %
Depreciation and amortization expense:
Same Store facilities (112,656) (112,092) 0.5 % (332,079) (333,650) (0.5) %
Acquired facilities (55,986) (7,223) 675.1 % (114,297) (22,292) 412.7 %
Newly developed and expanded facilities (14,977) (13,596) 10.2 % (46,126) (39,796) 15.9 %
Other non-same store facilities (4,933) (5,422) (9.0) % (15,637) (16,113) (3.0) %
Total depreciation and amortization expense (188,552) (138,333) 36.3 % (508,139) (411,851) 23.4 %
Net income (loss):
Same Store facilities 427,785 332,126 28.8 % 1,187,430 968,956 22.5 %
Acquired facilities (13,863) (1,102) 1158.0 % (35,464) (7,819) 353.6 %
Newly developed and expanded facilities 21,064 7,044 199.0 % 44,262 17,637 151.0 %
Other non-same store facilities (27) (1,631) (98.3) % (2,216) (5,162) (57.1) %
Total net income $ 434,959 $ 336,437 29.3 % $ 1,194,012 $ 973,612 22.6 %
Number of facilities at period end:
Same Store facilities 2,274 2,274 —
Acquired facilities 232 63 268.3 %
Newly developed and expanded facilities 139 133 4.5 %
Other non-same store facilities 33 34 (2.9) %
2,678 2,504 6.9 %
Net rentable square footage at period end:
Same Store facilities 148,695 148,695 —
Acquired facilities 18,524 4,539 308.1 %
Newly developed and expanded facilities 17,000 15,469 9.9 %
Other non-same store facilities 2,158 2,303 (6.3) %
186,377 171,006 9.0 %


Self-Storage Operations
Summary	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Percentage Change		2022		2021		Percentage Change

	(Dollar amounts and square footage in thousands)
Revenues:
Same Store Facilities	$	788,938	$	680,542	15.9	%	$	1,538,208	$	1,327,742	15.9	%
Acquired Facilities	95,498		32,372		195.0	%	181,869		43,495		318.1	%
Newly Developed and Expanded Facilities	65,899		46,214		42.6	%	125,975		87,691		43.7	%
Other Non-Same Store Facilities	22,951		17,865		28.5	%	44,249		34,412		28.6	%
	973,286		776,993		25.3	%	1,890,301		1,493,340		26.6	%
Cost of operations:
Same Store Facilities	180,331		167,653		7.6	%	368,260		349,072		5.5	%
Acquired Facilities	32,860		11,961		174.7	%	63,891		19,138		233.8	%
Newly Developed and Expanded Facilities	19,304		17,300		11.6	%	38,721		34,635		11.8	%
Other Non-Same Store Facilities	5,494		5,681		(3.3)	%	12,611		11,855		6.4	%
	237,989		202,595		17.5	%	483,483		414,700		16.6	%
Net operating income (a):
Same Store Facilities	608,607		512,889		18.7	%	1,169,948		978,670		19.5	%
Acquired Facilities	62,638		20,411		206.9	%	117,978		24,357		384.4	%
Newly Developed and Expanded Facilities	46,595		28,914		61.2	%	87,254		53,056		64.5	%
Other Non-Same Store Facilities	17,457		12,184		43.3	%	31,638		22,557		40.3	%
Total net operating income	735,297		574,398		28.0	%	1,406,818		1,078,640		30.4	%

Depreciation and amortization expense:
Same Store Facilities	(116,780)		(111,481)		4.8	%	(230,031)		(222,143)		3.6	%
Acquired Facilities	(76,255)		(38,591)		97.6	%	(160,720)		(50,064)		221.0	%
Newly Developed and Expanded Facilities	(14,781)		(13,243)		11.6	%	(29,409)		(28,512)		3.1	%
Other Non-Same Store Facilities	(10,892)		(9,413)		15.7	%	(20,676)		(18,868)		9.6	%
Total depreciation and amortization expense	(218,708)		(172,728)		26.6	%	(440,836)		(319,587)		37.9	%

Net income (loss):
Same Store Facilities	491,827		401,408		22.5	%	939,917		756,527		24.2	%
Acquired Facilities	(13,617)		(18,180)		(25.1)	%	(42,742)		(25,707)		66.3	%
Newly Developed and Expanded Facilities	31,814		15,671		103.0	%	57,845		24,544		135.7	%
Other Non-Same Store Facilities	6,565		2,771		136.9	%	10,962		3,689		197.2	%
Total net income	$	516,589	$	401,670	28.6	%	$	965,982	$	759,053	27.3	%

Number of facilities at period end:
Same Store Facilities							2,282		2,282		—
Acquired Facilities							314		161		95.0	%
Newly Developed and Expanded Facilities							145		140		3.6	%
Other Non-Same Store Facilities							66		66		—
							2,807		2,649		6.0	%
Net rentable square footage at period end:
Same Store Facilities							149,476		149,476		—
Acquired Facilities							28,400		13,223		114.8	%
Newly Developed and Expanded Facilities							16,898		15,531		8.8	%
Other Non-Same Store Facilities							5,309		5,280		0.5	%
							200,083		183,510		9.0	%

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(a)We revised our prior period financial statements to correct the presentation of share-based compensation expense and dividends paid on RSUs between general and administrative expense and self-storage cost of operations. As a result, we revised our statements of income for the three and nine months ended September 30, 2020 with an increase in self-storage cost of operations of$3.1 million and $9.4 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 three and nine months ended September 30, 2020.

~~(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. We believe that investors and analysts utilize NOI in a similar manner. NOI is not a substitute for net income, operating cash flow, or other related financial measures, in evaluating our operating results. See Note 1113 to our ~~September~~June 30, ~~2021~~2022 consolidated financial statements for a reconciliation of NOI to our total net income for all periods presented.

Same Store Facilities

The Same Store Facilities consist of facilities we have owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, ~~2019. Our Same Store Facilities decreased from 2,278 facilities at June 30, 2021 to 2,274 facilities at September 30, 2021.~~2020. The composition of our Same Store Facilities allows us more effectively to evaluate the ongoing performance of our self-storage portfolio in ~~2019,~~ 2020, 2021, and ~~2021~~2022 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe investors and analysts use Same Store information 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 of these ~~2,274~~2,282 facilities ~~(148.7~~(149.5 million net rentable square feet) that represent approximately ~~80%~~75% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at ~~September~~June 30, ~~2021.~~2022. 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 facilities~~the Same Store Facilities relative to our other self-storage facilities.

3529

Selected Operating Data for the Same Store Facilities ~~(2,274~~(2,282 facilities)


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended June 30,					Six Months Ended June 30,
		2021		2020		Percentage Change	2021		2020		Percentage Change		2022		2021		Percentage Change	2022		2021		Percentage Change

		(Dollar amounts in thousands, except for per square foot data)											(Dollar amounts in thousands, except for per square foot data)
Revenues (a):	Revenues (a):											Revenues (a):
Rental income	Rental income	$	694,589	$	609,150	14.0%	$	1,982,274	$	1,803,659	9.9%	Rental income	$	765,081	$	661,345	15.7%	$	1,490,514	$	1,288,497	15.7%
Late charges and administrative fees	Late charges and administrative fees	21,461		19,136		12.1%	60,558		64,004		(5.4)%	Late charges and administrative fees	23,857		19,197		24.3%	47,694		39,245		21.5%
Total revenues	Total revenues	716,050		628,286		14.0%	2,042,832		1,867,663		9.4%	Total revenues	788,938		680,542		15.9%	1,538,208		1,327,742		15.9%

Direct cost of operations (a):	Direct cost of operations (a):											Direct cost of operations (a):
Property taxes	Property taxes	69,573		71,533		(2.7)%	203,172		216,595		(6.2)%	Property taxes	71,227		67,484		5.5%	141,231		134,266		5.2%
On-site property manager payroll	On-site property manager payroll	28,116		30,701		(8.4)%	82,412		102,390		(19.5)%	On-site property manager payroll	29,531		25,650		15.1%	60,231		54,394		10.7%
Repairs and maintenance	Repairs and maintenance	13,078		12,954		1.0%	39,139		37,302		4.9%	Repairs and maintenance	13,255		13,107		1.1%	28,745		26,128		10.0%
Utilities	Utilities	11,051		11,278		(2.0)%	31,102		31,665		(1.8)%	Utilities	10,143		9,379		8.1%	21,589		20,175		7.0%
Marketing	Marketing	9,143		16,131		(43.3)%	30,535		48,512		(37.1)%	Marketing	8,648		6,863		26.0%	19,888		21,473		(7.4)%
Other direct property costs	Other direct property costs	18,851		17,071		10.4%	55,433		50,872		9.0%	Other direct property costs	20,253		18,311		10.6%	40,319		36,675		9.9%
Total direct cost of operations	Total direct cost of operations	149,812		159,668		(6.2)%	441,793		487,336		(9.3)%	Total direct cost of operations	153,057		140,794		8.7%	312,003		293,111		6.4%
Direct net operating income (b)	Direct net operating income (b)	566,238		468,618		20.8%	1,601,039		1,380,327		16.0%	Direct net operating income (b)	635,881		539,748		17.8%	1,226,205		1,034,631		18.5%

Indirect cost of operations (a):	Indirect cost of operations (a):											Indirect cost of operations (a):
Supervisory payroll	Supervisory payroll	(8,320)		(9,831)		(15.4)%	(27,768)		(31,786)		(12.6)%	Supervisory payroll	(8,739)		(9,214)		(5.2)%	(18,306)		(19,544)		(6.3)%
Centralized management costs	Centralized management costs	(13,757)		(11,464)		20.0%	(39,990)		(36,510)		9.5%	Centralized management costs	(14,767)		(13,091)		12.8%	(30,324)		(26,328)		15.2%
Share-based compensation	Share-based compensation	(3,720)		(3,105)		19.8%	(13,772)		(9,425)		46.1%	Share-based compensation	(3,768)		(4,554)		(17.3)%	(7,627)		(10,089)		(24.4)%
Net operating income	Net operating income	540,441		444,218		21.7%	1,519,509		1,302,606		16.7%	Net operating income	608,607		512,889		18.7%	1,169,948		978,670		19.5%
Depreciation and amortization expense	Depreciation and amortization expense	(112,656)		(112,092)		0.5%	(332,079)		(333,650)		(0.5)%	Depreciation and amortization expense	(116,780)		(111,481)		4.8%	(230,031)		(222,143)		3.6%
Net income	Net income	$	427,785	$	332,126	28.8%	$	1,187,430	$	968,956	22.5%	Net income	$	491,827	$	401,408	22.5%	$	939,917	$	756,527	24.2%

Gross margin (before indirect costs, depreciation and amortization expense)	Gross margin (before indirect costs, depreciation and amortization expense)	79.1%		74.6%		6.0%	78.4%		73.9%		6.1%	Gross margin (before indirect costs, depreciation and amortization expense)	80.6%		79.3%		1.6%	79.7%		77.9%		2.3%

Gross margin (before depreciation and amortization expense)	Gross margin (before depreciation and amortization expense)	75.5%		70.7%		6.8%	74.4%		69.7%		6.7%	Gross margin (before depreciation and amortization expense)	77.1%		75.4%		2.3%	76.1%		73.7%		3.3%

Weighted average for the period:	Weighted average for the period:											Weighted average for the period:
Square foot occupancy	Square foot occupancy	96.8%		95.5%		1.4%	96.5%		94.3%		2.3%	Square foot occupancy	95.8%		97.0%		(1.2)%	95.7%		96.3%		(0.6)%

Realized annual rental income per (c):	Realized annual rental income per (c):											Realized annual rental income per (c):
Occupied square foot	Occupied square foot	$	19.30	$	17.16	12.5%	$	18.42	$	17.16	7.3%	Occupied square foot	$	21.37	$	18.23	17.2%	$	20.83	$	17.89	16.4%
Available square foot	Available square foot	$	18.68	$	16.39	14.0%	$	17.77	$	16.18	9.8%	Available square foot	$	20.47	$	17.69	15.7%	$	19.94	$	17.23	15.7%

At September 30:
At June 30:												At June 30:
Square foot occupancy	Square foot occupancy						95.7%		94.6%		1.2%	Square foot occupancy						94.8%		96.5%		(1.8)%
Annual contract rent per occupied square foot (d)	Annual contract rent per occupied square foot (d)						$	19.56	$	17.67	10.7%	Annual contract rent per occupied square foot (d)						$	21.92	$	18.67	17.4%

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(a)Revenues and cost of operations do not include tenant reinsurance and merchandise sale 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.

(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 Revenue

We believe a balanced occupancy and rate strategy maximizes 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 to maximize revenue from new tenants to replace tenants that vacate.

We typically increase rental rates to our long-term tenants (generally, those who have been with us for at least a 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 ~~balancing~~evaluating the additional revenue from the increase against the negative impact of incremental move-outs, by considering the customer’s in-place rent and prevailing market rents, among other factors.

Revenues generated by our Same Store Facilities increased ~~14.0% and 9.4% for~~15.9% in each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively,~~2022, as compared to the same periods in ~~2020. The increase is~~2021, due primarily to ~~(i)~~ a ~~12.5%~~17.2% and ~~7.3%~~16.4% increase in realized annual rent per occupied square foot for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to the same periods in 2020, and (ii) a 1.4% and 2.3% increase in average occupancy for the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The same store revenue growth for the nine months ended September 30, 2021 was partially offset by a 5.4% decrease in late charges and administrative fees as compared to the same period in 2020.2021.

Our growth in revenues, ~~weighted average square foot occupancy,~~ realized annual rent per occupied square foot, and REVPAF for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021~~2022 as compared to the same ~~period~~periods in ~~2020~~2021 was evident in ~~substantially all of our markets including~~ each of our ~~top 15~~ markets.

~~For~~ Our weighted average square foot occupancy remained strong across our markets for the three and ~~nine~~six months ended ~~September~~June 30, 2020, our revenues were impacted by our decision to temporarily curtail our tenant rate increase program and additional pricing limitations to existing tenants imposed by local governments due to “State of Emergency” declarations in response to the COVID Pandemic and other disasters in the during 2020. Although most restrictions have recently been lifted, we continue to expect a portion of our revenues to remain impacted throughout 2021.2022.

The increase of realized annual rent per occupied square foot in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to the same periods in ~~2020~~2021 was due to ~~(i)~~rate increases to existing long-term tenants in substantially all of our markets in 2022 as compared to curtailed increases in certain markets in 2021, combined with a ~~23.5%~~12.3% and ~~28.1% year over year~~14.0% increase in average rates per square foot charged to new tenants moving in during the three and ~~nine~~six months ended June 30, 2022 as compared to the same periods in 2021, as a result of strong customer demand across all ~~markets, combined with (ii) rate increases to existing tenants in 2021 as compared to the curtailed increases in 2020.~~markets. At ~~September~~June 30, ~~2021,~~2022, annual contract rent per occupied square foot was ~~10.7%~~17.4% higher as compared to ~~September~~June 30, ~~2020.~~2021.

We experienced high occupancy levels throughout the first ~~nine~~six months of ~~2021. Our~~2022, although our average square foot occupancy levels ~~increased 1.4%~~decreased 1.2% and ~~2.3%~~0.6% on a year over year basis during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. ~~At September 30, 2021, our square foot occupancy was 95.7%. The improvement in occupancy trends was due primarily to improved trends in move-outs, with~~Year over year move-out volumes increased 9.4% and 7.2% and year over year ~~move-outs down 6.1%~~move-in volumes increased 2.7% and ~~8.9%~~decreased 1.2% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively. This resulted~~2022, respectively, leading to a lower square foot occupancy at June 30, 2022 of 94.8% as compared to 96.5% at June 30, 2021. In addition, during the quarter ended June 30, 2022, move-out volumes exceeded move-in volumes resulting in ~~an increased average length of stay for~~lower occupancy at June 30, 2022 compared to March 31, 2022.

Move-out volumes were partially impacted by rental rates increases to our existing tenants in the three and ~~nine~~six months ended ~~September~~June 30, 2021. 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 lead to increased promotional costs and decrease our pricing leverage. With higher occupancy and pricing trends, we reduced promotional discounts given to new move-in customers for the three and nine months ended September 30, 2021 by 70.3% and 49.2%, respectively,2022 as compared to the same periods in ~~2020.~~2021. However, move-out activity from tenants not receiving increases was also higher in 2022 compared to the same periods in 2021 but remains below pre-2020 levels. Average length of stay of our tenants increased in the three and six months ended June 30, 2022 as compared to the same

periods in 2021, which supports our revenue growth by contributing to the number of tenants eligible for rental rate increases.

In order to attract more new tenants to replace those that vacated in the quarter ended June 30, 2022, we took a number of actions including increasing promotional discounting, moderating the year over year growth of rental rates to new customers and increasing marketing expense.

Demand historically has been higher in the summer months than in the winter months 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 into our system is also impacted by new supply of self-storage space as well as alternatives to self-storage.

We expect continued revenue growth for the remainder of 2022 supported by consistently high customer demand and a stable tenant base leading to increasing realized annual rent per occupied square foot while maintaining a high level of occupancy.

Late Charges and Administrative Fees

Late charges and administrative fees increased ~~12.1%~~24.3% and 21.5% for the three and six months ended ~~September~~June 30, ~~2021~~2022, respectively, as compared to the same ~~period of 2020 due primarily to delinquent rent fees being waived~~periods in ~~2020 during the COVID Pandemic. Late charges and administrative fees decreased 5.4% year over year for the nine months ended September 30,~~ 2021, due to (i) ~~an acceleration~~higher late charges collected on delinquent accounts driven by more delinquent accounts compared to the same periods in ~~average collections whereby~~2021 and to a ~~greater percentage of tenants paid their monthly rent promptly to avoid the incurrence of such fees and~~lesser extent (ii) ~~reduced move-in~~higher administrative fees ~~due to lower move-ins.~~charged per move-in.

Selected Key Statistical Data

The following table sets forth average annual contract rent per square foot and total square footage for tenants moving in and moving out during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~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.


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended June 30,					Six Months Ended June 30,
		2021		2020		Change	2021		2020		Change		2022		2021		Change	2022		2021		Change

		(Amounts in thousands, except for per square foot amounts)											(Amounts in thousands, except for per square foot amounts)

Tenants moving in during the period:	Tenants moving in during the period:											Tenants moving in during the period:
Average annual contract rent per square foot	Average annual contract rent per square foot	$	18.47	$	14.95	23.5%	$	16.92	$	13.21	28.1%	Average annual contract rent per square foot	$	19.56	$	17.41	12.3%	$	18.37	$	16.12	14.0%
Square footage	Square footage	23,590		26,548		(11.1)%	71,356		80,138		(11.0)%	Square footage	23,916		23,288		2.7%	47,283		47,850		(1.2)%
Contract revenue gained from move-ins		$	108,927	$	99,223	9.8%	$	905,508	$	793,967	14.0%
Contract rents gained from move-ins												Contract rents gained from move-ins	$	116,949	$	101,361	15.4%	$	434,294	$	385,671	12.6%
Promotional discounts given	Promotional discounts given	$	5,858	$	19,697	(70.3)%	$	29,996	$	59,105	(49.2)%	Promotional discounts given	$	9,665	$	7,735	25.0%	$	19,004	$	24,312	(21.8)%

Tenants moving out during the period:	Tenants moving out during the period:											Tenants moving out during the period:
Average annual contract rent per square foot	Average annual contract rent per square foot	$	18.24	$	15.52	17.5%	$	17.21	$	15.52	10.9%	Average annual contract rent per square foot	$	20.29	$	16.92	19.9%	$	19.84	$	16.57	19.7%
Square footage	Square footage	24,885		26,496		(6.1)%	68,914		75,611		(8.9)%	Square footage	24,324		22,236		9.4%	47,253		44,085		7.2%
Contract revenue lost from move-outs		$	113,476	$	102,804	10.4%	$	889,507	$	880,112	1.1%
Contract rents lost from move-outs												Contract rents lost from move-outs	$	123,383	$	94,058	31.2%	$	468,750	$	365,244	28.3%

~~Revenue Expectations~~

At September 30, 2021, in place contractual rent was 11.9% higher on a year-over-year basis (comprised of a 1.2% increase in square foot occupancy and a 10.7% increase in annual contract rent per occupied foot).

~~For the remainder of 2021, we expect continued year-over-year revenue growth supported by strength in rates as a result of stable customer demand.~~

Analysis of Same Store Cost of Operations

Cost of operations (excluding depreciation and amortization) ~~decreased 4.6%~~increased 7.6% and ~~7.4%~~5.5% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to the same periods in ~~2020,~~2021. The increase during the three-month period is due primarily to ~~decreased marketing,~~increased property tax expense, on-site property manager payroll expense, marketing expense, other direct property costs and centralized management costs, while the increase during the six-month period is due primarily to increased property tax ~~expense.~~expense, on-site property manager payroll expense, other direct property costs and centralized management costs.

Property tax expense ~~decreased 2.7%~~increased 5.5% and ~~6.2%~~5.2% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to the same periods in ~~2020. In 2020 our property tax expense was recognized on an accelerated basis in each~~2021, as a result of the first three quarters. We expect decreases through the third quarter to be offset by an increase in the fourth quarter of 2021, resulting in an approximate increase of 4.8% for the year ending December 31, 2021 compared tohigher recently assessed values.

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the same period in 2020, due primarily to higher assessed values and, to a lesser extent, increased tax rates. A summary of our 2020 actual and 2021 estimated quarterly property tax expense is presented below. Amount for the three months ended December 31, 2021 is based on our current estimates of 2021’s full-year property tax expense.

Actual
2021 2020
(Amounts in thousands)
For the three months ended:
March 31 $ 66,481 $ 72,692
June 30 67,118 72,370
September 30 69,573 71,533
December 31 66,737 41,164
$ 269,909 $ 257,759

On-site property manager payroll expense ~~decreased 8.4%~~increased 15.1% and ~~19.5%~~10.7% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to the same periods in ~~2020.~~2021. The ~~decrease~~increase is primarily due to ~~(i) a temporary $3.00 hourly incentive increase and enhancement of paid time off benefits to all of our property managers between April 1, 2020 and June 30, 2020~~wage increases effective in late 2021 in response to ~~the COVID Pandemic and (ii)~~competitive labor conditions experienced in most geographical markets, partially offset by a year-over-year decline in hours worked due to staffing reductions from ~~reduced move-in and move-out activity and~~ revisions to other operational processes. In addition, since the second quarter of 2021, we have been experiencing very competitive labor conditions in most geographical markets. In response, on October 1, 2021, we increased the wages of all of ourWe expect on-site property ~~employees by an average of 7.5%, bringing our average pay for non-resident property employees, those not receiving rent and utility free housing,~~manager payroll expense to ~~$15 per hour.~~

~~Repairs and maintenance expense increased 1.0% and 4.9%~~increase, to a lesser extent, in the ~~three and nine months ended September 30, 2021, respectively,~~remainder of 2022 as compared to ~~the same periods~~2021 due in 2020. 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 andpart to continued competitive labor ~~and (iii) weather conditions, which can impact costs such as snow removal, roof repairs, and HVAC maintenance and repairs.~~

Our utility expenses consist 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 2.0% and 1.8% in the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. The decrease experienced in the three and nine months ended September 30, 2021 is 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 expect a decline in utility expense throughout the remainder of 2021.conditions.

Marketing expense ~~comprised principally~~includes Internet advertising and the operating costs of our telephone reservation center. Internet advertising expense, comprising ~~primarily~~ 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. We ~~decreased~~increased marketing expense by ~~43.3% and 37.1%~~26.0% in the three ~~and nine~~ months ended ~~September~~June 30, ~~2021, respectively,~~2022 as compared to the same ~~periods~~period in ~~2020, given strong demand and high occupancies~~2021 by a utilizing higher volume of online paid search programs to attract new tenants. Combined with the first quarter of 2022, marketing expense decreased by 7.4% on a year over year basis in ~~many of our same store properties.~~the six months ended June 30, 2022.

Other direct property costs include administrative expenses specific to each self-storage facility, such as property insurance, telephone and data communication lines, business license costs, bank charges related to 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 ~~10.4%~~10.6% and ~~9.0%~~9.9% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to ~~the same periods~~2021. The increase was due primarily to an increase in ~~2020. We continue to experience increased~~ credit card fees ~~due to~~as result of a long-term trend of more customers paying with credit cards rather than cash, checks, or other methods of payment with lower transaction costs.

Supervisory payroll expense, which represents cash compensation paid to the management personnel who directly and indirectly supervise the on-site property managers, decreased 15.4% and 12.6% in the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020, due primarily to lower headcount in 2021 and incentives related to the COVID Pandemic in 2020.

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,~~facilities management, customer service, pricing and marketing, operational accounting and finance, and legal costs. Centralized

management costs increased ~~20.0%~~12.8% and ~~9.5%~~15.2% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to the same periods in ~~2020.~~2021. The increase was due primarily to an increase in ITtechnology and data team costs that support property operations. We expect increases in centralized management costs in the remainder ~~2021~~of 2022 due to ~~increased headcount.~~

~~Share-based compensation expense includes the amortization of restricted share units~~continued investment in our technology and ~~stock options granted to management personnel who directly and indirectly supervise the on-site~~data platforms that support our 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 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. For the three and nine months ended September 30, 2021, share-based compensation expense increased 19.8% and 46.1%, respectively, as compared to the same periods in 2020, due primarily to the absence of comparable performance-based share-based compensation expense for the three and nine months ended September 30, 2020 and the accelerated compensation costs recognized in the three and nine months ended September 30, 2021 associated with modifying our share-based compensation plans in July 2020, to allow immediate vesting upon retirement.

~~Analysis of Same Store Depreciation and Amortization~~

Depreciation and amortization for Same Store Facilities increased 0.5% and decreased 0.5% in the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020. We expect modest increases in depreciation expense in the remainder of 2021 due to elevated levels of capital expenditures.

~~Quarterly Financial Data~~

~~The following table summarizes selected quarterly financial data with respect to the Same Store Facilities:~~

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:
2021 $ 646,897 $ 679,885 $ 716,050
2020 $ 625,818 $ 613,559 $ 628,286 $ 637,256 $ 2,504,919
Total cost of operations:
2021 $ 180,768 $ 166,946 $ 175,609
2020 $ 188,922 $ 192,067 $ 184,068 $ 146,394 $ 711,451
Property taxes:
2021 $ 66,481 $ 67,118 $ 69,573
2020 $ 72,692 $ 72,370 $ 71,533 $ 41,164 $ 257,759
Repairs and maintenance:
2021 $ 13,008 $ 13,053 $ 13,078
2020 $ 12,698 $ 11,650 $ 12,954 $ 13,461 $ 50,763
Marketing:
2021 $ 14,558 $ 6,834 $ 9,143
2020 $ 14,782 $ 17,599 $ 16,131 $ 13,505 $ 62,017
REVPAF:
2021 $ 16.86 $ 17.77 $ 18.68
2020 $ 16.12 $ 16.01 $ 16.39 $ 16.62 $ 16.29
Weighted average realized annual rent per occupied square foot:
2021 $ 17.63 $ 18.32 $ 19.30
2020 $ 17.33 $ 17.00 $ 17.16 $ 17.46 $ 17.24
Weighted average occupancy levels for the period:
2021 95.6% 97.0% 96.8%
2020 93.0% 94.2% 95.5% 95.2% 94.5%

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Analysis of Market Trends

The following tables set forth selected market trends in our Same Store Facilities:

Same Store Facilities Operating Trends by Market


		As of September 30, 2021		For the Three Months Ended September 30,																			As of June 30, 2022		Three Months Ended June 30,
		Number of Facilities	Square Feet (millions)	Realized Rent per Occupied Square Foot						Average Occupancy						Realized Rent per Available Square Foot							Number of Facilities	Square Feet (millions)	Realized Rent per Occupied Square Foot						Average Occupancy						Realized Rent per Available Square Foot
				2021		2020		Change		2021		2020		Change		2021		2020		Change					2022		2021		Change		2022		2021		Change		2022		2021		Change
Los Angeles	Los Angeles	213	15.2	$	27.98	$	25.96	7.8	%	98.4	%	97.4	%	1.0	%	$	27.53	$	25.29	8.9	%	Los Angeles	212	15.3	$	31.88	$	26.97	18.2	%	97.2	%	98.3	%	(1.1)	%	$	30.98	$	26.52	16.8	%
San Francisco	San Francisco	130	8.1	28.57		26.37		8.3	%	97.1	%	97.5	%	(0.4)	%	27.74		25.71		7.9	%	San Francisco	128	7.8	31.22		27.74		12.5	%	95.8	%	97.7	%	(1.9)	%	29.91		27.11		10.3	%
New York	New York	90	6.4	27.94		25.71		8.7	%	96.5	%	96.7	%	(0.2)	%	26.98		24.86		8.5	%	New York	90	6.4	29.99		26.91		11.4	%	95.3	%	96.9	%	(1.7)	%	28.59		26.08		9.6	%
Miami																						Miami	83	5.8	27.54		21.66		27.1	%	96.6	%	97.4	%	(0.8)	%	26.60		21.09		26.1	%
Seattle-Tacoma	Seattle-Tacoma	87	5.9	22.69		20.26		12.0	%	96.1	%	95.3	%	0.8	%	21.80		19.32		12.8	%	Seattle-Tacoma	86	5.7	24.75		21.54		14.9	%	95.3	%	96.3	%	(1.0)	%	23.59		20.74		13.7	%
Miami		83	5.8	23.19		19.40		19.5	%	97.5	%	95.5	%	2.1	%	22.60		18.52		22.0	%
Washington DC	Washington DC	89	5.5	23.44		20.98		11.7	%	95.4	%	95.6	%	(0.2)	%	22.37		20.06		11.5	%	Washington DC	90	5.5	25.09		22.16		13.2	%	94.3	%	96.4	%	(2.2)	%	23.67		21.36		10.8	%
Dallas-Ft. Worth																						Dallas-Ft. Worth	106	7.0	17.02		14.33		18.8	%	95.6	%	96.8	%	(1.2)	%	16.26		13.88		17.1	%
Atlanta																						Atlanta	101	6.6	17.10		14.02		22.0	%	95.2	%	96.8	%	(1.7)	%	16.27		13.57		19.9	%
Chicago	Chicago	129	8.1	17.31		14.78		17.1	%	96.2	%	95.6	%	0.6	%	16.66		14.13		17.9	%	Chicago	129	8.1	18.88		16.15		16.9	%	95.3	%	96.8	%	(1.5)	%	17.98		15.64		15.0	%
Atlanta		98	6.4	15.09		12.99		16.2	%	97.1	%	93.5	%	3.9	%	14.65		12.15		20.6	%
Dallas-Ft. Worth		102	6.6	15.29		13.28		15.1	%	96.2	%	93.7	%	2.7	%	14.71		12.45		18.2	%
Houston	Houston	92	6.4	14.12		12.46		13.3	%	94.7	%	92.8	%	2.0	%	13.37		11.56		15.7	%	Houston	95	6.8	15.58		13.24		17.7	%	94.5	%	95.1	%	(0.6)	%	14.72		12.59		16.9	%
Orlando-Daytona	Orlando-Daytona	70	4.5	15.29		13.49		13.3	%	96.3	%	94.7	%	1.7	%	14.72		12.78		15.2	%	Orlando-Daytona	70	4.5	17.47		14.39		21.4	%	96.8	%	97.0	%	(0.2)	%	16.91		13.95		21.2	%
Philadelphia	Philadelphia	56	3.5	19.09		16.95		12.6	%	97.5	%	97.0	%	0.5	%	18.62		16.45		13.2	%	Philadelphia	56	3.5	20.60		18.06		14.1	%	95.8	%	97.8	%	(2.0)	%	19.72		17.66		11.7	%
West Palm Beach	West Palm Beach	40	2.9	21.73		17.87		21.6	%	96.6	%	95.3	%	1.4	%	21.00		17.03		23.3	%	West Palm Beach	37	2.6	25.03		20.59		21.6	%	96.6	%	97.2	%	(0.6)	%	24.19		20.02		20.8	%
Tampa	Tampa	52	3.5	16.12		13.52		19.2	%	96.7	%	94.3	%	2.5	%	15.59		12.75		22.3	%	Tampa	51	3.4	18.53		15.02		23.4	%	95.5	%	96.5	%	(1.0)	%	17.70		14.50		22.1	%
Charlotte	Charlotte	50	3.8	12.94		10.97		18.0	%	96.7	%	94.1	%	2.8	%	12.51		10.32		21.2	%	Charlotte	50	3.8	14.72		12.08		21.9	%	95.8	%	96.3	%	(0.5)	%	14.10		11.63		21.2	%
All other markets	All other markets	893	56.1	16.08		14.13		13.8	%	96.8	%	95.5	%	1.4	%	15.57		13.50		15.3	%	All other markets	898	56.7	17.68		15.13		16.9	%	95.8	%	97.0	%	(1.2)	%	16.94		14.67		15.5	%
Totals	Totals	2,274	148.7	$	19.30	$	17.16	12.5	%	96.8	%	95.5	%	1.4	%	$	18.68	$	16.39	14.0	%	Totals	2,282	149.5	$	21.37	$	18.23	17.2	%	95.8	%	97.0	%	(1.2)	%	$	20.47	$	17.69	15.7	%

4234

Same Store Facilities Operating Trends by Market (Continued)


		For the Three Months Ended September 30,																									Three Months Ended June 30,
		Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)							Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)
		2021		2020		Change		2021		2020		Change		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change		2022		2021		Change		2022		2021		Change
Los Angeles	Los Angeles	$	106,385	$	97,749	8.8	%	$	14,802	$	15,875	(6.8)	%	$	2,503	$	2,351	6.5	%	$	89,080	$	79,523	12.0	%	Los Angeles	$	120,804	$	103,244	17.0	%	$	15,214	$	13,767	10.5	%	$	2,733	$	2,618	4.4	%	$	102,857	$	86,859	18.4	%
San Francisco	San Francisco	57,351		52,987		8.2	%	9,243		9,124		1.3	%	1,604		1,501		6.9	%	46,504		42,362		9.8	%	San Francisco	59,564		53,845		10.6	%	8,364		7,847		6.6	%	1,724		1,604		7.5	%	49,476		44,394		11.4	%
New York	New York	44,463		40,787		9.0	%	10,589		11,598		(8.7)	%	1,304		1,201		8.6	%	32,570		27,988		16.4	%	New York	47,217		42,970		9.9	%	11,246		10,089		11.5	%	1,339		1,309		2.3	%	34,632		31,572		9.7	%
Miami																										Miami	39,968		31,745		25.9	%	6,816		6,392		6.6	%	1,005		1,009		(0.4)	%	32,147		24,344		32.1	%
Seattle-Tacoma	Seattle-Tacoma	32,951		29,251		12.6	%	5,620		6,091		(7.7)	%	999		1,015		(1.6)	%	26,332		22,145		18.9	%	Seattle-Tacoma	34,489		30,235		14.1	%	5,612		5,408		3.8	%	936		986		(5.1)	%	27,941		23,841		17.2	%
Miami		33,813		27,763		21.8	%	7,437		7,976		(6.8)	%	959		960		(0.1)	%	25,417		18,827		35.0	%
Washington DC	Washington DC	31,506		28,253		11.5	%	6,622		7,006		(5.5)	%	929		879		5.7	%	23,955		20,368		17.6	%	Washington DC	33,725		30,361		11.1	%	6,744		6,511		3.6	%	1,037		971		6.8	%	25,944		22,879		13.4	%
Dallas-Ft. Worth																										Dallas-Ft. Worth	29,424		25,063		17.4	%	6,365		5,825		9.3	%	1,131		1,167		(3.1)	%	21,928		18,071		21.3	%
Atlanta																										Atlanta	28,272		23,539		20.1	%	5,608		4,746		18.2	%	1,171		1,245		(5.9)	%	21,493		17,548		22.5	%
Chicago	Chicago	35,024		29,753		17.7	%	13,904		14,020		(0.8)	%	1,396		1,298		7.6	%	19,724		14,435		36.6	%	Chicago	37,804		32,809		15.2	%	14,004		11,767		19.0	%	1,436		1,432		0.3	%	22,364		19,610		14.0	%
Atlanta		24,695		20,524		20.3	%	4,414		5,001		(11.7)	%	1,094		1,013		8.0	%	19,187		14,510		32.2	%
Dallas-Ft. Worth		25,106		21,283		18.0	%	5,836		6,747		(13.5)	%	1,037		984		5.4	%	18,233		13,552		34.5	%
Houston	Houston	22,119		19,145		15.5	%	7,021		6,921		1.4	%	1,014		954		6.3	%	14,084		11,270		25.0	%	Houston	25,947		22,124		17.3	%	7,262		6,966		4.2	%	1,004		1,100		(8.7)	%	17,681		14,058		25.8	%
Orlando-Daytona	Orlando-Daytona	17,036		14,824		14.9	%	3,309		3,992		(17.1)	%	792		705		12.3	%	12,935		10,127		27.7	%	Orlando-Daytona	19,544		16,141		21.1	%	3,646		3,321		9.8	%	859		832		3.2	%	15,039		11,988		25.5	%
Philadelphia	Philadelphia	17,053		15,075		13.1	%	3,728		4,030		(7.5)	%	651		663		(1.8)	%	12,674		10,382		22.1	%	Philadelphia	18,072		16,121		12.1	%	3,836		3,878		(1.1)	%	675		657		2.7	%	13,561		11,586		17.0	%
West Palm Beach	West Palm Beach	15,436		12,530		23.2	%	3,362		3,258		3.2	%	510		497		2.6	%	11,564		8,775		31.8	%	West Palm Beach	16,415		13,557		21.1	%	3,167		2,777		14.0	%	474		498		(4.8)	%	12,774		10,282		24.2	%
Tampa	Tampa	13,999		11,476		22.0	%	3,127		3,442		(9.2)	%	575		510		12.7	%	10,297		7,524		36.9	%	Tampa	15,527		12,722		22.0	%	3,114		2,788		11.7	%	593		611		(2.9)	%	11,820		9,323		26.8	%
Charlotte	Charlotte	12,404		10,264		20.8	%	2,421		2,420		—	%	511		481		6.2	%	9,472		7,363		28.6	%	Charlotte	13,978		11,506		21.5	%	2,271		2,071		9.7	%	547		544		0.6	%	11,160		8,891		25.5	%
All other markets	All other markets	226,709		196,622		15.3	%	48,377		52,167		(7.3)	%	9,919		9,388		5.7	%	168,413		135,067		24.7	%	All other markets	248,188		214,560		15.7	%	49,788		46,641		6.7	%	10,610		10,276		3.3	%	187,790		157,643		19.1	%
Totals	Totals	$	716,050	$	628,286	14.0	%	$	149,812	$	159,668	(6.2)	%	$	25,797	$	24,400	5.7	%	$	540,441	$	444,218	21.7	%	Totals	$	788,938	$	680,542	15.9	%	$	153,057	$	140,794	8.7	%	$	27,274	$	26,859	1.5	%	$	608,607	$	512,889	18.7	%

4335

Same Store Facilities Operating Trends by Market (Continued)


	As of June 30, 2022		Six Months Ended June 30,
	Number of Facilities	Square Feet (millions)	Realized Rent per Occupied Square Foot						Average Occupancy						Realized Rent per Available Square Foot
			2022		2021		Change		2022		2021		Change		2022		2021		Change
Los Angeles	212	15.3	$	30.66	$	26.66	15.0	%	97.5	%	98.1	%	(0.6)	%	$	29.88	$	26.15	14.3	%
San Francisco	128	7.8	30.55		27.35		11.7	%	95.9	%	97.6	%	(1.7)	%	29.31		26.70		9.8	%
New York	90	6.4	29.47		26.65		10.6	%	95.4	%	96.4	%	(1.0)	%	28.13		25.70		9.5	%
Miami	83	5.8	26.68		21.06		26.7	%	96.7	%	96.9	%	(0.2)	%	25.81		20.40		26.5	%
Seattle-Tacoma	86	5.7	24.18		21.07		14.8	%	95.1	%	95.6	%	(0.5)	%	23.01		20.14		14.3	%
Washington DC	90	5.5	24.61		21.76		13.1	%	94.2	%	95.8	%	(1.7)	%	23.18		20.84		11.2	%
Dallas-Ft. Worth	106	7.0	16.60		13.96		18.9	%	95.4	%	95.8	%	(0.4)	%	15.84		13.37		18.5	%
Atlanta	101	6.6	16.63		13.68		21.6	%	95.0	%	95.7	%	(0.7)	%	15.80		13.09		20.7	%
Chicago	129	8.1	18.44		15.79		16.8	%	94.9	%	95.8	%	(0.9)	%	17.50		15.13		15.7	%
Houston	95	6.8	15.23		12.96		17.5	%	94.3	%	94.3	%	—	%	14.36		12.22		17.5	%
Orlando-Daytona	70	4.5	16.98		14.06		20.8	%	96.5	%	96.1	%	0.4	%	16.38		13.52		21.2	%
Philadelphia	56	3.5	20.21		17.77		13.7	%	95.9	%	97.3	%	(1.4)	%	19.38		17.29		12.1	%
West Palm Beach	37	2.6	24.34		19.93		22.1	%	96.8	%	96.8	%	—	%	23.56		19.29		22.1	%
Tampa	51	3.4	18.07		14.57		24.0	%	95.6	%	96.1	%	(0.5)	%	17.28		13.99		23.5	%
Charlotte	50	3.8	14.32		11.74		22.0	%	95.7	%	95.6	%	0.1	%	13.70		11.22		22.1	%
All other markets	898	56.7	17.28		14.81		16.7	%	95.6	%	96.2	%	(0.6)	%	16.52		14.24		16.0	%
Totals	2,282	149.5	$	20.83	$	17.89	16.4	%	95.7	%	96.3	%	(0.6)	%	$	19.94	$	17.23	15.7	%

As of September 30, 2021 For the Nine Months Ended September 30,
Number
of
Facilities Square
Feet
(millions) Realized Rent per
Occupied Square Foot Average Occupancy Realized Rent per
Available Square Foot
2021 2020 Change 2021 2020 Change 2021 2020 Change
Los Angeles 213 15.2 $ 27.20 $ 25.87 5.1 % 98.2 % 96.3 % 2.0 % $ 26.72 $ 24.90 7.3 %
San Francisco 130 8.1 27.67 26.35 5.0 % 97.5 % 95.5 % 2.1 % 26.96 25.15 7.2 %
New York 90 6.4 27.08 25.76 5.1 % 96.5 % 94.8 % 1.8 % 26.13 24.43 7.0 %
Seattle-Tacoma 87 5.9 21.66 20.23 7.1 % 95.8 % 94.0 % 1.9 % 20.74 19.03 9.0 %
Miami 83 5.8 21.77 19.70 10.5 % 97.0 % 93.8 % 3.4 % 21.12 18.48 14.3 %
Washington DC 89 5.5 22.36 21.04 6.3 % 95.6 % 94.2 % 1.5 % 21.38 19.82 7.9 %
Chicago 129 8.1 16.30 14.88 9.5 % 96.0 % 93.6 % 2.6 % 15.64 13.92 12.4 %
Atlanta 98 6.4 14.18 13.17 7.7 % 96.2 % 92.5 % 4.0 % 13.64 12.19 11.9 %
Dallas-Ft. Worth 102 6.6 14.43 13.37 7.9 % 96.0 % 92.9 % 3.3 % 13.84 12.42 11.4 %
Houston 92 6.4 13.43 12.64 6.2 % 94.4 % 91.8 % 2.8 % 12.68 11.61 9.2 %
Orlando-Daytona 70 4.5 14.47 13.53 6.9 % 96.2 % 94.2 % 2.1 % 13.92 12.75 9.2 %
Philadelphia 56 3.5 18.21 16.72 8.9 % 97.4 % 95.8 % 1.7 % 17.73 16.03 10.6 %
West Palm Beach 40 2.9 20.35 18.00 13.1 % 96.8 % 94.2 % 2.8 % 19.70 16.96 16.2 %
Tampa 52 3.5 15.08 13.68 10.2 % 96.3 % 92.9 % 3.7 % 14.52 12.71 14.2 %
Charlotte 50 3.8 12.14 11.07 9.7 % 95.9 % 92.3 % 3.9 % 11.65 10.22 14.0 %
All other markets 893 56.1 15.26 14.07 8.5 % 96.4 % 94.4 % 2.1 % 14.71 13.28 10.8 %
Totals 2,274 148.7 $ 18.42 $ 17.16 7.3 % 96.5 % 94.3 % 2.3 % $ 17.77 $ 16.18 9.8 %

4436

Same Store Facilities Operating Trends by Market (Continued)


		For the Nine Months Ended September 30,																									Six Months Ended June 30,
		Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)							Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)
		2021		2020		Change		2021		2020		Change		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change		2022		2021		Change		2022		2021		Change
Los Angeles	Los Angeles	$	309,560	$	289,372	7.0	%	$	43,786	$	49,067	(10.8)	%	$	8,076	$	7,630	5.8	%	$	257,698	$	232,675	10.8	%	Los Angeles	$	233,150	$	203,574	14.5	%	$	30,992	$	29,087	6.5	%	$	5,633	$	5,580	0.9	%	$	196,525	$	168,907	16.4	%
San Francisco	San Francisco	166,975		156,057		7.0	%	26,144		28,237		(7.4)	%	5,097		4,752		7.3	%	135,734		123,068		10.3	%	San Francisco	116,722		105,932		10.2	%	17,199		16,400		4.9	%	3,434		3,412		0.6	%	96,089		86,120		11.6	%
New York	New York	129,251		121,249		6.6	%	31,942		36,059		(11.4)	%	4,076		3,890		4.8	%	93,233		81,300		14.7	%	New York	92,825		84,788		9.5	%	23,440		21,352		9.8	%	2,707		2,773		(2.4)	%	66,678		60,663		9.9	%
Miami																										Miami	77,559		61,503		26.1	%	13,658		12,863		6.2	%	2,063		2,142		(3.7)	%	61,838		46,498		33.0	%
Seattle-Tacoma	Seattle-Tacoma	93,997		86,751		8.4	%	17,291		19,058		(9.3)	%	3,116		3,081		1.1	%	73,590		64,612		13.9	%	Seattle-Tacoma	67,296		58,784		14.5	%	11,548		11,329		1.9	%	1,946		2,070		(6.0)	%	53,802		45,385		18.5	%
Miami		94,884		83,440		13.7	%	20,204		24,161		(16.4)	%	3,099		3,060		1.3	%	71,581		56,219		27.3	%
Washington DC	Washington DC	90,275		84,169		7.3	%	19,835		21,656		(8.4)	%	2,977		2,857		4.2	%	67,463		59,656		13.1	%	Washington DC	66,102		59,300		11.5	%	13,960		13,346		4.6	%	2,077		2,068		0.4	%	50,065		43,886		14.1	%
Dallas-Ft. Worth																										Dallas-Ft. Worth	57,352		48,408		18.5	%	12,750		12,206		4.5	%	2,288		2,369		(3.4)	%	42,314		33,833		25.1	%
Atlanta																										Atlanta	55,034		45,531		20.9	%	10,677		9,555		11.7	%	2,430		2,534		(4.1)	%	41,927		33,442		25.4	%
Chicago	Chicago	98,584		88,269		11.7	%	38,191		40,447		(5.6)	%	4,330		4,233		2.3	%	56,063		43,589		28.6	%	Chicago	73,631		63,560		15.8	%	28,904		24,287		19.0	%	3,023		2,934		3.0	%	41,704		36,339		14.8	%
Atlanta		69,054		62,154		11.1	%	13,681		15,608		(12.3)	%	3,555		3,196		11.2	%	51,818		43,350		19.5	%
Dallas-Ft. Worth		70,909		63,964		10.9	%	17,132		20,695		(17.2)	%	3,297		3,151		4.6	%	50,480		40,118		25.8	%
Houston	Houston	62,932		57,889		8.7	%	20,153		20,533		(1.9)	%	3,184		3,095		2.9	%	39,595		34,261		15.6	%	Houston	50,647		43,023		17.7	%	14,050		13,705		2.5	%	2,120		2,257		(6.1)	%	34,477		27,061		27.4	%
Orlando-Daytona	Orlando-Daytona	48,397		44,561		8.6	%	10,174		12,202		(16.6)	%	2,478		2,156		14.9	%	35,745		30,203		18.3	%	Orlando-Daytona	37,944		31,360		21.0	%	7,338		6,866		6.9	%	1,775		1,685		5.3	%	28,831		22,809		26.4	%
Philadelphia	Philadelphia	48,695		44,354		9.8	%	11,455		12,126		(5.5)	%	2,031		2,114		(3.9)	%	35,209		30,114		16.9	%	Philadelphia	35,572		31,642		12.4	%	8,019		7,726		3.8	%	1,365		1,381		(1.2)	%	26,188		22,535		16.2	%
West Palm Beach	West Palm Beach	43,471		37,589		15.6	%	9,404		9,713		(3.2)	%	1,634		1,553		5.2	%	32,433		26,323		23.2	%	West Palm Beach	32,009		26,179		22.3	%	6,306		5,644		11.7	%	963		1,041		(7.5)	%	24,740		19,494		26.9	%
Tampa	Tampa	39,156		34,456		13.6	%	9,068		10,510		(13.7)	%	1,847		1,639		12.7	%	28,241		22,307		26.6	%	Tampa	30,349		24,616		23.3	%	6,246		5,787		7.9	%	1,217		1,245		(2.2)	%	22,886		17,584		30.2	%
Charlotte	Charlotte	34,659		30,590		13.3	%	6,808		7,326		(7.1)	%	1,626		1,551		4.8	%	26,225		21,713		20.8	%	Charlotte	27,180		22,255		22.1	%	4,649		4,386		6.0	%	1,160		1,116		3.9	%	21,371		16,753		27.6	%
All other markets	All other markets	642,033		582,799		10.2	%	146,525		159,938		(8.4)	%	31,107		29,763		4.5	%	464,401		393,098		18.1	%	All other markets	484,836		417,287		16.2	%	102,267		98,572		3.7	%	22,056		21,354		3.3	%	360,513		297,361		21.2	%
Totals	Totals	$	2,042,832	$	1,867,663	9.4	%	$	441,793	$	487,336	(9.3)	%	$	81,530	$	77,721	4.9	%	$	1,519,509	$	1,302,606	16.7	%	Totals	$	1,538,208	$	1,327,742	15.9	%	$	312,003	$	293,111	6.4	%	$	56,257	$	55,961	0.5	%	$	1,169,948	$	978,670	19.5	%

4537

Acquired Facilities

The Acquired Facilities represent ~~232~~314 facilities that we acquired in ~~2019,~~ 2020, 2021, and ~~within the first nine months of 2021.~~2022. As a result of the stabilization process and timing of when these facilities were acquired, year-over-year changes can be significant. The following table summarizes operating data with respect to the Acquired Facilities:


ACQUIRED FACILITIES	ACQUIRED FACILITIES	Three Months Ended September 30,						Nine Months Ended September 30,						ACQUIRED FACILITIES	Three Months Ended June 30,						Six Months Ended June 30,
		2021		2020		Change (a)		2021		2020		Change (a)			2022		2021		Change (a)		2022		2021		Change (a)

		($ amounts in thousands, except for per square foot amounts)													($ amounts in thousands, except for per square foot amounts)
Revenues (b):	Revenues (b):													Revenues (b):
2019 Acquisitions		$	11,180	$	8,141	$	3,039	$	30,249	$	22,735	$	7,514
2020 Acquisitions	2020 Acquisitions	15,613		2,860		12,753		38,451		5,368		33,083		2020 Acquisitions	$	18,413	$	12,547	$	5,866	$	35,481	$	22,838	$	12,643
2021 Acquisitions	2021 Acquisitions	35,394		—		35,394		56,051		—		56,051		2021 Acquisitions	75,350		19,825		55,525		144,175		20,657		123,518
2022 Acquisitions														2022 Acquisitions	1,735		—		1,735		2,213		—		2,213
Total revenues	Total revenues	62,187		11,001		51,186		124,751		28,103		96,648		Total revenues	95,498		32,372		63,126		181,869		43,495		138,374

Cost of operations (b):	Cost of operations (b):													Cost of operations (b):
2019 Acquisitions		3,509		3,034		475		10,225		9,960		265
2020 Acquisitions	2020 Acquisitions	6,113		1,846		4,267		18,990		3,670		15,320		2020 Acquisitions	6,263		6,251		12		13,077		12,877		200
2021 Acquisitions	2021 Acquisitions	10,442		—		10,442		16,703		—		16,703		2021 Acquisitions	25,359		5,710		19,649		49,257		6,261		42,996
2022 Acquisitions														2022 Acquisitions	1,238		—		1,238		1,557		—		1,557
Total cost of operations	Total cost of operations	20,064		4,880		15,184		45,918		13,630		32,288		Total cost of operations	32,860		11,961		20,899		63,891		19,138		44,753

Net operating income:	Net operating income:													Net operating income:
2019 Acquisitions		7,671		5,107		2,564		20,024		12,775		7,249
2020 Acquisitions	2020 Acquisitions	9,500		1,014		8,486		19,461		1,698		17,763		2020 Acquisitions	12,150		6,296		5,854		22,404		9,961		12,443
2021 Acquisitions	2021 Acquisitions	24,952		—		24,952		39,348		—		39,348		2021 Acquisitions	49,991		14,115		35,876		94,918		14,396		80,522
2022 Acquisitions														2022 Acquisitions	497		—		497		656		—		656
Net operating income	Net operating income	42,123		6,121		36,002		78,833		14,473		64,360		Net operating income	62,638		20,411		42,227		117,978		24,357		93,621
Depreciation and amortization expense	Depreciation and amortization expense	(55,986)		(7,223)		(48,763)		(114,297)		(22,292)		(92,005)		Depreciation and amortization expense	(76,255)		(38,591)		(37,664)		(160,720)		(50,064)		(110,656)
Net loss	Net loss	$	(13,863)	$	(1,102)	$	(12,761)	$	(35,464)	$	(7,819)	$	(27,645)	Net loss	$	(13,617)	$	(18,180)	$	4,563	$	(42,742)	$	(25,707)	$	(17,035)

At September 30:
At June 30:														At June 30:
Square foot occupancy:	Square foot occupancy:													Square foot occupancy:
2019 Acquisitions								94.0%		91.5%		2.7%
2020 Acquisitions	2020 Acquisitions							90.0%		80.0%		12.5%		2020 Acquisitions							91.6%		88.7%		3.3%
2021 Acquisitions	2021 Acquisitions							87.0%		—		—		2021 Acquisitions							86.0%		86.2%		(0.2)%
2022 Acquisitions														2022 Acquisitions							68.0%		—		—
								89.1%		88.0%		1.3%									86.1%		87.1%		(1.1)%
Annual contract rent per occupied square foot:	Annual contract rent per occupied square foot:													Annual contract rent per occupied square foot:
2019 Acquisitions								$	14.96	$	11.41	31.1%
2020 Acquisitions	2020 Acquisitions							14.03		13.00		7.9%		2020 Acquisitions							$	16.31	$	12.75	27.9%
2021 Acquisitions	2021 Acquisitions							17.57		—		—		2021 Acquisitions							16.67		17.97		(7.2)%
2022 Acquisitions														2022 Acquisitions							11.74		—		—
								$	16.12	$	11.85	36.0%									$	16.41	$	15.94	2.9%
Number of facilities:	Number of facilities:													Number of facilities:
2019 Acquisitions								44		44		—
2020 Acquisitions	2020 Acquisitions							62		19		43		2020 Acquisitions							62		62		—
2021 Acquisitions	2021 Acquisitions							126		—		126		2021 Acquisitions							232		99		133
2022 Acquisitions														2022 Acquisitions							20		—		20
								232		63		169									314		161		153
Net rentable square feet (in thousands):
2019 Acquisitions								3,154		3,154		—
Net rentable square feet (in thousands) (c):														Net rentable square feet (in thousands) (c):
2020 Acquisitions	2020 Acquisitions							5,075		1,385		3,690		2020 Acquisitions							5,075		5,075		—
2021 Acquisitions	2021 Acquisitions							10,295		—		10,295		2021 Acquisitions							21,830		8,148		13,682
2022 Acquisitions														2022 Acquisitions							1,495		—		1,495
								18,524		4,539		13,985									28,400		13,223		15,177

4638

ACQUIRED FACILITIES (Continued)


		As of September 30, 2021			As of June 30, 2022
Costs to acquire (in thousands):	Costs to acquire (in thousands):			Costs to acquire (in thousands):
2019 Acquisitions		$	429,850
2020 Acquisitions	2020 Acquisitions	796,065		2020 Acquisitions	$	796,065
2021 Acquisitions	2021 Acquisitions	2,845,284		2021 Acquisitions	5,115,276
2022 Acquisitions				2022 Acquisitions	251,282
		$	4,071,199		$	6,162,623

(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.

(b)Revenues and cost of operations do not include tenant reinsurance and merchandise sale revenues and expenses generated at the facilities. See “Ancillary Operations” below for more information.

We believe that our economies of scale 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 months 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.

(c)The Acquired Facilities have an aggregate of approximately ~~18.5~~28.4 million net rentable square feet, including ~~3.6~~11.0 million in Texas, 3.8 million in Maryland, ~~1.9~~1.1 million in Virginia, ~~1.8~~0.9 million in ~~Texas,~~North Carolina, 0.8 million in ~~Florida,~~Colorado, 0.7 million in ~~each of~~ Arizona, ~~and Georgia,~~ 0.6 million in each of California, Florida, Georgia, Illinois, ~~Indiana,~~Minnesota, Ohio and ~~South Carolina,~~Oklahoma, 0.5 million in each of Idaho, Michigan, Missouri, Nebraska, ~~North Carolina~~Oregon and Pennsylvania, 0.4 million in each of ~~Colorado, Minnesota~~Indiana, South Carolina and ~~Washington,~~Tennessee, and 0.3 million in each of Alabama, ~~Massachusetts, Missouri~~Nevada and ~~Tennessee~~Washington, and ~~1.1~~0.8 million in other states.

~~For~~We have been active in acquiring facilities in recent years. Since the ~~nine~~beginning of 2020, we acquired a total of 314 facilities with 28.4 million net rentable square feet for $6.2 billion. During the three and six months ended ~~September~~June 30, ~~2021, the weighted average annualized yield on cost, based upon~~2022, these facilities contributed net operating income ~~for the 44 facilities acquired in 2019 was 6.2%. The yield for the facilities acquired in 2020 is not meaningful due to the presence~~ of ~~unstabilized facilities. The yield for the facilities acquired in the nine months ended September 30, 2021 is not meaningful due to our limited ownership period.~~$62.6 million and $118.0 million, respectively.

~~On April 28,~~During 2021, we ~~closed the acquisition of~~acquired the ezStorage portfolio, consisting of 48 properties (4.1 million net rentable square feet) for acquisition cost of $1.8 billion, which includes 47 self-storage facilities and one property that iswas under construction. Included in the ~~2021~~ Acquisition results in the table above are ezStorage portfolio revenues of ~~$22.7~~$48.7 million, NOI of ~~$17.8~~$38.3 million (including Direct NOI of ~~$18.4~~$39.7 million), and average square footage occupancy of ~~93.8%~~89.7% for the ~~three~~six months ended ~~September~~June 30, ~~2021.~~2022.

~~Subsequent to September 30,~~During 2021, we acquired ~~or were under contract to acquire 107 self-storage facilities across 16 states with 11.8 million net rentable square feet, for $2.3 billion. These include~~ the All Storage portfolio, consisting of 56 properties (7.5 million net rentable square feet) ~~that~~for $1.5 billion, with 55 properties closed in the fourth quarter of 2021 and one property closed in February 2022. Included in the Acquisition results in the table above are All Storage portfolio revenues of $35.2 million, NOI of $21.4 million (including Direct NOI of $22.8 million), and average square footage occupancy of 78.4% for the six months ended June 30, 2022.

We remain active in seeking to acquire additional self-storage facilities through 2022. Subsequent to June 30, 2022, we ~~are~~acquired or were under contract to acquire ~~for $1.5 billion. The acquisition, which is subject to the satisfaction of customary closing conditions, is expected to close in two separate tranches, with seven~~24 self-storage facilities ~~closing in November 2021 and 49 self-storage facilities closing in December 2021.~~across ten states with 1.7 million net rentable square feet, for $257.4 million.

We are actively 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, 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.

~~Analysis of Depreciation and Amortization of Acquired Facilities~~

Depreciation and amortization with respect to the Acquired Facilities for the three months ended September 30, 2021 and 2020 totaled $56.0 million and $7.2 million, respectively, and $114.3 million and $22.3 million for the nine months ended September 30, 2021 and 2020, 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 September 30, 2021, depreciation of buildings and amortization of tenant intangibles is expected to aggregate approximately $166.2 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 the remainder of 2021.

4739

Developed and Expanded Facilities

The developed and expanded facilities include 6854 facilities that were developed on new sites since January 1, ~~2016,~~2017, and 7191 facilities ~~subject~~expanded to ~~expansion of~~increase their net rentable square footage. Of these expansions, 4451 were completed ~~at January 1, 2020, 19~~before 2021, 22 were completed in ~~the 21 months ended September 30,~~ 2021 or 2022, and 818 are currently in process ~~or are expected to commence renovation in 2021.~~at June 30, 2022. The following table summarizes operating data with respect to the Developed and Expanded Facilities:


DEVELOPED AND EXPANDED
FACILITIES		Three Months Ended September 30,						Nine Months Ended September 30,
DEVELOPED AND EXPANDED FACILITIES														DEVELOPED AND EXPANDED FACILITIES
															Three Months Ended June 30,						Six Months Ended June 30,
		2021		2020		Change (a)		2021		2020		Change (a)			2022		2021		Change (a)		2022		2021		Change (a)

		($ amounts in thousands, except for per square foot amounts)													($ amounts in thousands, except for per square foot amounts)
Revenues (b):	Revenues (b):													Revenues (b):
Developed in 2016		$	9,241	$	7,237	$	2,004	$	25,459	$	20,942	$	4,517
Developed in 2017	Developed in 2017	7,317		5,520		1,797		20,021		15,761		4,260		Developed in 2017	$	8,599	$	6,661	$	1,938	$	16,541	$	12,704	$	3,837
Developed in 2018	Developed in 2018	7,569		5,267		2,302		20,391		14,467		5,924		Developed in 2018	8,990		6,769		2,221		17,283		12,822		4,461
Developed in 2019	Developed in 2019	3,313		1,831		1,482		8,470		4,349		4,121		Developed in 2019	3,997		2,819		1,178		7,623		5,157		2,466
Developed in 2020	Developed in 2020	1,062		79		983		2,093		86		2,007		Developed in 2020	1,676		662		1,014		3,158		1,031		2,127
Developed in 2021	Developed in 2021	558		—		558		706		—		706		Developed in 2021	1,931		144		1,787		3,360		148		3,212
Expansions completed before 2020		17,568		11,978		5,590		46,770		33,738		13,032
Expansions completed in 2020 or 2021		6,554		3,935		2,619		16,178		11,601		4,577

Expansions completed before 2021														Expansions completed before 2021	23,401		16,424		6,977		44,817		30,695		14,122
Expansions completed in 2021 or 2022														Expansions completed in 2021 or 2022	11,055		6,568		4,487		20,856		12,831		8,025
Expansions in process	Expansions in process	1,918		2,528		(610)		5,872		7,505		(1,633)		Expansions in process	6,250		6,167		83		12,337		12,303		34
Total revenues	Total revenues	55,100		38,375		16,725		145,960		108,449		37,511		Total revenues	65,899		46,214		19,685		125,975		87,691		38,284

Cost of operations (b):	Cost of operations (b):													Cost of operations (b):
Developed in 2016		2,384		2,480		(96)		7,214		7,584		(370)
Developed in 2017	Developed in 2017	2,540		2,702		(162)		7,461		7,685		(224)		Developed in 2017	2,696		2,418		278		5,324		4,921		403
Developed in 2018	Developed in 2018	2,669		2,605		64		7,774		7,993		(219)		Developed in 2018	2,432		2,543		(111)		4,987		5,105		(118)
Developed in 2019	Developed in 2019	1,222		1,159		63		3,917		3,546		371		Developed in 2019	1,504		1,287		217		2,872		2,695		177
Developed in 2020	Developed in 2020	432		157		275		1,275		209		1,066		Developed in 2020	427		444		(17)		855		843		12
Developed in 2021	Developed in 2021	400		—		400		890		—		890		Developed in 2021	832		407		425		1,687		490		1,197
Expansions completed before 2020		6,323		6,456		(133)		18,512		17,571		941
Expansions completed in 2020 or 2021		2,615		1,559		1,056		6,981		4,560		2,421

Expansions completed before 2021														Expansions completed before 2021	7,442		7,292		150		15,043		14,368		675
Expansions completed in 2021 or 2022														Expansions completed in 2021 or 2022	2,747		1,642		1,105		5,444		3,531		1,913
Expansions in process	Expansions in process	474		617		(143)		1,548		1,868		(320)		Expansions in process	1,224		1,267		(43)		2,509		2,682		(173)
Total cost of operations	Total cost of operations	19,059		17,735		1,324		55,572		51,016		4,556		Total cost of operations	19,304		17,300		2,004		38,721		34,635		4,086

Net operating income (loss):	Net operating income (loss):													Net operating income (loss):
Developed in 2016		6,857		4,757		2,100		18,245		13,358		4,887
Developed in 2017	Developed in 2017	4,777		2,818		1,959		12,560		8,076		4,484		Developed in 2017	5,903		4,243		1,660		11,217		7,783		3,434
Developed in 2018	Developed in 2018	4,900		2,662		2,238		12,617		6,474		6,143		Developed in 2018	6,558		4,226		2,332		12,296		7,717		4,579
Developed in 2019	Developed in 2019	2,091		672		1,419		4,553		803		3,750		Developed in 2019	2,493		1,532		961		4,751		2,462		2,289
Developed in 2020	Developed in 2020	630		(78)		708		818		(123)		941		Developed in 2020	1,249		218		1,031		2,303		188		2,115
Developed in 2021	Developed in 2021	158		—		158		(184)		—		(184)		Developed in 2021	1,099		(263)		1,362		1,673		(342)		2,015
Expansions completed before 2020		11,245		5,522		5,723		28,258		16,167		12,091
Expansions completed in 2020 or 2021		3,939		2,376		1,563		9,197		7,041		2,156

Expansions completed before 2021														Expansions completed before 2021	15,959		9,132		6,827		29,774		16,327		13,447
Expansions completed in 2021 or 2022														Expansions completed in 2021 or 2022	8,308		4,926		3,382		15,412		9,300		6,112
Expansions in process	Expansions in process	1,444		1,911		(467)		4,324		5,637		(1,313)		Expansions in process	5,026		4,900		126		9,828		9,621		207
Net operating income	Net operating income	36,041		20,640		15,401		90,388		57,433		32,955		Net operating income	46,595		28,914		17,681		87,254		53,056		34,198
Depreciation and amortization expense	Depreciation and amortization expense	(14,977)		(13,596)		(1,381)		(46,126)		(39,796)		(6,330)		Depreciation and amortization expense	(14,781)		(13,243)		(1,538)		(29,409)		(28,512)		(897)
Net income	Net income	$	21,064	$	7,044	$	14,020	$	44,262	$	17,637	$	26,625	Net income	$	31,814	$	15,671	$	16,143	$	57,845	$	24,544	$	33,301

4840


DEVELOPED AND EXPANDED FACILITIES (Continued)	DEVELOPED AND EXPANDED FACILITIES (Continued)						DEVELOPED AND EXPANDED FACILITIES (Continued)
		As of September 30,						As of June 30,
		2021		2020		Change (a)		2022		2021		Change (a)

		($ amounts in thousands, except for per square foot amounts)						($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:	Square foot occupancy:						Square foot occupancy:
Developed in 2016		93.0%		91.8%		1.3%
Developed in 2017	Developed in 2017	91.7%		89.2%		2.8%	Developed in 2017	93.2%		94.5%		(1.4)%
Developed in 2018	Developed in 2018	90.5%		87.1%		3.9%	Developed in 2018	91.2%		92.2%		(1.1)%
Developed in 2019	Developed in 2019	89.9%		84.7%		6.1%	Developed in 2019	88.9%		91.3%		(2.6)%
Developed in 2020	Developed in 2020	90.0%		31.7%		183.9%	Developed in 2020	92.6%		84.6%		9.5%
Developed in 2021	Developed in 2021	44.0%		—		—	Developed in 2021	80.7%		45.7%		76.6%
Expansions completed before 2020		89.9%		82.3%		9.2%
Expansions completed in 2020 or 2021		78.3%		67.1%		16.7%

Expansions completed before 2021							Expansions completed before 2021	89.9%		87.5%		2.7%
Expansions completed in 2021 or 2022							Expansions completed in 2021 or 2022	83.2%		89.8%		(7.3)%
Expansions in process	Expansions in process	82.5%		82.9%		(0.5)%	Expansions in process	85.2%		93.1%		(8.5)%
		87.3%		83.0%		5.2%		87.8%		88.9%		(1.2)%
Annual contract rent per occupied square foot:	Annual contract rent per occupied square foot:						Annual contract rent per occupied square foot:
Developed in 2016		$	18.26	$	14.73	24.0%
Developed in 2017	Developed in 2017	15.35		12.08		27.1%	Developed in 2017	$	18.27	$	14.05	30.0%
Developed in 2018	Developed in 2018	16.18		11.99		34.9%	Developed in 2018	19.48		14.91		30.7%
Developed in 2019	Developed in 2019	13.65		8.64		58.0%	Developed in 2019	17.45		12.51		39.5%
Developed in 2020	Developed in 2020	15.16		8.96		69.2%	Developed in 2020	20.44		13.01		57.1%
Developed in 2021	Developed in 2021	13.64		—		—	Developed in 2021	16.52		11.48		43.9%
Expansions completed before 2020		13.43		10.25		31.0%
Expansions completed in 2020 or 2021		15.33		15.14		1.3%

Expansions completed before 2021							Expansions completed before 2021	15.39		11.90		29.3%
Expansions completed in 2021 or 2022							Expansions completed in 2021 or 2022	21.24		19.09		11.3%
Expansions in process	Expansions in process	20.12		18.59		8.2%	Expansions in process	24.66		21.62		14.1%
		$	15.15	$	11.99	26.4%		$	18.18	$	14.25	27.6%
Number of facilities:	Number of facilities:						Number of facilities:
Developed in 2016		16		16		—
Developed in 2017	Developed in 2017	16		16		—	Developed in 2017	16		16		—
Developed in 2018	Developed in 2018	18		18		—	Developed in 2018	18		18		—
Developed in 2019	Developed in 2019	11		11		—	Developed in 2019	11		11		—
Developed in 2020	Developed in 2020	3		2		1	Developed in 2020	3		3		—
Developed in 2021	Developed in 2021	4		—		4	Developed in 2021	6		3		3
Expansions completed before 2020		44		44		—
Expansions completed in 2020 or 2021		19		18		1

Expansions completed before 2021							Expansions completed before 2021	51		51		—
Expansions completed in 2021 or 2022							Expansions completed in 2021 or 2022	22		20		2
Expansions in process	Expansions in process	8		8		—	Expansions in process	18		18		—
		139		133		6		145		140		5
Net rentable square feet (in thousands) (c):	Net rentable square feet (in thousands) (c):						Net rentable square feet (in thousands) (c):
Developed in 2016		2,141		2,141		—
Developed in 2017	Developed in 2017	2,040		2,040		—	Developed in 2017	2,040		2,040		—
Developed in 2018	Developed in 2018	2,069		2,069		—	Developed in 2018	2,069		2,069		—
Developed in 2019	Developed in 2019	1,057		1,057		—	Developed in 2019	1,057		1,057		—
Developed in 2020	Developed in 2020	347		246		101	Developed in 2020	347		347		—
Developed in 2021	Developed in 2021	502		—		502	Developed in 2021	681		359		322
Expansions completed before 2020		5,822		5,818		4
Expansions completed in 2020 or 2021		2,576		1,619		957

Expansions completed before 2021							Expansions completed before 2021	6,879		6,879		—
Expansions completed in 2021 or 2022							Expansions completed in 2021 or 2022	2,645		1,556		1,089
Expansions in process	Expansions in process	446		479		(33)	Expansions in process	1,180		1,224		(44)
		17,000		15,469		1,531		16,898		15,531		1,367

4941


		As of September 30, 2021			As of June 30, 2022
Costs to develop (in thousands):	Costs to develop (in thousands):			Costs to develop (in thousands):
Developed in 2016		$	257,585
Developed in 2017	Developed in 2017	239,871		Developed in 2017	$	239,871
Developed in 2018	Developed in 2018	262,187		Developed in 2018	262,187
Developed in 2019	Developed in 2019	150,387		Developed in 2019	150,387
Developed in 2020	Developed in 2020	42,063		Developed in 2020	42,063
Developed in 2021	Developed in 2021	89,125		Developed in 2021	115,632
Expansions completed before 2020 (d)		381,940
Expansions completed in 2020 or 2021 (d)		178,768
		$	1,601,926
Expansions completed before 2021 (d)				Expansions completed before 2021 (d)	478,659
Expansions completed in 2021 or 2022 (d)				Expansions completed in 2021 or 2022 (d)	160,386
					$	1,449,185

(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.

(b)Revenues and cost of operations do not include tenant reinsurance and merchandise sales generated at the facilities. See “Ancillary Operations” below for more information.

(c)The facilities included above have an aggregate of approximately ~~17.0~~16.9 million net rentable square feet at ~~September~~June 30, ~~2021,~~2022, including ~~6.0~~5.0 million in Texas, ~~2.6~~2.9 million in Florida, ~~1.9~~2.2 million in California, 1.5 million in Colorado, ~~1.1~~1.4 million in Minnesota, ~~0.8~~0.9 million in North Carolina, 0.6 million in ~~Washington,~~Michigan, 0.4 million in each of Missouri, South Carolina and ~~Virginia,~~Washington, 0.3 million in each of ~~Georgia, Michigan,~~ New Jersey and ~~South Carolina~~Virginia and ~~0.5~~0.6 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.

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.

Our existing unstabilized facilities continued to fill up in terms of occupancies consistent with our general expectations during the nine months ended September 30, 2021, 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 September 30, 2021, we had a development pipeline to develop 21 new self-storage facilities and expand 31 existing self-storage facilities, which will add approximately 4.6 million net rentable square feet at a cost of $730.6 million. 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.

We typically underwrite new developments to stabilize at approximately an 8.0% NOI yield on cost. Our developed facilities have thus far ~~leased-up~~leased up as expected and are at various stages of their revenue stabilization periods. The actual annualized yields that we may achieve on these facilities upon stabilization will depend on many factors, including local and current market conditions in the vicinity of each property and the level of new and existing supply.

We have 21 additional newly developed facilities in process, which will have a total of 1.7 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $272.8 million. We expect these facilities to open over the next 18 to 24 months.

The 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, many 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 “expansions completed” represent those facilities where the expansions have been completed at ~~September~~June 30, ~~2021~~2022. We incurred a total of ~~$560.7~~$639.0 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 ~~5.3~~6.0 million net rentable square feet of new storage space.

At June 30, 2022, we had 30 additional facilities in development, which will have a total of 2.6 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $480.3 million. We expect these facilities to open over the next 18 to 24 months.

The facilities under ~~“expansions~~"expansion in ~~process”~~process" represent those facilities where ~~development~~construction is in process at ~~September~~June 30, ~~2021 or which will commence construction by December 31, 2021. We have a pipeline~~2022, and together with additional future expansion activities primarily related to our Same Store Facilities at June 30, 2022, we expect to add a total of ~~2.9~~2.8 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of ~~$457.8~~$547.0 million.

~~Analysis of Depreciation and Amortization of Developed and Expanded~~

Other Non-Same Store Facilities

Depreciation and amortization with respect to the Developed and Expanded Facilities totaled $15.0 million and $46.1 million for the three and nine months ended September 30, 2021, respectively, as compared to $13.6 million and $39.8 million for the same periods in 2020. 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 September 30, 2021, depreciation of buildings is expected to aggregate approximately $62.5 million in the year ending December 31, 2021. There will be additional depreciation of new buildings that are developed or expanded in the remainder of 2021.

~~Other non-same store facilities~~

The ~~“other non-same store facilities”~~“Other Non-Same Store Facilities” represent facilities which, while not newly acquired, developed, or expanded, are not fully stabilized since January 1, ~~2019, due primarily to~~2020, including facilities under fill-up as well as facilities damaged in casualty events such as hurricanes, floods, and fires.

The ~~other non-same store facilities~~Other Non-Same Store Facilities have an aggregate of ~~2.2~~5.3 million net rentable square feet, including 1.1 million in Texas, 0.6 million in ~~Texas,~~each of Florida and Washington, 0.4 million in each of California and Virginia, 0.3 million in ~~California,~~each of Indiana and South Carolina, 0.2 million in each of Georgia, ~~Ohio~~Kentucky, Massachusetts and Tennessee and ~~0.7~~0.8 million in other states.

The net operating income for these facilities was $4.9 million and $13.4 million in the three and nine months ended September 30, 2021, respectively, as compared to $3.8 million and $11.0 million for the same periods in 2020. During the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, the average occupancy for these facilities totaled 93.1% and ~~91.8%~~92.4%, respectively, as compared to ~~89.8%~~93.9% and ~~84.2%~~92.3% for the same periods in ~~2020,~~2021, and the realized rent per occupied square ~~feet~~foot totaled ~~$14.27~~$18.02 and ~~$13.66,~~$17.47, respectively, as compared to ~~$12.77~~$13.86 and ~~$13.31~~$13.54 for the same periods in ~~2020.~~

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.2021.

Depreciation and amortization ~~with respect to the other non-same store facilities totaled $4.9~~expense

Depreciation and amortization expense for Self-Storage Operations increased $46.0 million and ~~$15.6~~$121.2 million ~~for~~in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to ~~$5.4 million and $16.1 million for~~ the same periods in ~~2020.~~2021, primarily due to newly acquired facilities of $5.1 billion in 2021. We expect ~~that~~continued increases in depreciation ~~for~~expense in the remainder of ~~2021 will approximate the level experienced~~2022 as a result of elevated levels of capital expenditures and new facilities that are acquired, developed or expanded in the ~~nine months ended September 30, 2021.~~

remainder of 2022.

5143

Ancillary Operations

Ancillary 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.,~~sale of merchandise at our self-storage facilities, and management of property owned by unrelated third ~~parties, and the sale of merchandise at our self-storage facilities.~~parties. The following table sets forth our ancillary operations:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change

		(Amounts in thousands)													(Amounts in thousands)
Revenues:	Revenues:													Revenues:
Tenant reinsurance premiums	Tenant reinsurance premiums	$	42,774	$	38,698	$	4,076	$	123,271	$	110,327	$	12,944	Tenant reinsurance premiums	$	46,687	$	40,816	$	5,871	$	91,882	$	80,497	$	11,385
Merchandise	Merchandise	7,384		8,010		(626)		21,932		23,005		(1,073)		Merchandise	7,534		7,512		22		14,405		14,548		(143)
Third party property management	Third party property management	4,263		3,888		375		12,455		10,508		1,947		Third party property management	4,538		3,994		544		8,902		8,192		710
Total revenues	Total revenues	54,421		50,596		3,825		157,658		143,840		13,818		Total revenues	58,759		52,322		6,437		115,189		103,237		11,952
Cost of operations:	Cost of operations:													Cost of operations:
Tenant reinsurance	Tenant reinsurance	11,029		6,544		4,485		26,115		20,611		5,504		Tenant reinsurance	8,198		7,262		936		15,475		15,086		389
Merchandise	Merchandise	4,476		4,850		(374)		13,148		13,510		(362)		Merchandise	4,527		4,706		(179)		8,431		8,672		(241)
Third party property management	Third party property management	4,230		3,780		450		12,781		9,960		2,821		Third party property management	4,485		4,023		462		8,819		8,551		268
Total cost of operations	Total cost of operations	19,735		15,174		4,561		52,044		44,081		7,963		Total cost of operations	17,210		15,991		1,219		32,725		32,309		416
Net operating income (loss):	Net operating income (loss):													Net operating income (loss):
Tenant reinsurance	Tenant reinsurance	31,745		32,154		(409)		97,156		89,716		7,440		Tenant reinsurance	38,489		33,554		4,935		76,407		65,411		10,996
Merchandise	Merchandise	2,908		3,160		(252)		8,784		9,495		(711)		Merchandise	3,007		2,806		201		5,974		5,876		98
Third party property management	Third party property management	33		108		(75)		(326)		548		(874)		Third party property management	53		(29)		82		83		(359)		442
Total net operating income	Total net operating income	$	34,686	$	35,422	$	(736)	$	105,614	$	99,759	$	5,855	Total net operating income	$	41,549	$	36,331	$	5,218	$	82,464	$	70,928	$	11,536

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 and 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.

Tenant reinsurance premium revenue increased ~~$4.1~~$5.9 million or ~~10.5%~~14.4% for the three months ended ~~September~~June 30, ~~2021,~~2022, and increased ~~$12.9~~$11.4 million or ~~11.7%~~14.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, in each case as compared to the same period in ~~2020. The increase is due to higher average premiums and~~2021, as a result of an increase in our tenant base with respect to acquired, newly developed, and expanded ~~facilities.~~facilities and the third party properties we manage. Tenant reinsurance premium revenue ~~with respect to the Same Store~~generated from tenants at our Same-Store Facilities ~~totaled $33.7~~were $34.8 million and ~~$100.0~~$69.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to ~~$32.8~~$33.3 million and ~~$95.2~~$66.5 million for the same periods in ~~2020.~~2021, representing an increase of 4.5% and 4.1%, respectively.

We expect future growth will come primarily from customers of newly acquired and developed facilities, as well as additional tenants at our existing unstabilized self-storage facilities.

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 which drive covered customer losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods. Cost of operations were $11.0 million and $26.1 million for the three and nine months ended September 30, 2021, respectively, as compared to $6.5 million and $20.6 million for the same periods in 2020.

Merchandise sales: ~~We sell~~Sales of locks, boxes, and packing supplies at our self-storage facilities ~~and the level of sales of these items is~~are 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 the remainder of ~~2021.~~2022.

~~Third party~~Third-party property management: At ~~September~~June 30, ~~2021,~~2022, we ~~manage 102~~managed 103 facilities for unrelated third parties, and were under contract to manage 4363 additional facilities including 3757 facilities that are currently under construction. During the six months ended June 30, 2022, we added 27 facilities to the program, acquired three facilities from the program, and had ten properties exit the program due to sales to other buyers. While we expect this business to increase in scope and size, we do 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-up~~fill-up for newly managed properties.

5244

~~Revenues and cost operations from our third party management activities~~Analysis of $3.9 million and $3.8 million, respectively, for the three months ended September 30, 2020, and $10.5 million and $10.0 million, respectively, for the nine months ended September 30, 2020, previously reported within interest and other income, have been reclassifieditems not allocated to ~~third party property management revenues and third party property management cost of operations, respectively, to conform to the September 30, 2021 presentation.~~segments

Equity in earnings of unconsolidated real estate entities

For all periods presented, we have equity investments in PSB and Shurgard, which we account for onusing the equity method and record our pro-rata share of the net income of these entities. The following table, and the discussion below, sets forth our equity in earnings of unconsolidated real estate entities:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
		2021		2020		Change		2021		2020		Change			2022		2021		Change		2022		2021		Change

		(Amounts in thousands)													(Amounts in thousands)
Equity in earnings:	Equity in earnings:													Equity in earnings:
PSB	PSB	$	27,110	$	16,548	$	10,562	$	62,494	$	51,513	$	10,981	PSB	$	40,124	$	20,908	$	19,216	$	77,010	$	35,384	$	41,626
Shurgard	Shurgard	5,750		4,692		1,058		18,888		11,350		7,538		Shurgard	8,401		8,158		243		14,939		13,138		1,801
Total equity in earnings	Total equity in earnings	$	32,860	$	21,240	$	11,620	$	81,382	$	62,863	$	18,519	Total equity in earnings	$	48,525	$	29,066	$	19,459	$	91,949	$	48,522	$	43,427

Investment in PSB: Throughout all periods presented, we owned 7,158,354 shares of PS Business Parks, Inc. (“PSB”) 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, on a one-for-one basis into PSB common stock.

At September 30, 2021, PSB wholly-owned approximately 28 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.

~~Equity in earnings from PSB increased $10.6 million and $11.0 million in the three and nine months ended September 30, 2021, respectively, as compared to the same periods in 2020.~~ Included in our equity earnings from PSB for the three and six months ended June 30, 2022 is our equity share of gains on sale of real estate totaling ~~$12.4~~$25.5 million and ~~$20.3~~$49.1 million, ~~for the three and nine months ended September 30, 2021,~~ respectively, as compared to ~~$3.2~~$8.0 million for each of the three and six months ended June 30, 2021. For the three and six months ended June 30, 2022, our equity share of earnings from PSB contributed $26.6 million and ~~$11.3~~$52.1 million, inrespectively, to Core FFO, as compared to $25.4 million and $49.6 million for the same periods in ~~2020. PSB’s filings~~2021.

On April 24, 2022, PSB entered into an Agreement and ~~selected financial information, including discussion~~Plan of Merger whereby affiliates of Blackstone agreed to acquire all outstanding shares of PSB's common stock for $187.50 per share in cash. On July 20, 2022, PSB announced that it completed the merger transaction with Blackstone. Each share of PSB common stock and each common unit of partnership interest we held in PSB were converted into the right to receive the merger consideration of $187.50 per share or unit and a $0.22 prorated quarterly cash dividend per share or unit, for a total of $187.72 per share or unit. At the close of the ~~factors that affect its~~merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a $2.1 billion gain on the sale of our equity investment in PSB in the Consolidated Statement of Income for the third quarter of 2022.

As a result of closing the sale of PSB, we will record significantly lower equity in earnings ~~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 Quarterly Report on Form 10-Q.~~unconsolidated subsidiaries in future periods than we have in historical periods.

Investment in Shurgard: ~~Throughout all periods presented, we effectively owned, directly and indirectly, 31,268,459 Shurgard common shares, representing an approximate 35%~~Included in our equity ~~interest in Shurgard. Shurgard’s common shares trade on Euronext Brussels under the “SHUR” symbol.~~

At September 30, 2021, Shurgard owned 247 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 September 30, 2021 financial statements.

~~Equity in~~ earnings from Shurgard ~~increased $1.1 million and $7.5 million in~~for each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively, as compared to the same periods in 2020. Shurgard’s public filings and publicly reported information, including discussion~~2022 is our equity share of ~~the factors that affect its earnings, can be obtained~~gains on ~~its website, https://corporate.shurgard.eu and on the website~~sale 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 Quarterly Report on Form 10-Q.~~real estate totaling $3.5 million.

For purposes of recording our equity in earnings from Shurgard, the Euro was translated at exchange rates of approximately ~~1.159~~1.045 U.S. Dollars per Euro at ~~September~~June 30, ~~2021 (1.226~~2022 (1.134 at December 31, ~~2020)~~2021), and average exchange rates of ~~1.179~~1.065 and ~~1.168~~1.205 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and average exchange rates of ~~1.196~~1.093 and ~~1.124~~1.205 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

5345

~~Analysis of items not allocated to segments~~

General and administrative expense: The following table sets forth our general and administrative expense:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
(Amounts in thousands)
Share-based compensation expense $ 9,746 $ 5,278 $ 4,468 $ 30,019 $ 11,080 $ 18,939
Costs of senior executives 850 327 523 2,550 2,294 256
Development and acquisition costs 1,857 1,620 237 5,411 8,319 (2,908)
Tax compliance costs and taxes paid 4,433 1,711 2,722 7,879 4,740 3,139
Legal costs 4,065 1,933 2,132 7,619 5,189 2,430
Public company costs 1,723 963 760 4,940 3,171 1,769
Other costs 9,008 6,430 2,578 20,578 18,441 2,137
Total $ 31,682 $ 18,262 $ 13,420 $ 78,996 $ 53,234 $ 25,762

Share-based compensation expense includes the amortization of restricted share units and stock options granted to certain corporate employees and trustees. We corrected our prior period financial statement presentation of share-based compensation expense and dividends paid on RSUs between general and administrative expense and self-storage cost of operations. As a result, we revised our statement of income for the three and nine months ended September 30, 2020 with an increase in self-storage cost of operations of $3.1 million and $9.4 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 three and nine months ended September 30, 2020.

Share-based compensation expense 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 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.

For the three and nine months ended September 30, 2021, share-based compensation expense increased $4.5 million and $18.9 million, respectively, as compared to the same periods in 2020, primarily due to (i) the absence of comparable performance-based share-based compensation expense for the three and nine months ended September 30, 2020, (ii) the accelerated compensation costs recognized in the three and nine months ended September 30, 2021 associated with modifying our share-based compensation plans in July 2020, to allow immediate vesting upon retirement and (iii) revaluation of certain awards previously classified as a liability during the second quarter of 2021.


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change		2022		2021		Change

	(Amounts in thousands)

Share-based compensation expense	$	12,034	$	12,864	$	(830)	$	20,832	$	20,544	$	288
Development and acquisition costs	3,674		2,888		786		6,514		4,695		1,819
Tax compliance costs and taxes paid	3,381		2,346		1,035		6,115		3,955		2,160
Legal costs	980		1,200		(220)		1,220		2,343		(1,123)
Corporate management costs	4,848		4,738		110		10,694		8,914		1,780
Other costs	3,914		3,704		210		6,525		6,863		(338)
Total	$	28,831	$	27,740	$	1,091	$	51,900	$	47,314	$	4,586

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 ~~$3.5~~$4.1 million and ~~$10.0~~$8.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, as compared to ~~$2.8~~$3.3 million and ~~$8.9~~$6.5 million for the same periods in ~~2020,~~2021, in development costs that were capitalized to newly developed and redeveloped self-storage facilities. ~~During the nine months ended September 30, 2020, we incurred $3.2 million in costs associated with the write-off of cancelled development projects.~~

Tax compliance costs and taxes paid include taxes paid to various state and local authorities, the costs of filing tax returns, and other costs associated with complying with federal and state tax laws. Such costs vary primarily based upon the tax rates and the level of our operations of the various states in which we do business. For the three and nine months ended September 30, 2021, state income tax increased $2.8 million and $3.2 million, respectively, as compared to the same

periods in 2020, due to rising taxable income in certain states where there are differences between federal and state tax laws. We expect continued increases in state income taxes through the end of 2021.

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.

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 the three months ended September 30, 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. The level of these costs depends upon corporate activities and initiatives.

Interest and other income: Interest and other income is comprised ~~primarily~~ of the ~~net income from~~revenue and cost associated with our commercial operations, 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. For the three and six months ended June 30, 2022, we recognized $10.3 million and $13.7 million interest and other income, respectively, as compared to $3.1 million and $6.0 million for the same periods in 2021. Amounts attributable to commercial operations was ~~$2.0 million and $6.2~~$2.2 million in each of the three ~~and nine~~ months ended ~~September~~June 30, 2022 and 2021, ~~respectively, as compared to~~and $4.2 million in each of the ~~$2.1 million~~six months ended June 30, 2022 and ~~$6.4 million for the same periods of 2020.~~2021. Excluding the aforementioned amounts attributable to our commercial operations, interest and other income ~~decreased $3.7~~increased $7.2 million and ~~$9.4~~$7.7 million infrom the three and ~~nine~~six months ended ~~September~~June 30, 2021 to the same periods in 2022, primarily due to (i) a $4.3 million unrealized gain on private equity investments recognized during the three and six months ended June 30, 2022 and (ii) $2.0 million and $2.1 million increase in interest earned on higher cash balances during the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2020. The reduction was primarily due to $3.5 million and $5.5 million in aggregate received during the three and nine months ended September 30, 2020, respectively, related to litigation settlements and the early repayment of notes receivable. Interest earned on cash balances decreased by $3.4 million from the nine months ended September 30, 2020 to the same period in 2021, reflecting a year-over-year decrease in average interest rate as well as average cash balance on hand. The level of other interest and income items in the remainder of 2021 will be dependent upon the level of cash balances we retain, interest rates, and the level of other income items.2021.

Interest expense: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we incurred ~~$24.6~~$34.3 million and ~~$63.6~~$68.6 million, respectively, of interest on our outstanding ~~debt,~~notes payable, as compared to ~~$15.1~~$22.7 million and ~~$44.6~~$38.9 million for the same periods in ~~2020.~~2021. In determining interest expense, these amounts were offset by capitalized interest of ~~$0.9~~$1.4 million and $2.6 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, associated with our development activities, as compared to ~~$0.8~~$0.7 million and ~~$2.5~~$1.7 million for the same periods in ~~2020.~~2021. The increase of interest expense in the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022 as compared to the same periods in ~~2020,~~2021 is due to our issuances of ~~(i) $500 million of senior notes on January 19,~~debt to fund our 2021 bearing interest at an annual rate of 0.875% and maturing on February 15, 2026, (ii) $700 million, $650 million and $650 million of senior notes on April 23, 2021 bearing interest at an annual rate of SOFR +0.47% (reset quarterly), 1.85% and 2.30%, respectively, and (iii) €700 million of Euro-denominated unsecured notes on September 9, 2021 bearing interest at an annual rate of 0.500% and maturing on September 9, 2030.acquisition activity. At ~~September~~June 30, ~~2021,~~2022, we had ~~$5.8~~$7.3 billion of ~~debt~~notes payable outstanding, with a weighted average interest rate of approximately ~~1.8%~~1.9%.

Foreign Currency Exchange Gain (Loss): For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recorded foreign currency gains of ~~$40.9~~$101.7 million and ~~$73.6~~$137.1 million, respectively, representing primarily the changes in the U.S. Dollar equivalent of our Euro-denominated unsecured notes due to fluctuations in exchange rates. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we recorded foreign currency ~~translation~~ losses of ~~$41.9~~$12.7 million and ~~$52.3~~gains of $32.7 million, respectively. The Euro was translated at exchange rates of approximately ~~1.159~~1.045 U.S. Dollars per Euro at ~~September~~June 30, 2022, 1.134 at December 31, 2021, 1.188 at June 30, 2021 and 1.226 at December 31, ~~2020, 1.172 at September 30, 2020 and 1.122 at December 31, 2019.~~2020. Future gains and losses on foreign currency will be dependent upon changes in the relative value of the Euro to the U.S. Dollar and the level of Euro-denominated ~~debt~~notes payable outstanding.

Gain on Sale of Real Estate: In the three and ~~nine~~six months ended ~~September~~June 30, 2021, we recorded ~~$0.3~~gains totaling $4.0 million and ~~$13.7~~$13.4 million, ~~in gains,~~ respectively, ~~and in the nine months ended September 30, 2020, we recorded gains totaling $1.1 million, primarily~~ in connection with the partial or complete sale of real estate facilities pursuant to eminent domain ~~proceedings.~~

~~Net Income Allocable to Preferred Shareholders:~~ ~~Net income allocable to preferred shareholders based upon distributions decreased from $53.9 million and $158.8 million~~proceedings (none in the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, to $46.2 million and $138.5 million in the same period in 2021. This decrease is due primarily to lower average coupon rates of recently issued preferred stock compared to recent series we have redeemed. We also allocated income from our common shareholders to the holders of our preferred shares of $17.0 million in the nine months ended September 30, 2021, and $23.3 million and $38.4 million in the three and nine months ended September 30, 2020,2022).

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~~respectively, in connection with the redemption of preferred securities.Based upon our preferred shares outstanding at September 30, 2021, our quarterly distribution to our preferred shareholders is expected to be approximately $46.1 million.~~

Liquidity and Capital Resources

Overview

As of June 30, 2022, our expected material cash requirements for the next twelve months and thereafter comprised (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 financing.

Sources of Capital

While operating as a REIT allows us to minimize the payment of U.S. federal corporate income tax expense, we are required to distribute at least 90% of our taxable income to our shareholders. ~~This~~Notwithstanding this requirement, we are nonetheless able to retain operating cash flow to the extent that our tax depreciation exceeds our maintenance capital expenditures. Retained operating cash flow represents our expected cash flow provided by operating activities, less shareholder distributions and capital expenditures. Our annual operating retained cash flow increased from $200 million to $300 million per year in recent years to approximately $700 million in 2021. We anticipate retained operating cash flow over the next twelve months will be similar to 2021.

The REIT distribution requirement limits cash flow from operations that can be retained and reinvested in the business, increasing 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 has 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 enable us to effectively access both the public and private capital markets to raise capital.

While we must distribute 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) medium and long-term debt, (ii) preferred equity, 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 any short-term bank loans, as bridge financing.

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 notes 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 enables us to effectively access both the public and private capital markets to raise capital.

We have a $500.0 million revolving line of credit which we ~~occasionally~~are able to use as temporary “bridge” financing until we are able to raise longer term capital. As of ~~September~~June 30, ~~2021~~2022 and ~~November 1, 2021,~~August 4, 2022, there were no borrowings outstanding on the revolving line of ~~credit,~~credit; however, we do have approximately ~~$21.2~~$18.6 million of outstanding letters of credit which limits our borrowing capacity to ~~$478.8 million.~~$481.4 million as of August 4, 2022. Our line of credit matures on April 19, 2024.

We believe that we have significant financial flexibility to adapt to changing conditions and ~~opportunities. Currently, market rates of interest for our debt, and market coupon rates for our preferred equity, are at historically low levels~~opportunities and we have significant access to ~~these~~ sources of ~~capital.~~capital including debt and preferred equity. 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 change significantly in the long run, our access to or cost of debt and preferred equity capital could be negatively impacted and potentially affect future investment activities.

~~Liquidity and Capital Resource Analysis:~~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 interest payments on debt, maintenance capital expenditures and distributions to our shareholders for the foreseeable future.

Our expected capital resources include: (i) ~~$958.2 million~~$1.0 billion of cash as of ~~September~~June 30, ~~2021 and~~2022, (ii) approximately ~~$600.0~~$700.0 million of expected retained operating cash flow over the next twelve ~~months. Retained operating cash flow represents our expected cash flow provided by operating activities, less shareholder distributions and capital expenditures.~~

Our currently identified capital needs consist primarily of (i) $2.3 billion in property acquisitions currently under contract, (ii) $502.2 million of remaining spending on our current development pipeline, which will be incurred primarily in the next 18 to 24 months and (iii) ~~$502.6~~approximately $400.0 million of cash proceeds we will retain from the sale of our equity investment in ~~scheduled principal repayments in 2022, including $500.0 million for our senior notes which mature on September 15, 2022. We expect our capital needs to increase over~~PSB after the ~~next year as we add projects to our development pipeline and acquire additional properties. Additional potential capital needs could result from various activities including the redemption~~payment of ~~outstanding preferred securities, repurchases of common stock, or mergers and acquisition activities; however, there can be no assurance of any such activities transpiring in the near or longer term.~~a $2.3 billion special dividend.

~~In the near term, to fund property acquisitions under contract including our $1.5 billion acquisition of All Storage portfolio, we expect to issue unsecured debt.~~

Over the long term, to the extent that our capital needs exceed our capital resources, we believe we have a variety of possibilities to raise additional capital including issuing common or preferred securities, issuing debt, or entering into joint venture arrangements to acquire or develop facilities.

Cash Requirements

The following summarizes our expected material cash requirements which comprise (i) contractually obligated expenditures, (ii) other essential expenditures, and (iii) opportunistic expenditures. We expect our capital needs to increase over the next year as we add projects to our development pipeline and acquire additional properties.

Required Debt Repayments: As of ~~September~~June 30, ~~2021,~~2022, the principal outstanding on our debt totaled approximately ~~$5.8~~$7.4 billion, consisting of ~~$23.6~~$22.8 million of secured ~~debt, $1.8~~notes payable, $1.6 billion of Euro-denominated unsecured ~~debt~~

notes payable and ~~$4.0~~$5.8 billion of U.S. Dollar denominated unsecured ~~debt.~~notes payable. Approximate principal maturities and interest payments are as follows (amounts in thousands):


Remainder of 2021		$	251
2022		502,574
Remainder of 2022				Remainder of 2022	$	561,767
2023	2023	19,219		2023	135,268
2024	2024	816,020		2024	917,052
2025	2025	280,615		2025	361,149
2026				2026	1,251,200
Thereafter	Thereafter	4,192,080		Thereafter	4,905,242
		$	5,810,759		$	8,131,678

On ~~January 19, 2021, we completed a public offering of $500 million~~July 26, 2022, the Company called for redemption on August 15, 2022 its 2.370% Senior Notes, with an aggregate outstanding principal amount of ~~senior notes bearing interest at an annual rate of 0.875% and maturing on February~~$500.0 million, due September 15, 2026. 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 SOFR + 0.47%, 1.85% and 2.30%, respectively, and maturing on April 23, 2024, May 1, 2028 and May 1, 2031, respectively. On September 9, 2021, we completed a public offering of €700.0 million aggregate principal amount of senior notes bearing interest at an annual rate of 0.500% and maturing on September 9, 2030.

~~Our debt is well-laddered and we plan to refinance our 2022 unsecured notes when it comes due in September~~ 2022.

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.

Capital expenditures totaled ~~$177.6~~$205.6 million in the first ~~nine~~six months of ~~2021,~~2022 and are expected to approximate ~~$250.0~~$300 million for the year ending December 31, ~~2021.~~2022. 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, upgrades to the configuration and layout of the offices and other customer zones to improve the customer experience. We spent approximately $105 million in the first six months of 2022 and expect to spend ~~approximately $120~~$180 million in ~~2021~~2022 on this effort. In addition, we have made investments in LED lighting and the installation of solar panels, which ~~are expected to approximate $36~~approximated $24 million for the ~~year ending December 31, 2021.~~six months ended June 30, 2022 and we expect to spend $30 million in 2022.

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.

Requirement to Pay Distributions: For all periods presented herein, we have elected to be treated as 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 requirements in all periods presented herein, and we expect to continue to qualify as a REIT.

On ~~October 27, 2021,~~July 22, 2022, our Board of Trustees declared a special cash dividend of $13.15 per common share totaling approximately $2.3 billion, in connection with the sale of our equity investment in PSB. The special dividend is payable on August 4, 2022 to shareholders of record as of August 1, 2022.

On August 3, 2022, 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 ~~December 2021.~~September 2022. Our consistent, long-term dividend policy has been to distribute 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.

The annual distribution requirement with respect to our Preferred Shares outstanding at ~~September~~June 30, ~~2021~~2022 is approximately ~~$184.2~~$194.7 million per year.

~~We estimate we will pay approximately $6.2 million per year in distributions to noncontrolling interests outstanding at September 30, 2021.~~

Real Estate Investment Activities: We continue to seek to acquire additional self-storage facilities from third parties. Subsequent to ~~September~~June 30, ~~2021,~~2022, we acquired or were under contract to acquire ~~107~~24 self-storage facilities for a

total purchase price of ~~$2.3 billion. 10~~$257.4 million. Additionally, on July 8, 2022, we acquired the commercial interests of ~~these~~PSB at three sites, totaling five properties, ~~are under construction~~jointly occupied with our self-storage facilities located in Maryland and ~~expected to close as they are completed in the remainder of 2021 and 2022.~~Virginia, for $47.0 million.

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 ~~September~~June 30, ~~2021,~~2022, we had development and expansion projects at a total cost of approximately ~~$730.6 million.~~$1.0 billion. Costs incurred through ~~September~~June 30, ~~2021~~2022 were ~~$228.4~~$380.1 million, with the remaining cost to complete of ~~$502.2~~$647.3 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 increase 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.

Property Operating Expenses: 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.

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 ~~November 1, 2021, our 4.900% Series E Preferred Shares ($350 million) is~~August 4, 2022, we have two 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) and our 5.050% Series G Preferred Shares ($300.0 million). See Note 89 to our ~~September~~June 30, ~~2021~~2022 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 the three and six months ended ~~September~~June 30, ~~2021,~~2022, we did not repurchase any of our common shares. From the inception of the repurchase program through ~~November 1, 2021,~~August 4, 2022, we have repurchased a total of 23,721,916 common shares at an aggregate cost of approximately $679.1 million. Future levels of common share repurchases will be dependent upon our available capital, investment alternatives and the trading price of our common shares.

~~Contractual Obligations~~

~~Our significant contractual obligations as September 30, 2021 and their impact on our cash flows and liquidity are summarized below for the years ending December 31 (amounts in thousands):~~

Total
Remainder of
2021
2022 2023 2024 2025 Thereafter
Interest and principal payments on debt (1) $ 6,412,827 $ 24,531 $ 596,188 $ 103,920 $ 897,029 $ 357,120 $ 4,434,039
Leases commitments (2) 66,325 668 3,122 2,966 2,934 2,897 53,738
Construction commitments (3) 134,064 38,313 93,871 1,880 — — —
Total $ 6,613,216 $ 63,512 $ 693,181 $ 108,766 $ 899,963 $ 360,017 $ 4,487,777

~~(1)~~Represents contractual principal and interest payments. Amounts with respect to certain Euro-denominated debt are based upon exchange rates at September 30, 2021. See Note 6 to our September 30, 2021 financial statements for further information.

~~(2)Represents future contractual payments on land, equipment and office space under various lease commitments.~~

~~(3)Represents future expected payments for construction under contract at September 30, 2021.~~

The annual distribution requirement with respect to our Preferred Shares outstanding at September 30, 2021 is approximately $184.2 million per year. Dividends are paid when and if declared by our Board and accumulate if not paid.

~~Off-Balance Sheet Arrangements: At September 30, 2021, we had no material off-balance sheet arrangements as defined under Regulation S-K 303(a)(4) and the instructions thereto.~~

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

To 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 is our only market-risk sensitive portion of our capital structure, which totals approximately ~~$5.8~~$7.3 billion ~~and represents 64.0% of the book value of our equity~~ at ~~September~~June 30, ~~2021.~~2022.

The fair value of our debt at ~~September~~June 30, ~~2021~~2022 is approximately ~~$5.9~~$6.5 billion. The table below summarizes the annual maturities of our debt, which had a weighted average effective rate of ~~1.8%~~1.9% at ~~September~~June 30, ~~2021.~~2022. See Note 67 to our ~~September~~June 30, ~~2021~~2022 consolidated financial statements for further information regarding our debt (amounts in thousands).

Remainder of
2021
2022 2023 2024 2025 Thereafter Total
Debt $ 251 $ 502,574 $ 19,219 $ 816,020 $ 280,615 $ 4,192,080 $ 5,810,759


	Remainder of 2022		2023		2024		2025		2026		Thereafter		Total

Debt	$	502,011	$	19,219	$	804,627	$	253,042	$	1,150,138	$	4,655,225	$	7,384,262

We have foreign currency exposure at ~~September~~June 30, ~~2021~~2022 related to (i) our investment in Shurgard, with a book value of ~~$327.9~~$282.9 million, and a fair value of ~~$1.7~~$1.5 billion based upon the closing price of Shurgard’s stock on ~~September~~June 30, ~~2021,~~2022, and (ii) €1.5 billion ($~~1.8~~1.6 billion) of Euro-denominated unsecured notes ~~payable.~~payable, providing a natural hedge against the fair value of our investment in Shurgard.

ITEM 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We 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 controls and 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.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at a reasonable assurance level.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5950

Part II. OTHER INFORMATION

ITEM 1. Legal Proceedings

ITEM 1A. Risk Factors

In addition to the other information in this Quarterly Report on Form 10-Q, you should carefully consider the risks described in our Annual Report on Form 10-K filed for the year ended December 31, ~~2020,~~2021, in Part I, Item 1A, Risk Factors, and in our other filings with the SEC. These factors may materially affect our business, financial condition and operating results. There have been no material changes to the risk factors relating to the Company disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

In addition, in considering the forward-looking statements contained in this Quarterly Report on Form 10-Q and elsewhere, you should refer to the qualifications and limitations on our forward-looking statements that are described in Forward Looking Statements at the beginning of Part I, Item 2 of this Quarterly Report on Form 10-Q.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Common Share Repurchases

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 ~~November 1, 2021,~~August 4, 2022, 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 ~~September~~June 30, ~~2021.~~2022. 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.

~~Preferred Share Redemptions~~

~~We redeemed, pursuant to our option to redeem such shares, 13,000,000 of our 4.950% Series D preferred shares in July 2021, at $25.00 per share.~~

ITEM 6. Exhibits

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed in the attached Exhibit Index which is incorporated herein by reference.

6051

PUBLIC STORAGE

INDEX TO EXHIBITS (1)

(Items 15(a)(3) and 15(c)


3.1			Articles ~~Supplementary for~~of Amendment to Restated Declaration of Trust of Public Storage, ~~3.950% Cumulative Preferred Shares, Series Q. Filed~~filed with the Maryland State Department of Assessments and Taxation on April 28, 2022 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated ~~August 10, 2021~~April 29, 2022 and incorporated herein by ~~reference herein.~~reference).

~~4.1~~10.1*			~~Eighth Supplemental Indenture, dated as~~Form of ~~September 9,~~ 2021 ~~between Public Storage and Wells Fargo Bank, National Association, as trustee, including the form~~Plan Trustee Non-Qualified Stock Option Agreement. Filed herewith.

10.2*			Form of ~~Global Note representing the Notes.~~2021 Plan Performance-Based Non-Qualified Stock Option Agreement (2022). Filed ~~as Exhibit 4.2 to the Company’s Current Report on~~ herewith.

10.3*			Form ~~8-K dated September 9,~~of 2021 ~~and incorporated by reference herein.~~Plan Performance-Based Stock Unit Agreement (2022). Filed herewith.

31.1			Rule 13a – 14(a) Certification. Filed herewith.

31.2			Rule 13a – 14(a) Certification. Filed herewith.

32			Section 1350 Certifications. Filed herewith.

101 .INS			Inline XBRL Instance 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			Inline XBRL Taxonomy Extension Schema. Filed herewith.

101 .CAL			Inline XBRL Taxonomy Extension Calculation Linkbase. Filed herewith.

101 .DEF			Inline XBRL Taxonomy Extension Definition Linkbase. Filed herewith.

101 .LAB			Inline XBRL Taxonomy Extension Label Linkbase. Filed herewith.

101 .PRE			Inline XBRL Taxonomy Extension Presentation Link. Filed herewith.

104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

_ (1) SEC			File No. 001-33519 unless otherwise indicated.

*			Denotes management compensatory plan or arrangement.

6152

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			DATED: ~~November 1, 2021~~August 4, 2022
			PUBLIC STORAGE
			By:			/s/ H. Thomas Boyle
						H. Thomas Boyle Senior Vice President &and Chief Financial Officer ~~(Principal financial officer and duly authorized officer)~~

6253


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Weighted average common shares and equivalents outstanding:
Basic weighted average common shares outstanding	174,926	174,503	174,787	174,481
Net effect of dilutive stock options - based on treasury stock method	880	123	611	125
Diluted weighted average common shares outstanding	175,806	174,626	175,398	174,606


			Amounts at September 30, 2021
	Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book Value		Fair Value

			($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due September 15, 2022	2.370%	2.483%	$	500,000	$	(495)	$	499,505	$	509,800
Notes due April 23, 2024	SOFR+0.47%	0.596%	700,000		(1,804)		698,196		704,200
Notes due February 15, 2026	0.875%	1.030%	500,000		(3,246)		496,754		493,515
Notes due September 15, 2027	3.094%	3.218%	500,000		(3,152)		496,848		546,757
Notes due May 1, 2028	1.850%	1.962%	650,000		(4,446)		645,554		653,619
Notes due May 1, 2029	3.385%	3.459%	500,000		(2,334)		497,666		549,252
Notes due May 1, 2031	2.300%	2.419%	650,000		(6,554)		643,446		658,400
			4,000,000		(22,031)		3,977,969		4,115,543

Euro Denominated Unsecured Debt
Notes due April 12, 2024	1.540%	1.540%	115,896		—		115,896		120,868
Notes due November 3, 2025	2.175%	2.175%	280,484		—		280,484		303,644
Notes due September 9, 2030	0.500%	0.640%	811,272		(10,010)		801,262		795,777
Notes due January 24, 2032	0.875%	0.978%	579,480		(5,528)		573,952		581,103
			1,787,132		(15,538)		1,771,594		1,801,392

Mortgage Debt, secured by 27 real estate facilities with a net book value of $96.6 million	3.905%	3.903%	23,627		—		23,627		24,939

			$	5,810,759	$	(37,569)	$	5,773,190	$	5,941,874


			Actual
	2021		2020

	(Amounts in thousands)
For the three months ended:
March 31	$	66,481	$	72,692
June 30	67,118		72,370
September 30	69,573		71,533

December 31	66,737		41,164
	$	269,909	$	257,759


	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:
2021	$	646,897	$	679,885	$	716,050
2020	$	625,818	$	613,559	$	628,286	$	637,256	$	2,504,919

Total cost of operations:
2021	$	180,768	$	166,946	$	175,609
2020	$	188,922	$	192,067	$	184,068	$	146,394	$	711,451

Property taxes:
2021	$	66,481	$	67,118	$	69,573
2020	$	72,692	$	72,370	$	71,533	$	41,164	$	257,759

Repairs and maintenance:
2021	$	13,008	$	13,053	$	13,078
2020	$	12,698	$	11,650	$	12,954	$	13,461	$	50,763

Marketing:
2021	$	14,558	$	6,834	$	9,143
2020	$	14,782	$	17,599	$	16,131	$	13,505	$	62,017

REVPAF:
2021	$	16.86	$	17.77	$	18.68
2020	$	16.12	$	16.01	$	16.39	$	16.62	$	16.29

Weighted average realized annual rent per occupied square foot:
2021	$	17.63	$	18.32	$	19.30
2020	$	17.33	$	17.00	$	17.16	$	17.46	$	17.24

Weighted average occupancy levels for the period:
2021	95.6%		97.0%		96.8%
2020	93.0%		94.2%		95.5%		95.2%		94.5%


	Total		Remainder of 2021		2022		2023		2024		2025		Thereafter

Interest and principal payments on debt (1)	$	6,412,827	$	24,531	$	596,188	$	103,920	$	897,029	$	357,120	$	4,434,039
Leases commitments (2)	66,325		668		3,122		2,966		2,934		2,897		53,738
Construction commitments (3)	134,064		38,313		93,871		1,880		—		—		—
Total	$	6,613,216	$	63,512	$	693,181	$	108,766	$	899,963	$	360,017	$	4,487,777