Extra Space Storage Inc

Previous wording

As of March 31, 2024, we owned or had ownership interests in 2,384 operating stores. Of these stores, 1,909 are wholly-owned, three in consolidated joint ventures and 472 are in unconsolidated joint ventures. In addition, we managed an additional 1,409 stores for third parties bringing the total number of stores which we own and/or manage to 3,793. These stores are located in 42 states and Washington, D.C. The majority of our stores are clustered around large population centers. The clustering of assets around these population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.

Current wording

As of June 30, 2024, we owned or had ownership interests in 2,389 operating stores. Of these stores, 1,912 are wholly-owned, five are in consolidated joint ventures, and 472 are in unconsolidated joint ventures. In addition, we managed an additional 1,423 stores for third parties bringing the total number of stores which we own and/or manage to 3,812. These stores are located in 42 states and Washington, D.C. The majority of our stores are clustered around large population centers. The clustering of assets around these population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.

Previous wording

As of March 31, 2024, approximately 2,155,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For stores that were stabilized as of March 31, 2024, the average length of stay was approximately 17.4 months.

Current wording

As of June 30, 2024, approximately 2,235,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For stores that were stabilized as of June 30, 2024, the average length of stay for tenants who have vacated was approximately 17.5 months.

Previous wording

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $20.36 for the three months ended March 31, 2024, compared to $20.41 for the three months ended March 31, 2023. Average annual rent per square foot for new leases was $13.60 for the three months ended March 31, 2024, compared to $16.00 for the three months ended March 31, 2023. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 2.2% and 2.5%, respectively.

Current wording

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $20.38 for the three months ended June 30, 2024 and 2023. Average annual rent per square foot for new leases was $15.60 for the three months ended June 30, 2024, compared to $17.15 for the three months ended June 30, 2023. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 2.3% and 2.7%, respectively.

Previous wording

Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider “hybrid” stores, a mix of drive-up and multi-floor buildings. We have a number of multi-floor buildings with elevator access only, and a number of stores featuring ground-floor access only.

Current wording

Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider “hybrid” stores, a mix of drive-up and multi-floor buildings.

Previous wording

(1) Includes three consolidated joint ventures and excludes approximately 18,000 units related to Bargold.

Current wording

(1) Includes five consolidated joint ventures and excludes approximately 18,000 units related to Bargold.

Previous wording

Comparison of the three months ended March 31, 2024 and 2023

Current wording

Comparison of the three and six months ended June 30, 2024 and 2023

Previous wording

Results for the three months ended March 31, 2024 included the operations of 2,384 stores (1,909 wholly-owned, three in consolidated joint ventures, and 472 in joint ventures accounted for using the equity method) compared to the results for the three months ended March 31, 2023, which included the operations of 1,457 stores (1,133 wholly-owned, one in a consolidated joint venture, and 323 in joint ventures accounted for using the equity method).

Current wording

Results for the three and six months ended June 30, 2024 included the operations of 2,389 stores (1,912 wholly-owned, five in consolidated joint ventures, and 472 in joint ventures accounted for using the equity method) compared to the results for the three and six months ended June 30, 2023, which included the operations of 1,457 stores (1,133 wholly-owned, one in a consolidated joint venture, and 323 in joint ventures accounted for using the equity method).

Previous wording

Property Rental—The increase in property rental revenues for the three months ended March 31, 2024 was primarily the result of an increase of $248,455 associated with the merger of Life Storage, other acquisitions completed in 2023, and acquisitions completed in the first quarter of 2024. We acquired 771 wholly-owned stores in 2023 and an additional six wholly-owned stores during the three months ended March 31, 2024.

Current wording

Property Rental—The increase in property rental revenues for the three and six months ended June 30, 2024 was primarily the result of an increase of $501,213 associated with the merger of Life Storage (the “Life Storage Merger”), other acquisitions completed in 2023, and acquisitions completed in the first six months of 2024. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024.

Previous wording

Tenant Reinsurance—The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 3,793 stores at March 31, 2024 compared to 2,388 stores at March 31, 2023.

Current wording

Tenant Reinsurance—The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 3,812 stores at June 30, 2024 compared to 2,388 stores at June 30, 2023.

Previous wording

Management Fees and Other Income—Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income. The increase for the three months ended March 31, 2024 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year. As of March 31, 2024, we managed 1,884 stores for joint ventures and third parties, compared to 1,255 stores as of March 31, 2023.

Current wording

Management Fees and Other Income—Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income. The increase for the three and six months ended June 30, 2024 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year. As of June 30, 2024, we managed 1,895 stores for joint ventures and third parties, compared to 1,254 stores as of June 30, 2023.

Previous wording

Property Operations—The increase in property operations expense during the three months ended March 31, 2024 consists primarily of an increase of $79,051 related to the Life Storage Merger, other acquisitions completed in 2023, and acquisitions completed in the first quarter of 2024. We acquired 771 wholly-owned stores in 2023 and an additional six wholly-owned stores during the three months ended March 31, 2024. Additionally, for the three months ended March 31, 2024 there was an increase of $8,451 at our stabilized stores primarily due to payroll, marketing and insurance, partially offset by utilities.

Current wording

Property Operations—The increase in property operations expense during the three and six months ended June 30, 2024 consists primarily of an increase of $152,504 related to the Life Storage Merger, other acquisitions completed in 2023, and acquisitions completed in the first six months of 2024. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024. Additionally, for the three and six months ended June 30,

Previous wording

Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. These increases are primarily related to an increase in stores. We operated 3,793 stores at March 31, 2024 compared to 2,388 stores at March 31, 2023.

Current wording

Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. These increases are primarily related to an increase in stores. We operated 3,812 stores at June 30, 2024 compared to 2,388 stores at June 30, 2023.

Previous wording

General and Administrative—General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, office expense, office rent, travel and professional fees. These expenses are recognized as incurred. Our overall expense has increased primarily as a result of our increased size through acquisitions, business combinations and growth through our joint venture partners and managed portfolio.

Current wording

General and Administrative—General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, office expense, office rent, travel and professional fees. These expenses are recognized as incurred. Our overall General and Administrative expense has increased primarily as a result of our increased size through acquisitions, business combinations and growth through our joint venture partners and managed portfolio.

Previous wording

Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 771 wholly-owned stores in 2023 and an additional six wholly-owned stores during the three months ended March 31, 2024. Additionally, the increase relates to the amortization of intangibles recorded as part of the Life Storage Merger.

Current wording

Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024. Additionally, the increase relates to the amortization of intangibles recorded as part of the Life Storage Merger.

Previous wording

Interest Expense—The increase in interest expense during the three months ended March 31, 2024 was primarily the result of a higher debt balance and higher weighted average interest rate compared to the same period in the prior year. As of March 31, 2024, we had approximately $11.5 billion in total face value of debt, compared to approximately $7.4 billion at March 31, 2023. The increase in the face value of debt is due to the Life Storage Merger. The weighted average interest rate of the total of fixed- and variable-rate debt was 4.5% at March 31, 2024, compared to 4.3% at March 31, 2023.

Current wording

Interest Expense—The increase in interest expense during the three and six months ended June 30, 2024 was primarily the result of a higher debt balance and higher weighted average interest rate compared to the same period in the prior year. As of June 30, 2024, we had approximately $11.8 billion in total face value of debt, compared to approximately $7.5 billion at June 30, 2023. The increase in the face value of debt is due to the Life Storage Merger. The weighted average interest rate of the total of fixed- and variable-rate debt was 4.6% at June 30, 2024, compared to 4.5% at June 30, 2023.

Previous wording

Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes—Represents the amortization of the discount assigned in order to present the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

Current wording

Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes—Represents the amortization of the discount assigned to the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

Previous wording

Interest Income—Interest income represents interest earned on variable interest rate bridge loans, debt securities and on notes receivable from Common and Preferred Operating Partnership unit holders. The increase in interest income during the three months ended March 31, 2024 was primarily the result of an increase in amount of bridge loans held combined with an increase in interest rates. The balance of bridge loans was $752,336 as of March 31, 2024, compared to $507,885 as of March 31, 2023.

Current wording

Interest Income—Interest income represents interest earned on variable interest rate bridge loans, debt securities and on notes receivable from Common and Preferred Operating Partnership unit holders. The increase in interest income during the three and six months ended June 30, 2024 was primarily the result of an increase in amount of bridge loans held combined with an increase in interest rates. The balance of bridge loans was $1,136,306 as of June 30, 2024, compared to $540,355 as of June 30, 2023.

Previous wording

Income Tax Expense—The increase in income tax expense for the three months ended March 31, 2024 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.

Current wording

Income Tax Expense—The increase in income tax expense for the three and six months ended June 30, 2024 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.

Previous wording

Cash flows from operating activities for the three months ended March 31, 2024 increased when compared to the same period in the prior year. Cash flows used in investing activities relate primarily to our acquisition and development of new stores, sales of stores, investments in unconsolidated real estate entities and notes receivable from bridge loans, and fluctuate depending on our actions in those areas. Cash flows from financing activities depend primarily on our debt and equity financing activities. A summary of cash flows along with significant components are as follows:

Current wording

Cash flows from operating activities for the six months ended June 30, 2024 increased when compared to the same period in the prior year. Cash flows used in investing activities relate primarily to our acquisition and development of new stores, sales of stores, investments in unconsolidated real estate entities and notes receivable from bridge loans, and fluctuate depending on our actions in those areas. Cash flows from financing activities depend primarily on our debt and equity financing activities. A summary of cash flows along with significant components are as follows:

Previous wording

As of March 31, 2024, we had $50,816 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2024 and 2023, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Current wording

As of June 30, 2024, we had $76,973 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2024 and 2023, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

Previous wording

As of March 31, 2024, we had $11,479,914 face value of debt, resulting in a debt to total enterprise value ratio of 27.0%. As of March 31, 2024, the ratio of total fixed-rate debt and other instruments to total debt was 77.2% ($8,858,252 total fixed-rate debt including $1,384,038 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of the total of fixed- and variable-rate debt at March 31, 2024 was 4.5%. Certain of our real estate assets are pledged as collateral for our debt. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at March 31, 2024.

Current wording

As of June 30, 2024, we had $11,803,723 face value of debt, resulting in a debt to total enterprise value ratio of 25.5%. As of June 30, 2024, the ratio of total fixed-rate debt and other instruments to total debt was 75.0% ($8,857,343 total fixed-rate debt including $1,383,303 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of the total of fixed- and variable-rate debt at June 30, 2024 was 4.6%. Certain real estate assets are pledged as collateral for our debt. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at June 30, 2024.

Previous wording

We hold a BBB+/Stable rating from S&P, which was upgraded from BBB/Stable in July 2023 in connection with the Life Storage Merger, and a Baa2 rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of March 31, 2024, we had a total of 1,677 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $32,023,434 and our total asset value was calculated as $37,860,700 according to the calculations as defined by our public bonds.

Current wording

We hold a BBB+/Stable rating from S&P, which was upgraded from BBB/Stable in July 2023 in connection with the Life Storage Merger, and a Baa2 rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of June 30, 2024, we had a total of 1,680 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $32,357,105 and our total asset value was calculated as $38,192,174 according to the calculations as defined by our public bonds.