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, ~~2022~~2023

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

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)


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

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

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

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

Securities registered pursuant to Section 12b of the Act:

Title of Class

Trading Symbol

Name of each exchange on which registered

Common Shares, $0.10 par value

PSA

New York Stock Exchange

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

PSAPrF

New York Stock Exchange

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

PSAPrG

New York Stock Exchange

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

PSAPrH

New York Stock Exchange

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

PSAPrI

New York Stock Exchange

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

PSAPrJ

New York Stock Exchange

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

PSAPrK

New York Stock Exchange

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

PSAPrL

New York Stock Exchange

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

PSAPrM

New York Stock Exchange

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

PSAPrN

New York Stock Exchange

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

PSAPrO

New York Stock Exchange

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

PSAPrP

New York Stock Exchange

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

PSAPrQ

New York Stock Exchange

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

PSAPrR

New York Stock Exchange

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

PSAPrS

New York Stock Exchange

0.875% Senior Notes due 2032

PSA32

New York Stock Exchange

0.500% Senior Notes due 2030

PSA30

New York Stock Exchange

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

☒ Yes ☐ No

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

☒ Yes ☐ No

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

Large accelerated filer

Accelerated
filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒

☐

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

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

☐ Yes ☒ No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of ~~October 27, 2022:~~July 28, 2023:

Common Shares of beneficial interest, $0.10 par value per share – ~~175,638,388~~175,829,466 shares

PUBLIC STORAGE

INDEX


PART I	FINANCIAL INFORMATION	Pages

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets	1

	Consolidated Statements of Income	2

	Consolidated Statements of Comprehensive Income	3

	Consolidated Statements of Equity and Redeemable Noncontrolling Interests	4-7

	Consolidated Statements of Cash Flows	8-9

	Condensed Notes to Consolidated Financial Statements	10-23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24~~-51~~-52

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5253

Item 4.	Controls and Procedures	5253

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

Item 1.	Legal Proceedings	5354

Item 1A.	Risk Factors	5354

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5354

Item 6.	Exhibits	5354

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)


							June 30, 2023		December 31, 2022
		September 30, 2022		December 31, 2021			(Unaudited)
		(Unaudited)
ASSETS	ASSETS					ASSETS

Cash and equivalents	Cash and equivalents	$	883,787	$	734,599	Cash and equivalents	$	651,665	$	775,253
Real estate facilities, at cost:	Real estate facilities, at cost:					Real estate facilities, at cost:
Land	Land	5,240,841		5,134,060		Land	5,315,098		5,273,073
Buildings	Buildings	18,535,053		17,673,773		Buildings	19,365,416		18,946,053
		23,775,894		22,807,833			24,680,514		24,219,126
Accumulated depreciation	Accumulated depreciation	(8,346,598)		(7,773,308)		Accumulated depreciation	(8,966,878)		(8,554,155)
		15,429,296		15,034,525			15,713,636		15,664,971
Construction in process	Construction in process	406,354		272,471		Construction in process	449,931		372,992
		15,835,650		15,306,996			16,163,567		16,037,963

Investments in unconsolidated real estate entities	Investments in unconsolidated real estate entities	252,648		828,763		Investments in unconsolidated real estate entities	276,778		275,752
Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	239,811		302,894		Goodwill and other intangible assets, net	212,022		232,517
Other assets	Other assets	239,024		207,656		Other assets	256,294		230,822
Total assets	Total assets	$	17,450,920	$	17,380,908	Total assets	$	17,560,326	$	17,552,307

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY

Notes payable	Notes payable	$	6,740,451	$	7,475,279	Notes payable	$	6,894,167	$	6,870,826

Accrued and other liabilities	Accrued and other liabilities	589,712		482,091		Accrued and other liabilities	507,588		514,680
Total liabilities	Total liabilities	7,330,163		7,957,370		Total liabilities	7,401,755		7,385,506

Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)

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, 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, 175,336,452 shares issued and outstanding (175,134,455 shares at December 31, 2021)		17,534		17,513
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 at December 31, 2022) at liquidation preference						Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 at December 31, 2022) at liquidation preference	4,350,000		4,350,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,492,886 shares issued and outstanding (175,265,668 shares at December 31, 2022)						Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,492,886 shares issued and outstanding (175,265,668 shares at December 31, 2022)	17,549		17,527
Paid-in capital	Paid-in capital	5,878,739		5,821,667		Paid-in capital	5,940,945		5,896,423
Accumulated deficit	Accumulated deficit	(122,631)		(550,416)		Accumulated deficit	(167,404)		(110,231)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(96,470)		(53,587)		Accumulated other comprehensive loss	(75,146)		(80,317)
Total Public Storage shareholders’ equity	Total Public Storage shareholders’ equity	10,027,172		9,335,177		Total Public Storage shareholders’ equity	10,065,944		10,073,402
Noncontrolling interests	Noncontrolling interests	93,585		20,112		Noncontrolling interests	92,627		93,399
Total equity	Total equity	10,120,757		9,355,289		Total equity	10,158,571		10,166,801
Total liabilities, redeemable noncontrolling interests and equity		$	17,450,920	$	17,380,908
Total liabilities and equity						Total liabilities and equity	$	17,560,326	$	17,552,307

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,
2022 2021 2022 2021
Revenues:
Self-storage facilities $ 1,027,374 $ 840,510 $ 2,917,675 $ 2,333,850
Ancillary operations 60,757 54,421 175,946 157,658
1,088,131 894,931 3,093,621 2,491,508
Expenses:
Self-storage cost of operations 255,470 216,999 738,953 631,699
Ancillary cost of operations 21,572 19,735 54,297 52,044
Depreciation and amortization 220,772 188,552 661,608 508,139
General and administrative 29,501 31,682 81,401 78,996
Interest expense 34,113 23,736 100,178 60,980
561,428 480,704 1,636,437 1,331,858
Other increases to net income:
Interest and other income 12,736 3,356 26,394 9,321
Equity in earnings of unconsolidated real estate entities 8,180 32,860 100,129 81,382
Foreign currency exchange gain 100,170 40,906 237,270 73,584
Gain on sale of real estate 1,503 279 1,503 13,683
Gain on sale of equity investment in PS Business Parks, Inc. 2,128,860 — 2,128,860 —
Net income 2,778,152 491,628 3,951,340 1,337,620
Allocation to noncontrolling interests (9,158) (1,537) (14,553) (4,067)
Net income allocable to Public Storage shareholders 2,768,994 490,091 3,936,787 1,333,553
Allocation of net income to:
Preferred shareholders (48,678) (46,237) (145,716) (138,500)
Preferred shareholders - redemptions — — — (16,989)
Restricted share units (8,155) (1,527) (11,405) (3,678)
Net income allocable to common shareholders $ 2,712,161 $ 442,327 $ 3,779,666 $ 1,174,386
Net income per common share:
Basic $ 15.47 $ 2.53 $ 21.57 $ 6.72
Diluted $ 15.38 $ 2.52 $ 21.44 $ 6.70
Basic weighted average common shares outstanding 175,283 174,926 175,227 174,787
Diluted weighted average common shares outstanding 176,328 175,806 176,325 175,398



	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Revenues:
Self-storage facilities	$	1,056,120	$	973,286	$	2,088,304	$	1,890,301
Ancillary operations	63,650		58,759		125,698		115,189
	1,119,770		1,032,045		2,214,002		2,005,490

Expenses:
Self-storage cost of operations	257,678		237,989		526,293		483,483
Ancillary cost of operations	22,202		17,210		41,878		32,725
Depreciation and amortization	222,133		218,708		443,783		440,836
General and administrative	25,434		28,831		50,978		51,900
Interest expense	38,079		32,941		74,180		66,065
	565,526		535,679		1,137,112		1,075,009

Other increases (decreases) to net income:
Interest and other income	18,452		10,279		37,086		13,658
Equity in earnings of unconsolidated real estate entities	9,565		48,525		15,560		91,949
Foreign currency exchange (loss) gain	(1,096)		101,723		(27,956)		137,100



Net income	581,165		656,893		1,101,580		1,173,188
Allocation to noncontrolling interests	(3,136)		(3,043)		(5,843)		(5,395)
Net income allocable to Public Storage shareholders	578,029		653,850		1,095,737		1,167,793
Allocation of net income to:
Preferred shareholders	(48,673)		(48,673)		(97,351)		(97,038)

Restricted share units	(1,097)		(1,796)		(2,539)		(3,250)
Net income allocable to common shareholders	$	528,259	$	603,381	$	995,847	$	1,067,505
Net income per common share:
Basic	$	3.01	$	3.44	$	5.68	$	6.09
Diluted	$	3.00	$	3.42	$	5.65	$	6.05

Basic weighted average common shares outstanding	175,484		175,229		175,428		175,200
Diluted weighted average common shares outstanding	176,212		176,312		176,181		176,325

See accompanying notes.

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,
		2022		2021		2022		2021				2023		2022		2023		2022

Net income	Net income	$	2,778,152	$	491,628	$	3,951,340	$	1,337,620		Net income	$	581,165	$	656,893	$	1,101,580	$	1,173,188
Foreign currency exchange loss on investment in Shurgard		(17,253)		(6,898)		(42,883)		(9,579)
Foreign currency translation gain (loss) on investment in Shurgard											Foreign currency translation gain (loss) on investment in Shurgard	1,302		(18,835)		5,171		(25,630)
Total comprehensive income	Total comprehensive income	2,760,899		484,730		3,908,457		1,328,041			Total comprehensive income	582,467		638,058		1,106,751		1,147,558
Allocation to noncontrolling interests	Allocation to noncontrolling interests	(9,158)		(1,537)		(14,553)		(4,067)			Allocation to noncontrolling interests	(3,136)		(3,043)		(5,843)		(5,395)
Comprehensive income allocable to Public Storage shareholders	Comprehensive income allocable to Public Storage shareholders	$	2,751,741	$	483,193	$	3,893,904	$	1,323,974		Comprehensive income allocable to Public Storage shareholders	$	579,331	$	635,015	$	1,100,908	$	1,142,163

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three Months Ended ~~September~~June 30, ~~2022~~2023

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

(Unaudited)


		Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests			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, 2022		$	4,350,000	$	17,524	$	5,848,632	$	(182,213)	$	(79,217)	$	9,954,726	$	93,622	$	10,048,348	$	—
Balances at March 31, 2023																				Balances at March 31, 2023	$	4,350,000	$	17,547	$	5,923,564	$	(168,952)	$	(76,448)	$	10,045,711	$	92,337	$	10,138,048

Issuance of common shares in connection with share-based compensation (97,189 shares)		—		10		16,445		—		—		16,455		—		16,455		—
Issuance of common shares in connection with share-based compensation (26,664 shares)																				Issuance of common shares in connection with share-based compensation (26,664 shares)	—		2		5,003		—		—		5,005		—		5,005
Taxes withheld upon net share settlement of restricted share units	Taxes withheld upon net share settlement of restricted share units	—		—		(779)		—		—		(779)		—		(779)		—		Taxes withheld upon net share settlement of restricted share units	—		—		(464)		—		—		(464)		—		(464)
Share-based compensation expense	Share-based compensation expense	—		—		14,441		—		—		14,441		—		14,441		—		Share-based compensation expense	—		—		12,842		—		—		12,842		—		12,842

Contributions by noncontrolling interests	Contributions by noncontrolling interests	—		—		—		—		—		—		561		561		—		Contributions by noncontrolling interests	—		—		—		—		—		—		729		729

Net income	Net income	—		—		—		2,778,152		—		2,778,152		—		2,778,152		—		Net income	—		—		—		581,165		—		581,165		—		581,165
Net income allocated to noncontrolling interests	Net income allocated to noncontrolling interests	—		—		—		(9,158)		—		(9,158)		9,158		—		—		Net income allocated to noncontrolling interests	—		—		—		(3,136)		—		(3,136)		3,136		—
Distributions to:	Distributions to:																			Distributions to:
Preferred shareholders (Note 9)	Preferred shareholders (Note 9)	—		—		—		(48,678)		—		(48,678)		—		(48,678)		—		Preferred shareholders (Note 9)	—		—		—		(48,673)		—		(48,673)		—		(48,673)
Noncontrolling interests	Noncontrolling interests	—		—		—		—		—		—		(9,756)		(9,756)		—		Noncontrolling interests	—		—		—		—		—		—		(3,575)		(3,575)
Common shareholders and restricted share unitholders ($15.15 per share) (Note 9)		—		—		—		(2,660,734)		—		(2,660,734)		—		(2,660,734)		—
Other comprehensive loss		—		—		—		—		(17,253)		(17,253)		—		(17,253)		—
Balances at September 30, 2022		$	4,350,000	$	17,534	$	5,878,739	$	(122,631)	$	(96,470)	$	10,027,172	$	93,585	$	10,120,757	$	—
Common shareholders and restricted share unitholders ($3.00 per share) (Note 9)																				Common shareholders and restricted share unitholders ($3.00 per share) (Note 9)	—		—		—		(527,808)		—		(527,808)		—		(527,808)
Other comprehensive income																				Other comprehensive income	—		—		—		—		1,302		1,302		—		1,302
Balances at June 30, 2023																				Balances at June 30, 2023	$	4,350,000	$	17,549	$	5,940,945	$	(167,404)	$	(75,146)	$	10,065,944	$	92,627	$	10,158,571

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

Three 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		Redeemable Noncontrolling Interests			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																				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

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

Contributions by noncontrolling interests	Contributions by noncontrolling interests	—		—		—		—		—		—		594		594		—		Contributions by noncontrolling interests	—		—		—		—		—		—		5,346		5,346		—
Reclassification from redeemable noncontrolling interests to noncontrolling interests																				Reclassification from redeemable noncontrolling interests to noncontrolling interests	—		—		—		—		—		—		83,826		83,826		(83,826)
Net income	Net income	—		—		—		491,628		—		491,628		—		491,628		—		Net income	—		—		—		656,893		—		656,893		—		656,893		—
Net income allocated to noncontrolling interests	Net income allocated to noncontrolling interests	—		—		—		(1,537)		—		(1,537)		1,537		—		—		Net income allocated to noncontrolling interests	—		—		—		(3,043)		—		(3,043)		3,043		—		—
Distributions to:	Distributions to:																			Distributions to:
Preferred shareholders	Preferred shareholders	—		—		—		(46,237)		—		(46,237)		—		(46,237)		—		Preferred shareholders	—		—		—		(48,673)		—		(48,673)		—		(48,673)		—
Noncontrolling interests	Noncontrolling interests	—		—		—		—		—		—		(1,706)		(1,706)		—		Noncontrolling interests	—		—		—		—		—		—		(19,142)		(19,142)		—
Common shareholders and restricted share unitholders ($2.00 per share)	Common shareholders and restricted share unitholders ($2.00 per share)	—		—		—		(351,226)		—		(351,226)		—		(351,226)		—		Common shareholders and restricted share unitholders ($2.00 per share)	—		—		—		(351,289)		—		(351,289)		—		(351,289)		—
Other comprehensive loss	Other comprehensive loss	—		—		—		—		(6,898)		(6,898)		—		(6,898)		—		Other comprehensive loss	—		—		—		—		(18,835)		(18,835)		—		(18,835)		—
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	$	—
Balances at June 30, 2022																				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

~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023

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

(Unaudited)

Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss Total
Public Storage Shareholders' Equity Noncontrolling Interests Total Equity 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 (201,997 shares) (Note 11) — 21 27,994 — — 28,015 — 28,015 —
Taxes withheld upon net share settlement of restricted share units (Note 11) — — (12,989) — — (12,989) — (12,989) —
Share-based compensation expense (Note 11) — — 49,235 — — 49,235 — 49,235 —
Contributions by noncontrolling interests — — — — — — 6,698 6,698 15,426
Reclassification from redeemable noncontrolling interests to noncontrolling interests 83,826 83,826 (83,826)
Net income — — — 3,951,340 — 3,951,340 — 3,951,340 —
Net income allocated to noncontrolling interests — — — (14,553) — (14,553) 13,893 (660) 660
Distributions to:
Preferred shareholders (Note 9) — — — (145,716) — (145,716) — (145,716) —
Noncontrolling interests — — — — — — (30,944) (30,944) (509)
Common shareholders and restricted share unitholders ($19.15 per share) (Note 9) — — — (3,363,286) — (3,363,286) — (3,363,286) —
Other comprehensive loss — — — — (42,883) (42,883) — (42,883) —
Balances at September 30, 2022 $ 4,350,000 $ 17,534 $ 5,878,739 $ (122,631) $ (96,470) $ 10,027,172 $ 93,585 $ 10,120,757 $ —


	Cumulative Preferred Shares		Common Shares		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Public Storage Shareholders' Equity		Noncontrolling Interests		Total Equity
Balances at December 31, 2022	$	4,350,000	$	17,527	$	5,896,423	$	(110,231)	$	(80,317)	$	10,073,402	$	93,399	$	10,166,801


Issuance of common shares in connection with share-based compensation (227,218 shares) (Note 11)	—		22		30,162		—		—		30,184		—		30,184
Taxes withheld upon net share settlement of restricted share units (Note 11)	—		—		(9,396)		—		—		(9,396)		—		(9,396)
Share-based compensation cost (Note 11)	—		—		23,756		—		—		23,756		—		23,756

Contributions by noncontrolling interests	—		—		—		—		—		—		733		733

Net income	—		—		—		1,101,580		—		1,101,580		—		1,101,580
Net income allocated to noncontrolling interests	—		—		—		(5,843)		—		(5,843)		5,843		—
Distributions to:
Preferred shareholders (Note 9)	—		—		—		(97,351)		—		(97,351)		—		(97,351)
Noncontrolling interests	—		—		—		—		—		—		(7,348)		(7,348)
Common shareholders and restricted share unitholders ($6.00 per share) (Note 9)	—		—		—		(1,055,559)		—		(1,055,559)		—		(1,055,559)
Other comprehensive income	—		—		—		—		5,171		5,171		—		5,171
Balances at June 30, 2023	$	4,350,000	$	17,549	$	5,940,945	$	(167,404)	$	(75,146)	$	10,065,944	$	92,627	$	10,158,571

See accompanying notes.

PUBLIC STORAGE

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 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 29,900 preferred shares 747,500 — (22,189) — — 725,311 — 725,311 —
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 (466,518 shares) — 47 81,365 — — 81,412 — 81,412 —
Share-based compensation expense, net of cash paid in lieu of common shares — — 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 — — — (138,500) — (138,500) — (138,500) —
Noncontrolling interests — — — — — — (4,513) (4,513) —
Common shareholders and restricted share unitholders ($6.00 per share) — — — (1,051,376) — (1,051,376) — (1,051,376) —
Other comprehensive loss — — — — (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	250,000		—		(7,168)		—		—		242,832		—		242,832		—

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

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

See accompanying notes.

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,
		2022		2021				2023		2022
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net income	Net income	$	3,951,340	$	1,337,620		Net income	$	1,101,580	$	1,173,188
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 equity investment in PS Business Parks, Inc.		(2,128,860)		—
Gain on sale of real estate		(1,503)		(13,683)

Depreciation and amortization	Depreciation and amortization	661,608		508,139			Depreciation and amortization	443,783		440,836
Equity in earnings of unconsolidated real estate entities	Equity in earnings of unconsolidated real estate entities	(100,129)		(81,382)			Equity in earnings of unconsolidated real estate entities	(15,560)		(91,949)
Distributions from cumulative equity in earnings of unconsolidated real estate entities	Distributions from cumulative equity in earnings of unconsolidated real estate entities	134,460		59,251			Distributions from cumulative equity in earnings of unconsolidated real estate entities	17,329		46,593
Unrealized foreign currency exchange gain		(236,698)		(73,584)
Unrealized foreign currency exchange loss (gain)							Unrealized foreign currency exchange loss (gain)	27,845		(136,818)
Share-based compensation expense	Share-based compensation expense	44,597		47,647			Share-based compensation expense	21,794		30,856
Other	Other	55,975		30,712			Other	6,658		3,970
Total adjustments		(1,570,550)		477,100
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Other assets							Other assets	(19,419)		(6,198)
Accrued and other liabilities							Accrued and other liabilities	(4,717)		(6,705)
Net cash flows from operating activities	Net cash flows from operating activities	2,380,790		1,814,720			Net cash flows from operating activities	1,579,293		1,453,773
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	(337,896)		(169,103)			Capital expenditures to maintain real estate facilities	(105,056)		(104,836)
Capital expenditures for property enhancements							Capital expenditures for property enhancements	(67,319)		(83,329)
Capital expenditures for energy efficiencies (LED lighting, solar)							Capital expenditures for energy efficiencies (LED lighting, solar)	(25,850)		(24,308)
Development and expansion of real estate facilities	Development and expansion of real estate facilities	(231,483)		(201,527)			Development and expansion of real estate facilities	(161,435)		(156,463)
Acquisition of real estate facilities and intangible assets	Acquisition of real estate facilities and intangible assets	(529,357)		(2,845,284)			Acquisition of real estate facilities and intangible assets	(190,778)		(231,417)
Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	13,670		8,765			Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities	3,165		4,537
Proceeds from sale of real estate investments		1,543		16,070
Proceeds from sale of equity investment in PS Business Parks, Inc.		2,636,011		—
Net cash flows from (used in) investing activities		1,552,488		(3,191,079)

Net cash flows used in investing activities							Net cash flows used in investing activities	(547,273)		(595,816)
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:
Issuance costs on amendment of credit facility							Issuance costs on amendment of credit facility	(8,377)		—
Repayments on notes payable	Repayments on notes payable	(502,270)		(1,585)			Repayments on notes payable	(8,200)		(472)
Issuance of notes payable, net of issuance costs		—		3,300,160

Issuance of preferred shares	Issuance of preferred shares	242,832		725,311			Issuance of preferred shares	—		242,832
Issuance of common shares in connection with share-based compensation	Issuance of common shares in connection with share-based compensation	27,913		81,412			Issuance of common shares in connection with share-based compensation	30,057		11,492
Redemption of preferred shares		—		(825,000)

Taxes paid upon net share settlement of restricted share units	Taxes paid upon net share settlement of restricted share units	(12,989)		(10,438)			Taxes paid upon net share settlement of restricted share units	(9,396)		(12,210)
Acquisition of noncontrolling interests		—		(33)

Contributions by noncontrolling interests	Contributions by noncontrolling interests	1,659		2,359			Contributions by noncontrolling interests	733		1,698
Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(3,508,581)		(1,189,876)			Distributions paid to preferred shareholders, common shareholders and restricted share unitholders	(1,152,555)		(799,502)
Distributions paid to noncontrolling interests	Distributions paid to noncontrolling interests	(31,453)		(4,513)			Distributions paid to noncontrolling interests	(7,348)		(21,697)
Net cash flows (used in) from financing activities		(3,782,889)		2,077,797
Net cash flows from operating, investing, and financing activities		150,389		701,438
Net effect of foreign exchange impact on cash and equivalents, including restricted cash		—		313
Increase in cash and equivalents, including restricted cash		$	150,389	$	701,751
Net cash flows used in financing activities							Net cash flows used in financing activities	(1,155,086)		(577,859)

Net (decrease) increase in cash and equivalents, including restricted cash							Net (decrease) increase in cash and equivalents, including restricted cash	$	(123,066)	$	280,098

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,
		2022		2021				2023		2022

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	$	734,599	$	257,560		Cash and equivalents	$	775,253	$	734,599
Restricted cash included in other assets	Restricted cash included in other assets	26,691		25,040			Restricted cash included in other assets	29,904		26,691
		$	761,290	$	282,600			$	805,157	$	761,290

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	$	883,787	$	958,247		Cash and equivalents	$	651,665	$	1,013,886
Restricted cash included in other assets	Restricted cash included in other assets	27,892		26,104			Restricted cash included in other assets	30,426		27,502
		$	911,679	$	984,351			$	682,091	$	1,041,388

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	$	(14,254)	$	(18,243)		Capital expenditures to maintain real estate facilities	$	(6,405)	$	(7,706)
Capital expenditures for property enhancements							Capital expenditures for property enhancements	(3,446)		(6,268)
Capital expenditures for energy efficiencies (LED lighting, solar)							Capital expenditures for energy efficiencies (LED lighting, solar)	(1,177)		(1,822)
Construction or expansion of real estate facilities	Construction or expansion of real estate facilities	(71,006)		(39,305)			Construction or expansion of real estate facilities	(57,850)		(48,682)

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

See accompanying notes.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

1.Description of the Business

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

At ~~September~~June 30, ~~2022,~~2023, we had direct and indirect equity interests in ~~2,836~~2,888 self-storage facilities (with approximately ~~202.2~~206.0 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.2 million net rentable square feet of commercial and retail space.

At ~~September~~June 30, ~~2022,~~2023, we owned a 35% common equity interest in Shurgard Self Storage SALimited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned ~~259~~266 self-storage facilities (with approximately 1415 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.

On July 20, 2022, in connection with the closing of PS Business Parks, Inc.’s (“PSB”) merger transaction with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our 41% common equity interest in PSB in its entirety. Prior to the merger transaction, PSB was a REIT traded on the New York Stock Exchange under the “PSB” symbol, which owned commercial properties, primarily multi-tenant industrial, flex, and office space. Refer to Note 4. Investments in Unconsolidated Real Estate Entities for transaction information and our accounting treatment of the sale.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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

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

Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

Summary of Significant Accounting Policies

There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

3.Real Estate Facilities

Activity in real estate facilities during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 is as follows:

~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023

(Amounts in thousands)

Operating facilities, at cost:

Beginning balance

~~22,807,833~~24,219,126

Capital expenditures to maintain real estate facilities

~~329,253~~96,352

Capital expenditures for property enhancements

70,986

Capital expenditures for energy efficiencies (LED lighting, solar)

27,206

Acquisitions

~~514,541~~185,903

Dispositions and other

~~(1,704)~~(3,448)

Developed or expanded facilities opened for operation

~~125,971~~84,389

Ending balance

~~23,775,894~~24,680,514

Accumulated depreciation:

Beginning balance

~~(7,773,308)~~(8,554,155)

Depreciation expense

~~(574,374)~~(415,358)

Dispositions and other

~~1,084~~2,635

Ending balance

~~(8,346,598)~~(8,966,878)

Construction in process:

Beginning balance

~~272,471~~372,992

Costs incurred to develop and expand real estate facilities

~~259,854~~ 163,670

Write-off of cancelled projects

(2,342)

Developed or expanded facilities opened for operation

~~(125,971)~~(84,389)

Ending balance

~~406,354~~449,931

Total real estate facilities at ~~September~~June 30, ~~2022~~2023

~~15,835,650~~16,163,567

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we acquired 4416 self-storage facilities ~~(3.2~~(1.2 million net rentable square feet of storage space), for a total cost of ~~$501.9 million, consisting of $482.0~~$190.8 million in ~~cash and $19.9 million in partnership units in our subsidiary.~~cash. Approximately ~~$14.4~~$4.9 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing ~~$126.0~~$84.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, adding ~~0.9~~0.6 million net rentable square feet of self-storage space. Construction in process at ~~September~~June 30, ~~2022~~2023 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.

Additionally, on July 8, 2022, we acquired from PSB the commercial interests in five properties at three sites jointly occupied with certain of our self-storage facilities located in Maryland and Virginia, for $47.3 million. We recognized $27.0 million of real estate assets and $0.7 million of intangibles for the properties acquired, representing the cost of these commercial properties that we did not have interest in through our equity investment in PSB. We recognized the remaining $19.6 million as an increase to our basis in our equity investment in PSB, which represents the elimination of our portion of the gain recorded by PSB.

During the nine months ended September 30, 2022, we sold portions of real estate facilities in connection with eminent domain proceedings for $1.5 million in cash proceeds and recorded a related gain on sale of real estate of approximately $1.5 million.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

4.Investments in Unconsolidated Real Estate Entities

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

Investments in Unconsolidated Real Estate Entities at
September 30, 2022 December 31, 2021
PSB $ — $ 515,312
Shurgard 252,648 313,451
Total $ 252,648 $ 828,763


	Investments in Unconsolidated Real Estate Entities at

	June 30, 2023		December 31, 2022


Shurgard	$	276,778	$	275,752

Equity in Earnings of Unconsolidated Real Estate Entities for the
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
PSB $ 3,586 $ 27,110 $ 80,596 $ 62,494
Shurgard 4,594 5,750 19,533 18,888
Total $ 8,180 $ 32,860 $ 100,129 $ 81,382


	Equity in Earnings of Unconsolidated Real Estate Entities for the
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

PSB	$	—	$	40,124	$	—	$	77,010
Shurgard	9,565		8,401		15,560		14,939
Total	$	9,565	$	48,525	$	15,560	$	91,949

Investment in PSB

~~Prior to~~On July 20, 2022, in connection with the closing of the merger of PS Business Parks, Inc. (“PSB”) with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our equity investment in PSB in its entirety on July 20, 2022, 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 a 41% common equity interest in ~~PSB.~~

~~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, including a $5.25 closing cash dividend 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.its entirety. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion ~~which was classified within gain on sale~~during the third quarter of ~~equity investment in PS Business Parks, Inc. in~~2022.

During the ~~Consolidated Statement of Income.~~

We classified the proceeds from the merger consideration of $2.6 billion or $182.25 per share or unit within cash flows from investing activities in the Consolidated Statements of Cash Flows for the ninesix months ended ~~September~~June 30, ~~2022. During the nine months ended September 30,~~ 2022, ~~and 2021,~~ we received cash distributions from PSB totaling ~~$109.5 million and $45.6 million, respectively, which were classified within~~$30.4 million. Since the sale of PSB in July 2022, we no longer recognize equity in earnings or receive cash ~~flows~~distributions from ~~operating activities in the Consolidated Statements of Cash Flows.~~PSB.

Investment in Shurgard

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

Based upon the closing price at ~~September~~June 30, ~~2022~~2023 (€~~41.60~~41.83 per share of Shurgard common stock, at ~~0.980~~1.089 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately ~~$1.3~~$1.4 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). ~~For each of~~During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we received ~~$2.6~~$1.9 million and $1.7 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® ~~trademark.~~trademark, respectively. We eliminated ~~$0.9~~$0.7 million and $0.6 million of intra-entity profits and losses for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and~~

~~PUBLIC STORAGE~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022~~

~~(Unaudited)~~

~~2021,~~respectively, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, we received cash ~~dividends~~dividend distributions from Shurgard totaling ~~$37.8~~$19.8 million and ~~$21.5~~$20.1 million, respectively. Approximately ~~$13.7~~$3.2 million and ~~$8.8~~$4.5 million of total cash distributions from Shurgard during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows.

At ~~September~~June 30, ~~2022,~~2023, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately ~~$65.7~~$64.7 million ($~~74.7~~67.8 million at December 31, ~~2021)~~2022). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately ~~$9.0~~$3.1 million and ~~$7.3~~$4.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

As of June 30, 2023 and 2022, we translated the book value of our investment in Shurgard ~~is a publicly held entity trading on Euronext Brussels under~~from Euro to U.S. Dollars and recorded $5.2 million other comprehensive income and $25.6 million other comprehensive loss during the ~~symbol “SHUR”.~~six months ended June 30, 2023 and 2022, respectively.

5.Goodwill and Other Intangible Assets

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


		At September 30, 2022						At December 31, 2021							At June 30, 2023						At December 31, 2022
		Gross Book Value		Accumulated Amortization		Net Book Value		Gross Book Value		Accumulated Amortization		Net Book Value			Gross Book Value		Accumulated Amortization		Net Book Value		Gross Book Value		Accumulated Amortization		Net Book Value
Goodwill	Goodwill	$	165,843	$	—	$	165,843	$	165,843	$	—	$	165,843	Goodwill	$	165,843	$	—	$	165,843	$	165,843	$	—	$	165,843
Shurgard® Trade Name	Shurgard® Trade Name	18,824		—		18,824		18,824		—		18,824		Shurgard® Trade Name	18,824		—		18,824		18,824		—		18,824
Finite-lived intangible assets, subject to amortization	Finite-lived intangible assets, subject to amortization	196,617		(141,473)		55,144		198,180		(79,953)		118,227		Finite-lived intangible assets, subject to amortization	762,981		(735,626)		27,355		758,106		(710,256)		47,850
Total goodwill and other intangible assets	Total goodwill and other intangible assets	$	381,284	$	(141,473)	$	239,811	$	382,847	$	(79,953)	$	302,894	Total goodwill and other intangible assets	$	947,648	$	(735,626)	$	212,022	$	942,773	$	(710,256)	$	232,517

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was ~~$20.0~~$10.8 million and ~~$78.2~~$25.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~$23.3~~$24.3 million and ~~$49.0~~$58.2 million for the same periods in ~~2021.~~2022. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, intangibles increased ~~$15.1~~$4.9 million, in connection with the acquisition of real estate ~~facilities.~~facilities (Note 3).

The estimated future amortization expense for our finite-lived intangible assets at ~~September~~June 30, ~~2022~~2023 is as follows (amounts in thousands):


Year	Year	Amount		Year	Amount
Remainder of 2022		$	15,830
2023		30,074
Remainder of 2023				Remainder of 2023	$	15,335
2024				2024	6,621
Thereafter	Thereafter	9,240		Thereafter	5,399
Total	Total	$	55,144	Total	$	27,355

~~PUBLIC STORAGE~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022~~

~~(Unaudited)~~

6.Credit Facility

~~We have a~~On June 12, 2023, we entered into an amended revolving credit agreement (the “Credit Facility”) ~~with a~~, which increases our borrowing limit from $500 million ~~borrowing limit that matures on~~to $1.5 billion and extends the maturity date from April 19, ~~2024.~~2024 to June 12, 2027. We have the option to further extend the maturity date by up to one additional year with additional extension fees up to 0.125% of the extended commitment amount. Amounts drawn on the Credit Facility bear annual interest at rates ranging from ~~LIBOR~~SOFR plus ~~0.7%~~0.65% to ~~LIBOR~~SOFR plus ~~1.350%~~1.40% depending upon ~~the ratio of~~ our ~~Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBOR~~credit rating (SOFR plus ~~0.75%~~0.70% at ~~September~~June 30, ~~2022)~~2023). We are also required to pay a quarterly facility fee ranging from ~~0.07%~~0.10% per annum to ~~0.25%~~0.30% per annum depending upon ~~the ratio of~~ our ~~Total Indebtedness to our Gross Asset Value~~credit rating (0.10% per annum at ~~September~~June 30, ~~2022)~~2023). At ~~September~~June 30, ~~2022~~2023 and ~~November 1, 2022,~~August 2, 2023, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling ~~$18.6~~$16.7 million at ~~September~~June 30, ~~2022~~2023 ($~~21.2~~18.6 million at December 31, ~~2021)~~2022 under the previous credit facility). The Credit Facility has various customary restrictive covenants with which we were in compliance at ~~September~~June 30, ~~2022.~~2023. We incurred a total of $8.4 million of issuance costs associated with the amended Credit Facility, which is classified as Other Assets on the Consolidated Balance Sheets and will be amortized as Interest Expense on the Consolidated Statement of Income through June 12, 2027.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

7.Notes Payable

Our notes payable are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are set forth in the tables below:


				Amounts at September 30, 2022											Amounts at June 30, 2023
		Coupon Rate	Effective Rate	Principal		Unamortized Costs		Book Value		Fair Value			Coupon Rate	Effective Rate	Principal		Unamortized Costs		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 April 23, 2024	Notes due April 23, 2024	SOFR+0.47%	1.766%	$	700,000	$	(1,101)	$	698,899	$	685,550	Notes due April 23, 2024	SOFR+0.47%	5.519%	$	700,000	$	(573)	$	699,427	$	699,210
Notes due February 15, 2026	Notes due February 15, 2026	0.875%	1.030%	500,000		(2,507)		497,493		436,666		Notes due February 15, 2026	0.875%	1.030%	500,000		(1,951)		498,049		448,134
Notes due November 9, 2026	Notes due November 9, 2026	1.500%	1.640%	650,000		(3,574)		646,426		573,097		Notes due November 9, 2026	1.500%	1.640%	650,000		(2,922)		647,078		582,127
Notes due September 15, 2027	Notes due September 15, 2027	3.094%	3.218%	500,000		(2,624)		497,376		459,630		Notes due September 15, 2027	3.094%	3.218%	500,000		(2,228)		497,772		466,373
Notes due May 1, 2028	Notes due May 1, 2028	1.850%	1.962%	650,000		(3,768)		646,232		543,338		Notes due May 1, 2028	1.850%	1.962%	650,000		(3,260)		646,740		564,513
Notes due November 9, 2028	Notes due November 9, 2028	1.950%	2.044%	550,000		(2,939)		547,061		459,260		Notes due November 9, 2028	1.950%	2.044%	550,000		(2,578)		547,422		471,981
Notes due May 1, 2029	Notes due May 1, 2029	3.385%	3.459%	500,000		(2,024)		497,976		450,179		Notes due May 1, 2029	3.385%	3.459%	500,000		(1,792)		498,208		461,929
Notes due May 1, 2031	Notes due May 1, 2031	2.300%	2.419%	650,000		(5,869)		644,131		517,641		Notes due May 1, 2031	2.300%	2.419%	650,000		(5,355)		644,645		541,477
Notes due November 9, 2031	Notes due November 9, 2031	2.250%	2.322%	550,000		(3,224)		546,776		430,706		Notes due November 9, 2031	2.250%	2.322%	550,000		(2,957)		547,043		451,002
				5,250,000		(27,630)		5,222,370		4,556,067					5,250,000		(23,616)		5,226,384		4,686,746

Euro Denominated Unsecured Debt	Euro Denominated Unsecured Debt											Euro Denominated Unsecured Debt
Notes due April 12, 2024	Notes due April 12, 2024	1.540%	1.540%	97,984		—		97,984		94,290		Notes due April 12, 2024	1.540%	1.540%	108,853		—		108,853		106,422
Notes due November 3, 2025	Notes due November 3, 2025	2.175%	2.175%	237,135		—		237,135		227,663		Notes due November 3, 2025	2.175%	2.175%	263,440		—		263,440		249,402
Notes due September 9, 2030	Notes due September 9, 2030	0.500%	0.640%	685,890		(8,890)		677,000		513,593		Notes due September 9, 2030	0.500%	0.640%	761,973		(8,051)		753,922		588,775
Notes due January 24, 2032	Notes due January 24, 2032	0.875%	0.978%	489,921		(4,992)		484,929		354,996		Notes due January 24, 2032	0.875%	0.978%	544,266		(4,590)		539,676		408,797
				1,510,930		(13,882)		1,497,048		1,190,542					1,678,532		(12,641)		1,665,891		1,353,396

Mortgage Debt, secured by 10 real estate facilities with a net book value of $57.5 million		3.811%	3.811%	21,033		—		21,033		20,703
Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.8 million												Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.8 million	4.428%	4.428%	1,892		—		1,892		1,710

				$	6,781,963	$	(41,512)	$	6,740,451	$	5,767,312				$	6,930,424	$	(36,257)	$	6,894,167	$	6,041,852

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)


							Amounts at
		Amounts at					December 31, 2022
		December 31, 2021					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		$	499,637	$	506,362
Notes due April 23, 2024	Notes due April 23, 2024	698,372		700,314		Notes due April 23, 2024	699,075		691,309
Notes due February 15, 2026	Notes due February 15, 2026	496,939		488,141		Notes due February 15, 2026	497,678		441,849
Notes due November 9, 2026	Notes due November 9, 2026	645,773		649,996		Notes due November 9, 2026	646,643		578,899
Notes due September 15, 2027	Notes due September 15, 2027	496,980		535,206		Notes due September 15, 2027	497,508		466,029
Notes due May 1, 2028	Notes due May 1, 2028	645,724		649,221		Notes due May 1, 2028	646,401		558,197
Notes due November 9, 2028	Notes due November 9, 2028	546,701		548,241		Notes due November 9, 2028	547,182		468,509
Notes due May 1, 2029	Notes due May 1, 2029	497,743		545,580		Notes due May 1, 2029	498,053		456,855
Notes due May 1, 2031	Notes due May 1, 2031	643,617		656,546		Notes due May 1, 2031	644,303		530,390
Notes due November 9, 2031	Notes due November 9, 2031	546,512		551,932		Notes due November 9, 2031	546,866		443,514
		5,717,998		5,831,539			5,223,709		4,635,551

Euro Denominated Unsecured Debt	Euro Denominated Unsecured Debt					Euro Denominated Unsecured Debt
Notes due April 12, 2024	Notes due April 12, 2024	113,431		117,526		Notes due April 12, 2024	107,035		104,344
Notes due November 3, 2025	Notes due November 3, 2025	274,518		295,256		Notes due November 3, 2025	259,039		246,119
Notes due September 9, 2030	Notes due September 9, 2030	784,287		769,561		Notes due September 9, 2030	740,634		566,204
Notes due January 24, 2032	Notes due January 24, 2032	561,761		551,842		Notes due January 24, 2032	530,317		396,297
		1,733,997		1,734,185			1,637,025		1,312,964

Mortgage Debt	Mortgage Debt	23,284		24,208		Mortgage Debt	10,092		9,568

		$	7,475,279	$	7,589,932		$	6,870,826	$	5,958,083

U.S. Dollar Denominated Unsecured Notes

~~On August 15, 2022, the Company redeemed its 2.370% Senior Notes due September 15, 2022, with an aggregate principal amount of $500.0 million.~~

The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at ~~September~~June 30, ~~2022.~~2023. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately ~~14%~~13% at ~~September~~June 30, ~~2022)~~2023) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately ~~25x~~24x for the twelve months ended ~~September~~June 30, ~~2022)~~2023) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Notes

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

We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange (loss) gain” on our income statement ~~(gains~~(losses of ~~$100.9~~$1.1 million and ~~$239.2~~$28.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to 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).

~~PUBLIC STORAGE~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 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.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

At ~~September~~June 30, ~~2022,~~2023, the related contractual interest rates of our mortgage notes are fixed, ranging between ~~3.2%~~3.9% and 7.1%, and mature between ~~February~~September 1, ~~2023~~2028 and July 1, 2030.

At ~~September~~June 30, ~~2022,~~2023, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):


		Unsecured Debt		Mortgage Debt		Total			Unsecured Debt		Mortgage Debt		Total

Remainder of 2022		$	—	$	212	$	212
2023		—		19,219		19,219
Remainder of 2023								Remainder of 2023	$	—	$	60	$	60
2024	2024	797,984		124		798,108		2024	808,853		124		808,977
2025	2025	237,135		131		237,266		2025	263,440		131		263,571
2026	2026	1,150,000		138		1,150,138		2026	1,150,000		138		1,150,138
2027								2027	500,000		146		500,146
Thereafter	Thereafter	4,575,811		1,209		4,577,020		Thereafter	4,206,239		1,293		4,207,532
		$	6,760,930	$	21,033	$	6,781,963		$	6,928,532	$	1,892	$	6,930,424
Weighted average effective rate	Weighted average effective rate	1.9%		3.8%		1.9%		Weighted average effective rate	2.3%		4.4%		2.3%

Cash paid for interest totaled ~~$87.6~~$73.7 million and ~~$49.8~~$66.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Interest capitalized as real estate totaled ~~$4.2~~$3.8 million and $2.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

8.Noncontrolling Interests

There are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At ~~September~~June 30, ~~2022,~~2023, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the ~~option~~request of the unitholder. ~~These include a total of 54,137 partnership units of $19.9 million issued to third-parties in connection with our acquisition of self-storage properties in the nine months ended September 30, 2022.~~

At March 31, 2022, there were 254,833 partnership units of $83.8 million 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 from redeemable noncontrolling interests to noncontrolling interests in total equity during the three months ended June 30, 2022.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

9.Shareholders’ Equity

Preferred Shares

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:


					At September 30, 2022			At December 31, 2021							At June 30, 2023			At December 31, 2022
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 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		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		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 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		—	—		Series S	1/13/2027	4.100	%	10,000	250,000		10,000	250,000
Total Preferred Shares	Total Preferred Shares				174,000	$	4,350,000	164,000	$	4,100,000	Total Preferred Shares				174,000	$	4,350,000	174,000	$	4,350,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At ~~September~~June 30, ~~2022,~~2023, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.

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

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

Dividends

On ~~January 13, 2022, we issued 10.0 million depositary shares, each representing 0.001~~February 4, 2023, our Board of Trustees declared a ~~share of our 4.100% Series S Preferred Shares, at~~50% increase in its regular common quarterly dividend from $2.00 to $3.00 per share. The distribution equates to an ~~issuance price of $25.00~~annualized increase to the Company’s regular common dividend from $8.00 to $12.00 per ~~depositary share, for a total of $250.0 million in gross proceeds, and we incurred $7.2 million in issuance costs.~~share.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

~~Dividends~~

Common share dividends paid, including amounts paid to our restricted share unitholders and deferred share unitholders, totaled ~~$2.7 billion~~$527.6 million ($~~15.15~~3.00 per share) and ~~$351.2~~$351.3 million ($2.00 per share) for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$3.4 billion ($19.15 per share) and $1.05~~$1.06 billion ($6.00 per share) and $702.5 million ($4.00 per share) for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively. Included in common share dividends paid for the three and nine months ended September 30, 2022 is $2.3 billion of a special cash dividend (“Special Dividend”) of $13.15 per common share paid on August 4, 2022 in connection with the sale of our equity investment in PSB on July 20, 2022. Preferred share dividends paid totaled $48.7 million ~~and $46.2 million~~ for each of the three months ended ~~September~~June 30, 2023 and 2022, and ~~2021, respectively, and $145.7~~$97.4 million and ~~$138.5~~$97.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

10.Related Party Transactions

At ~~September~~June 30, ~~2022,~~2023, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children owned the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately ~~$1.7 million and $1.5~~$1.1 million for each of the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021, respectively.~~

On July 8, 2022, we acquired from PSB the commercial interests in five properties at three sites jointly occupied with certain of our self-storage facilities located in Maryland and Virginia, for $47.3 million. We recognized $27.0 million of real estate assets and $0.7 million of intangibles for the properties acquired, representing the cost of these commercial properties that we did not have interest in through our equity investment in PSB. We recognized the remaining $19.6 million as an increase in our basis in our equity investment in PSB, which represents the elimination of our portion of the gain recorded by PSB.2022.

11.Share-Based Compensation

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

We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, ~~$0.4~~$0.6 million and ~~$2.4~~$1.3 million share-based compensation cost was capitalized as real estate facilities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to ~~$0.8~~$1.1 million and ~~$3.1~~$2.1 million for the same periods of ~~2021,~~2022, respectively.


												Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022

		(Amounts in thousands)								(Amounts in thousands)

Self-storage cost of operations	Self-storage cost of operations	$	4,203	$	4,506	$	13,740	$	16,272		Self-storage cost of operations	$	3,428	$	4,673	$	7,352	$	9,537
Ancillary cost of operations	Ancillary cost of operations	203		342		690		1,122			Ancillary cost of operations	323		221		640		487
General and administrative	General and administrative	9,335		9,747		30,167		30,291			General and administrative	8,198		12,034		13,802		20,832
Total	Total	$	13,741	$	14,595	$	44,597	$	47,685		Total	$	11,949	$	16,928	$	21,794	$	30,856

~~PUBLIC STORAGE~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022~~

~~(Unaudited)~~

Included in share-based compensation is ~~$2.9~~$1.6 million and ~~$12.4~~$2.1 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to ~~$4.8~~$5.3 million and ~~$15.8~~$9.5 million for the same periods in ~~2021, of~~2022, respectively, in connection with retirement acceleration as discussed in Note 2 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

As of ~~September~~June 30, ~~2022,~~2023, there was ~~$96.8~~$89.5 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Stock Options

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

On August 4, 2022, we paid a Special Dividend of $13.15 per common share to shareholders of record as of August 1, 2022. Stock options that were outstanding at the time of the Special Dividend were adjusted pursuant to the anti-dilution provisions of the Company’s equity and performance-based incentive compensation plans that provide for equitable adjustments in the event of an extraordinary cash dividend. The anti-dilution adjustments proportionately increased the number of outstanding stock options and reduced the exercise prices of outstanding stock options by a conversion rate of 1.03275, resulting in an increase of 104,348 stock options outstanding. The adjustments did not result in incremental share-based compensation expense.

During the ~~nine~~six months ended ~~September~~June 30, ~~2022, 142,683~~2023, 177,168 stock options were granted, ~~146,608~~174,569 options were exercised, and no41,307 options were forfeited. In addition, we expect an incremental 61,250 stock options to be issued based on the estimated achievement of performance targets on our multi-year performance-based stock options granted during the nine months ended September 30, 2021. A total of ~~3,201,624~~3,125,775 stock options were outstanding at ~~September~~June 30, ~~2022 (3,039,951~~2023 (3,164,483 at December 31, ~~2021)~~2022).

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we granted ~~65,000~~60,000 stock options in connection with non-management trustee compensation. For the remaining ~~77,683~~117,168 stock options granted during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, vesting is dependent upon meeting certain market conditions over the three-year period from ~~January 1, 2022~~March 15, 2023 through ~~December 31, 2024,~~March 14, 2026, with continued service-based vesting through the first quarter of ~~2027.~~2028. These stock options require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning up to 200% of the target options originally granted.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we incurred share-based compensation cost for outstanding stock options of ~~$4.2~~$4.6 million and ~~$15.8~~$7.8 million, respectively, as compared to ~~$5.5~~$7.7 million and ~~$20.5~~$11.6 million for the same periods in ~~2021.~~2022.

Restricted Share Units

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

During the ~~nine~~six months ended ~~September~~June 30, ~~2022, 27,943~~2023, 38,895 RSUs were granted, ~~18,487~~18,193 RSUs were forfeited and ~~76,818~~70,848 RSUs vested. The vesting resulted in the issuance of ~~55,079~~51,350 common shares. A total of ~~503,460~~425,901 RSUs were outstanding at ~~September~~June 30, ~~2022 (570,822~~2023 (476,047 at December 31, ~~2021)~~2022).

~~Included in~~Among the 38,895 RSUs granted during the ~~nine~~six months ended ~~September~~June 30, ~~2022 are 21,985~~2023, 37,211 RSUs were awarded where vesting is dependent upon meeting certain market conditions over a three-year period from ~~January 1, 2022~~March 15, 2023 through ~~December 31, 2024,~~March 14, 2026, with continued service-based vesting through the first quarter of ~~2027. The amount~~2028. These RSUs require relative achievement of ~~these RSUs that are earned and vested, if any, will be based, in addition to continued employment requirements, on~~ the ~~Company's~~

~~PUBLIC STORAGE~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~September 30, 2022~~

~~(Unaudited)~~

~~relative~~Company’s total shareholder return ~~over the three-year period~~ as compared to the weighted average total shareholder return of ~~the~~ specified peer groups and can result in grantees earning up to 200% of the target RSUs originally granted.

Also included in the RSUs granted during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 are ~~5,958~~1,684 service-based RSUs.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we incurred share-based compensation cost for RSUs of ~~$9.7~~$7.7 million and ~~$30.6~~$14.9 million, respectively, as compared to ~~$9.6~~$10.1 million and ~~$29.4~~$20.9 million for the same periods in ~~2021.~~2022.

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,~~shares, or fully-vested DSUs to be settled at a specified future date. ~~Shares of unrestricted stock~~Unrestricted common shares and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we granted ~~1,742~~1,018 DSUs and ~~310 shares of~~432 unrestricted common ~~stock.~~

shares. During the six months ended June 30, 2023, 867 previously granted DSUs were settled in common shares.

2019

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

12. Net Income per Common Share

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

We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options outstanding for diluted net income per common share. Potentially dilutive stock options representing ~~147,344~~321,070 common 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, 2023, as compared to 142,683 common shares for the same periods in 2022, because their effect would have been antidilutive.

The following table reconciles the numerators and denominators of the basic and diluted net income per common shares computation for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively (in thousands, except per share amounts):


											Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	$	2,712,161	$	442,327	$	3,779,666	$	1,174,386	Numerator for basic and dilutive net income per common share – net income allocable to common shareholders	$	528,259	$	603,381	$	995,847	$	1,067,505

Denominator for basic net income per share - weighted average common shares outstanding	Denominator for basic net income per share - weighted average common shares outstanding	175,283		174,926		175,227		174,787		Denominator for basic net income per share - weighted average common shares outstanding	175,484		175,229		175,428		175,200
Net effect of dilutive stock options - based on treasury stock method	Net effect of dilutive stock options - based on treasury stock method	1,045		880		1,098		611		Net effect of dilutive stock options - based on treasury stock method	728		1,083		753		1,125
Denominator for dilutive net income per share - weighted average common shares outstanding	Denominator for dilutive net income per share - weighted average common shares outstanding	176,328		175,806		176,325		175,398		Denominator for dilutive net income per share - weighted average common shares outstanding	176,212		176,312		176,181		176,325

Net income per common share:	Net income per common share:									Net income per common share:
Basic	Basic	$	15.47	$	2.53	$	21.57	$	6.72	Basic	$	3.01	$	3.44	$	5.68	$	6.09
Dilutive	Dilutive	$	15.38	$	2.52	$	21.44	$	6.70	Dilutive	$	3.00	$	3.42	$	5.65	$	6.05

2120

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(Unaudited)

13.Segment Information

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

Self-Storage Operations

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

Ancillary Operations

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

Presentation of Segment Information

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


												Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021				2023		2022		2023		2022

		(amounts in thousands)								(amounts in thousands)
Self-Storage Operations Reportable Segment	Self-Storage Operations Reportable Segment										Self-Storage Operations Reportable Segment
Revenue	Revenue	$	1,027,374	$	840,510	$	2,917,675	$	2,333,850		Revenue	$	1,056,120	$	973,286	$	2,088,304	$	1,890,301
Cost of operations	Cost of operations	(255,470)		(216,999)		(738,953)		(631,699)			Cost of operations	(257,678)		(237,989)		(526,293)		(483,483)
Net operating income	Net operating income	771,904		623,511		2,178,722		1,702,151			Net operating income	798,442		735,297		1,562,011		1,406,818
Depreciation and amortization	Depreciation and amortization	(220,772)		(188,552)		(661,608)		(508,139)			Depreciation and amortization	(222,133)		(218,708)		(443,783)		(440,836)
Net income	Net income	551,132		434,959		1,517,114		1,194,012			Net income	576,309		516,589		1,118,228		965,982

Ancillary Operations	Ancillary Operations										Ancillary Operations
Revenue	Revenue	60,757		54,421		175,946		157,658			Revenue	63,650		58,759		125,698		115,189
Cost of operations	Cost of operations	(21,572)		(19,735)		(54,297)		(52,044)			Cost of operations	(22,202)		(17,210)		(41,878)		(32,725)
Net operating income	Net operating income	39,185		34,686		121,649		105,614			Net operating income	41,448		41,549		83,820		82,464

Total net income allocated to segments	Total net income allocated to segments	590,317		469,645		1,638,763		1,299,626			Total net income allocated to segments	617,757		558,138		1,202,048		1,048,446

Other items not allocated to segments:	Other items not allocated to segments:										Other items not allocated to segments:
General and administrative	General and administrative	(29,501)		(31,682)		(81,401)		(78,996)			General and administrative	(25,434)		(28,831)		(50,978)		(51,900)
Interest and other income	Interest and other income	12,736		3,356		26,394		9,321			Interest and other income	18,452		10,279		37,086		13,658
Interest expense	Interest expense	(34,113)		(23,736)		(100,178)		(60,980)			Interest expense	(38,079)		(32,941)		(74,180)		(66,065)
Equity in earnings of unconsolidated real estate entities	Equity in earnings of unconsolidated real estate entities	8,180		32,860		100,129		81,382			Equity in earnings of unconsolidated real estate entities	9,565		48,525		15,560		91,949
Foreign currency exchange gain		100,170		40,906		237,270		73,584
Foreign currency exchange (loss) gain											Foreign currency exchange (loss) gain	(1,096)		101,723		(27,956)		137,100

Gain on sale of real estate		1,503		279		1,503		13,683
Gain on sale of equity investment in PS Business Parks, Inc.		2,128,860		—		2,128,860		—

Net income	Net income	$	2,778,152	$	491,628	$	3,951,340	$	1,337,620		Net income	$	581,165	$	656,893	$	1,101,580	$	1,173,188

2221

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2022~~2023

(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 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 all states. Customers participate in the program at their option. At ~~September~~June 30, ~~2022,~~2023, there were approximately ~~1.2~~1.3 million certificates held by our self-storage customers, representing aggregate coverage of approximately ~~$5.6~~$6.0 billion.

Commitments

We have construction commitments representing future expected payments for construction under contract totaling ~~$265.7~~$244.6 million at ~~September~~June 30, ~~2022.~~2023. We expect to pay approximately ~~$71.4~~$128.2 million in the remainder of ~~2022, $185.8~~2023, $114.2 million in ~~2023~~2024, and ~~$8.5~~$2.2 million in ~~2024~~2025 for these construction commitments.

We have future contractual payments on land, equipment and office space under various lease commitments totaling ~~$64.1~~$61.8 million at ~~September~~June 30, ~~2022.~~2023. We expect to pay approximately ~~$0.7~~$1.4 million in the remainder of ~~2022,~~2023, $3.1 million in ~~each of 2023 and~~ 2024, $3.0 million in each of 2025 and 2026, $2.1 million in 2027, and ~~$51.2~~$49.2 million thereafter for these commitments.

15. Subsequent Events

On July 24, 2023, we entered into a definitive agreement with Blackstone Real Estate Income Trust, Inc. (“BREIT”) to acquire BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million square feet) and manages 25 self-storage facilities (1.8 million square feet) for third parties, for a cash acquisition price of $2.2 billion (the “Simply Acquisition”). The acquisition, which is subject to the satisfaction of customary closing conditions, is currently expected to close in the third quarter of 2023.

In connection with the Simply Acquisition, on July 24, 2023, we completed a public offering of $400 million, $500 million, $700 million, and $600 million aggregate principal amount of unsecured senior notes bearing interest at an annual rate of Compounded SOFR + 0.60% (reset quarterly), 5.125%, 5.100%, and 5.350%, respectively, and maturing on July 25, 2025, January 15, 2029, August 1, 2033, and August 1, 2053, respectively.

Subsequent to ~~September~~June 30, ~~2022,~~2023, we acquired or were under contract to acquire 33eleven self-storage facilities across six states with ~~1.7~~0.8 million net rentable square feet, for ~~$262.6~~$118.2 million.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

On August 2, 2023, the Company filed a Form 8-K to announce its intention to implement a corporate reorganization into an umbrella partnership real estate investment trust (UPREIT) structure. As part of the reorganization, New PSA, a Maryland real estate investment trust that currently is a wholly-owned subsidiary, will become the parent company of the Company and its subsidiaries. New PSA will change its name to “Public Storage”. All outstanding shares of the Company will be automatically exchanged for an equivalent number of identical shares of New PSA and such shares will continue to trade on an uninterrupted basis on the NYSE under the same ticker symbols and with the same CUSIPs. The Company will continue to be the issuer of its unsecured notes, and there will be no change to the CUSIPs of such notes. New PSA is expected to qualify as a REIT for federal income tax purposes. Upon the consummation of the reorganization, which is expected to occur on August 14, 2023, the Company’s current trustees and officers will become trustees and officers of New PSA. There will be no change in the Company’s assets, liabilities or operations as a result of the reorganization. The Company’s shareholders will not recognize gain or loss for federal income tax purposes as a result of this tax free reorganization.

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

Cautionary Statement Regarding ~~Forward Looking~~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 ~~2022~~2023 outlook and all underlying assumptions, our expected acquisition, disposition, development, and redevelopment activity, our planned reorganization into an UPREIT structure, supply and demand for our self-storage facilities, information relating to operating trends in our markets, expectations regarding operating expenses, including property tax changes, expectations regarding the impacts from inflation and a potential future recession, 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 that~~management and 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, ~~2021~~2022 filed with the Securities and Exchange Commission (the “SEC”) on February ~~22, 2022~~21, 2023 and in our other filings with the SEC. These include changes in demand for our facilities, impacts of natural disasters, adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance, adverse economic effects from the COVID-19 ~~pandemic,~~Pandemic, international military conflicts, or similar events impacting public health and/or economic activity, increases in the costs of our primary customer acquisition channels, adverse impacts to us and our customers from inflation, unfavorable foreign currency rate fluctuations, changes in federal or state tax laws related to the taxation of REITs, ~~and~~ security breaches, including ransomware, or a failure of our networks, systems, or 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 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, ~~2022,~~2023, there were no material changes to our critical accounting estimates as compared to the critical accounting 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, ~~2021.~~2022.

Overview

Our self-storage operations generate most of our net income, and our earnings growth is impacted by the levels of growth within our Same Store 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, ~~2022,~~2023, revenues generated by our Same Store Facilities increased by ~~14.7%~~6.3% ($~~105.4~~51.1 million) and ~~15.4%~~8.0% ($~~315.9~~126.5 million), respectively, as compared to the same periods in ~~2021,~~2022, while Same Store cost of operations increased by ~~7.7%~~5.2% ($~~13.5~~9.7 million) and ~~6.2%~~5.4% ($~~32.7~~20.7 million), respectively. Demand and operating trends ~~remained strong, leading~~softened in the second half of 2022 continuing through the first half of 2023 and returned to ~~increases~~historical seasonal patterns as compared to what we experienced in ~~our self-storage rental rates while maintaining high~~2020 and 2021. We expect these trends to lead to moderating levels of ~~occupancy.~~

income growth through 2023.

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 ~~2020,~~2021, we acquired a total of ~~338~~322 facilities with ~~30.1~~28.0 million net rentable square feet for ~~$6.4~~$6.0 billion. In our non-same store portfolio, we also have developed and expanded self-storage facilities of ~~17.3~~15.8 million net rentable square feet for a total cost of ~~$1.5~~$1.4 billion. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, net operating income generated by our Acquired Facilities and Newly Developed and Expanded Facilities increased ~~74.9%~~24.1% ($~~51.8~~21.8 million) and ~~122.6%~~27.7% ($~~179.7~~47.1 million), respectively, as compared to the same periods in ~~2021.~~

2022.

We have experienced recent inflationary impacts on our cost of operations including labor, utilities, and repairs and maintenance, and costs of development and expansion activities, and we may continue to experience such impacts in the future. We have implemented various initiatives to manage the adverse impacts, such as enhancements in operational processes and investments in technology to reduce payroll hours, achievement of economies of scale from recent acquisitions with supervisory payroll allocated over a broader number of self-storage facilities, and investments in solar power and LED lights to lower utility usage.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed facilities), we have embarked on our multi-year Property of Tomorrow program to (i) rebrand our properties with more pronounced, attractive, and clearly identifiable color schemes and signage, (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. We expect to complete the program byin 2025. We spent approximately $67 million on the ~~end of 2025. We~~program in the six months ended June 30, 2023 and expect to spend approximately ~~$220~~$160 million over ~~2022~~2023 on this effort.

On ~~April~~July 24, ~~2022, PSB~~2023, we entered into ~~an Agreement and Plan of Merger whereby affiliates of~~a definitive agreement with Blackstone ~~agreed~~Real Estate Income Trust, Inc. (“BREIT”) to acquire ~~all outstanding shares of PSB’s common stock~~BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million square feet) and manages 25 self-storage facilities (1.8 million square feet) for $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, including a $5.25 closing cash dividend per share or unit, and a $0.22 prorated quarterly cash dividend per share or unit,third parties, for a ~~total~~cash acquisition price of ~~$187.72 per share or unit. At~~$2.2 billion (the “Simply Acquisition”). The 127 wholly-owned facilities are geographically diversified across 18 states and located in markets with population growth that has been approximately double the ~~close~~national average since 2018. Approximately 65% of the ~~merger transaction, we received a total~~facilities are located in high-growth Sunbelt markets. The acquisition, which is subject to the satisfaction of ~~$2.7 billion of cash proceeds and recognized a gain of $2.1 billion, which was classified within gain on sale of our equity investment in PS Business Parks, Inc.~~customary closing conditions, is currently expected to close in the ~~Consolidated Statement~~third quarter of ~~Income.~~

2023.

In connection with the ~~sale~~Simply Acquisition, on July 24, 2023, we completed a public offering of ~~our equity~~$400 million, $500 million, $700 million, and $600 million aggregate principal amount of unsecured senior notes bearing interest at an annual rate of Compounded SOFR + 0.60% (reset quarterly), 5.125%, 5.100%, and 5.350%, respectively, and maturing on July 25, 2025, January 15, 2029, August 1, 2033, and August 1, 2053, respectively.

On August 2, 2023, the Company filed a Form 8-K to announce its intention to implement a corporate reorganization into an umbrella partnership real estate investment ~~in PSB,~~trust (UPREIT) structure. As part of the reorganization, New PSA, a Maryland real estate investment trust that currently is a wholly-owned subsidiary, will become the parent company of the Company and its subsidiaries. New PSA will change its name to “Public Storage”. All outstanding shares of the Company will be automatically exchanged for an equivalent number of identical shares of New PSA and such shares will continue to trade on an uninterrupted basis on the NYSE under the same ticker symbols and with the same CUSIPs. The Company will continue to be the issuer of its unsecured notes, and there will be no change to the CUSIPs of such notes. New PSA is expected to qualify as a REIT for federal income tax purposes. Upon the consummation of the reorganization, which is expected to occur on August ~~4, 2022, we paid~~14, 2023, the Company’s current trustees and officers will become trustees and officers of New PSA. There will be no change in the Company’s assets, liabilities or operations as a ~~special cash dividend~~result of ~~$13.15 per common share, totaling approximately $2.3 billion, to~~the reorganization. The Company’s shareholders will not recognize gain or loss for federal income tax purposes as a result of ~~record as of August 1, 2022.~~

this tax free reorganization.

2526

Results of Operations

Operating Results for the Three Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

For the three months ended ~~September~~June 30, ~~2022,~~2023, net income allocable to our common shareholders was ~~$2,712.2~~$528.3 million or ~~$15.38~~$3.00 per diluted common share, compared to ~~$442.3~~$603.4 million or ~~$2.52~~$3.42 per diluted common share for the same period in ~~2021,~~2022, representing ~~an increase~~a decrease of ~~$2,269.9~~$75.1 million or ~~$12.86~~$0.42 per diluted common share. The ~~increase~~decrease is due primarily to (i) a ~~$2.1 billion gain on sale of our equity investment in PSB, (ii) a $148.4~~$102.8 million ~~increase in self-storage net operating income, and (iii) a $59.3 million increase~~decrease in foreign currency exchange gains primarily associated with our Euro denominated notes payable ~~partially offset by (iv)~~and (ii) a ~~$32.2 million increase in depreciation and amortization expense, (v) a $24.7~~$39.0 million decrease in equity in earnings of unconsolidated real estate entities due to the sale of our equity investment in PSB ~~and (vi)~~in July 2022, partially offset by (iii) a ~~$10.4~~$63.1 million increase in ~~interest expense.~~

self-storage net operating income.

The ~~$148.4~~$63.1 million increase in self-storage net operating income in the three months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021~~2022 is a result of a ~~$91.9~~$41.4 million increase attributable to our Same Store Facilities and a ~~$56.5~~$21.7 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased ~~14.7%~~6.3% or ~~$105.4~~$51.1 million in the three months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, due primarily to higher realized annual rent per occupied square foot, partially offset by a decline in occupancy. Cost of operations for the Same Store Facilities increased by ~~7.7%~~5.2% or ~~$13.5~~$9.7 million in the three months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, due primarily to increased property tax expense and marketing ~~expense, other direct property costs, and centralized management costs.~~expense. The increase in net operating income of ~~$56.5~~$21.7 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and 2022 and the fill-up of recently developed and expanded facilities.

Operating Results for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~

2022

For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, net income allocable to our common shareholders was ~~$3,779.7~~$995.8 million or ~~$21.44~~$5.65 per diluted common share, compared to ~~$1,174.4~~$1,067.5 million or ~~$6.70~~$6.05 per diluted common share for the same period in ~~2021,~~2022, representing ~~an increase~~a decrease of ~~$2,605.3~~$71.7 million or ~~$14.74~~$0.40 per diluted common share. The ~~increase~~decrease is due primarily to (i) a ~~$2.1 billion gain on sale of our equity investment in PSB, (ii) a $476.6~~$165.1 million ~~increase in self-storage net operating income, and (iii) a $163.7 million increase~~decrease in foreign currency exchange gains primarily associated with our Euro denominated notes payable and (ii) a $76.4 million decrease in equity in earnings of unconsolidated real estate entities due to our sale of PSB in July 2022, partially offset by ~~(iv)~~(iii) a ~~$153.5~~$155.2 million increase in ~~depreciation~~self-storage net operating income and ~~amortization expense, and (v)~~(iv) a ~~$39.2~~$23.4 million increase in interest ~~expense.~~

and other income.

The ~~$476.6~~$155.2 million increase in self-storage net operating income in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021~~2022 is a result of a ~~$283.2~~$105.7 million increase attributable to our Same Store Facilities and a ~~$193.4~~$49.5 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased ~~15.4%~~8.0% or ~~$315.9~~$126.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, due primarily to higher realized annual rent per occupied square foot, partially offset by a decline in occupancy. Cost of operations for the Same Store Facilities increased by ~~6.2%~~5.4% or ~~$32.7~~$20.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, due primarily to increased property tax expense, ~~on-site property manager payroll~~repairs and maintenance expenses, marketing expense, and other direct property ~~costs, and centralized management~~ costs. The increase in net operating income of ~~$193.4~~$49.5 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and 2022 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~~Nareit. We believe that FFO and FFO per share are useful to REIT investors and analysts in measuring our performance because Nareit’s definition of ~~Real Estate Investment Trusts~~FFO excludes items included in net income that do not relate to or are not indicative of our operating and ~~are considered helpful measures of REIT performance by REITs and many REIT analysts.~~financial performance. FFO represents net income before 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, ~~2022,~~2023, FFO was ~~$4.66~~$4.29 per diluted common share as compared to ~~$3.61~~$4.58 per diluted common share for the same period in ~~2021,~~2022, representing ~~an increase~~a decrease of ~~29.1%~~6.3%, or ~~$1.05~~$0.29 per diluted common share.

For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, FFO was ~~$13.08~~$8.24 per diluted common share as compared to ~~$9.69~~$8.41 per diluted common share for the same period in ~~2021,~~2022, representing ~~an increase~~a decrease of ~~35.0%~~2.0%, or ~~$3.39~~$0.17 per diluted common share.

We also present “Core FFO” and “Core FFO per share” non-GAAP measures that 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 of ~~loss~~ contingency ~~accruals and casualties,~~resolution, due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, and our equity share of ~~merger transaction costs,~~deferred tax benefits of a change in tax status and severance of a senior executive ~~and casualties~~ from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share are not 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 measures, Core FFO and Core FFO per share may not be comparable among REITs.

2728

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		Percentage Change		2022		2021		Percentage Change					2023		2022		Percentage Change		2023		2022		Percentage Change

		(Amounts in thousands, except per share data)												(Amounts in thousands, except per share data)
Reconciliation of Net Income to FFO and Core FFO:	Reconciliation of Net Income to FFO and Core FFO:															Reconciliation of Net Income to FFO and Core FFO:
Net income allocable to common shareholders	Net income allocable to common shareholders	$	2,712,161	$	442,327	513.2	%	$	3,779,666	$	1,174,386	221.8	%			Net income allocable to common shareholders	$	528,259	$	603,381	(12.5)	%	$	995,847	$	1,067,505	(6.7)	%
Eliminate items excluded from FFO:	Eliminate items excluded from FFO:															Eliminate items excluded from FFO:
Depreciation and amortization	Depreciation and amortization	218,963		187,611				657,131		505,218						Depreciation and amortization	220,971		217,373				440,758		438,168
Depreciation from unconsolidated real estate investments	Depreciation from unconsolidated real estate investments	10,599		19,209				44,985		54,485						Depreciation from unconsolidated real estate investments	9,155		17,566				17,684		34,386
Depreciation allocated to noncontrolling interests and restricted share unitholders	Depreciation allocated to noncontrolling interests and restricted share unitholders	(1,843)		(1,318)				(4,841)		(3,413)						Depreciation allocated to noncontrolling interests and restricted share unitholders	(1,732)		(1,533)				(3,205)		(3,190)
Gains on sale of real estate investments, including our equity share from investments	Gains on sale of real estate investments, including our equity share from investments	(1,219)		(12,572)				(54,403)		(31,156)						Gains on sale of real estate investments, including our equity share from investments	(72)		(29,306)				(72)		(53,184)
Gain on sale of equity investment in PS Business Parks, Inc.		$	(2,116,839)	$	—			$	(2,116,839)	$	—

FFO allocable to common shares	FFO allocable to common shares	$	821,822	$	635,257	29.4	%	$	2,305,699	$	1,699,520	35.7	%			FFO allocable to common shares	$	756,581	$	807,481	(6.3)	%	$	1,451,012	$	1,483,685	(2.2)	%
Eliminate the impact of items excluded from Core FFO, including our equity share from investments:	Eliminate the impact of items excluded from Core FFO, including our equity share from investments:															Eliminate the impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange gain		(100,170)		(40,906)				(237,270)		(73,584)
Preferred share redemption charge		—		—				—		16,989
Property losses and tenant claims due to casualties (a)		6,118		4,909				6,118		4,909
Foreign currency exchange loss (gain)																Foreign currency exchange loss (gain)	1,096		(101,723)				27,956		(137,100)

Other items	Other items	(344)		2,000				422		(543)						Other items	(4,093)		(1,781)				(6,226)		766
Core FFO allocable to common shares	Core FFO allocable to common shares	$	727,426	$	601,260	21.0	%	$	2,074,969	$	1,647,291	26.0	%			Core FFO allocable to common shares	$	753,584	$	703,977	7.0	%	$	1,472,742	$	1,347,351	9.3	%

Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:	Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:															Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:
Diluted Earnings per share		$	15.38	$	2.52	510.3	%	$	21.44	$	6.70	220.0	%
Diluted earnings per share																Diluted earnings per share	$	3.00	$	3.42	(12.3)	%	$	5.65	$	6.05	(6.6)	%
Eliminate amounts per share excluded from FFO:	Eliminate amounts per share excluded from FFO:															Eliminate amounts per share excluded from FFO:
Depreciation and amortization	Depreciation and amortization	1.29		1.17				3.95		3.17						Depreciation and amortization	1.29		1.32				2.59		2.66
Gains on sale of real estate investments, including our equity share from investments	Gains on sale of real estate investments, including our equity share from investments	(0.01)		(0.08)				(0.31)		(0.18)						Gains on sale of real estate investments, including our equity share from investments	—		(0.16)				—		(0.30)
Gain on sale of equity investment in PS Business Parks, Inc.		(12.00)		—				(12.00)		—

FFO per share	FFO per share	$	4.66	$	3.61	29.1	%	$	13.08	$	9.69	35.0	%			FFO per share	$	4.29	$	4.58	(6.3)	%	$	8.24	$	8.41	(2.0)	%
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:	Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:															Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange gain		(0.57)		(0.23)				(1.35)		(0.42)
Preferred share redemption charge		—		—				—		0.10
Property losses and tenant claims due to casualties (a)		0.04		0.03				0.04		0.03
Foreign currency exchange loss (gain)																Foreign currency exchange loss (gain)	0.01		(0.58)				0.16		(0.78)

Other items	Other items	—		0.01				—		(0.01)						Other items	(0.02)		(0.01)				(0.04)		0.01
Core FFO per share	Core FFO per share	$	4.13	$	3.42	20.8	%	$	11.77	$	9.39	25.3	%			Core FFO per share	$	4.28	$	3.99	7.3	%	$	8.36	$	7.64	9.4	%

Diluted weighted average common shares	Diluted weighted average common shares	176,328		175,806				176,325		175,398						Diluted weighted average common shares	176,212		176,312				176,181		176,325

~~(a)~~Property losses and tenant claims due to casualties were related to Hurricane Ian for the three and nine months ended September 30, 2022, and Hurricane Ida for the same periods in 2021, and were included in general and administrative expenses and ancillary cost of operations on the Consolidated Statements of Income.

2829

Analysis of Net Income -— Self-Storage Operations

Our self-storage operations are analyzed in four groups: (i) the ~~2,282~~2,344 facilities that we have owned and operated on a stabilized basis since January 1, ~~2020~~2021 (the “Same Store Facilities”), (ii) ~~338~~322 facilities we acquired since January 1, ~~2020~~2021 (the “Acquired Facilities”), (iii) ~~150~~136 facilities that have been newly developed or expanded, or that will commence expansion by December 31, ~~2022~~2023 (the “Newly Developed and Expanded Facilities”), and (iv) 6686 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, ~~2020~~2021 (the “Other Non-same Store Facilities”). See Note 13 to our ~~September~~June 30, ~~2022~~2023 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

2930


Self-Storage Operations	Self-Storage Operations																Self-Storage Operations
Summary	Summary	Three Months Ended September 30,						Nine Months Ended September 30,							Summary	Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		Percentage Change		2022		2021		Percentage Change						2023		2022		Percentage Change		2023		2022		Percentage Change

		(Dollar amounts and square footage in thousands)												(Dollar amounts and square footage in thousands)
Revenues:	Revenues:																Revenues:
Same Store Facilities	Same Store Facilities	$	822,527	$	717,109	14.7	%	$	2,360,735	$	2,044,851	15.4	%				Same Store Facilities	$	864,505	$	813,422	6.3	%	$	1,711,673	$	1,585,210	8.0	%
Acquired Facilities	Acquired Facilities	108,989		51,007		113.7	%	290,858		94,502		207.8	%				Acquired Facilities	98,575		77,085		27.9	%	193,797		146,388		32.4	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities	71,362		52,806		35.1	%	197,337		140,497		40.5	%				Newly Developed and Expanded Facilities	64,705		56,177		15.2	%	126,736		107,261		18.2	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities	24,496		19,588		25.1	%	68,745		54,000		27.3	%				Other Non-Same Store Facilities	28,335		26,602		6.5	%	56,098		51,442		9.1	%
		1,027,374		840,510		22.2	%	2,917,675		2,333,850		25.0	%					1,056,120		973,286		8.5	%	2,088,304		1,890,301		10.5	%
Cost of operations:	Cost of operations:																Cost of operations:
Same Store Facilities	Same Store Facilities	189,957		176,444		7.7	%	558,217		525,516		6.2	%				Same Store Facilities	196,443		186,745		5.2	%	403,245		382,527		5.4	%
Acquired Facilities	Acquired Facilities	38,058		16,555		129.9	%	101,949		35,693		185.6	%				Acquired Facilities	31,836		26,597		19.7	%	64,715		50,814		27.4	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities	21,265		18,075		17.6	%	59,986		52,710		13.8	%				Newly Developed and Expanded Facilities	19,235		16,230		18.5	%	38,588		32,680		18.1	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities	6,190		5,925		4.5	%	18,801		17,780		5.7	%				Other Non-Same Store Facilities	10,164		8,417		20.8	%	19,745		17,462		13.1	%
		255,470		216,999		17.7	%	738,953		631,699		17.0	%					257,678		237,989		8.3	%	526,293		483,483		8.9	%
Net operating income (a):	Net operating income (a):																Net operating income (a):
Same Store Facilities	Same Store Facilities	632,570		540,665		17.0	%	1,802,518		1,519,335		18.6	%				Same Store Facilities	668,062		626,677		6.6	%	1,308,428		1,202,683		8.8	%
Acquired Facilities	Acquired Facilities	70,931		34,452		105.9	%	188,909		58,809		221.2	%				Acquired Facilities	66,739		50,488		32.2	%	129,082		95,574		35.1	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities	50,097		34,731		44.2	%	137,351		87,787		56.5	%				Newly Developed and Expanded Facilities	45,470		39,947		13.8	%	88,148		74,581		18.2	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities	18,306		13,663		34.0	%	49,944		36,220		37.9	%				Other Non-Same Store Facilities	18,171		18,185		(0.1)	%	36,353		33,980		7.0	%
Total net operating income	Total net operating income	771,904		623,511		23.8	%	2,178,722		1,702,151		28.0	%				Total net operating income	798,442		735,297		8.6	%	1,562,011		1,406,818		11.0	%

Depreciation and amortization expense:	Depreciation and amortization expense:																Depreciation and amortization expense:
Same Store Facilities	Same Store Facilities	(119,154)		(113,815)		4.7	%	(349,185)		(335,958)		3.9	%				Same Store Facilities	130,064		124,242		4.7	%	256,707		244,986		4.8	%
Acquired Facilities	Acquired Facilities	(74,564)		(52,090)		43.1	%	(235,284)		(102,154)		130.3	%				Acquired Facilities	64,461		69,123		(6.7)	%	131,710		146,262		(9.9)	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities	(15,326)		(13,668)		12.1	%	(44,730)		(42,179)		6.0	%				Newly Developed and Expanded Facilities	14,873		12,428		19.7	%	29,273		24,739		18.3	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities	(11,728)		(8,979)		30.6	%	(32,409)		(27,848)		16.4	%				Other Non-Same Store Facilities	12,735		12,915		(1.4)	%	26,093		24,849		5.0	%
Total depreciation and amortization expense	Total depreciation and amortization expense	(220,772)		(188,552)		17.1	%	(661,608)		(508,139)		30.2	%				Total depreciation and amortization expense	222,133		218,708		1.6	%	443,783		440,836		0.7	%

Net income (loss):	Net income (loss):																Net income (loss):
Same Store Facilities	Same Store Facilities	513,416		426,850		20.3	%	1,453,333		1,183,377		22.8	%				Same Store Facilities	537,998		502,435		7.1	%	1,051,721		957,697		9.8	%
Acquired Facilities	Acquired Facilities	(3,633)		(17,638)		(79.4)	%	(46,375)		(43,345)		7.0	%				Acquired Facilities	2,278		(18,635)		(112.2)	%	(2,628)		(50,688)		(94.8)	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities	34,771		21,063		65.1	%	92,621		45,608		103.1	%				Newly Developed and Expanded Facilities	30,597		27,519		11.2	%	58,875		49,842		18.1	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities	6,578		4,684		40.4	%	17,535		8,372		109.4	%				Other Non-Same Store Facilities	5,436		5,270		3.1	%	10,260		9,131		12.4	%
Total net income	Total net income	$	551,132	$	434,959	26.7	%	$	1,517,114	$	1,194,012	27.1	%				Total net income	$	576,309	$	516,589	11.6	%	$	1,118,228	$	965,982	15.8	%

Number of facilities at period end:	Number of facilities at period end:																Number of facilities at period end:
Same Store Facilities	Same Store Facilities							2,282		2,282		—					Same Store Facilities							2,344		2,344		—	%
Acquired Facilities	Acquired Facilities							338		188		79.8	%				Acquired Facilities							322		252		27.8	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities							150		142		5.6	%				Newly Developed and Expanded Facilities							136		125		8.8	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities							66		66		—					Other Non-Same Store Facilities							86		86		—	%
								2,836		2,678		5.9	%											2,888		2,807		2.9	%
Net rentable square footage at period end:	Net rentable square footage at period end:																Net rentable square footage at period end:
Same Store Facilities	Same Store Facilities							149,476		149,476		—					Same Store Facilities							155,160		155,160		—	%
Acquired Facilities	Acquired Facilities							30,072		15,370		95.7	%				Acquired Facilities							27,954		23,325		19.8	%
Newly Developed and Expanded Facilities	Newly Developed and Expanded Facilities							17,320		16,239		6.7	%				Newly Developed and Expanded Facilities							15,793		14,523		8.7	%
Other Non-Same Store Facilities	Other Non-Same Store Facilities							5,310		5,292		0.3	%				Other Non-Same Store Facilities							7,081		7,075		0.1	%
								202,178		186,377		8.5	%											205,988		200,083		3.0	%

3031

(a)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 13 to our ~~September~~June 30, ~~2022~~2023 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, ~~2020.~~2021. The composition of our Same Store Facilities allows us more effectively to evaluate the ongoing performance of our self-storage portfolio in ~~2020,~~ 2021, 2022, and ~~2022~~2023 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 (for all periods presented) of these ~~2,282~~2,344 facilities ~~(149.5~~(155.2 million net rentable square feet) that represent approximately ~~74%~~75% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at ~~September~~June 30, ~~2022.~~2023. It includes various measures and detail that we do not include in the analysis of the developed, acquired, and other non-same store facilities, due to the relative magnitude and importance of the Same Store Facilities relative to our other self-storage facilities.

3132

Selected Operating Data for the Same Store Facilities ~~(2,282~~(2,344 facilities)


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		Percentage Change	2022		2021		Percentage Change				2023		2022		Percentage Change	2023		2022		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	$	795,700	$	695,556	14.4%	$	2,286,214	$	1,984,053	15.2%			Rental income	$	836,124	$	788,684	6.0%	$	1,655,058	$	1,535,817	7.8%
Late charges and administrative fees	Late charges and administrative fees	26,827		21,553		24.5%	74,521		60,798		22.6%			Late charges and administrative fees	28,381		24,738		14.7%	56,615		49,393		14.6%
Total revenues	Total revenues	822,527		717,109		14.7%	2,360,735		2,044,851		15.4%			Total revenues	864,505		813,422		6.3%	1,711,673		1,585,210		8.0%

Direct cost of operations (a):	Direct cost of operations (a):													Direct cost of operations (a):
Property taxes	Property taxes	72,716		70,021		3.8%	213,947		204,287		4.7%			Property taxes	77,211		74,504		3.6%	153,895		147,562		4.3%
On-site property manager payroll	On-site property manager payroll	29,538		28,189		4.8%	89,769		82,583		8.7%			On-site property manager payroll	31,514		30,575		3.1%	64,044		62,320		2.8%
Repairs and maintenance	Repairs and maintenance	14,605		13,121		11.3%	43,350		39,249		10.4%			Repairs and maintenance	14,665		13,679		7.2%	32,676		29,588		10.4%
Utilities	Utilities	12,020		11,133		8.0%	33,609		31,308		7.3%			Utilities	10,067		10,611		(5.1)%	22,633		22,561		0.3%
Marketing	Marketing	12,492		9,180		36.1%	32,380		30,653		5.6%			Marketing	14,469		9,086		59.2%	30,022		20,805		44.3%
Other direct property costs	Other direct property costs	20,890		18,894		10.6%	61,209		55,569		10.1%			Other direct property costs	22,073		20,911		5.6%	45,297		41,641		8.8%
Total direct cost of operations	Total direct cost of operations	162,261		150,538		7.8%	474,264		443,649		6.9%			Total direct cost of operations	169,999		159,366		6.7%	348,567		324,477		7.4%
Direct net operating income (b)	Direct net operating income (b)	660,266		566,571		16.5%	1,886,471		1,601,202		17.8%			Direct net operating income (b)	694,506		654,056		6.2%	1,363,106		1,260,733		8.1%

Indirect cost of operations (a):	Indirect cost of operations (a):													Indirect cost of operations (a):
Supervisory payroll	Supervisory payroll	(8,329)		(8,362)		(0.4)%	(26,635)		(27,906)		(4.6)%			Supervisory payroll	(8,502)		(9,059)		(6.1)%	(17,700)		(18,979)		(6.7)%
Centralized management costs	Centralized management costs	(16,058)		(13,808)		16.3%	(46,382)		(40,136)		15.6%			Centralized management costs	(15,211)		(14,440)		5.3%	(31,108)		(31,203)		(0.3)%
Share-based compensation	Share-based compensation	(3,309)		(3,736)		(11.4)%	(10,936)		(13,825)		(20.9)%			Share-based compensation	(2,731)		(3,880)		(29.6)%	(5,870)		(7,868)		(25.4)%
Net operating income	Net operating income	632,570		540,665		17.0%	1,802,518		1,519,335		18.6%			Net operating income	668,062		626,677		6.6%	1,308,428		1,202,683		8.8%
Depreciation and amortization expense	Depreciation and amortization expense	(119,154)		(113,815)		4.7%	(349,185)		(335,958)		3.9%			Depreciation and amortization expense	(130,064)		(124,242)		4.7%	(256,707)		(244,986)		4.8%
Net income	Net income	$	513,416	$	426,850	20.3%	$	1,453,333	$	1,183,377	22.8%			Net income	$	537,998	$	502,435	7.1%	$	1,051,721	$	957,697	9.8%

Gross margin (before indirect costs, depreciation and amortization expense)	Gross margin (before indirect costs, depreciation and amortization expense)	80.3%		79.0%		1.6%	79.9%		78.3%		2.0%			Gross margin (before indirect costs, depreciation and amortization expense)	80.3%		80.4%		(0.1)%	79.6%		79.5%		0.1%

Gross margin (before depreciation and amortization expense)	Gross margin (before depreciation and amortization expense)	76.9%		75.4%		2.0%	76.4%		74.3%		2.8%			Gross margin (before depreciation and amortization expense)	77.3%		77.0%		0.4%	76.4%		75.9%		0.7%

Weighted average for the period:	Weighted average for the period:													Weighted average for the period:
Square foot occupancy	Square foot occupancy	94.5%		96.8%		(2.4)%	95.3%		96.5%		(1.2)%			Square foot occupancy	93.7%		95.7%		(2.1)%	93.5%		95.6%		(2.2)%

Realized annual rental income per (c):	Realized annual rental income per (c):													Realized annual rental income per (c):
Occupied square foot	Occupied square foot	$	22.52	$	19.22	17.2%	$	21.39	$	18.34	16.6%			Occupied square foot	$	22.99	$	21.23	8.3%	$	22.82	$	20.69	10.3%
Available square foot	Available square foot	$	21.28	$	18.60	14.4%	$	20.39	$	17.69	15.3%			Available square foot	$	21.54	$	20.32	6.0%	$	21.33	$	19.79	7.8%

At September 30:
At June 30:														At June 30:
Square foot occupancy	Square foot occupancy						93.3%		95.7%		(2.5)%			Square foot occupancy						93.2%		94.8%		(1.7)%
Annual contract rent per occupied square foot (d)	Annual contract rent per occupied square foot (d)						$	22.94	$	19.49	17.7%			Annual contract rent per occupied square foot (d)						$	23.34	$	21.80	7.1%

3233

(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 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 evaluating the additional revenue from the increase against the negative impact of incremental move-outs, by considering ~~the customer’s~~customers’ in-place rent and prevailing market rents, among other factors.

Revenues generated by our Same Store Facilities increased ~~14.7%~~6.3% and ~~15.4%~~8.0% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022, in each case~~2023, respectively, as compared to the same ~~period~~periods in ~~2021,~~2022. The increase is due primarily to ~~a 17.2%~~(i) an 8.3% and ~~16.6%~~10.3% increase in realized annual rent per occupied square foot for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021.~~

~~Our growth~~2022, partially offset by (ii) a 2.1% and 2.2% decrease in ~~revenues, realized annual rent per occupied square foot, and REVPAF~~average occupancy for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, respectively, as compared to the same periods in ~~2021 was evident in each of our markets. Our weighted average square foot occupancy remained strong across our markets for the three and nine months ended September 30,~~ 2022.

The increase ofin realized annual rent per occupied square foot in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same periods in ~~2021~~2022 was due to 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~~partially offset by a ~~2.8%~~14.4% and ~~10.0% increase~~11.1% decrease in average rates per square foot charged to new tenants moving in who replaced tenants moving out with higher rental rates during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023, respectively, as compared to the same periods in ~~2021,~~2022. The growth rate in realized annual rent per occupied square foot has decelerated since the second half of 2022 as a result of ~~strong customer demand in most of our markets. These improvements were partially offset by~~ increases in ~~move-out~~moving-out activity that drove us to lower move-in rates and ~~promotional~~increase promotion discounts ~~given during the three and nine months ended September~~to replace tenants that vacate. At June 30, ~~2022 as compared to the same periods in 2021. At September 30, 2022,~~2023, annual contract rent per occupied square foot was ~~17.7%~~7.1% higher as compared to ~~September~~June 30, ~~2021.~~2022.

~~We experienced high occupancy~~Occupancy levels, ~~throughout~~although strong, have gradually declined since the ~~first nine months~~second half of 2022 ~~although our~~as move-out activity increased and customer demand softened. The weighted average square foot occupancy ~~levels decreased 2.4%~~for our same store facilities was 93.7% and ~~1.2% on a year over year basis during~~93.5% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022, respectively. Year over year~~2023, respectively, representing a decrease of 2.1% and 2.2% as compared to the same periods in 2022. We lowered move-in rental rates and increased promotional activity and advertising spending to increase move-in activity at our facilities, which led to a year-over-year 13.6% and 13.1% increase in move-in volumes that more than offset the year-over-year 9.6% and 10.5% increase in move-out volumes ~~increased 12.3% and 9.0% and year over year move-in volumes increased 9.1% and 2.2% in~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022, respectively, leading to a lower square foot occupancy at September~~2023, respectively. Move-in volumes net of move-out volumes were higher in the six months ended June 30, ~~2022 of 93.3%~~2023 as compared to ~~95.7% at September 30, 2021. In addition, during~~ the ~~quarter ended September 30,~~same period in 2022, ~~move-out volumes exceeded move-in volumes resulting~~which reduced the year-over-year decline in ~~lower~~ occupancy ~~at September 30,~~levels between December 31, 2022 ~~compared to~~and June 30, ~~2022.~~2023.

Move-out volumes were partially impacted by rental ~~rates~~rate increases to our existing tenants in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same periods in ~~2021.~~2022. However, move-out activity from tenants not

receiving increases was also higher in ~~2022~~the three and six months ended June 30, 2023 as compared to the same periods in ~~2021 but remains below~~2022, returning to pre-2020 levels. Average length of stay of our tenants ~~increased~~remained at similar high levels in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same periods in ~~2021,~~2022, which ~~supports~~supported 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 September 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. More typical seasonal patterns of demand with lower demand in the winter months returned in 2022. Demand fluctuates due to various local and regional factors, including the overall economy. Demand ~~into~~for our ~~system~~facilities is also impacted by new supply of self-storage space ~~as well as~~and alternatives to self-storage.

We expect ~~continued revenue growth during~~weaker industry-wide demand in the remainder of 2023 as compared to 2022 ~~supported~~driven by ~~consistently~~a weaker macroeconomic outlook and more limited moving activities, with move-out activities and occupancy levels returning to pre-2020 levels. To mitigate the negative impact of macroeconomic challenges, we will continue to support demand levels for our self-storage facilities with increased marketing expense, lowering rental rates to new customers, and increased promotional discounting. As a result, we expect revenue growth to decline significantly through the course of 2023 as compared to high ~~customer demand~~levels of growth in 2022 and 2021. With a ~~stable tenant base leading to increasing realized annual rent per occupied square foot while maintaining a high level~~wide range of ~~occupancy.~~potential macroeconomic pathways for the remainder of 2023, the range of potential revenue growth rates is wide including the potential for year-over-year declines in revenue in the second half of 2023.

Late Charges and Administrative Fees

Late charges and administrative fees increased ~~24.5%~~14.7% and ~~22.6%~~14.6% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021,~~2022, due to (i) higher late charges collected on delinquent accounts driven by more delinquent accounts ~~compared to the same periods in 2021~~ and to a lesser extent (ii) higher administrative fees ~~charged per move-in combined with~~resulting from higher move-in volumes. Delinquency levels at our same store properties remain below pre-2020 levels.

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, ~~2022~~2023 and ~~2021.~~2022. 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,
		2022		2021		Change	2022		2021		Change				2023		2022		Change	2023		2022		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	$	18.97	$	18.45	2.8%	$	18.58	$	16.89	10.0%			Average annual contract rent per square foot	$	16.77	$	19.58	(14.4)%	$	16.34	$	18.39	(11.1)%
Square footage	Square footage	25,784		23,623		9.1%	73,067		71,473		2.2%			Square footage	28,426		25,016		13.6%	55,810		49,361		13.1%
Contract rents gained from move-ins	Contract rents gained from move-ins	$	122,281	$	108,961	12.2%	$	1,018,189	$	905,384	12.5%			Contract rents gained from move-ins	$	119,176	$	122,453	(2.7)%	$	455,968	$	453,874	0.5%
Promotional discounts given	Promotional discounts given	$	12,625	$	5,941	112.5%	$	31,629	$	30,253	4.5%			Promotional discounts given	$	14,874	$	11,763	26.4%	$	30,643	$	22,942	33.6%

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	$	21.41	$	18.19	17.7%	$	20.42	$	17.15	19.1%			Average annual contract rent per square foot	$	21.38	$	20.28	5.4%	$	21.26	$	19.83	7.2%
Square footage	Square footage	27,991		24,936		12.3%	75,235		69,021		9.0%			Square footage	27,771		25,337		9.6%	54,362		49,201		10.5%
Contract rents lost from move-outs	Contract rents lost from move-outs	$	149,822	$	113,396	32.1%	$	1,152,224	$	887,783	29.8%			Contract rents lost from move-outs	$	148,436	$	128,459	15.6%	$	577,868	$	487,828	18.5%

Analysis of Same Store Cost of Operations

Cost of operations (excluding depreciation and amortization) increased ~~7.7%~~5.2% and ~~6.2%~~5.4% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021.~~2022. The increase during the three-month period is due primarily to increased property tax expense and marketing expense, ~~other direct property costs and centralized management costs,~~ while the increase during the ~~nine-month~~six-month period is due primarily to increased property tax expense, ~~on-site property manager payroll~~repairs and maintenance expense, marketing expense, and other direct property ~~costs and centralized management~~ costs.

Property tax expense increased ~~3.8%~~3.6% and ~~4.7%~~4.3% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021,~~2022, as a result of higher ~~recently~~assessed values. We expect property tax expense to grow 5.3% in 2023 due primarily to higher assessed values.

On-site property manager payroll expense increased ~~4.8%~~3.1% and ~~8.7%~~2.8% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021. The increase is~~2022, due primarily ~~due~~ to increases in wage ~~increases effective in late 2021 in response to~~rates as a result of competitive labor conditions experienced in most geographical markets. We expect an inflationary increase in on-site property manager payroll expense ~~to increase, to a lesser extent,~~in 2023 driven by increased wage rates, partially offset by expected reduction in labor hours driven by revisions in operational processes.

Repairs and maintenance expense increased 7.2% and 10.4% in the ~~remainder of 2022~~three and six months ended June 30, 2023, respectively, as compared to ~~2021 due~~the same periods in ~~part to continued competitive~~2022. Repairs and maintenance expense levels are dependent upon many factors such as (i) damage and equipment malfunctions, (ii) short-term local supply and demand factors for material and labor, ~~conditions.~~and (iii) weather conditions, which can impact costs such as snow removal, roof repairs, and HVAC maintenance and repairs.

Marketing expense includes Internet advertising and the operating costs of our telephone reservation center. Internet advertising expense, comprising 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 increased marketing expense by ~~36.1%~~59.2% and ~~5.6%~~44.3% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, ~~as compared to the same periods in 2021,~~ by utilizing a higher volume of online paid search programs to attract new ~~tenants.~~tenants, as compared to the same periods in 2022 when we refrained from advertising due to strong demand and high occupancy levels in many of our same store properties.

Other direct property costs include administrative expenses specific to each self-storage facility, such as property loss, 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 ~~10.6%~~5.6% and ~~10.1%~~8.8% in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to ~~2021. The increase was~~the same periods in 2022. These increases were due primarily to an increase in credit card fees as a result of year-over-year increases in revenues, and to a lesser extent, a long-term trend of more customers paying with credit cards rather than cash, checks, or other methods of payment with lower transaction costs.

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, facilities management, customer service, pricing and marketing, operational accounting and finance, and legal costs. Centralized management costs increased 16.3% and 15.6% in the three and nine months ended September 30, 2022, respectively, as compared to the same periods in 2021. The increase was due primarily to an We expect a moderate increase in ~~technology and data team costs that support~~other direct property ~~operations. We expect increases in centralized management~~ costs in the remainder of ~~2022 due to continued investment~~2023 primarily driven by an increase in ~~our technology and data platforms that support our property operations.~~credit card fees.

3536

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, 2022 Three Months Ended September 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 $ 34.03 $ 27.82 22.3 % 96.5 % 98.4 % (1.9) % $ 32.85 $ 27.37 20.0 %
San Francisco 128 7.8 32.32 28.69 12.7 % 94.9 % 97.1 % (2.3) % 30.69 27.85 10.2 %
New York 90 6.4 31.59 27.94 13.1 % 94.2 % 96.5 % (2.4) % 29.77 26.98 10.3 %
Miami 83 5.8 29.08 23.20 25.3 % 94.9 % 97.5 % (2.7) % 27.60 22.62 22.0 %
Seattle-Tacoma 86 5.7 26.06 22.64 15.1 % 94.2 % 96.0 % (1.9) % 24.54 21.72 13.0 %
Washington DC 90 5.5 26.20 23.39 12.0 % 93.4 % 95.5 % (2.2) % 24.47 22.33 9.6 %
Chicago 129 8.1 20.07 17.31 15.9 % 93.4 % 96.2 % (2.9) % 18.73 16.66 12.4 %
Dallas-Ft. Worth 106 7.0 17.92 15.31 17.0 % 94.2 % 96.2 % (2.1) % 16.89 14.73 14.7 %
Atlanta 101 6.6 18.03 15.06 19.7 % 93.5 % 97.1 % (3.7) % 16.86 14.62 15.3 %
Houston 95 6.8 16.44 14.03 17.2 % 93.2 % 94.7 % (1.6) % 15.33 13.29 15.3 %
Orlando-Daytona 70 4.5 18.73 15.29 22.5 % 95.6 % 96.3 % (0.7) % 17.91 14.72 21.7 %
Philadelphia 56 3.5 21.60 19.09 13.1 % 93.7 % 97.5 % (3.9) % 20.23 18.62 8.6 %
West Palm Beach 37 2.6 26.34 22.01 19.7 % 95.0 % 96.7 % (1.8) % 25.03 21.28 17.6 %
Tampa 51 3.4 19.60 16.12 21.6 % 94.5 % 96.7 % (2.3) % 18.52 15.60 18.7 %
Charlotte 50 3.8 15.62 12.94 20.7 % 95.0 % 96.7 % (1.8) % 14.85 12.51 18.7 %
All other markets 898 56.7 18.53 16.05 15.5 % 94.5 % 96.8 % (2.4) % 17.51 15.54 12.7 %
Totals 2,282 149.5 $ 22.52 $ 19.22 17.2 % 94.5 % 96.8 % (2.4) % $ 21.28 $ 18.60 14.4 %

~~Same Store Facilities Operating Trends by Market (Continued)~~

Three Months Ended September 30,
Revenues ($000's) Direct Expenses ($000's) Indirect Expenses ($000's) Net Operating Income ($000's)
2022 2021 Change 2022 2021 Change 2022 2021 Change 2022 2021 Change
Los Angeles $ 128,223 $ 106,642 20.2 % $ 16,361 $ 14,847 10.2 % $ 2,828 $ 2,495 13.3 % $ 109,034 $ 89,300 22.1 %
San Francisco 61,163 55,391 10.4 % 9,119 8,995 1.4 % 1,619 1,566 3.4 % 50,425 44,830 12.5 %
New York 48,976 44,463 10.2 % 11,232 10,589 6.1 % 1,295 1,304 (0.7) % 36,449 32,570 11.9 %
Miami 41,604 34,062 22.1 % 7,467 7,568 (1.3) % 996 962 3.5 % 33,141 25,532 29.8 %
Seattle-Tacoma 35,926 31,739 13.2 % 5,876 5,462 7.6 % 984 973 1.1 % 29,066 25,304 14.9 %
Washington DC 34,937 31,810 9.8 % 7,197 6,680 7.7 % 1,030 941 9.5 % 26,710 24,189 10.4 %
Chicago 39,521 35,024 12.8 % 14,522 13,904 4.4 % 1,450 1,396 3.9 % 23,549 19,724 19.4 %
Dallas-Ft. Worth 30,654 26,629 15.1 % 6,846 6,243 9.7 % 1,116 1,092 2.2 % 22,692 19,294 17.6 %
Atlanta 29,407 25,376 15.9 % 5,582 4,545 22.8 % 1,152 1,129 2.0 % 22,673 19,702 15.1 %
Houston 27,171 23,391 16.2 % 7,758 7,392 5.0 % 1,052 1,054 (0.2) % 18,361 14,945 22.9 %
Orlando-Daytona 20,738 17,036 21.7 % 3,948 3,309 19.3 % 872 792 10.1 % 15,918 12,935 23.1 %
Philadelphia 18,605 17,053 9.1 % 3,924 3,728 5.3 % 671 651 3.1 % 14,010 12,674 10.5 %
West Palm Beach 17,023 14,423 18.0 % 3,615 3,138 15.2 % 478 474 0.8 % 12,930 10,811 19.6 %
Tampa 16,290 13,696 18.9 % 3,470 3,052 13.7 % 573 564 1.6 % 12,247 10,080 21.5 %
Charlotte 14,762 12,404 19.0 % 2,468 2,421 1.9 % 575 511 12.5 % 11,719 9,472 23.7 %
All other markets 257,527 227,970 13.0 % 52,876 48,665 8.7 % 11,005 10,002 10.0 % 193,646 169,303 14.4 %
Totals $ 822,527 $ 717,109 14.7 % $ 162,261 $ 150,538 7.8 % $ 27,696 $ 25,906 6.9 % $ 632,570 $ 540,665 17.0 %


	As of June 30, 2023		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
			2023		2022		Change		2023		2022		Change		2023		2022		Change
Los Angeles	215	15.6	$	36.07	$	31.72	13.7	%	95.4	%	97.1	%	(1.8)	%	$	34.43	$	30.80	11.8	%
San Francisco	129	7.9	32.62		31.07		5.0	%	94.3	%	95.8	%	(1.6)	%	30.77		29.75		3.4	%
New York	92	6.8	32.19		29.87		7.8	%	93.1	%	95.2	%	(2.2)	%	29.97		28.42		5.5	%
Miami	87	6.2	30.29		27.68		9.4	%	93.4	%	96.5	%	(3.2)	%	28.30		26.72		5.9	%
Seattle-Tacoma	89	6.0	26.30		24.68		6.6	%	92.5	%	95.2	%	(2.8)	%	24.33		23.49		3.6	%
Washington DC	90	5.5	26.52		25.09		5.7	%	93.2	%	94.3	%	(1.2)	%	24.71		23.67		4.4	%
Dallas-Ft. Worth	111	7.6	18.48		16.86		9.6	%	93.0	%	95.4	%	(2.5)	%	17.19		16.08		6.9	%
Atlanta	103	6.8	18.02		17.07		5.6	%	91.9	%	95.2	%	(3.5)	%	16.57		16.25		2.0	%
Chicago	130	8.2	20.06		18.87		6.3	%	93.9	%	95.3	%	(1.5)	%	18.84		17.97		4.8	%
Houston	101	7.5	16.99		15.47		9.8	%	92.1	%	94.5	%	(2.5)	%	15.64		14.62		7.0	%
Orlando-Daytona	69	4.4	19.89		17.50		13.7	%	93.9	%	96.8	%	(3.0)	%	18.68		16.93		10.3	%
Philadelphia	56	3.5	21.50		20.60		4.4	%	93.6	%	95.8	%	(2.3)	%	20.14		19.72		2.1	%
West Palm Beach	39	2.8	26.56		24.63		7.8	%	94.1	%	96.6	%	(2.6)	%	24.99		23.79		5.0	%
Tampa	53	3.5	20.17		18.54		8.8	%	92.5	%	95.5	%	(3.1)	%	18.66		17.71		5.4	%
Charlotte	52	3.9	16.18		14.70		10.1	%	93.7	%	95.7	%	(2.1)	%	15.17		14.07		7.8	%
All other markets	928	59.0	18.77		17.55		7.0	%	93.9	%	95.8	%	(2.0)	%	17.63		16.81		4.9	%
Totals	2,344	155.2	$	22.99	$	21.23	8.3	%	93.7	%	95.7	%	(2.1)	%	$	21.54	$	20.32	6.0	%

Same Store Facilities Operating Trends by Market (Continued)


		As of September 30, 2022		Nine Months Ended September 30,																			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							Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)
				2022		2021		Change		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change		2023		2022		Change		2023		2022		Change
Los Angeles	Los Angeles	212	15.3	$	31.78	$	27.05	17.5	%	97.2	%	98.2	%	(1.0)	%	$	30.87	$	26.55	16.3	%	Los Angeles	$	137,156	$	122,502	12.0	%	$	16,923	$	15,553	8.8	%	$	2,672	$	2,054	30.1	%	$	117,561	$	104,895	12.1	%
San Francisco	San Francisco	128	7.8	31.14		27.80		12.0	%	95.6	%	97.4	%	(1.8)	%	29.77		27.08		9.9	%	San Francisco	62,073		59,931		3.6	%	9,662		8,443		14.4	%	1,431		1,730		(17.3)	%	50,980		49,758		2.5	%
New York	New York	90	6.4	30.17		27.08		11.4	%	95.0	%	96.5	%	(1.6)	%	28.67		26.13		9.7	%	New York	52,094		49,411		5.4	%	11,610		11,718		(0.9)	%	1,188		1,393		(14.7)	%	39,296		36,300		8.3	%
Miami	Miami	83	5.8	27.47		21.78		26.1	%	96.1	%	97.1	%	(1.0)	%	26.41		21.14		24.9	%	Miami	45,523		42,811		6.3	%	8,108		7,403		9.5	%	1,043		1,067		(2.2)	%	36,372		34,341		5.9	%
Seattle-Tacoma	Seattle-Tacoma	86	5.7	24.80		21.60		14.8	%	94.8	%	95.7	%	(0.9)	%	23.52		20.67		13.8	%	Seattle-Tacoma	37,655		36,355		3.6	%	6,501		5,944		9.4	%	984		984		—	%	30,170		29,427		2.5	%
Washington DC	Washington DC	90	5.5	25.14		22.30		12.7	%	93.9	%	95.7	%	(1.9)	%	23.61		21.34		10.6	%	Washington DC	35,301		33,725		4.7	%	6,808		6,744		0.9	%	1,003		1,037		(3.3)	%	27,490		25,944		6.0	%
Chicago		129	8.1	18.98		16.30		16.4	%	94.4	%	96.0	%	(1.7)	%	17.91		15.64		14.5	%
Dallas-Ft. Worth	Dallas-Ft. Worth	106	7.0	17.04		14.41		18.3	%	95.0	%	95.9	%	(0.9)	%	16.19		13.82		17.1	%	Dallas-Ft. Worth	34,125		31,808		7.3	%	7,279		7,097		2.6	%	1,165		1,201		(3.0)	%	25,681		23,510		9.2	%
Atlanta	Atlanta	101	6.6	17.09		14.14		20.9	%	94.5	%	96.1	%	(1.7)	%	16.15		13.60		18.8	%	Atlanta	29,501		28,787		2.5	%	5,991		5,788		3.5	%	1,136		1,192		(4.7)	%	22,374		21,807		2.6	%
Chicago																						Chicago	39,986		37,996		5.2	%	15,555		14,168		9.8	%	1,382		1,445		(4.4)	%	23,049		22,383		3.0	%
Houston	Houston	95	6.8	15.63		13.32		17.3	%	94.0	%	94.4	%	(0.4)	%	14.68		12.58		16.7	%	Houston	30,512		28,420		7.4	%	8,401		8,150		3.1	%	1,067		1,088		(1.9)	%	21,044		19,182		9.7	%
Orlando-Daytona	Orlando-Daytona	70	4.5	17.56		14.47		21.4	%	96.2	%	96.2	%	—	%	16.89		13.92		21.3	%	Orlando-Daytona	21,307		19,282		10.5	%	3,942		3,601		9.5	%	803		846		(5.1)	%	16,562		14,835		11.6	%
Philadelphia	Philadelphia	56	3.5	20.67		18.21		13.5	%	95.1	%	97.4	%	(2.4)	%	19.66		17.73		10.9	%	Philadelphia	18,506		18,072		2.4	%	3,748		3,836		(2.3)	%	646		675		(4.3)	%	14,112		13,561		4.1	%
West Palm Beach	West Palm Beach	37	2.6	24.99		20.63		21.1	%	96.2	%	96.7	%	(0.5)	%	24.05		19.95		20.6	%	West Palm Beach	18,019		17,135		5.2	%	3,744		3,308		13.2	%	509		499		2.0	%	13,766		13,328		3.3	%
Tampa	Tampa	51	3.4	18.57		15.09		23.1	%	95.3	%	96.3	%	(1.0)	%	17.69		14.53		21.7	%	Tampa	17,013		16,105		5.6	%	3,596		3,249		10.7	%	579		615		(5.9)	%	12,838		12,241		4.9	%
Charlotte	Charlotte	50	3.8	14.75		12.14		21.5	%	95.5	%	95.9	%	(0.4)	%	14.08		11.65		20.9	%	Charlotte	15,575		14,401		8.2	%	2,808		2,358		19.1	%	496		566		(12.4)	%	12,271		11,477		6.9	%
All other markets	All other markets	898	56.7	17.70		15.22		16.3	%	95.2	%	96.4	%	(1.2)	%	16.85		14.67		14.9	%	All other markets	270,159		256,681		5.3	%	55,323		52,006		6.4	%	10,340		10,987		(5.9)	%	204,496		193,688		5.6	%
Totals	Totals	2,282	149.5	$	21.39	$	18.34	16.6	%	95.3	%	96.5	%	(1.2)	%	$	20.39	$	17.69	15.3	%	Totals	$	864,505	$	813,422	6.3	%	$	169,999	$	159,366	6.7	%	$	26,444	$	27,379	(3.4)	%	$	668,062	$	626,677	6.6	%

Same Store Facilities Operating Trends by Market (Continued)


		Nine Months Ended September 30,																									As of June 30, 2023		Six Months Ended June 30,
		Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)							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		2022		2021		Change					2023		2022		Change		2023		2022		Change		2023		2022		Change
Los Angeles	Los Angeles	$	361,373	$	310,217	16.5	%	$	47,353	$	43,933	7.8	%	$	8,461	$	8,075	4.8	%	$	305,559	$	258,209	18.3	%	Los Angeles	215	15.6	$	35.53	$	30.51	16.5	%	95.7	%	97.4	%	(1.7)	%	$	33.99	$	29.72	14.4	%
San Francisco	San Francisco	177,885		161,323		10.3	%	26,318		25,394		3.6	%	5,053		4,979		1.5	%	146,514		130,950		11.9	%	San Francisco	129	7.9	32.37		30.40		6.5	%	94.3	%	95.9	%	(1.7)	%	30.52		29.15		4.7	%
New York	New York	141,802		129,251		9.7	%	34,673		31,942		8.5	%	4,001		4,076		(1.8)	%	103,128		93,233		10.6	%	New York	92	6.8	31.99		29.34		9.0	%	93.0	%	95.2	%	(2.3)	%	29.74		27.94		6.4	%
Miami	Miami	119,163		95,565		24.7	%	21,123		20,431		3.4	%	3,061		3,103		(1.4)	%	94,979		72,031		31.9	%	Miami	87	6.2	29.98		26.76		12.0	%	93.5	%	96.7	%	(3.3)	%	28.04		25.89		8.3	%
Seattle-Tacoma	Seattle-Tacoma	103,222		90,523		14.0	%	17,424		16,793		3.8	%	2,930		3,041		(3.7)	%	82,868		70,689		17.2	%	Seattle-Tacoma	89	6.0	26.11		24.11		8.3	%	92.4	%	95.0	%	(2.7)	%	24.14		22.91		5.4	%
Washington DC	Washington DC	101,040		91,109		10.9	%	21,157		20,026		5.6	%	3,107		3,009		3.3	%	76,776		68,074		12.8	%	Washington DC	90	5.5	26.33		24.61		7.0	%	92.5	%	94.2	%	(1.8)	%	24.35		23.18		5.0	%
Chicago		113,152		98,584		14.8	%	43,427		38,191		13.7	%	4,473		4,330		3.3	%	65,252		56,063		16.4	%
Dallas-Ft. Worth	Dallas-Ft. Worth	88,006		75,037		17.3	%	19,597		18,449		6.2	%	3,404		3,461		(1.6)	%	65,005		53,127		22.4	%	Dallas-Ft. Worth	111	7.6	18.31		16.45		11.3	%	92.9	%	95.2	%	(2.4)	%	17.01		15.65		8.7	%
Atlanta	Atlanta	84,440		70,907		19.1	%	16,259		14,099		15.3	%	3,582		3,664		(2.2)	%	64,599		53,144		21.6	%	Atlanta	103	6.8	18.06		16.60		8.8	%	91.4	%	95.0	%	(3.8)	%	16.51		15.78		4.6	%
Chicago																										Chicago	130	8.2	20.09		18.43		9.0	%	92.7	%	94.9	%	(2.3)	%	18.62		17.50		6.4	%
Houston	Houston	77,818		66,414		17.2	%	21,808		21,097		3.4	%	3,173		3,311		(4.2)	%	52,837		42,006		25.8	%	Houston	101	7.5	16.86		15.10		11.7	%	92.0	%	94.3	%	(2.4)	%	15.52		14.24		9.0	%
Orlando-Daytona	Orlando-Daytona	58,682		48,397		21.3	%	11,285		10,174		10.9	%	2,648		2,478		6.9	%	44,749		35,745		25.2	%	Orlando-Daytona	69	4.4	19.65		17.00		15.6	%	94.4	%	96.5	%	(2.2)	%	18.55		16.40		13.1	%
Philadelphia	Philadelphia	54,176		48,695		11.3	%	11,941		11,455		4.2	%	2,038		2,031		0.3	%	40,197		35,209		14.2	%	Philadelphia	56	3.5	21.54		20.21		6.6	%	93.0	%	95.9	%	(3.0)	%	20.04		19.38		3.4	%
West Palm Beach	West Palm Beach	49,032		40,602		20.8	%	9,921		8,783		13.0	%	1,440		1,515		(5.0)	%	37,671		30,304		24.3	%	West Palm Beach	39	2.8	26.34		23.96		9.9	%	94.0	%	96.8	%	(2.9)	%	24.75		23.19		6.7	%
Tampa	Tampa	46,639		38,311		21.7	%	9,716		8,841		9.9	%	1,790		1,808		(1.0)	%	35,133		27,662		27.0	%	Tampa	53	3.5	20.01		18.08		10.7	%	92.8	%	95.7	%	(3.0)	%	18.57		17.29		7.4	%
Charlotte	Charlotte	41,942		34,659		21.0	%	7,117		6,808		4.5	%	1,735		1,626		6.7	%	33,090		26,225		26.2	%	Charlotte	52	3.9	16.04		14.29		12.2	%	93.5	%	95.6	%	(2.2)	%	14.99		13.67		9.7	%
All other markets	All other markets	742,363		645,257		15.0	%	155,145		147,233		5.4	%	33,057		31,360		5.4	%	554,161		466,664		18.7	%	All other markets	928	59.0	18.63		17.14		8.7	%	93.6	%	95.5	%	(2.0)	%	17.43		16.38		6.4	%
Totals	Totals	$	2,360,735	$	2,044,851	15.4	%	$	474,264	$	443,649	6.9	%	$	83,953	$	81,867	2.5	%	$	1,802,518	$	1,519,335	18.6	%	Totals	2,344	155.2	$	22.82	$	20.69	10.3	%	93.5	%	95.6	%	(2.2)	%	$	21.33	$	19.79	7.8	%

Same Store Facilities Operating Trends by Market (Continued)


	Six Months Ended June 30,
	Revenues ($000's)						Direct Expenses ($000's)						Indirect Expenses ($000's)						Net Operating Income ($000's)
	2023		2022		Change		2023		2022		Change		2023		2022		Change		2023		2022		Change
Los Angeles	$	270,767	$	236,449	14.5	%	$	34,609	$	31,651	9.3	%	$	5,521	$	5,756	(4.1)	%	$	230,637	$	199,042	15.9	%
San Francisco	123,115		117,441		4.8	%	19,447		17,347		12.1	%	3,050		3,468		(12.1)	%	100,618		96,626		4.1	%
New York	103,267		97,053		6.4	%	24,995		24,418		2.4	%	2,526		2,828		(10.7)	%	75,746		69,807		8.5	%
Miami	90,215		82,956		8.8	%	15,973		14,808		7.9	%	2,125		2,191		(3.0)	%	72,117		65,957		9.3	%
Seattle-Tacoma	74,704		70,920		5.3	%	13,394		12,238		9.4	%	2,005		2,048		(2.1)	%	59,305		56,634		4.7	%
Washington DC	69,594		66,102		5.3	%	14,067		13,960		0.8	%	2,046		2,077		(1.5)	%	53,481		50,065		6.8	%
Dallas-Ft. Worth	67,568		61,949		9.1	%	15,110		14,169		6.6	%	2,365		2,439		(3.0)	%	50,093		45,341		10.5	%
Atlanta	58,869		56,032		5.1	%	12,143		10,978		10.6	%	2,361		2,475		(4.6)	%	44,365		42,579		4.2	%
Chicago	79,024		74,004		6.8	%	31,942		29,237		9.3	%	2,807		3,042		(7.7)	%	44,275		41,725		6.1	%
Houston	60,563		55,377		9.4	%	16,628		15,715		5.8	%	2,178		2,299		(5.3)	%	41,757		37,363		11.8	%
Orlando-Daytona	42,354		37,440		13.1	%	8,012		7,246		10.6	%	1,665		1,751		(4.9)	%	32,677		28,443		14.9	%
Philadelphia	36,876		35,572		3.7	%	7,848		8,019		(2.1)	%	1,332		1,365		(2.4)	%	27,696		26,188		5.8	%
West Palm Beach	35,725		33,433		6.9	%	7,552		6,583		14.7	%	1,037		1,016		2.1	%	27,136		25,834		5.0	%
Tampa	33,896		31,478		7.7	%	7,200		6,514		10.5	%	1,202		1,263		(4.8)	%	25,494		23,701		7.6	%
Charlotte	30,797		27,995		10.0	%	5,580		4,814		15.9	%	1,092		1,203		(9.2)	%	24,125		21,978		9.8	%
All other markets	534,339		501,009		6.7	%	114,067		106,780		6.8	%	21,366		22,829		(6.4)	%	398,906		371,400		7.4	%
Totals	$	1,711,673	$	1,585,210	8.0	%	$	348,567	$	324,477	7.4	%	$	54,678	$	58,050	(5.8)	%	$	1,308,428	$	1,202,683	8.8	%

3940

Acquired Facilities

The Acquired Facilities represent ~~338~~322 facilities that we acquired in ~~2020,~~ 2021, 2022, and ~~2022.~~2023. 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,
		2022		2021		Change (a)		2022		2021		Change (a)						2023		2022		Change (a)		2023		2022		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):
2020 Acquisitions		$	20,118	$	15,613	$	4,505	$	55,599	$	38,451	$	17,148
2021 Acquisitions	2021 Acquisitions	84,008		35,394		48,614		228,183		56,051		172,132					2021 Acquisitions	$	85,344	$	75,350	$	9,994	$	168,585	$	144,175	$	24,410
2022 Acquisitions	2022 Acquisitions	4,863		—		4,863		7,076		—		7,076					2022 Acquisitions	12,195		1,735		10,460		23,796		2,213		21,583
2023 Acquisitions																	2023 Acquisitions	1,036		—		1,036		1,416		—		1,416
Total revenues	Total revenues	108,989		51,007		57,982		290,858		94,502		196,356					Total revenues	98,575		77,085		21,490		193,797		146,388		47,409

Cost of operations (b):	Cost of operations (b):																Cost of operations (b):
2020 Acquisitions		6,780		6,113		667		19,857		18,990		867
2021 Acquisitions	2021 Acquisitions	28,679		10,442		18,237		77,936		16,703		61,233					2021 Acquisitions	26,162		25,359		803		53,288		49,257		4,031
2022 Acquisitions	2022 Acquisitions	2,599		—		2,599		4,156		—		4,156					2022 Acquisitions	5,280		1,238		4,042		10,862		1,557		9,305
2023 Acquisitions																	2023 Acquisitions	394		—		394		565		—		565
Total cost of operations	Total cost of operations	38,058		16,555		21,503		101,949		35,693		66,256					Total cost of operations	31,836		26,597		5,239		64,715		50,814		13,901

Net operating income:	Net operating income:																Net operating income:
2020 Acquisitions		13,338		9,500		3,838		35,742		19,461		16,281
2021 Acquisitions	2021 Acquisitions	55,329		24,952		30,377		150,247		39,348		110,899					2021 Acquisitions	59,182		49,991		9,191		115,297		94,918		20,379
2022 Acquisitions	2022 Acquisitions	2,264		—		2,264		2,920		—		2,920					2022 Acquisitions	6,915		497		6,418		12,934		656		12,278
2023 Acquisitions																	2023 Acquisitions	642		—		642		851		—		851
Net operating income	Net operating income	70,931		34,452		36,479		188,909		58,809		130,100					Net operating income	66,739		50,488		16,251		129,082		95,574		33,508
Depreciation and amortization expense	Depreciation and amortization expense	(74,564)		(52,090)		(22,474)		(235,284)		(102,154)		(133,130)					Depreciation and amortization expense	(64,461)		(69,123)		4,662		(131,710)		(146,262)		14,552
Net loss	Net loss	$	(3,633)	$	(17,638)	$	14,005	$	(46,375)	$	(43,345)	$	(3,030)				Net loss	$	2,278	$	(18,635)	$	20,913	$	(2,628)	$	(50,688)	$	48,060

At September 30:
At June 30:																	At June 30:
Square foot occupancy:	Square foot occupancy:																Square foot occupancy:
2020 Acquisitions								90.8%		90.0%		0.9%
2021 Acquisitions	2021 Acquisitions							85.5%		87.0%		(1.7)%					2021 Acquisitions							85.2%		86.0%		(0.9)%
2022 Acquisitions	2022 Acquisitions							78.8%		—		—					2022 Acquisitions							85.5%		68.0%		25.7%
2023 Acquisitions																	2023 Acquisitions							56.8%		—%		—%
								85.7%		88.0%		(2.6)%												84.0%		85.0%		(1.2)%
Annual contract rent per occupied square foot:	Annual contract rent per occupied square foot:																Annual contract rent per occupied square foot:
2020 Acquisitions								$	17.22	$	14.03	22.7%
2021 Acquisitions	2021 Acquisitions							17.72		17.57		0.9%					2021 Acquisitions							$	18.21	$	16.67	9.2%
2022 Acquisitions	2022 Acquisitions							11.11		—		—					2022 Acquisitions							12.22		11.74		4.1%
2023 Acquisitions																	2023 Acquisitions							13.74		—		—%
								$	17.00	$	16.38	3.8%												$	17.04	$	16.44	3.6%
Number of facilities:	Number of facilities:																Number of facilities:
2020 Acquisitions								62		62		—
2021 Acquisitions	2021 Acquisitions							232		126		106					2021 Acquisitions							232		232		—
2022 Acquisitions	2022 Acquisitions							44		—		44					2022 Acquisitions							74		20		54
2023 Acquisitions																	2023 Acquisitions							16		—		16
								338		188		150												322		252		70
Net rentable square feet (in thousands) (c):	Net rentable square feet (in thousands) (c):																Net rentable square feet (in thousands) (c):
2020 Acquisitions								5,075		5,075		—
2021 Acquisitions								21,830		10,295		11,535
2021 Acquisitions (d)																	2021 Acquisitions (d)							22,009		21,830		179
2022 Acquisitions	2022 Acquisitions							3,167		—		3,167					2022 Acquisitions							4,740		1,495		3,245
2023 Acquisitions																	2023 Acquisitions							1,205		—		1,205
								30,072		15,370		14,702												27,954		23,325		4,629

4041

ACQUIRED FACILITIES (Continued)


		As of September 30, 2022			As of June 30, 2023
Costs to acquire (in thousands):	Costs to acquire (in thousands):			Costs to acquire (in thousands):
2020 Acquisitions		$	796,065
2021 Acquisitions		5,115,276
2021 Acquisitions (d)				2021 Acquisitions (d)	$	5,115,276
2022 Acquisitions	2022 Acquisitions	501,892		2022 Acquisitions	730,957
2023 Acquisitions				2023 Acquisitions	190,778
		$	6,413,233		$	6,037,011

(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.

(c)The Acquired Facilities have an aggregate of approximately ~~30.1~~28.0 million net rentable square feet, including ~~11.2~~10.9 million in Texas, ~~3.8~~3.9 million in Maryland, 1.6 million in Florida, 1.2 million in ~~Oklahoma,~~each of South Carolina and Virginia, 1.1 million in ~~Virginia, 0.9~~Oklahoma, 1.0 million in North Carolina, ~~0.8~~0.7 million in Idaho, 0.6 million in each of Arizona and Colorado, ~~0.7~~0.5 million in ~~Ohio, 0.6~~Nebraska, 0.4 million in each of Georgia, Indiana, and Oregon, 0.3 million in each of California, ~~Florida, Georgia, Illinois,~~ Minnesota, ~~and South Carolina, 0.5 million in each of Idaho, Michigan, Missouri, Nebraska, Oregon and Pennsylvania, 0.4 million in each of Alabama, Indiana,~~ Nevada, ~~and~~Ohio, Tennessee, ~~0.3 million in~~and Washington, and ~~1.1~~1.7 million in other states.

(d)We have completed the expansion projects on facilities acquired in 2021 for $26.8 million, adding 179,000 net rentable square feet of storage space as of June 30, 2023.

We have been active in acquiring facilities in recent years. Since the beginning of ~~2020,~~2021, we acquired a total of ~~338~~322 facilities with ~~30.1~~28.0 million net rentable square feet for ~~$6.4~~$6.0 billion. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, these facilities contributed net operating income of ~~$70.9~~$66.7 million and ~~$188.9~~$129.1 million, ~~respectively.~~respectively, consistent with our original underwritten expectations.

During 2021, we acquired the ezStorage portfolio, consisting of 48 properties (4.1 million net rentable square feet) for acquisition cost of $1.8 billion. As of June 30, 2023, we have completed the expansion projects on four properties of this portfolio for $26.4 million, adding 169,000 net rentable square feet of storage space. Included in the Acquisition results in the table above are ezStorage portfolio revenues of ~~$74.7~~$51.7 million, NOI of ~~$59.0~~$40.4 million (including Direct NOI of ~~$61.1~~$41.7 million), and average square footage occupancy of ~~90.1%~~85.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023.

During 2021, we acquired the All Storage portfolio, consisting of 56 properties (7.5 million net rentable square feet) for $1.5 billion. Included in the Acquisition results in the table above are All Storage portfolio revenues of ~~$57.3~~$43.1 million, NOI of ~~$33.5~~$27.4 million (including Direct NOI of ~~$35.7~~$28.9 million), and average square footage occupancy of ~~79.3%~~78.6% for the ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023.

We remain active in seeking to acquire additional self-storage ~~facilities through 2022.~~facilities. Subsequent to ~~September~~June 30, ~~2022,~~2023, we acquired or were under contract to acquire 33eleven self-storage facilities across six states with ~~1.7~~0.8 million net rentable square feet, for ~~$262.6~~$118.2 million. In addition, as part of the Simply Acquisition announced on July 24, 2023, we will add 127 wholly-owned self-storage facilities (9.4 million net rentable square fees) to our portfolio. Future acquisition volume is likely to be impacted by increasing cost of capital requirements and overall macro-economic uncertainties.

4142

Developed and Expanded Facilities

The developed and expanded facilities include 5949 facilities that were developed on new sites since January 1, ~~2017,~~2018, and 9187 facilities expanded to increase their net rentable square footage. Of these expansions, 5161 were completed before ~~2021, 24~~2022, 14 were completed in ~~2021~~2022 or ~~2022,~~2023, and 1612 are currently in process at ~~September~~June 30, ~~2022.~~2023. The following table summarizes operating data with respect to the Developed and Expanded Facilities:


DEVELOPED AND EXPANDED FACILITIES	DEVELOPED AND EXPANDED FACILITIES															DEVELOPED AND EXPANDED FACILITIES
		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		Change (a)		2022		2021		Change (a)					2023		2022		Change (a)		2023		2022		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 2017		$	9,324	$	7,317	$	2,007	$	25,865	$	20,021	$	5,844
Developed in 2018	Developed in 2018	9,712		7,569		2,143		26,995		20,391		6,604				Developed in 2018	$	10,028	$	8,990	$	1,038	$	19,808	$	17,283	$	2,525
Developed in 2019	Developed in 2019	4,423		3,313		1,110		12,046		8,470		3,576				Developed in 2019	4,541		3,997		544		8,916		7,623		1,293
Developed in 2020	Developed in 2020	1,782		1,062		720		4,940		2,093		2,847				Developed in 2020	1,930		1,676		254		3,831		3,158		673
Developed in 2021	Developed in 2021	2,390		558		1,832		5,750		706		5,044				Developed in 2021	2,757		1,931		826		5,366		3,360		2,006
Developed in 2022	Developed in 2022	137		—		137		137		—		137				Developed in 2022	1,597		—		1,597		2,683		—		2,683
Expansions completed before 2021		25,116		19,077		6,039		69,933		49,772		20,161
Expansions completed in 2021 or 2022		12,924		7,935		4,989		34,733		21,691		13,042
Developed in 2023																Developed in 2023	138		—		138		163		—		163
Expansions completed before 2022																Expansions completed before 2022	34,631		31,267		3,364		68,375		59,615		8,760
Expansions completed in 2022 or 2023																Expansions completed in 2022 or 2023	5,108		3,403		1,705		9,722		6,514		3,208
Expansions in process	Expansions in process	5,554		5,975		(421)		16,938		17,353		(415)				Expansions in process	3,975		4,913		(938)		7,872		9,708		(1,836)
Total revenues	Total revenues	71,362		52,806		18,556		197,337		140,497		56,840				Total revenues	64,705		56,177		8,528		126,736		107,261		19,475

Cost of operations (b):	Cost of operations (b):															Cost of operations (b):
Developed in 2017		2,622		2,540		82		7,946		7,461		485
Developed in 2018	Developed in 2018	2,896		2,669		227		7,883		7,774		109				Developed in 2018	2,835		2,432		403		5,668		4,987		681
Developed in 2019	Developed in 2019	1,395		1,222		173		4,267		3,917		350				Developed in 2019	1,454		1,504		(50)		2,961		2,872		89
Developed in 2020	Developed in 2020	456		432		24		1,311		1,275		36				Developed in 2020	450		427		23		874		855		19
Developed in 2021	Developed in 2021	1,010		400		610		2,697		890		1,807				Developed in 2021	925		832		93		1,842		1,687		155
Developed in 2022	Developed in 2022	236		—		236		236		—		236				Developed in 2022	962		—		962		1,945		—		1,945
Expansions completed before 2021		8,256		7,433		823		23,299		21,801		1,498
Expansions completed in 2021 or 2022		3,200		2,190		1,010		8,857		5,949		2,908
Developed in 2023																Developed in 2023	266		—		266		495		—		495
Expansions completed before 2022																Expansions completed before 2022	9,806		9,163		643		19,900		18,548		1,352
Expansions completed in 2022 or 2023																Expansions completed in 2022 or 2023	1,744		950		794		3,273		1,818		1,455
Expansions in process	Expansions in process	1,194		1,189		5		3,490		3,643		(153)				Expansions in process	793		922		(129)		1,630		1,913		(283)
Total cost of operations	Total cost of operations	21,265		18,075		3,190		59,986		52,710		7,276				Total cost of operations	19,235		16,230		3,005		38,588		32,680		5,908

Net operating income (loss):	Net operating income (loss):															Net operating income (loss):
Developed in 2017		6,702		4,777		1,925		17,919		12,560		5,359
Developed in 2018	Developed in 2018	6,816		4,900		1,916		19,112		12,617		6,495				Developed in 2018	7,193		6,558		635		14,140		12,296		1,844
Developed in 2019	Developed in 2019	3,028		2,091		937		7,779		4,553		3,226				Developed in 2019	3,087		2,493		594		5,955		4,751		1,204
Developed in 2020	Developed in 2020	1,326		630		696		3,629		818		2,811				Developed in 2020	1,480		1,249		231		2,957		2,303		654
Developed in 2021	Developed in 2021	1,380		158		1,222		3,053		(184)		3,237				Developed in 2021	1,832		1,099		733		3,524		1,673		1,851
Developed in 2022	Developed in 2022	(99)		—		(99)		(99)		—		(99)				Developed in 2022	635		—		635		738		—		738
Expansions completed before 2021		16,860		11,644		5,216		46,634		27,971		18,663
Expansions completed in 2021 or 2022		9,724		5,745		3,979		25,876		15,742		10,134
Developed in 2023																Developed in 2023	(128)		—		(128)		(332)		—		(332)
Expansions completed before 2022																Expansions completed before 2022	24,825		22,104		2,721		48,475		41,067		7,408
Expansions completed in 2022 or 2023																Expansions completed in 2022 or 2023	3,364		2,453		911		6,449		4,696		1,753
Expansions in process	Expansions in process	4,360		4,786		(426)		13,448		13,710		(262)				Expansions in process	3,182		3,991		(809)		6,242		7,795		(1,553)
Net operating income	Net operating income	50,097		34,731		15,366		137,351		87,787		49,564				Net operating income	45,470		39,947		5,523		88,148		74,581		13,567
Depreciation and amortization expense	Depreciation and amortization expense	(15,326)		(13,668)		(1,658)		(44,730)		(42,179)		(2,551)				Depreciation and amortization expense	(14,873)		(12,428)		(2,445)		(29,273)		(24,739)		(4,534)
Net income	Net income	$	34,771	$	21,063	$	13,708	$	92,621	$	45,608	$	47,013			Net income	$	30,597	$	27,519	$	3,078	$	58,875	$	49,842	$	9,033

DEVELOPED AND EXPANDED FACILITIES (Continued)
As of September 30,
2022 2021 Change (a)
($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:
Developed in 2017 90.8% 91.7% (1.0)%
Developed in 2018 89.4% 90.5% (1.2)%
Developed in 2019 88.4% 89.9% (1.7)%
Developed in 2020 93.1% 90.0% 3.4%
Developed in 2021 82.7% 44.0% 88.0%
Developed in 2022 25.8% — —
Expansions completed before 2021 88.0% 87.3% 0.8%
Expansions completed in 2021 or 2022 83.9% 85.7% (2.1)%
Expansions in process 80.8% 93.5% (13.6)%
85.9% 87.4% (1.7)%
Annual contract rent per occupied square foot:
Developed in 2017 $ 19.52 $ 15.35 27.2%
Developed in 2018 20.72 16.18 28.1%
Developed in 2019 18.20 13.65 33.3%
Developed in 2020 21.46 15.16 41.6%
Developed in 2021 17.72 13.64 29.9%
Developed in 2022 16.19 — —
Expansions completed before 2021 16.16 12.86 25.7%
Expansions completed in 2021 or 2022 21.58 18.51 16.6%
Expansions in process 26.28 22.47 17.0%
$ 19.01 $ 15.30 24.2%
Number of facilities:
Developed in 2017 16 16 —
Developed in 2018 18 18 —
Developed in 2019 11 11 —
Developed in 2020 3 3 —
Developed in 2021 6 4 2
Developed in 2022 5 — 5
Expansions completed before 2021 51 51 —
Expansions completed in 2021 or 2022 24 23 1
Expansions in process 16 16 —
150 142 8
Net rentable square feet (in thousands) (c):
Developed in 2017 2,040 2,040 —
Developed in 2018 2,069 2,069 —
Developed in 2019 1,057 1,057 —
Developed in 2020 347 347 —
Developed in 2021 681 502 179
Developed in 2022 399 — 399
Expansions completed before 2021 6,879 6,879 —
Expansions completed in 2021 or 2022 2,897 2,210 687
Expansions in process 951 1,135 (184)
17,320 16,239 1,081


DEVELOPED AND EXPANDED FACILITIES (Continued)				DEVELOPED AND EXPANDED FACILITIES (Continued)
					As of June 30,
		As of September 30, 2022			2023		2022		Change (a)
Costs to develop (in thousands):
Developed in 2017		$	239,871

					($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:				Square foot occupancy:
Developed in 2018	Developed in 2018	262,187		Developed in 2018	90.4%		91.2%		(0.9)%
Developed in 2019	Developed in 2019	150,387		Developed in 2019	89.1%		88.9%		0.2%
Developed in 2020	Developed in 2020	42,063		Developed in 2020	92.9%		92.6%		0.3%
Developed in 2021	Developed in 2021	115,632		Developed in 2021	87.7%		80.7%		8.7%
Developed in 2022	Developed in 2022	61,214		Developed in 2022	75.7%		—%		—%
Expansions completed before 2021 (d)		478,659
Expansions completed in 2021 or 2022 (d)		168,877
Developed in 2023				Developed in 2023	37.8%		—%		—%
Expansions completed before 2022				Expansions completed before 2022	89.2%		90.0%		(0.9)%
Expansions completed in 2022 or 2023				Expansions completed in 2022 or 2023	77.0%		70.0%		10.0%
Expansions in process				Expansions in process	86.9%		92.9%		(6.5)%
		$	1,518,890		86.5%		88.2%		(1.9)%
Annual contract rent per occupied square foot:				Annual contract rent per occupied square foot:
Developed in 2018				Developed in 2018	$	21.35	$	19.48	9.6%
Developed in 2019				Developed in 2019	19.01		17.45		8.9%
Developed in 2020				Developed in 2020	22.78		20.44		11.4%
Developed in 2021				Developed in 2021	18.77		16.52		13.6%
Developed in 2022				Developed in 2022	14.58		—		—%
Developed in 2023				Developed in 2023	9.03		—		—%
Expansions completed before 2022				Expansions completed before 2022	18.25		16.95		7.7%
Expansions completed in 2022 or 2023				Expansions completed in 2022 or 2023	17.57		18.25		(3.7)%
Expansions in process				Expansions in process	28.02		26.95		4.0%
					$	18.65	$	17.54	6.3%
Number of facilities:				Number of facilities:
Developed in 2018				Developed in 2018	18		18		—
Developed in 2019				Developed in 2019	11		11		—
Developed in 2020				Developed in 2020	3		3		—
Developed in 2021				Developed in 2021	6		6		—
Developed in 2022				Developed in 2022	8		—		8
Developed in 2023				Developed in 2023	3		—		3
Expansions completed before 2022				Expansions completed before 2022	61		61		—
Expansions completed in 2022 or 2023				Expansions completed in 2022 or 2023	14		14		—
Expansions in process				Expansions in process	12		12		—
					136		125		11
Net rentable square feet (in thousands) (c):				Net rentable square feet (in thousands) (c):
Developed in 2018				Developed in 2018	2,069		2,069		—
Developed in 2019				Developed in 2019	1,057		1,057		—
Developed in 2020				Developed in 2020	347		347		—
Developed in 2021				Developed in 2021	681		681		—
Developed in 2022				Developed in 2022	631		—		631
Developed in 2023				Developed in 2023	268		—		268
Expansions completed before 2022				Expansions completed before 2022	8,420		8,382		38
Expansions completed in 2022 or 2023				Expansions completed in 2022 or 2023	1,643		1,199		444
Expansions in process				Expansions in process	677		788		(111)
					15,793		14,523		1,270


	As of June 30, 2023
Costs to develop (in thousands):
Developed in 2018	$	262,187
Developed in 2019	150,387
Developed in 2020	42,063
Developed in 2021	115,632
Developed in 2022	100,089
Developed in 2023	47,255
Expansions completed before 2022 (d)	506,594
Expansions completed in 2022 or 2023 (d)	137,486
	$	1,361,693

(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 ~~17.3~~15.8 million net rentable square feet at ~~September~~June 30, ~~2022,~~2023, including ~~5.0~~3.7 million in Texas, ~~3.0~~3.1 million in Florida, ~~2.2~~2.3 million in California, ~~1.5 million in Colorado,~~ 1.4 million in each of Colorado and Minnesota, ~~0.9~~0.8 million in North Carolina, 0.7 million in Michigan, 0.4 million in Missouri, 0.3 million in each of ~~Missouri,~~ New Jersey, South Carolina, Virginia, and Washington, ~~0.3 million in Virginia~~ and ~~0.7~~0.8 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.

We typically underwrite new developments to stabilize at approximately an 8.0% NOI yield on cost. Our developed facilities have thus far 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.

The facilities under “expansions completed” represent those facilities where the expansions have been completed at ~~September~~June 30, ~~2022.~~2023. We incurred a total of ~~$647.5~~$644.1 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 ~~6.1~~6.2 million net rentable square feet of new storage space.

At ~~September~~June 30, ~~2022,~~2023, we had 2425 additional facilities in development, which will have a total of ~~2.1~~2.5 million net rentable square feet of storage space and have an aggregate development cost totaling approximately ~~$421.0~~$554.0 million. We expect these facilities to open over the next 18 to 24 months.

The facilities under “expansion in process” represent those facilities where construction is in process at ~~September~~June 30, ~~2022,~~2023, and together with additional future expansion activities primarily related to our Same Store Facilities at ~~September~~June 30, ~~2022,~~2023, we expect to add a total of ~~3.0~~2.3 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of ~~$590.9~~$473.0 million.

4445

Other Non-Same Store Facilities

The “Other Non-Same Store Facilities” represent facilities which, while not newly acquired, developed, or expanded, are not fully stabilized since January 1, ~~2020,~~2021, including facilities undergoing fill-up as well as facilities damaged in casualty events such as hurricanes, floods, and fires.

The Other Non-Same Store Facilities have an aggregate of ~~5.3~~7.1 million net rentable square feet, including ~~1.1~~1.2 million in Texas, ~~0.6~~0.5 million in ~~each of Florida and Washington,~~Pennsylvania, 0.4 million in each of California, Illinois, Michigan, Minnesota, Ohio, and ~~Virginia,~~Washington, 0.3 million in each of ~~Indiana~~Arizona, Florida, and South Carolina, 0.2 million in each of Alabama, Colorado, Georgia, ~~Kentucky, Massachusetts~~Missouri, and ~~Tennessee~~Virginia, and ~~0.8~~1.1 million in other states.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the average occupancy for these facilities totaled ~~92.5%~~88.4% and ~~92.5%~~87.4%, respectively, as compared to ~~93.9%~~91.5% and ~~92.6%~~90.4% for the same periods in ~~2021,~~2022, and the realized rent per occupied square foot totaled ~~$19.34~~$18.17 and ~~$18.08,~~$18.11, respectively, as compared to ~~$15.15~~$16.25 and ~~$14.03~~$15.87 for the same periods in ~~2021.~~2022.

Depreciation and amortization expense

Depreciation and amortization expense for Self-Storage Operations increased ~~$32.2~~$3.4 million and ~~$153.5~~$2.9 million in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to the same periods in ~~2021, primarily~~2022, due to ~~newly acquired facilities of $5.1 billion in 2021. We expect continued increases in depreciation expense in the remainder of 2022 as a result of~~ elevated levels of capital expenditures and new facilities that are ~~acquired, developed or expanded in the remainder of 2022.~~recently developed.

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


															Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change

		(Amounts in thousands)													(Amounts in thousands)
Revenues:	Revenues:													Revenues:
Tenant reinsurance premiums	Tenant reinsurance premiums	$	47,960	$	42,774	$	5,186	$	139,842	$	123,271	$	16,571	Tenant reinsurance premiums	$	50,372	$	46,687	$	3,685	$	99,670	$	91,882	$	7,788
Merchandise	Merchandise	7,378		7,384		(6)		21,783		21,932		(149)		Merchandise	7,295		7,534		(239)		14,115		14,405		(290)
Third party property management	Third party property management	5,419		4,263		1,156		14,321		12,455		1,866		Third party property management	5,983		4,538		1,445		11,913		8,902		3,011
Total revenues	Total revenues	60,757		54,421		6,336		175,946		157,658		18,288		Total revenues	63,650		58,759		4,891		125,698		115,189		10,509
Cost of operations:	Cost of operations:													Cost of operations:
Tenant reinsurance	Tenant reinsurance	12,191		11,029		1,162		27,666		26,115		1,551		Tenant reinsurance	11,899		8,198		3,701		21,471		15,475		5,996
Merchandise	Merchandise	4,517		4,476		41		12,948		13,148		(200)		Merchandise	4,487		4,527		(40)		8,700		8,431		269
Third party property management	Third party property management	4,864		4,230		634		13,683		12,781		902		Third party property management	5,816		4,485		1,331		11,707		8,819		2,888
Total cost of operations	Total cost of operations	21,572		19,735		1,837		54,297		52,044		2,253		Total cost of operations	22,202		17,210		4,992		41,878		32,725		9,153
Net operating income (loss):
Net operating income:														Net operating income:
Tenant reinsurance	Tenant reinsurance	35,769		31,745		4,024		112,176		97,156		15,020		Tenant reinsurance	38,473		38,489		(16)		78,199		76,407		1,792
Merchandise	Merchandise	2,861		2,908		(47)		8,835		8,784		51		Merchandise	2,808		3,007		(199)		5,415		5,974		(559)
Third party property management	Third party property management	555		33		522		638		(326)		964		Third party property management	167		53		114		206		83		123
Total net operating income	Total net operating income	$	39,185	$	34,686	$	4,499	$	121,649	$	105,614	$	16,035	Total net operating income	$	41,448	$	41,549	$	(101)	$	83,820	$	82,464	$	1,356

Tenant reinsurance operations: Tenant reinsurance premium revenue increased ~~$5.2~~$3.7 million or ~~12.1%~~7.9% for the three months ended ~~September~~June 30, ~~2022,~~2023, and increased ~~$16.6~~$7.8 million or ~~13.4%~~8.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, in each case as compared to the same period in ~~2021,~~2022, as a result of an increase in our tenant base with respect to acquired, newly developed, and expanded facilities and the third party properties we manage. Tenant reinsurance premium revenue generated from tenants at our Same-Store Facilities were ~~$35.0~~$37.5 million and ~~$104.2~~$74.5 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to ~~$33.8~~$36.1 million and ~~$100.3~~$71.8 million for the same periods in ~~2021,~~2022, representing an increase of ~~3.6%~~3.9% and ~~3.9%~~3.8%, 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~~that drive covered customer losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods. ~~Included in~~Tenant reinsurance cost of operations ~~are $4.0~~increased $3.7 million ~~of estimated claims costs related to Hurricane Ian~~and $6.0 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, as compared to ~~$2.0 million of estimated claims costs related to Hurricane Ida for~~ the same periods in ~~2021.~~2022, primarily due to increased claim expenses related to fire and flooding events.

Merchandise sales: Sales of locks, boxes, and packing supplies at our self-storage facilities 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 ~~2022.~~2023.

Third-party property management: At ~~September~~June 30, ~~2022,~~2023, in our third-party property management program, we managed ~~108~~132 facilities for unrelated third parties, and were under contract to manage 6783 additional facilities including 6279 facilities that are currently under construction. During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we added 3830 facilities to the program ~~acquired three facilities from the program,~~ and had ~~twelve~~seven properties exit the program due to sales to other buyers. As part of the Simply Acquisition announced on July 24, 2023, we will integrate an additional 25 facilities into our third-party management platform. 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 fill-up for newly managed properties.

Analysis of items not allocated to segments

Equity in earnings of unconsolidated real estate entities

We account for the equity investments in PSB (prior to the sale of our investment in PSB) and Shurgard using 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 June 30,						Six Months Ended June 30,
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change

		(Amounts in thousands)													(Amounts in thousands)
Equity in earnings:	Equity in earnings:													Equity in earnings:
PSB	PSB	$	3,586	$	27,110	$	(23,524)	$	80,596	$	62,494	$	18,102	PSB	$	—	$	40,124	$	(40,124)	$	—	$	77,010	$	(77,010)
Shurgard	Shurgard	4,594		5,750		(1,156)		19,533		18,888		645		Shurgard	9,565		8,401		1,164		15,560		14,939		621
Total equity in earnings	Total equity in earnings	$	8,180	$	32,860	$	(24,680)	$	100,129	$	81,382	$	18,747	Total equity in earnings	$	9,565	$	48,525	$	(38,960)	$	15,560	$	91,949	$	(76,389)

Investment in PSB: 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, in connection with the closing of the merger of PSB ~~announced that it~~with Blackstone, we completed the ~~merger transaction with Blackstone. Each share~~sale of ~~PSB~~our 41% common ~~stock and each common unit of partnership~~equity interest ~~we held~~ in PSB were converted into the right to receive the merger consideration of $187.50 per share or unit, including a $5.25 closing cash dividend 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.in its entirety. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion ~~which was classified within gain on sale~~during the third quarter of our equity investment in PS Business Parks, Inc. in the Consolidated Statement of Income. Accordingly, equity in earnings from PSB for the three and nine months ended September 30, 2022 reflect activities through the merger date, July 20, 2022.

Included in our equity earnings from PSB for the ~~nine~~three and six months ended ~~September~~June 30, 2022 is our equity share of gains on sale of real estate totaling $25.5 million and $49.1 million, ~~(none for the three months ended September 30, 2022), as compared to $12.4 million and $20.3 million for three and nine months ended September 30, 2021,~~ respectively. ~~For the three and nine months ended September 30, 2022, our~~Our equity share of earnings from PSB contributed ~~$5.6~~$26.6 million and ~~$57.7~~$52.1 million, respectively, to Core FFO ~~as compared to $24.8 million~~in the three and ~~$74.5 million for the same periods in 2021.~~

~~As a result of closing~~six months ended June 30, 2022. Since the sale of PSB in July 2022, we ~~will~~ no longer recognize equity in earnings from ~~PSB in the future.~~PSB.

Investment in Shurgard: ~~Included in our equity earnings from Shurgard for the nine months ended September 30, 2022 is our equity share of gains on sale of 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 ~~0.980~~1.089 U.S. Dollars per Euro at ~~September~~June 30, ~~2022 (1.134~~2023 (1.070 at December 31, ~~2021)~~2022), and average exchange rates of ~~1.008~~1.088 and ~~1.179~~1.065 for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and average exchange rates of ~~1.065~~1.081 and ~~1.196~~1.093 for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, respectively.

Included in our equity earnings from Shurgard for each of the three and six months ended June 30, 2022 ~~and 2021, respectively. Accordingly,~~is our equity share of gains on sale of real estate totaling $3.5 million (none for the same periods in 2023). Included in our equity in earnings from Shurgard ~~was negatively impacted by the strengthening~~were $9.2 million and $17.7 million of ~~the U.S. Dollar against the Euro by approximately 14.5%~~our share of depreciation and ~~11.0%~~amortization expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022, respectively.~~2023, respectively, as compared to $8.0 million and $15.0 million for the same periods in 2022.

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


															Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change

		(Amounts in thousands)													(Amounts in thousands)

Share-based compensation expense	Share-based compensation expense	$	9,335	$	9,747	$	(412)	$	30,167	$	30,291	$	(124)	Share-based compensation expense	$	8,198	$	12,034	$	(3,836)	$	13,802	$	20,832	$	(7,030)
Development and acquisition costs	Development and acquisition costs	2,571		1,885		686		9,085		6,580		2,505		Development and acquisition costs	2,889		3,674		(785)		8,046		6,514		1,532
Federal and State tax expense and related compliance costs	Federal and State tax expense and related compliance costs	5,546		4,306		1,240		11,661		8,261		3,400		Federal and State tax expense and related compliance costs	3,061		3,381		(320)		6,377		6,115		262
Legal costs	Legal costs	1,100		3,717		(2,617)		2,320		6,060		(3,740)		Legal costs	1,194		980		214		1,775		1,220		555
Corporate management costs	Corporate management costs	5,620		4,304		1,316		16,314		13,218		3,096		Corporate management costs	5,815		4,848		967		12,552		10,694		1,858
Other costs	Other costs	5,329		7,723		(2,394)		11,854		14,586		(2,732)		Other costs	4,277		3,914		363		8,426		6,525		1,901
Total	Total	$	29,501	$	31,682	$	(2,181)	$	81,401	$	78,996	$	2,405	Total	$	25,434	$	28,831	$	(3,397)	$	50,978	$	51,900	$	(922)

Share-based compensation expense includes the amortization of restricted share units and stock options granted to certain corporate employees and trustees.

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. 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.

Share-based compensation expense classified as general and administrative expense decreased $3.8 million and $7.0 million in the three and six months ended June 30, 2023, respectively, as compared to the same period in 2022 due primarily to the absence of comparable accelerated compensation expense recognized for awards granted to corporate management personnel who are eligible for immediate vesting of their outstanding awards upon retirement.

Interest and other income: The following table sets forth our interest and other income:


															Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended September 30,						Nine Months Ended September 30,
		2022		2021		Change		2022		2021		Change			2023		2022		Change		2023		2022		Change

		(Amounts in thousands)													(Amounts in thousands)

Interest earned on cash balances	Interest earned on cash balances	$	8,149	$	18	$	8,131	$	10,307	$	48	$	10,259	Interest earned on cash balances	$	13,245	$	2,023	$	11,222	$	25,104	$	2,158	$	22,946
Commercial operations	Commercial operations	3,011		1,961		1,050		7,259		6,158		1,101		Commercial operations	2,584		2,166		418		4,967		4,248		719
Unrealized gain on private equity investments	Unrealized gain on private equity investments	344		—		344		4,641		—		4,641		Unrealized gain on private equity investments	275		4,297		(4,022)		2,493		4,297		(1,804)
Other	Other	1,232		1,377		(145)		4,187		3,115		1,072		Other	2,348		1,793		555		4,522		2,955		1,567
Total	Total	$	12,736	$	3,356	$	9,380	$	26,394	$	9,321	$	17,073	Total	$	18,452	$	10,279	$	8,173	$	37,086	$	13,658	$	23,428

Interest expense: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we incurred ~~$35.8~~$40.1 million and ~~$104.4~~$77.9 million, respectively, of interest on our outstanding notes payable, as compared to ~~$24.6~~$34.3 million and ~~$63.6~~$68.6 million for the same periods in ~~2021.~~2022. In determining interest expense, these amounts were offset by capitalized interest of ~~$1.7~~$2.0 million and ~~$4.2~~$3.8 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, associated with our development activities, as compared to ~~$0.9~~$1.4 million and $2.6 million for the same periods in ~~2021.~~2022. The increase of interest expense in the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 as compared to the same periods in ~~2021~~2022 is due to the increase of Compounded SOFR on our ~~issuances of debt to fund our 2021 acquisition activity.~~$700.0 million variable rate unsecured notes, partially offset by the interest savings on the $500.0 million unsecured notes redeemed in August 2022. At ~~September~~June 30, ~~2022,~~2023, we had ~~$6.7~~$6.9 billion of notes payable outstanding, with a weighted average interest rate of approximately ~~1.9%~~2.3%.

Foreign Currency Exchange (Loss) Gain: For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we recorded foreign currency ~~gains~~losses of ~~$100.2~~$1.1 million and ~~$237.3~~$28.0 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, ~~2021,~~2022, we recorded foreign currency gains of ~~$40.9~~$101.7 million and ~~$73.6~~$137.1 million, respectively. The Euro was translated at exchange rates of approximately ~~0.980~~1.089 U.S. Dollars per Euro at ~~September~~June 30, 2023, 1.070 at December 31, 2022, 1.045 at June 30, 2022 and 1.134 at December 31, ~~2021, 1.159 at September 30, 2021 and 1.226 at December 31, 2020.~~2021. 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 notes payable outstanding.

~~Gain on Sale of Real Estate:~~ In the three and nine months ended September 30, 2022, we recorded $1.5 million in gains, and in the three and nine months ended September 30, 2021, we recorded gains totaling $0.3 million and $13.7 million, respectively, in connection with the partial sale of real estate facilities pursuant to eminent domain proceedings.

4849

Liquidity and Capital Resources

Overview and our 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. Notwithstanding this requirement, ~~we are nonetheless able to retain~~our annual operating retained cash flow increased from $200 million to ~~the extent that our tax depreciation exceeds our maintenance capital expenditures.~~$300 million per year in recent years to approximately $700 million in 2021 and $1 billion in 2022. Retained operating cash flow represents our expected cash flow provided by operating activities (including property operating costs and interest payments described below), less shareholder distributions and capital expenditures. ~~Our annual operating~~We expect retained cash flow ~~increased from $200~~of approximately $400 million ~~to $300 million per year in recent years to approximately $700 million in 2021.~~for 2023.

~~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.~~ 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~~On June 12, 2023, we amended our revolving line of credit, ~~which we are able~~increasing the borrowing limit from $500 million to ~~use~~$1.5 billion. We increased the size of the revolving line of credit and its associated lender base given our increased levels of debt maturities in coming years and to serve as temporary “bridge” financing until we are able to raise longer term capital. As of ~~September~~June 30, ~~2022~~2023 and ~~November 1, 2022,~~August 2, 2023, there were no borrowings outstanding on the revolving line of credit; however, we do have approximately ~~$18.6~~$16.7 million of outstanding letters of credit, which limits our borrowing capacity to ~~$481.4~~$1,483.3 million as of ~~November 1, 2022.~~August 2, 2023. Our line of credit matures on ~~April 19, 2024.~~June 12, 2027.

We believe that we have significant financial flexibility to adapt to changing conditions and opportunities, and we have significant access to sources of capital including debt and preferred equity. While the costs of financing have increased recently, based on our strong credit profile and 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~~deteriorated significantly ~~in the~~for a long ~~run,~~period of time, our access to or cost of debt and preferred equity capital could be negatively impacted and potentially affect future investment activities.

Our current and expected capital resources include: (i) ~~$883.8~~$651.7 million of cash as of ~~September~~June 30, ~~2022 and~~2023, (ii) approximately ~~$600.0~~$400 million of expected retained operating cash flow over the next twelve ~~months.~~months, and (iii) $2.2 billion of proceeds from the U.S. Dollar denominated unsecured senior notes issued on July 24, 2023 in connection with the Simply Acquisition. We believe that our 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.

As described below, our current committed cash requirements consist of (i) ~~$19.4 million~~$2.2 billion of ~~principal payments~~acquisition price of the Simply Acquisition announced on ~~debt in the remainder of 2022 and throughout~~July 24, 2023, (ii) ~~$262.6~~$118.2 million in property acquisitions currently under contract, ~~and~~ (iii) ~~$605.5~~$577.0 million of remaining spending on our current development pipeline, which will be incurred primarily in the next 18 to 24 ~~months.~~months, and (iv) $809 million in scheduled principal repayments on our unsecured and mortgage notes in the next twelve months, including $700 million of our U.S. Dollar denominated unsecured notes that mature on April 23, 2024 and €100 million of our Euro denominated unsecured notes that mature on April 12, 2024. We plan to refinance these unsecured notes as they come due in April 2024. Our cash requirements may increase over the next year as we add projects to our development pipeline and acquire additional properties. Additional potential cash requirements could result from various activities including the redemption of outstanding preferred securities, repurchases of common stock, or merger and acquisition activities, as and to the extent we determine to engage in such activities.

Over the long term, to the extent that our cash requirements 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, including payments of principal and interest, (ii) other essential expenditures, including property operating expenses, maintenance capital expenditures and dividends paid in accordance with REIT distribution requirements, and (iii) opportunistic expenditures, including acquisitions and developments and repurchases of our securities. We expect to satisfy these cash requirements through operating cash flow and opportunistic debt and equity financings.

Required Debt Repayments: As of ~~September~~June 30, ~~2022,~~2023, the principal outstanding on our debt totaled approximately ~~$6.8~~$6.9 billion, consisting of ~~$21.0 million of secured notes payable, $1.5 billion of Euro-denominated unsecured notes payable and~~ $5.3 billion of U.S. Dollar denominated unsecured notes payable, $1.7 billion of Euro-denominated unsecured notes payable, and $1.9 million of mortgage notes payable. Approximate principal maturities and interest payments (including $38.6 million in estimated interest on our $700 million variable rate unsecured notes) are as follows (amounts in thousands):


Remainder of 2022		$	33,971
2023		147,164
					Principal		Interest		Total
Remainder of 2023				Remainder of 2023	$	60	$	75,647	$	75,707
2024	2024	916,091		2024	808,977		130,506		939,483
2025	2025	344,661		2025	263,571		108,584		372,155
2026	2026	1,250,688		2026	1,150,138		101,406		1,251,544
2027				2027	500,146		87,644		587,790
Thereafter	Thereafter	4,824,794		Thereafter	4,207,532		163,883		4,371,415
		$	7,517,369		$	6,930,424	$	667,670	$	7,598,094

We have $700 million of our U.S. Dollar denominated unsecured notes that mature on April 23, 2024 and €100 million of our Euro denominated unsecured notes that mature on April 12, 2024. We plan to refinance these unsecured notes as they come due in April 2024.

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~~We spent $105 million of capital expenditures ~~totaled $329.3 million~~to maintain real estate facilities in the first ~~nine~~six months of ~~2022~~2023 and ~~are expected~~expect to ~~approximate $400~~spend approximately $173 million ~~to $450 million for the year ending December 31, 2022.~~in 2023. In addition to standard capital repairs of building elements reaching the end of their useful lives, our capital expenditures in recent years have included incremental expenditures to enhance the competitive position of certain of our facilities relative to local competitors pursuant to a multi-year program. Such investments include development of more pronounced, attractive, and clearly identifiable color schemes and signage and upgrades to the configuration and layout of the offices and other customer zones to improve the customer experience. We spent approximately ~~$175~~$67 million in the first ~~nine~~six months of ~~2022~~2023 and expect to spend ~~$220~~$160 million in ~~2022~~2023 on this effort. In addition, we have ~~made investments~~spent $26 million in LED lighting and the installation of solar panels ~~which approximated $39 million for~~in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and we expect to spend ~~$50~~$117 million in ~~2022.~~2023.

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 26, 2022,~~August 2, 2023, our Board declared a regular common quarterly dividend of ~~$2.00~~$3.00 per common share totaling approximately ~~$350~~$526 million, which will be paid at the end of ~~December~~September 2023. This represented a 50% increase in the $2.00 per common share quarterly dividend paid during 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~~preferred shares outstanding at ~~September~~June 30, ~~2022~~2023 is approximately $194.7 million per year.

Real Estate Investment Activities: We continue to seek to acquire additional self-storage facilities from third parties. Subsequent to ~~September~~June 30, ~~2022,~~2023, we acquired or were under contract to acquire 33eleven self-storage facilities for a total purchase price of ~~$262.6~~$118.2 million. In addition, on July 24, 2023, we entered into a definitive agreement to acquire BREIT Simply Storage LLC, a self-storage company that owns and operates 127 self-storage facilities (9.4 million square feet) and manages 25 self-storage facilities (1.8 million square feet) for third parties, for a cash acquisition price of $2.2 billion.

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, ~~2022,~~2023, we had development and expansion projects at a total cost of approximately $1.0 billion. Costs incurred through ~~September~~June 30, ~~2022~~2023 were ~~$406.4~~$449.9 million, with the remaining cost to complete of ~~$605.5~~$577.0 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, 2022,~~August 2, 2023, we have two series of preferred securities that are eligible for redemption, at our option and with 30 days’ notice: our 5.150% Series F Preferred Shares ($280.0 million) and our 5.050% Series G Preferred Shares ($300.0 million). See Note 9 to our ~~September~~June 30, ~~2022~~2023 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 nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we did not repurchase any of our common shares. From the inception of the repurchase program through ~~November 1, 2022,~~August 2, 2023, 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.

5152

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, which totals approximately $6.9 billion at June 30, 2023, is ~~our~~the only market-risk sensitive portion of our capital ~~structure, which totals approximately $6.7 billion at September 30, 2022.~~structure.

The fair value of our debt at ~~September~~June 30, ~~2022~~2023 is approximately ~~$5.8~~$6.0 billion. The table below summarizes the annual maturities of our debt, which had a weighted average effective rate of ~~1.9%~~2.3% at ~~September~~June 30, ~~2022.~~2023. See Note 7 to our ~~September~~June 30, ~~2022~~2023 consolidated financial statements for further information regarding our debt (amounts in thousands).

Remainder of 2022 2023 2024 2025 2026 Thereafter Total
Debt $ 212 $ 19,219 $ 798,108 $ 237,266 $ 1,150,138 $ 4,577,020 $ 6,781,963


	Remainder of 2023		2024		2025		2026		2027		Thereafter		Total

Debt	$	60	$	808,977	$	263,571	$	1,150,138	$	500,146	$	4,207,532	$	6,930,424

We have foreign currency exposure at ~~September~~June 30, ~~2022~~2023 related to (i) our investment in Shurgard, with a book value of ~~$252.6~~$276.8 million, and a fair value of ~~$1.3~~$1.4 billion based upon the closing price of Shurgard’s stock on ~~September~~June 30, ~~2022,~~2023, and (ii) €1.5 billion ($~~1.5~~1.7 billion) of Euro-denominated unsecured notes 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, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5253

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, ~~2021,~~2022, 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, ~~2021.~~2022.

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~~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, 2022,~~August 2, 2023, 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, ~~2022.~~2023. We have no current plans to repurchase shares; however, future levels of common share repurchases will be dependent upon our available capital, investment alternatives, and the trading price of our common shares.

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.

5354

PUBLIC STORAGE

INDEX TO EXHIBITS (1)

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


10.1			Third Amended and Restated Credit Agreement, dated as of June 12, 2023, by and among the Company, the financial institutions party thereto, Wells Fargo Securities, LLC, BofA Securities, Inc. and JPMorgan Chase Bank, N.A., as Joint Bookrunners, Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., The Bank of Nova Scotia, BNP Paribas and Sumitomo Mitsui Banking Corporation, as Joint Lead Arrangers, Wells Fargo Bank, National Association, as Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Co-Syndication Agents, and PNC Bank, National Association, TD Bank, N.A., The Bank of Nova Scotia, BNP Paribas and Sumitomo Mitsui Banking Corporation, as Documentation Agents. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 12, 2023 and incorporated herein by reference.

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.

5455

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, 2022~~August 2, 2023
			PUBLIC STORAGE
			By:			/s/ H. Thomas Boyle
						H. Thomas Boyle Senior Vice President, ~~and~~ Chief Financial and Investment Officer

5556


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

PSB	$	—	$	515,312
Shurgard	252,648		313,451
Total	$	252,648	$	828,763


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

	($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:
Developed in 2017	90.8%		91.7%		(1.0)%
Developed in 2018	89.4%		90.5%		(1.2)%
Developed in 2019	88.4%		89.9%		(1.7)%
Developed in 2020	93.1%		90.0%		3.4%
Developed in 2021	82.7%		44.0%		88.0%
Developed in 2022	25.8%		—		—
Expansions completed before 2021	88.0%		87.3%		0.8%
Expansions completed in 2021 or 2022	83.9%		85.7%		(2.1)%
Expansions in process	80.8%		93.5%		(13.6)%
	85.9%		87.4%		(1.7)%
Annual contract rent per occupied square foot:
Developed in 2017	$	19.52	$	15.35	27.2%
Developed in 2018	20.72		16.18		28.1%
Developed in 2019	18.20		13.65		33.3%
Developed in 2020	21.46		15.16		41.6%
Developed in 2021	17.72		13.64		29.9%
Developed in 2022	16.19		—		—
Expansions completed before 2021	16.16		12.86		25.7%
Expansions completed in 2021 or 2022	21.58		18.51		16.6%
Expansions in process	26.28		22.47		17.0%
	$	19.01	$	15.30	24.2%
Number of facilities:
Developed in 2017	16		16		—
Developed in 2018	18		18		—
Developed in 2019	11		11		—
Developed in 2020	3		3		—
Developed in 2021	6		4		2
Developed in 2022	5		—		5
Expansions completed before 2021	51		51		—
Expansions completed in 2021 or 2022	24		23		1
Expansions in process	16		16		—
	150		142		8
Net rentable square feet (in thousands) (c):
Developed in 2017	2,040		2,040		—
Developed in 2018	2,069		2,069		—
Developed in 2019	1,057		1,057		—
Developed in 2020	347		347		—
Developed in 2021	681		502		179
Developed in 2022	399		—		399
Expansions completed before 2021	6,879		6,879		—
Expansions completed in 2021 or 2022	2,897		2,210		687
Expansions in process	951		1,135		(184)
	17,320		16,239		1,081