Public Storage

Previous wording

During the six months ended June 30, 2024, 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, 2023.

Current wording

During the nine months ended September 30, 2024, 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, 2023.

Previous wording

During the three and six months ended June 30, 2024, revenues generated by our Same Store Facilities (as defined below) decreased by 1.0% ($9.8 million) and 0.5% ($9.2 million), respectively, as compared to the same periods in 2023, while Same Store cost of operations increased by 0.9% ($1.9 million) and 2.9% ($12.8 million), respectively. Demand has continued to soften through 2023 and the first half of 2024, and we expect this trend to continue during the remainder of 2024.

Current wording

During the three and nine months ended September 30, 2024, revenues generated by our Same Store Facilities (as defined below) decreased by 1.3% ($12.3 million) and 0.8% ($21.4 million), respectively, as compared to the same periods in 2023, while Same Store cost of operations increased by 2.6% ($5.8 million) and 2.8% ($18.6 million), respectively. While demand growth is down as compared to 2023, demand has improved sequentially during 2024, and we expect this trend to lead to moderating levels of income growth through 2024.

Previous wording

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 2022, we acquired a total of 240 facilities with 17.0 million net rentable square feet for $3.4 billion. Additionally, within our non-same store portfolio, our Newly Developed and Expanded Facilities (as defined below) include a total of 126 self-storage facilities with 14.9 million net rentable square feet. For development and expansions completed by June 30, 2024, we incurred a total cost of $1.4 billion. During the three and six months ended June 30, 2024, combined net operating income generated by our Acquired Facilities (as defined below) and Newly Developed and Expanded Facilities increased 81.3% ($35.3 million) and 81.4% ($67.7 million), respectively, as compared to the same periods in 2023.

Current wording

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 2022, we acquired a total of 243 facilities with 17.2 million net rentable square feet for $3.5 billion. Additionally, within our non-same store portfolio, our Newly Developed and Expanded Facilities (as defined below) include a total of 127 self-storage facilities with 15.3 million net rentable square feet. For development and expansions completed by September 30, 2024, we incurred a total cost of $1.6 billion. During the three and nine months ended September 30, 2024, combined net operating income generated by our Acquired Facilities (as defined below) and Newly Developed and Expanded Facilities increased 51.3% ($27.1 million) and 69.7% ($94.8 million), respectively, as compared to the same periods in 2023.

Previous wording

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 and (ii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. We expect to complete the program in 2024. We spent approximately $63 million on the program in the six months ended June 30, 2024 and expect to spend approximately $150 million over 2024 on this effort. We have also embarked on a solar program under which we plan to install solar panels on over 1,000 of our self-storage facilities. We have completed the installations on 572 facilities through June 30, 2024. We spent approximately $26 million on the program in the six months ended June 30, 2024 and expect to spend $100 million over 2024 on this effort.

Current wording

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 and (ii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. We expect to complete the program in 2024. We spent approximately $106 million on the program in the nine months ended September 30, 2024 and expect to spend approximately $130 million over 2024 on this effort. We have also embarked on a solar program under which we plan to install solar panels on over 1,400 of our self-storage facilities. We have completed the installations on 669 facilities through September 30, 2024. We spent approximately $36 million on the program in the nine months ended September 30, 2024 and expect to spend $70 million over 2024 on this effort.

Previous wording

On April 16, 2024, PSOC completed a public offering of $1.0 billion aggregate principal amount of senior notes, including $700 million aggregate principal amount of floating rate senior notes bearing interest at a rate of Compounded SOFR + 0.70% (reset quarterly) maturing on April 16, 2027 and $300 million aggregate principal amount of senior notes bearing interest at a fixed annual rate of 5.350% maturing on August 1, 2053. The 2053 notes issued at a discount of $5.3 million constitute a further issuance of, and form a single series with, our outstanding 5.350% senior notes due 2053 issued on July 26, 2023 in the aggregate principal amount of $600 million. These senior notes are guaranteed by Public Storage. We received $988.5 million of net proceeds from the offering. On April 23, 2024, we repaid PSOC’s outstanding $700 million aggregate principal amount of floating rate senior notes at maturity due April 23, 2024.

Current wording

On April 16, 2024, PSOC completed a public offering of $1.0 billion aggregate principal amount of senior notes, including $700 million aggregate principal amount of floating rate senior notes bearing interest at a rate of Compounded SOFR + 0.70% (reset quarterly) maturing on April 16, 2027 and $300 million aggregate principal amount of senior notes bearing interest at a fixed annual rate of 5.350% maturing on August 1, 2053. The 2053 notes, which were issued at a discount of $5.3 million, constitute a further issuance of, and form a single series with, our outstanding 5.350% senior notes due 2053 issued on July 26, 2023 in the aggregate principal amount of $600 million. These senior notes are guaranteed by Public Storage. We received $988.5 million of net proceeds from the offering. On April 23, 2024, we repaid at maturity PSOC’s outstanding $700 million aggregate principal amount of floating rate senior notes due April 23, 2024.

Previous wording

For the three months ended June 30, 2024, net income allocable to our common shareholders was $468.4 million or $2.66 per diluted common share, compared to $528.3 million or $3.00 per diluted common share for the same period in 2023, representing a decrease of $59.9 million or $0.34 per diluted common share. The decrease is due primarily to (i) a $61.2 million increase in depreciation and amortization expense and (ii) a $35.2 million increase in interest expense, partially offset by (iii) a $27.8 million increase in self-storage net operating income and (iv) a $13.5 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable.

Current wording

For the three months ended September 30, 2024, net income allocable to our common shareholders was $380.7 million or $2.16 per diluted common share, compared to $563.2 million or $3.20 per diluted common share for the same period in 2023, representing a decrease of $182.5 million or $1.04 per diluted common share. The decrease is due primarily to (i) a $118.5 million increase in foreign currency losses primarily associated with our Euro denominated notes payable, (ii) a $41.6 million increase in depreciation and amortization expense, and (iii) a $15.9 million increase in interest expense, partially offset by (iv) an $11.7 million increase in self-storage net operating income.

Previous wording

The $27.8 million increase in self-storage net operating income in the three months ended June 30, 2024 as compared to the same period in 2023 is a result of a $39.5 million increase attributable to our non-same store facilities, partially offset by an $11.7 million decrease attributable to our Same Store Facilities. Revenues for the Same Store Facilities decreased 1.0% or $9.8 million in the three months ended June 30, 2024 as compared to the same period in 2023, due primarily to lower realized annual rent per occupied square foot and a decline in occupancy. Cost of operations for the Same Store Facilities increased by 0.9% or $1.9 million in the three months ended June 30, 2024 as compared to the same period in 2023, due primarily to increased property tax expense partially offset by decreased on-site property manager payroll. The increase in net operating income of $39.5 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2023 and the fill-up of recently developed and expanded facilities.

Current wording

The $11.7 million increase in self-storage net operating income in the three months ended September 30, 2024 as compared to the same period in 2023 is a result of a $29.8 million increase attributable to our non-same store facilities, partially offset by an $18.0 million decrease attributable to our Same Store Facilities. Revenues for the Same Store Facilities decreased 1.3% or $12.3 million in the three months ended September 30, 2024 as compared to the same period in 2023, due primarily to lower realized annual rent per occupied square foot and a decline in occupancy. Cost of operations for the Same Store Facilities increased by 2.6% or $5.8 million in the three months ended September 30, 2024 as compared to the same period in 2023, due primarily to increased other direct property costs, repairs and maintenance expense and marketing expense, partially offset by decreased on-site property manager payroll. The increase in net operating income of $29.8 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2023.

Previous wording

For the six months ended June 30, 2024, net income allocable to our common shareholders was $927.6 million or $5.26 per diluted common share, compared to $995.8 million or $5.65 per diluted common share for the same period in 2023, representing a decrease of $68.2 million or $0.39 per diluted common share. The decrease is due primarily to (i) a $124.8 million increase in depreciation and amortization expense and (ii) a $66.8 million increase in interest expense, partially offset by (iii) a $77.9 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable and (iv) a $52.9 million increase in self-storage net operating income.

Current wording

For the nine months ended September 30, 2024, net income allocable to our common shareholders was $1.3 billion or $7.43 per diluted common share, compared to $1.6 billion or $8.85 per diluted common share for the same period in 2023, representing a decrease of $250.8 million or $1.42 per diluted common share. The decrease is due primarily to (i) a $166.3 million increase in depreciation and amortization expense and (ii) a $82.7 million increase in interest expense, and (iii) a $40.5 million increase in foreign currency exchange losses primarily associated with our Euro denominated notes payable, partially offset by (iv) a $64.6 million increase in self-storage net operating income.

Previous wording

The $52.9 million increase in self-storage net operating income in the six months ended June 30, 2024 as compared to the same period in 2023 is a result of a $74.9 million increase attributable to our non-same store facilities, partially offset by a $22.0 million decrease attributable to our Same Store Facilities. Revenues for the Same Store Facilities decreased 0.5% or $9.2 million in the six months ended June 30, 2024 as compared to the same period in 2023, due primarily to a decline in occupancy. Cost of operations for the Same Store Facilities increased by 2.9% or $12.8 million in the six months ended June 30, 2024 as compared to the same period in 2023, due primarily to increased property tax expense and marketing expense partially offset by decreased on-site property manager payroll and utilities. The increase in net operating income of $74.9 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2023 and the fill-up of recently developed and expanded facilities.

Current wording

The $64.6 million increase in self-storage net operating income in the nine months ended September 30, 2024 as compared to the same period in 2023 is a result of a $104.6 million increase attributable to our non-same store facilities, partially offset by a $40.0 million decrease attributable to our Same Store Facilities. Revenues for the Same Store Facilities decreased 0.8% or $21.4 million in the nine months ended September 30, 2024 as compared to the same period in 2023, due primarily to a decline in occupancy. Cost of operations for the Same Store Facilities increased by 2.8% or $18.6 million in the nine months ended September 30, 2024 as compared to the same period in 2023, due primarily to increased marketing expense, property tax expense and repairs and maintenance expense, partially offset by decreased on-site property manager payroll, utility expense and centralized management costs. The increase in net operating income of $104.6 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2023.

Previous wording

For the three months ended June 30, 2024, FFO was $4.30 per diluted common share as compared to $4.29 for the same period in 2023, representing an increase of 0.2%, or $0.01 per diluted common share.

Current wording

For the three months ended September 30, 2024, FFO was $3.80 per diluted common share as compared to $4.58 for the same period in 2023, representing a decrease of 17.0%, or $0.78 per diluted common share.

Previous wording

For the six months ended June 30, 2024, FFO was $8.54 per diluted common share as compared to $8.24 per diluted common share for the same period in 2023, representing an increase of 3.6%, or $0.30 per diluted common share.

Current wording

For the nine months ended September 30, 2024, FFO was $12.34 per diluted common share as compared to $12.82 per diluted common share for the same period in 2023, representing a decrease of 3.7%, or $0.48 per diluted common share.

Previous wording

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 contingencies and resolutions, due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, amortization of acquired non real estate-related intangibles, and our equity share of deferred tax benefits of a change in tax status and unrealized gain on derivatives from our equity investee. 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.

Current wording

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 contingencies and resolutions, casualties, due diligence costs incurred in pursuit of strategic transactions, unrealized gain on private equity investments, UPREIT reorganization costs, Simply integration costs, amortization of acquired non real estate-related intangibles, and our equity share of deferred tax benefits of a change in tax status, unrealized gain on derivatives and Lok’nStore integration costs from our equity investee. 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.

Previous wording

Our self-storage operations are analyzed in four groups: (i) the 2,507 facilities that we have owned and operated on a stabilized basis since January 1, 2022 (the “Same Store Facilities”), (ii) 240 facilities we acquired since January 1, 2022 (the “Acquired Facilities”), (iii) 126 facilities that have been newly developed or expanded, or that will commence expansion by December 31, 2024 (the “Newly Developed and Expanded Facilities”), and (iv) 176 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 2022 (the “Other Non-same Store Facilities”). See Note 13 to our June 30, 2024 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

Current wording

Our self-storage operations are analyzed in four groups: (i) the 2,507 facilities that we have owned and operated on a stabilized basis since January 1, 2022 (the “Same Store Facilities”), (ii) 243 facilities we acquired since January 1, 2022 (the “Acquired Facilities”), (iii) 127 facilities that have been newly developed or expanded, or that will commence expansion by December 31, 2024 (the “Newly Developed and Expanded Facilities”), and (iv) 176 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 2022 (the “Other Non-same Store Facilities”). See Note 13 to our September 30, 2024 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

Previous wording

The following table summarizes the historical operating results (for all periods presented) of these 2,507 facilities (170.0 million net rentable square feet) that represent approximately 78% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2024. 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.

Current wording

The following table summarizes the historical operating results (for all periods presented) of these 2,507 facilities (170.0 million net rentable square feet) that represent approximately 77% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at September 30, 2024. 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.

Previous wording

Revenues generated by our Same Store Facilities decreased 1.0% and 0.5% in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 1.0% decrease in the three months ended June 30, 2024 was due primarily to a 0.6% decrease in realized annual rent per occupied square foot and a 0.5% decrease in average occupancy, as compared to the same period in 2023. The 0.5% decrease in the six months ended June 30, 2024 was due primarily to a 0.6% decrease in average occupancy partially offset by a 0.1% increase in realized annual rent per occupied square foot, as compared to the same period in 2023.

Current wording

Revenues generated by our Same Store Facilities decreased 1.3% and 0.8% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The 1.3% decrease in the three months ended September 30, 2024 was due primarily to a 0.8% decrease in realized annual rent per occupied square foot and a 0.5% decrease in average occupancy, as compared to the same period in 2023. The 0.8% decrease in the nine months ended September 30, 2024 was due primarily to a 0.6% decrease in average occupancy and a 0.2% decrease in realized annual rent per occupied square foot, as compared to the same period in 2023.

Previous wording

The decrease in realized annual rent per occupied square foot in the three months ended June 30, 2024 as compared to the same period in 2023 was due to a decrease in average rates per square foot charged to new tenants moving in over the past twelve months, partially offset by cumulative rate increases to existing long-term tenants over the same period. At June 30, 2024, annual contract rent per occupied square foot was 1.4% lower as compared to June 30, 2023.

Current wording

The decrease in realized annual rent per occupied square foot in the three months ended September 30, 2024 as compared to the same period in 2023 was due to a decrease in average rates per square foot charged to new tenants moving in over the past twelve months, partially offset by cumulative rate increases to existing long-term tenants over the same period. At September 30, 2024, annual contract rent per occupied square foot was 0.5% lower as compared to September 30, 2023.

Previous wording

The weighted average square foot occupancy for our Same Store Facilities was 93.0% and 92.6% in the three and six months ended June 30, 2024, respectively, representing a decrease of 0.5% and 0.6% as compared to the same periods in 2023. Occupancy levels have gradually declined since the second half of 2022 as customer demand softened. During the three and six months ended June 30, 2024, we lowered move-in rental rates and increased advertising spending to stimulate move-in activity at our facilities.

Current wording

The weighted average square foot occupancy for our Same Store Facilities was 92.7% and 92.6% in the three and nine months ended September 30, 2024, respectively, representing a decrease of 0.5% and 0.6% as compared to the same periods in 2023. Occupancy levels have gradually declined since the second half of 2022 as customer demand softened. During the three and nine months ended September 30, 2024, we lowered move-in rental rates and increased advertising spending to stimulate move-in activity at our facilities, as compared to the same periods in 2023.

Previous wording

Move-out activities from our tenants were lower in the three and six months ended June 30, 2024 as compared to the same periods in 2023. These lower move-out volumes contributed to stronger average length of stay for tenants and supported revenue growth.

Current wording

Move-out activities from our tenants were relatively flat in the three months ended September 30, 2024 and lower in the nine months ended September 30, 2024, as compared to the same periods in 2023. Average length of stay for tenants remained strong during the three and nine months ended September 30, 2024, which supported revenue growth from existing long-term tenants.

Previous wording

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 six months ended June 30, 2024 and 2023. Contract rents gained from move-ins and contracts rents lost from move-outs included in the table assume move-in and move-out activities occur at the beginning of each period presented. The table 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.

Current wording

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 months ended September 30, 2024 and 2023. Contract rents gained from move-ins and contracts rents lost from move-outs included in the table assume move-in and move-out activities occur at the beginning of each period presented. The table 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.

Previous wording

Demand was weaker in the first half of 2024 compared to the same period in 2023 primarily from lower home-moving activities partially offset by increases in customers who sought storage space for other reasons. Demand fluctuates due to various local and regional factors, including the overall economy, as well as new supply of self-storage space and alternatives to self-storage.

Current wording

Industry-wide demand was weaker in the first nine months of 2024 compared to the same period in 2023 partially due to lower home-moving activities offset by increases in customers who sought storage space for other reasons. Demand fluctuates due to various local and regional factors, including the overall economy, as well as new supply of self-storage space and alternatives to self-storage.

Previous wording

We expect weaker industry-wide demand in the remainder of 2024 as compared to 2023, but with an improvement in the year-over-year decline in demand in the second half of 2024 as compared to the first half of 2024. We plan to mitigate the effect of lower industry-wide demand to our facilities by continuing to support new customer move-ins with increased marketing expense, lower rental rates to new customers, and increased promotional discounting. As a result, we expect a moderate decline in Same Store Facilities revenues in 2024 as compared to those earned in 2023.

Current wording

We expect weaker industry-wide demand in the remainder of 2024 as compared to 2023, but with an improvement in the year-over-year decline in demand in the remainder of 2024 as compared to the first nine months of 2024. We plan to mitigate the effect of lower industry-wide demand to our facilities by continuing to support new customer move-ins with increased marketing expense, lower rental rates to new customers, and increased promotional discounting. As a result, we expect a moderate decline in Same Store Facilities revenues in 2024 as compared to those earned in 2023.

Previous wording

Late charges and administrative fees remained flat for the three months ended June 30, 2024 and increased 1.3% for the six months ended June 30, 2024, as compared to the same periods in 2023. The year-over-year increase for the six months ended June 30, 2024 was due primarily to higher late charges and lien fees collected on delinquent accounts. Delinquency rates remained at similar levels for the three and six months ended June 30, 2024 as compared to the same periods in 2023.

Current wording

Late charges and administrative fees stayed relatively flat for the three months ended September 30, 2024 and increased 0.7% for the nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The year-over-year increase for the nine months ended September 30, 2024 was due primarily to higher late charges and lien fees collected on delinquent accounts. Delinquency rates remained at similar levels for the three and nine months ended September 30, 2024 as compared to the same periods in 2023.

Previous wording

Cost of operations (excluding depreciation and amortization) increased 0.9% and 2.9% in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The increase during the three-month period is due primarily to increased property tax expense partially offset by decreased on-site property manager payroll, while the increase during the six-month period is due primarily to increased property tax expense and marketing expense partially offset by decreased on-site property manager payroll and utilities.

Current wording

Cost of operations (excluding depreciation and amortization) increased 2.6% and 2.8% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The increase during the three-month period is due primarily to increased repair and maintenance expense, marketing expense, and other direct property costs, partially offset by decreased on-site property manager payroll. The increase during the nine-month period is due primarily to increased property tax expense, repair and maintenance expense, and marketing expense, partially offset by decreased on-site property manager payroll, utility expense and centralized management costs.

Previous wording

Property tax expense increased 3.9% and 5.6% in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, as a result of higher assessed values. We expect property tax expense to grow 4% to 5% in 2024 due primarily to higher assessed values.

Current wording

Property tax expense increased 0.7% and 4.0% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, as a result of higher assessed values. We expect property tax expense to grow 4% to 5% in 2024 due primarily to higher assessed values.

Previous wording

On-site property manager payroll expense decreased 6.5% and 2.6% in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, primarily due to reduction in labor hours driven by revisions in operational processes. We expect on-site property manager payroll expense to decrease moderately in 2024 as compared to 2023 as we continue to enhance operational processes.

Current wording

On-site property manager payroll expense decreased 5.3% and 3.5% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, primarily due to reduction in labor hours driven by revisions in operational processes. We expect on-site property manager payroll expense to decrease moderately in 2024 as compared to 2023 as we continue to enhance operational processes.

Previous wording

Our utility expense consists primarily of electricity costs, which are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Utility expense decreased 8.4% and 6.8% in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, due primarily to decreases in utility rates and our investment in energy saving technology such as solar power and LED lights, which generate favorable returns on investment in the form of lower utility usage. We expect a decline in utility expense in 2024 as compared to 2023 as we continue our investment in solar power.

Current wording

Our utility expense consists primarily of electricity costs, which are dependent upon energy prices and usage levels. Changes in usage levels are driven primarily by weather and temperature. Utility expense decreased 0.7% and 4.7% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, due primarily to our investment in energy saving technology such as solar power and LED lights, which generate favorable returns on investment in the form of lower utility usage. We expect a decline in utility expense in 2024 as compared to 2023 as we continue our investment in solar power.

Previous wording

Marketing expense includes Internet advertising we utilize through our online paid search programs, television 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 12.1% and 26.7% in the three and six months ended June 30, 2024, respectively, as compared to the same period in 2023, primarily by utilizing a higher volume of online paid search programs to attract new tenants. We plan to continue to use internet advertising and other advertising channels to support move-in volumes in the remainder of 2024.

Current wording

Marketing expense includes Internet advertising we utilize through our online paid search programs, television advertising and the operating costs of our website and 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 12.2% and 21.3% in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, primarily by utilizing a higher volume of online paid search programs to attract new tenants. We plan to continue to use internet advertising and other advertising channels to support move-in volumes in the remainder of 2024.

Previous wording

The Acquired Facilities represent 240 facilities that we acquired in 2022, 2023, and 2024. 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:

Current wording

The Acquired Facilities represent 243 facilities that we acquired in 2022, 2023, and 2024. 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:

Previous wording

We have been active in acquiring facilities in recent years. Since the beginning of 2022, we acquired a total of 240 facilities with 17.0 million net rentable square feet for $3.4 billion. During the three and six months ended June 30, 2024, these facilities contributed net operating income of $40.9 million and $78.1 million, respectively.

Current wording

We have been active in acquiring facilities in recent years. Since the beginning of 2022, we acquired a total of 243 facilities with 17.2 million net rentable square feet for $3.5 billion. During the three and nine months ended September 30, 2024, these facilities contributed net operating income of $40.2 million and $118.3 million, respectively.

Previous wording

During 2023, we acquired BREIT Simply Storage LLC, a self-storage company that owned and operated 127 self-storage facilities (9.4 million square feet) and managed 25 self-storage facilities (1.8 million square feet) for third parties, for a purchase price of $2.2 billion in cash. Included in the Acquisition results in the table above are the Simply portfolio self-storage revenues of $76.0 million, NOI of $52.0 million (including Direct NOI of $54.6 million), and average square footage occupancy of 86.7% for the six months ended June 30, 2024.

Current wording

During 2023, we acquired BREIT Simply Storage LLC (“Simply”), a self-storage company that owned and operated 127 self-storage facilities (9.4 million square feet) and managed 25 self-storage facilities (1.8 million square feet) for third parties, for a purchase price of $2.2 billion in cash. Included in the acquisition results in the table above are the Simply portfolio self-storage revenues of $113.9 million, NOI of $77.9 million (including Direct NOI of $81.9 million), and average square footage occupancy of 87.4% for the nine months ended September 30, 2024.

Previous wording

We remain active in seeking to acquire additional self-storage facilities. Future acquisition volume is likely to be impacted by cost of capital and overall macro-economic uncertainties. Subsequent to June 30, 2024, we acquired or were under contract to acquire three self-storage facilities across three states with 0.2 million net rentable square feet, for $24.2 million.

Current wording

We remain active in seeking to acquire additional self-storage facilities. Future acquisition volume is likely to be impacted by cost of capital and overall macro-economic uncertainties. Subsequent to September 30, 2024, we acquired or were under contract to acquire 14 self-storage facilities across nine states with 1.2 million net rentable square feet, for $181.2 million.

Previous wording

The Newly Developed and Expanded Facilities include 42 facilities that were developed on new sites since January 1, 2019, and 84 facilities expanded to increase their net rentable square footage. Of these expansions, 64 were completed before 2023, 12 were completed in 2023 or 2024, and eight are currently in process at June 30, 2024. The following table summarizes operating data with respect to the Newly Developed and Expanded Facilities:

Current wording

The Newly Developed and Expanded Facilities include 43 facilities that were developed on new sites since January 1, 2019, and 84 facilities expanded to increase their net rentable square footage. Of these expansions, 64 were completed before 2023, 15 were completed in 2023 or 2024, and five are currently in process at September 30, 2024. The following table summarizes operating data with respect to the Newly Developed and Expanded Facilities:

Previous wording

Our Newly Developed and Expanded Facilities includes a total of 126 self-storage facilities of 14.9 million net rentable square feet. For development and expansions completed by June 30, 2024, we incurred a total cost of $1.4 billion. During the three and six months ended June 30, 2024, Newly Developed and Expanded Facilities contributed net operating income of $37.8 million and $72.7 million, respectively.

Current wording

Our Newly Developed and Expanded Facilities includes a total of 127 self-storage facilities of 15.3 million net rentable square feet. For development and expansions completed by September 30, 2024, we incurred a total cost of $1.6 billion. During the three and nine months ended September 30, 2024, Newly Developed and Expanded Facilities contributed net operating income of $39.8 million and $112.5 million, respectively.

Previous wording

The facilities under “expansions completed” represent those facilities where the expansions have been completed at June 30, 2024. We incurred a total of $762.2 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 6.4 million net rentable square feet of new storage space.

Current wording

The facilities under “expansions completed” represent those facilities where the expansions have been completed at September 30, 2024. We incurred a total of $871.5 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 6.7 million net rentable square feet of new storage space.

Previous wording

At June 30, 2024, we had 22 additional facilities in development, which will have a total of 2.2 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $419.5 million. We expect these facilities to open over the next 18 to 24 months.

Current wording

At September 30, 2024, we had 23 additional facilities in development, which will have a total of 2.3 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $426.7 million. We expect these facilities to open over the next 18 to 24 months.

Previous wording

The facilities under “expansion in process” represent those facilities where construction is in process at June 30, 2024, and together with additional future expansion activities primarily related to our Same Store Facilities at June 30, 2024, we expect to add a total of 1.6 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of $319.2 million.

Current wording

The facilities under “expansion in process” represent those facilities where construction is in process at September 30, 2024, and together with additional future expansion activities primarily related to our Same Store Facilities at September 30, 2024, we expect to add a total of 1.7 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of $285.8 million.

Previous wording

The Other Non-Same Store Facilities have an aggregate of 17.1 million net rentable square feet at June 30, 2024. During the three and six months ended June 30, 2024 and 2023, the average occupancy for these facilities totaled 82.1% and 80.8%, respectively, as compared to 81.7% and 81.1% for the same periods in 2023, and the realized rent per occupied square foot totaled $17.18 and $17.16, respectively, as compared to $16.16 and $16.07 for the same periods in 2023.

Current wording

The Other Non-Same Store Facilities have an aggregate of 17.1 million net rentable square feet at September 30, 2024. During the three and nine months ended September 30, 2024 and 2023, the average occupancy for these facilities totaled 84.4% and 82.1%, respectively, as compared to 82.1% and 81.5% for the same periods in 2023, and the realized rent per occupied square foot totaled $17.20 and $17.17, respectively, as compared to $16.89 and $16.35 for the same periods in 2023.

Previous wording

Depreciation and amortization expense for Self-Storage Operations increased $61.2 million and $124.8 million in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, primarily due to newly acquired facilities of $2.7 billion in 2023 and newly developed and expanded facilities in 2024. We expect continued increases in depreciation expense in the remainder of 2024 as a result of elevated levels of capital expenditures and new facilities that are acquired, developed or expanded over 2024.

Current wording

Depreciation and amortization expense for Self-Storage Operations increased $41.6 million and $166.3 million in the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, primarily due to newly acquired facilities of $2.7 billion in 2023 and newly developed and expanded facilities in 2024.

Previous wording

Tenant reinsurance operations: Tenant reinsurance premium revenue increased $5.5 million or 11.0% for the three months ended June 30, 2024, and increased $10.4 million or 10.4% for the six months ended June 30, 2024, in each case as compared to the same period in 2023, 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, as well as the increase of average premiums charged per customer at our same store facilities. Tenant reinsurance premium revenue generated from tenants at our Same Store Facilities were $42.3 million and $83.9 million for the three and six months ended June 30, 2024, respectively, as compared to $40.8 million and $81.0 million for the same periods in 2023, representing an increase of 3.7% and 3.6%, respectively.

Current wording

Tenant reinsurance operations: Tenant reinsurance premium revenue increased $6.7 million or 13.1% for the three months ended September 30, 2024, and increased $17.1 million or 11.3% for the nine months ended September 30, 2024, in each case as compared to the same period in 2023, 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, as well as higher insurance coverage in our tenant base at our same store facilities. Tenant reinsurance premium revenue generated from tenants at our Same Store Facilities were $43.1 million and $127.0 million for the three and nine months ended September 30, 2024, respectively, as compared to $41.1 million and $122.1 million for the same periods in 2023, representing an increase of 4.9% and 4.0%, respectively.

Previous wording

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 that drive covered customer losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods. Tenant reinsurance cost of operations increased $1.0 million and $3.1 million for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, primarily due to increased access fees we paid to the third-party owners of properties we manage driven by the growth of our third-party property management program.

Current wording

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 that drive covered customer losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods. Tenant reinsurance cost of operations increased $7.1 million and $10.2 million for the three and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023, primarily due to increased claim volumes and expenses related to flooding and burglary events as well as increased access fees we paid to the third-party owners of properties we manage driven by the significant growth of our third-party property management program.