10q10k10q10k.net

What changed in Extra Space Storage's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Extra Space Storage's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+132 added−136 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-28)

Top changes in Extra Space Storage's 2023 10-K

132 paragraphs added · 136 removed · 110 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

25 edited+1 added−1 removed37 unchanged
Biggest changeWe also offer other health-oriented benefits such as smoking cessation programs and a fitness program that allows for reimbursements to employees for expenses incurred relating to fit-friendly activities, sports or exercise equipment. Training and Development In order to attract and retain diverse top talent, we offer training and development opportunities for our employees.
Biggest changeWe offer individualized counseling to our employees to assist them with their journey towards better health and financial wellness. We also offer other health-oriented benefits such as smoking cessation programs and a fitness program that allows for reimbursements to employees for expenses incurred relating to fit-friendly activities, sports or exercise equipment.
Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods. Our research has shown that tenants choose a store based primarily on the convenience of the site to their home or business, making high-density, high-traffic population centers ideal locations for stores.
Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods. Our research has shown that tenants choose a store based primarily on price and the convenience of the site to their home or business, making high-density, high-traffic population centers ideal locations for stores.
A store’s visibility on the internet, price, perceived security, cleanliness, and the general professionalism of the store managers and staff are also contributing factors to a store’s ability to successfully secure rentals. Although most stores are leased to tenants on a month-to-month basis, tenants tend to continue their leases for extended periods of time.
A store’s visibility on the internet, perceived security, cleanliness, and the general professionalism of the store managers and staff are also contributing factors to a store’s ability to successfully secure rentals. Although most stores are leased to tenants on a month-to-month basis, tenants tend to continue their leases for extended periods of time.
Our collection and processing of personal information may be subject to various data privacy and security laws, which govern the collection, use, disclosure of personal information and are constantly evolving, may conflict with each other to complicate compliance efforts and can results in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
Our collection and processing of personal information may be subject to various data privacy and security laws, which govern the collection, use, disclosure of personal information and are constantly evolving, may conflict with each other to complicate compliance efforts and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
Our management business enables us to generate increased revenues through management fees as well as expand our geographic footprint, data sophistication and scale with little capital investment. We believe this expanded footprint enables us to reduce our operating costs through economies of scale. In addition, we see our management business as a potential future acquisition pipeline.
Our management business enables us to generate increased revenues through management fees as well as expand our geographic footprint, data sophistication and scale with little capital investment. We believe this expanded footprint enables us to reduce our operating costs through economies of scale. In addition, our management business is a potential future acquisition pipeline.
During 2022, we expanded participation in our employee resource groups that provide our employees a space to build community by celebrating their culture, providing mentoring opportunities and developing educational content for Extra Space.
During 2023, we expanded participation in our employee resource groups that provide our employees a space to build community by celebrating their culture, providing mentoring opportunities and developing educational content for Extra Space.
We sell stock under the ATM program from time to time to raise capital when we believe conditions are advantageous. During the year ended December 31, 2022, we didn't issue or sell any shares of common stock.
We sell stock under the ATM program from time to time to raise capital when we believe conditions are advantageous. During the year ended December 31, 2023, we didn't issue or sell any shares of common stock.
A wholly-owned, consolidated subsidiary fully reinsures such policies and thereby assumes all risk of losses under these policies and receives reinsurance premiums substantially equal to the premiums collected from our tenants, from the non-affiliated insurance company. As of December 31, 2022, we managed 887 stores for third party owners.
A wholly-owned, consolidated subsidiary fully reinsures such policies and thereby assumes all risk of losses under these policies and receives reinsurance premiums substantially equal to the premiums collected from our tenants, from the non-affiliated insurance company. As of December 31, 2023, we managed 1,337 stores for third party owners.
Common Operating Partnership units receive distributions equal to the dividends on common stock, while Preferred Operating Partnership units receive distributions at various negotiated rates. We may issue additional units in the future when circumstances are favorable. Joint Ventures - As of December 31, 2022, we owned 319 of our stores through joint ventures with third parties.
Common Operating Partnership units receive distributions equal to the dividends on common stock, while Preferred Operating Partnership units receive distributions at various negotiated rates. We may issue additional units in the future when circumstances are favorable. Joint Ventures - As of December 31, 2023, we owned 474 of our stores through unconsolidated joint ventures with third parties.
We will continue to utilize a combination of secured and unsecured financing for future store acquisitions and development. As of December 31, 2022, we had $1.3 billion of secured notes payable and $5.1 billion of unsecured notes payable outstanding. Equity - We have an active "at the market" ("ATM") program for selling stock.
We will continue to utilize a combination of secured and unsecured financing for future store acquisitions and development. As of December 31, 2023, we had $1.3 billion of secured notes payable and $9.4 billion of unsecured notes payable outstanding. Equity - We have an active "at the market" ("ATM") program for selling stock.
We proactively redevelop properties to add units or modify existing unit mix to better meet the demand in a given market and to maximize revenue. We also redevelop properties to reduce their effective useful age, increase visual appeal, enhance security and to improve brand consistency across the portfolio.
We proactively redevelop properties to add units or modify existing unit mix to better meet the demand in a given market and to maximize revenue. We also redevelop properties to extend their useful life, increase visual appeal, enhance security and to improve brand consistency across the portfolio.
We believe that if we focus on attracting, developing, and retaining diverse top talent at all levels of the organization, our employees will take care of our customers and drive growth for our shareholders. As of December 31, 2022, we had 4,781 employees and believe our relationship with our employees is good.
We believe that if we focus on attracting, developing, and retaining diverse top talent at all levels of the organization, our employees will take care of our customers and drive growth for our shareholders. As of December 31, 2023, we had 7,618 employees and believe our relationship with our employees is good.
Our employees are not represented by a collective bargaining agreement. In 2022, we invited our employees to participate in an employee satisfaction survey. We achieved an overall satisfaction score of 79% with over 91% of our employees participating in our survey.
Our employees are not represented by a collective bargaining agreement. In 2023, we invited our employees to participate in an employee satisfaction survey and achieved an overall satisfaction score of 79% with over 95% of our employees participating in our survey.
Our employee population is approximately 47% female and approximately 44% have self-identified as people of color: Black or African American (16%), Hispanic or Latino (20%), Asian (2.4%), of two or more races (4.2%), Native American (0.6%), and Pacific Islander (0.5%).
Our employee population is approximately 49% female and approximately 44% have self-identified as people of color: Black or African American (18%), Hispanic or Latino (18%), Asian (2.4%), of two or more races (4.2%), Native American (0.7%), and Pacific Islander (0.5%).
As of December 31, 2022, our Credit Lines had available capacity of $1.4 billion, of which $445.0 million was undrawn. 5 Secured and Unsecured Debt - We primarily use public bonds, unsecured private placement bonds and unsecured bank term loans to finance store acquisitions and development efforts.
As of December 31, 2023, our Credit Lines had available capacity of $2.1 billion, of which $1,458 million was undrawn. 6 Secured and Unsecured Debt - We primarily use public bonds, unsecured private placement bonds and unsecured bank term loans to finance store acquisitions and development efforts.
Stores offer month-to-month rental of storage space for personal or business use. As of December 31, 2022, we owned and/or operated 2,338 stores in 41 states, and Washington, D.C., comprising approximately 176.1 million square feet of net rentable space in approximately 1.6 million units.
Stores offer month-to-month rental of storage space for personal or business use. As of December 31, 2023, we owned and/or operated 3,714 stores in 42 states, and Washington, D.C., comprising approximately 283 million square feet of net rentable space in approximately 2.6 million units.
Tenants typically rent fully enclosed spaces that vary in size and typically range from 5 feet by 5 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet. Tenants have responsibility for moving their items into and out of their units.
Stores offer month-to-month rental of storage space for personal or business use. Tenants typically rent fully enclosed spaces that vary in size and typically range from 5 feet by 5 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet. Tenants have responsibility for moving their items into and out of their units.
We will continue to implement and pursue diversity, equity and inclusion initiatives and tracking that allow us to attract and retain diverse top talent, improve employee engagement, increase innovation and customer insight and enhance the quality of our decision making.
We will continue to implement and pursue diversity, equity and inclusion initiatives and tracking that allow us to attract and retain diverse top talent, improve employee engagement, increase innovation and customer insight and enhance the quality of our decision making. Newsweek recently recognized us as one of America's Greatest Workplaces for Diversity 2024.
We generally originate mortgage loans and mezzanine loans, with the intent to sell many of the mortgage loans to third parties, while retaining our interests in the mezzanine loans. As of December 31, 2022, the total principal balance of bridge loans receivable was $491.9 million. 4 We have made investments in preferred stock of other self-storage companies.
We generally originate mortgage loans and mezzanine loans, with the intent to sell a portion of the mortgage loans to third parties, while retaining our interests in the mezzanine loans. As of December 31, 2023, the total balance of bridge loans receivable was $594.7 million. 5 We have made investments in preferred stock of other self-storage companies.
The industry is also characterized by fragmented ownership. According to the Almanac, as of the end of 2022, the top ten self-storage companies in the United States operated approximately 24.2% of the total U.S. stores, and the top 50 self-storage 6 companies operated approximately 31.9% of the total U.S. stores.
The industry is also characterized by fragmented ownership. According to the Almanac, as of the end of 2023, the top ten self-storage companies in the United States operated approximately 26.1% of the total U.S. stores, and the top 50 self-storage 7 companies operated approximately 32.9% of the total U.S. stores.
For the year ended December 31, 2022, we sold two stores for $38.7 million. Industry & Competition We are the second largest self-storage operator in the United States. Our four primary competitors who are public self-storage REITs are CubeSmart, Life Storage, National Storage Affiliates and Public Storage. Stores offer month-to-month rental of storage space for personal or business use.
For the year ended December 31, 2023, we did not sell any stores. For the year ended December 31, 2022, we sold two stores for $38.7 million. Industry & Competition We are the largest self-storage operator in the United States. Our three primary competitors who are public self-storage REITs are CubeSmart, National Storage Affiliates and Public Storage.
Compensation, Health and Well Being We offer competitive health benefits and encourage our employees to participate in employee health and wellness programs. Over 58% of our employees who are enrolled in our health plan participate in these programs. We offer individualized counseling to our employees to assist them with their journey towards better health.
Compensation, Health and Well Being We offer competitive health benefits and encourage our employees to participate in employee health and wellness programs. Over 56% of our employees who are enrolled in our health plan participate in these programs, which are designed to improve employees' overall health.
The self-storage industry is a mature industry that has seen the average occupancy continue to increase. According to the Self-Storage Almanac (the “Almanac”), the national average physical occupancy rate was 90.2% of net rentable square feet in 2015, compared to an average physical occupancy rate of 93.4% in 2022. Our average occupancy for wholly-owned stores for 2022 was 93.3%.
The self-storage industry is a mature industry with average occupancies that are typically at or above 90%. According to the Self-Storage Almanac (the “Almanac”), the national average physical occupancy rate was 92.8% of net rentable square feet in 2017, compared to an average physical occupancy rate of 91.6% in 2023. Our average occupancy for wholly-owned stores for 2023 was 92.0%.
In 2022, we invested in training and development for our employees, which included leadership training, communication training, individual learning plans, site manager training and mentorship programs. Our field employees received an aver age of eight ho urs of training and each new hire received an average of 82 hours of training in 2022.
In 2023, we invested in training and development for our employees, which included leadership training, communication training, individual development plans, site manager training and mentorship programs.
Additionally, we provide our employees with an education assistance program through Western Governors University that allows our employees a path to an undergraduate degree in business or information technology through scholarships and other assistance. 7 Diversity, Equity and Inclusion We value diversity, equity and inclusion and undertake a wide spectrum of initiatives to attract and retain a diverse workforce.
Our field employees received an aver age of 22 ho urs of training and each new hire received an average of 82 hours of training in 2023. 8 Diversity, Equity and Inclusion We value diversity, equity and inclusion and undertake a wide spectrum of initiatives to attract and retain a diverse workforce.
Removed
We also launched a formal internship program with Project Destined to support a more diverse talent pipeline into real estate professions. Utah Business Magazine recently recognized us as one of the top 100 Companies Championing Women.
Added
We also provide employees access to a network of childcare and elder care providers. Training and Development In order to attract and retain diverse top talent, we believe strongly that development is a continuous journey throughout the employee's career. We provide formal development programs which are available to employees who are ready for an intense structured experience.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

37 edited+11 added−14 removed93 unchanged
Biggest changeAlthough we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply.
Biggest changeAlthough we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, may conflict with one another or other legal obligations with which we must comply, may require us to incur significant costs, implement new processes, or otherwise affect our ability to use and disclose the information we collect, which could affect our results of operations, business, and financial condition.
Therefore, our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions or to continue to make distributions required to maintain our qualification as a REIT; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • because a portion of our debt bears interest at variable rates, an increase in interest rates could materially increase our interest expense; • we may be forced to dispose of one or more of our stores, possibly on disadvantageous terms; • after debt service, the amount available for cash distributions to our stockholders is reduced; • we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions; • we may default on our obligations and the lenders or mortgagees may foreclose on our stores that secure their loans and receive an assignment of rents and leases and/or enforce our guarantees; 13 • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and • our default under any one of our mortgage loans with cross-default or cross-collateralization provisions could result in a default on other indebtedness or result in the foreclosures of other stores.
Therefore, our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions or to continue to make distributions required to maintain our qualification as a REIT; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • because a portion of our debt bears interest at variable rates, an increase in interest rates could materially increase our interest expense; • we may be forced to dispose of one or more of our stores, possibly on disadvantageous terms; • after debt service, the amount available for cash distributions to our stockholders is reduced; • we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions; • we may default on our obligations and the lenders or mortgagees may foreclose on our stores that secure their loans and receive an assignment of rents and leases and/or enforce our guarantees; • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and • our default under any one of our mortgage loans with cross-default or cross-collateralization provisions could result in a default on other indebtedness or result in the foreclosures of other stores.
In addition, our Operating Partnership is required to indemnify us, our affiliates and each of our respective 11 trustees, officers, directors, employees and agents to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Operating Partnership, provided that our Operating Partnership will not indemnify for (1) willful misconduct or a knowing violation of the law, (2) any transaction for which such person received an improper personal benefit in violation or breach of any provision of the partnership agreement, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful.
In addition, our Operating Partnership is required to indemnify us, our affiliates and each of our respective trustees, officers, directors, employees and agents to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Operating Partnership, provided that our Operating Partnership will not indemnify for (1) willful misconduct or a knowing violation of the law, (2) any transaction for which such person received an improper personal benefit in violation or breach of any provision of the partnership agreement, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful.
Our ability to acquire stores on favorable terms and successfully integrate and operate them may be constrained by the following significant risks • competition from local investors and other real estate investors with significant capital, including other publicly-traded REITs and institutional investment funds; • competition from other potential acquirers may significantly increase the purchase price which could reduce our profitability; • the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions; and 9 • we may acquire stores subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by persons dealing with the former owners of the stores and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the stores.
Our ability to acquire stores on favorable terms and successfully integrate and operate them may be constrained by the following significant risks: • competition from local investors and other real estate investors with significant capital, including other publicly-traded REITs and institutional investment funds; • competition from other potential acquirers may significantly increase the purchase price which could reduce our profitability; • the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions; and • we may acquire stores subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by persons dealing with the former owners of the stores and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the stores.
In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers, which could harm our financial condition. Certain provisions of Maryland law and our organizational documents, including the stock ownership limit imposed by our charter, may inhibit market activity in our stock and could prevent or delay a change in control transaction.
In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers, which could harm our financial condition. 13 Certain provisions of Maryland law and our organizational documents, including the stock ownership limit imposed by our charter, may inhibit market activity in our stock and could prevent or delay a change in control transaction.
Further, the impact of climate change may increase the cost of, or make unavailable, property insurance or other hazard insurance on terms we find acceptable or necessary to adequately protect our properties. Risks Related to Our Organization and Structure Conflicts of interest could arise as a result of our relationship with our Operating Partnership.
Further, the impact of climate change may increase the cost of, or make 12 unavailable, property insurance or other hazard insurance on terms we find acceptable or necessary to adequately protect our properties. Risks Related to Our Organization and Structure Conflicts of interest could arise as a result of our relationship with our Operating Partnership.
Also, we must 15 make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, and we will be subject to U.S. federal corporate income tax to the extent we distribute less than 100% of our REIT taxable income, without regard to the dividends paid deduction and including net capital gains.
Also, we must make distributions to stockholders aggregating annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, and we will be subject to U.S. federal corporate income tax to the extent we distribute less than 100% of our REIT taxable income, without regard to the dividends paid deduction and including net capital gains.
We, jointly with certain corporate subsidiaries, including Extra Space Management, Inc., elected to treat each such subsidiary as a taxable REIT subsidiary (“TRS”) of our Company for U.S. federal income tax purposes. A TRS is subject to U.S. federal corporate income tax, and may also be subject to state and local taxes, on its taxable income.
We, jointly with certain corporate subsidiaries, including Extra Space Management, Inc., elected to treat each such subsidiary as a taxable REIT subsidiary of our Company for U.S. federal income tax purposes. A TRS is subject to U.S. federal corporate income tax, and may also be subject to state and local taxes, on its taxable income.
If we fail to qualify as a REIT or lose our qualification as a REIT at any time, we will face serious tax consequences that would substantially reduce the funds available for distribution for each of the years involved because: • we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal corporate income tax on our taxable income; • we also could be subject to the U.S. federal alternative minimum income tax for taxable years prior to 2018 and possibly increased state and local taxes; and • unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following a year during which we were disqualified.
If we fail to qualify as a REIT or lose our qualification as a REIT at any time, we will face serious tax consequences that would substantially reduce the funds available for distribution for each of the years involved because: • we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal corporate income tax on our taxable income; • we also could be subject to a U.S. federal alternative minimum income tax and possibly increased state and local taxes; and • unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following a year during which we were disqualified.
In addition, if we fail to qualify as a REIT, we will not be required to make distributions to stockholders, and all distributions to stockholders will be subject to tax as regular corporate dividends to the extent of our current and accumulated earnings and profits.
In addition, if we fail to qualify as a REIT, we will not be required to make distributions to stockholders, and all distributions to stockholders will be subject to tax as regular corporate dividends to the extent of our current and accumulated 16 earnings and profits.
Additionally, we do not anticipate that our internally generated cash flow will be adequate to repay our existing indebtedness upon maturity and, therefore, we expect to repay our indebtedness through refinancings and equity and/or debt offerings.
Additionally, we do not anticipate that our internally generated cash flow will be adequate to repay our existing indebtedness upon maturity and, therefore, we expect to repay our indebtedness through refinancings and equity 14 and/or debt offerings.
If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected. Virtually all of our leases are on a month-to-month basis. Any delay in re-letting units as vacancies arise would reduce our revenues and harm our operating results.
If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected. Nearly all of our leases are on a month-to-month basis. Any delay in re-letting units as vacancies arise would reduce our revenues and harm our operating results.
We expect to continue our joint venture strategy by entering into more joint ventures for the purpose of developing new stores and acquiring existing stores. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity.
We expect to continue our joint venture strategy by entering into additional joint ventures for the purpose of developing new stores and acquiring existing stores. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity.
This, in turn, could cause our other debt, including the notes and our revolving credit facility, to become due and payable as a result of cross-default or cross-acceleration provisions contained in the agreements governing the other debt and permit certain of our lenders to 14 foreclose on our assets, if any, that secure this debt.
This, in turn, could 15 cause our other debt, including the notes and our revolving credit facility, to become due and payable as a result of cross-default or cross-acceleration provisions contained in the agreements governing the other debt and permit certain of our lenders to foreclose on our assets, if any, that secure this debt.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to 10 comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business, financial condition and results of operations.
Although the self-storage industry has historically been resilient to ordinary market downturns, the impact of the COVID-19 pandemic and other pandemics, epidemics or public health emergencies on the U.S. and world economies generally, and on our future results in particular, could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted.
Although the self-storage industry has historically been resilient to ordinary market downturns, the impact of pandemics, epidemics or public health emergencies on the U.S. and world economies generally, and on our future results in particular, could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted.
Our operations, revenues and operating income may be adversely impacted by, for example, increases in unemployment rates, rising interest rates, changing demographics, recessions, perceptions about the safety of our stores, changes in local zoning laws, consequences from climate change, public health emergencies, as well as earthquakes, hurricanes and other natural disasters, terrorist acts, civil disturbances or acts of war.
Our operations, revenues and operating income may be adversely impacted by, for example, increases in unemployment rates, rising interest rates, changing demographics, decreases in the volume of housing market transactions, recessions, perceptions about the safety of our stores, changes in local zoning laws, consequences from climate change, public health emergencies, as well as earthquakes, hurricanes and other natural disasters, terrorist acts, civil disturbances or acts of war.
Our joint venture investments could be adversely affected by our lack of sole decision-making authority. As of December 31, 2022, we held interests in 319 operating stores through joint ventures. Some of these arrangements could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers' financial conditions and disputes between us and our co-venturers.
Our joint venture investments could be adversely affected by our lack of sole decision-making authority. As of December 31, 2023, we held interests in 474 operating stores through joint ventures. Some of these arrangements could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers' financial conditions and disputes between us and our co-venturers.
Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our stores or to pay the distributions currently contemplated or necessary to maintain our qualification as a REIT and may expose us to the risk of default under our debt obligations. As of December 31, 2022, we had approximately $7.4 billion of outstanding indebtedness.
Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our stores or to pay the distributions currently contemplated or necessary to maintain our qualification as a REIT and may expose us to the risk of default under our debt obligations. As of December 31, 2023, we had approximately $11.3 billion of outstanding indebtedness.
Further, our insurance coverage may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. Failure to comply with laws and regulations relating to data privacy and protection, could adversely affect our business and our financial condition.
Further, our insurance coverage may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. Actual or perceived failures to comply with laws and regulations relating to data privacy and protection, could adversely affect our business, results of operations, and our financial condition.
In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss.
In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. As a result, our operating results may be adversely affected.
Our information technology systems and those of our third-party service providers, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g. ransomware), malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error (e.g., social engineering, phishing), fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
Our information technology systems and those of our third-party service providers, strategic partners and other contractors or consultants are vulnerable to attack and damage or interruption from computer viruses and malware (e.g. ransomware), misconfigurations, bugs or other vulnerabilities, malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error fraud, denial or degradation of service attacks, and sophisticated nation-state and nation-state-supported actors.
If our property taxes we pay increase, our cash flow would be adversely impacted, and our ability to pay any expected dividends to our stockholders and unitholders could be adversely affected. Public health emergencies, such as pandemics including the COVID-19 pandemic, and measures intended to prevent the spread of a public health emergency, could adversely affect our results of operations.
If our property taxes we pay increase, our cash flow would be adversely impacted, and our ability to pay any expected dividends to our stockholders and unitholders could be adversely affected. Public health emergencies, and measures intended to prevent the spread of a public health emergency, could adversely affect our results of operations.
Our board of directors could issue additional shares of our common stock or establish a series of preferred stock that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our securities or otherwise not be in the best interests of our stockholders. 12 Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Our board of directors could issue additional shares of our common stock or establish a series of preferred stock that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our securities or otherwise not be in the best interests of our stockholders.
As a result, our operating results may be adversely affected. 8 Legal disputes, settlement and defense costs could have an adverse effect on our operating results. From time to time we have to make monetary settlements or defend actions or arbitration (including class actions) to resolve tenant, employment-related or other claims and disputes.
Legal disputes, settlement and defense costs could have an adverse effect on our operating results. 9 From time to time we have to make monetary settlements or defend actions or arbitration (including class actions) to resolve tenant, employment-related or other claims and disputes.
We and our vendors rely on information technology, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
We and our vendors rely on information technology, and any material failure, inadequacy, interruption or security incident affecting that technology could harm our business, results of operations and financial condition.
As of December 31, 2022, we had approximately $7.4 billion of debt outstanding, of which approximately $2.6 billion, or 35.3% was subject to variable interest rates (excluding debt with interest rate swaps). This variable rate debt had a weighted average interest rate of approximately 5.5% per annum.
As of December 31, 2023, we had approximately $11.3 billion of debt outstanding, of which approximately $3.0 billion, or 26.6% was subject to variable interest rates (excluding debt with interest rate swaps). This variable rate debt had a weighted average interest rate of approximately 6.6% per annum.
Dividends payable by REITs may be taxed at higher rates than dividends of non-REIT corporations. The maximum U.S. federal income tax rate for qualified dividends paid by domestic non-REIT corporations to U.S. stockholders that are individuals, trust or estates is generally 20%.
The maximum U.S. federal income tax rate for qualified dividends paid by domestic non-REIT corporations to U.S. stockholders that are individuals, trust or estates is generally 20%.
We face risks related to public health emergencies, such as epidemics and pandemics, including the COVID-19 pandemic, which impacted our business in 2020, and could materially and adversely impact our results of operations in the future.
We face risks related to public health emergencies, such as epidemics and pandemics that could materially and adversely impact our results of operations in the future.
Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, divert significant management attention and resources to remedy any damages that result, subject us to liability claims or regulatory penalties and have a material adverse effect on our business and results of operations.
Any failure to maintain the proper functioning, confidentiality, security and availability of our or our third-party service providers' information technology systems or our Confidential Information could interrupt our 11 operations, damage our reputation, divert significant management attention and resources to remedy any damages that result, subject us to liability and claims or regulatory investigations and enforcement actions, which could result in, among other things, fines and penalties, and have a material adverse effect on our business, financial condition and results of operations.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant and other sensitive information.
We also rely on third-party vendors for information technology and services, including commercially available systems, software, tools and monitoring to provide security for the processing, transmission and storage of Confidential Information.
If one or more of our stores is not in compliance with the ADA or other legislation, then we would be required to incur additional costs to bring the facility into compliance. There is significant competition among self-storage operators and from other storage alternatives.
If one or more of our stores is not in compliance with the ADA or other legislation, then we would be required to incur additional costs to bring the facility into compliance. We face continuing risks and costs in connection with integrating the Life Storage business following our business combination with Life Storage, Inc.
In the United States, both federal and various state governments have adopted, or are considering, laws, guidelines or rules for the collection, distribution, use and storage of information collected from or about consumers or their devices.
In the United States, both federal and various state governments have adopted, or are considering, laws, guidelines or rules for the collection, distribution, use, storage and security of personal information, and we are or may become subject to such obligations with respect to information collected from or about our employees, contractors or customers.
We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally identifiable information, and tenant and lease data. We purchase some of our information technology from vendors, on whom our systems depend.
We rely on information technology networks and systems, including the Internet, to process, transmit and store confidential information, and to manage or support a variety of business processes, including financial transactions and records, intellectual property, proprietary business information, and personal information of our employees, contractors and customers, such as tenant and lease data (collectively, "Confidential Information").
Our existing indebtedness contains covenants that limit our operating flexibility and failure to comply with all covenants in our debt agreements could materially and adversely affect us.
Failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations and ability to make cash distributions to our stockholders. Our existing indebtedness contains covenants that limit our operating flexibility and failure to comply with all covenants in our debt agreements could materially and adversely affect us.
Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks.
Although we have taken steps to protect the security of our information technology systems and Confidential Information, it is possible that our cybersecurity risk management program and processes, including our policies, safety and security measures will not be fully implemented, complied with or able to prevent such systems’ improper functioning or damage, or the improper accessing or disclosure of Confidential Information, from such security breaches, disruptions, and shutdowns.
In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance our debt. Risks Related to Qualification and Operation as a REIT Dividends payable by REITs may be taxed at higher rates.
In the event that some or all of our debt is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance our debt. A downgrade in our credit ratings could materially adversely affect our business and financial condition and the market value of our outstanding notes.
Removed
Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. We and certain of our service providers are from time to time, subject to cyberattacks and security incidents.
Added
(“Life Storage”) in July 2023, and we may not be able to successfully realize the synergies and other benefits of the acquisition or do so within the anticipated time frame. The acquisition of Life Storage involves the combination of two companies that previously operated as independent public companies and their respective operating partnerships.
Removed
For example, the California Consumer Privacy Act of 2018 ("CCPA") went into effect on January 1, 2020, and creates individual privacy rights for California consumers and increases the privacy and security obligations of entities handling certain personal information.
Added
Although we believe the combined company has benefited from the elimination of duplicative costs associated with supporting a public company platform, we have devoted, and will continue to devote, significant management attention and resources to integrating the operations of Extra Space and Life Storage.
Removed
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that has increased the likelihood of, and risks associated with, data breach litigation.
Added
Although much of Life Storage’s business is integrated, we may encounter costs and difficulties in the continuing integration process include the following: • the inability to fully combine the operations of Life Storage into our business, including the integration of employees, customer records and maintaining cybersecurity protections, in a manner that permits us to achieve the cost savings anticipated to result from the transaction; • the inability to dispose of former Life Storage assets or operations that we may desire to dispose of; • the difficulties of operating separate brands and the costs of potentially rebranding Life Storage stores over an extended period of time; • the complexities associated with managing the combined businesses out of different locations and integrating personnel from the two companies; • the failure to retain key employees of either of the two companies; • potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Life Storage business; and • performance shortfalls as a result of the diversion of management’s attention caused by completing the Life Storage transaction and integrating the companies’ operations.
Removed
Further, the California Privacy Rights Act ("CPRA") generally went into effect in January 2023, and significantly amends the CCPA and will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
Added
For all these reasons, it is possible that the continuing integration process could result in the distraction of our management and ongoing business or inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the Life Storage transaction, or could otherwise adversely affect our business and financial results. 10 There is significant competition among self-storage operators and from other storage alternatives.
Removed
It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may be required.
Added
The costs associated with the investigation, remediation and potential notification of such breaches to counter-parties and data subjects could be material. We and certain of our service providers are, from time to time, subject to cyberattacks and security incidents.
Removed
Similar laws have passed in Virginia, Utah, Connecticut and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
Added
For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act, requires certain businesses that process personal information of California residents to, among other things: provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt-out of certain disclosures of their personal information; and enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf.
Removed
Failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations and ability to make cash distributions to our stockholders. Changes in the method pursuant to which the London Interbank Offered Rate (“LIBOR”) is determined and the transition to other benchmarks may adversely affect our financial results.
Added
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Removed
LIBOR and certain other “benchmarks” have been the subject of continuing national, international and other regulatory guidance and proposals for reform.
Added
The credit ratings assigned to the outstanding publicly-traded notes and other debt securities of the operating partnership could change based upon, among other things, our results of operations and financial condition.
Removed
In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, publicly announced that it intends to phase out LIBOR, and on March 5, 2021, the FCA announced that USD LIBOR will no longer be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of one week and two month USD settings, and immediately after June 30, 2023, in the case of the remaining USD settings.
Added
These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any rating will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. Moreover, these credit ratings are not recommendations to buy, sell or hold the notes or any other securities.
Removed
In anticipation of the planned discontinuation of LIBOR, we have converted most of our contracts from LIBOR to the Secured Overnight Financing Rate ("SOFR"), and expect to have converted all remaining contracts indexed to LIBOR to SOFR by June 30, 2023. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S.
Added
If any of the credit rating agencies that have rated the outstanding notes or other debt securities of the operating partnership downgrades or lowers its credit rating, or if any credit rating agency indicates that it has placed any such rating on a so-called “watch list” for a possible downgrading or lowering or otherwise indicates that its outlook for that rating is negative, it could have a material adverse effect on our costs and availability of capital, which could in turn have a material adverse effect on our financial condition, results of operations, cash flows and our ability to satisfy our debt service obligations (including payments on the outstanding notes) and to make dividends and other distributions to our security holders and could also have the material adverse effect on the market value of the outstanding notes.
Removed
Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. The ongoing transition from LIBOR to SOFR has and may continue to impact our business, including by affecting interest on loans and amounts received and paid on derivative instruments.
Added
Risks Related to Qualification and Operation as a REIT Dividends payable by REITs may be taxed at higher rates. Dividends payable by REITs may be taxed at higher rates than dividends of non-REIT corporations.
Removed
These risks arise in connection with transitioning contracts to an alternative rate, including any resulting value transfer that may occur, and may vary by contract.
Removed
The value of loans, securities, or derivative instruments tied to LIBOR, as well as interest rates on our current or future indebtedness, have been and will continue to be impacted by the transition from LIBOR to SOFR or other benchmark rates.
Removed
In addition, transitioning to an alternative reference rate can be challenging, especially if we cannot agree with the respective counterparty about how to make the transition. These risks may have a material adverse effect on our financing costs, and as a result, our financial condition, operating results and cash flows.

Item 2. Properties

Properties — owned and leased real estate

6 edited+2 added−1 removed2 unchanged
Biggest changeItem 2. Properties As of December 31, 2022, we owned or had ownership interests in 1,451 operating stores. Of these stores, 1,132 are wholly-owned, one is in a consolidated joint venture, and 318 are in unconsolidated joint ventures. In addition, we managed 887 stores for third parties bringing the total number of stores which we own and/or manage to 2,338.
Biggest changeItem 2. Properties As of December 31, 2023, we owned or had ownership interests in 2,377 operating stores. Of these stores, 1,903 are wholly-owned, two are in consolidated joint ventures, and 472 are in unconsolidated joint ventures. In addition, we managed 1,337 stores for third parties bringing the total number of stores which we own and/or manage to 3,714.
These stores are located in 41 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.
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.
As of December 31, 2022, approximately 1,335,000 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.
As of December 31, 2023, approximately 2,100,000 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 December 31, 2022, the average length of stay was approximately 16.4 months.
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 December 31, 2023, the average length of stay was approximately 17.4 months.
Average annual rent per square foot for new leases was $18.55 for the year ended December 31, 2022, compared to $19.30 for the year ended December 31, 2021. The average discounts, as a percentage of rental revenues, during these periods were 2.9% and 3.3%, respectively. Our store portfolio is made up of different types of construction and building configurations.
Average annual rent per square foot for new leases was $16.19 for the year ended December 31, 2023, compared to $18.32 for the year ended December 31, 2022. The average discounts, as a percentage of rental revenues, during these periods were 2.5% and 3.0%, respectively. Our store portfolio is made up of different types of construction and building configurations.
The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $21.09 for the year ended December 31, 2022, compared to $17.68 for the year ended December 31, 2021.
The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $21.25 for the year ended December 31, 2023, compared to $20.50 for the year ended December 31, 2022.
Removed
The following table presents additional information regarding net rentable square feet and the number of stores by state: As of December 31, 2022 REIT Owned JV Owned Managed Total Location Property Count (1) Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet Alabama 9 677,643 2 150,808 4 276,695 15 1,105,146 Arizona 25 1,781,391 10 767,735 21 1,813,435 56 4,362,561 California 177 13,617,759 49 3,589,268 101 9,245,648 327 26,452,675 Colorado 17 1,148,067 9 664,076 26 1,889,128 52 3,701,271 Connecticut 7 538,856 7 575,724 8 512,463 22 1,627,043 Delaware — — 2 143,330 2 149,951 4 293,281 Florida 112 8,666,633 44 3,648,367 111 8,681,681 267 20,996,681 Georgia 67 5,188,222 15 1,215,893 23 1,758,268 105 8,162,383 Hawaii 14 942,888 — — 3 159,393 17 1,102,281 Idaho 2 131,569 — — 1 78,180 3 209,749 Illinois 60 3,692,816 10 740,744 30 2,104,187 100 6,537,747 Indiana 91 3,941,553 1 57,866 20 1,463,018 112 5,462,437 Kansas 1 50,059 2 108,920 3 228,935 6 387,914 Kentucky 13 958,359 1 51,771 9 782,473 23 1,792,603 Louisiana 5 386,984 — — 11 808,823 16 1,195,807 Maine — — — — 8 572,791 8 572,791 Maryland 35 2,951,121 11 898,882 39 2,758,372 85 6,608,375 Massachusetts 47 3,006,416 9 613,696 30 1,919,036 86 5,539,148 Michigan 8 667,567 4 309,126 9 646,509 21 1,623,202 Minnesota 7 584,395 4 304,882 16 1,171,513 27 2,060,790 Mississippi 3 234,245 — — — — 3 234,245 Missouri 6 431,381 2 119,650 13 985,543 21 1,536,574 Nebraska — — — — 3 277,866 3 277,866 Nevada 14 1,039,354 4 474,116 8 764,572 26 2,278,042 New Hampshire 2 134,764 2 84,165 5 332,146 9 551,075 New Jersey 64 5,113,817 17 1,228,570 38 2,891,480 119 9,233,867 New Mexico 11 698,987 10 683,085 12 899,202 33 2,281,274 New York 28 2,046,133 18 1,511,452 36 2,214,518 82 5,772,103 North Carolina 23 1,727,329 5 401,432 21 1,638,229 49 3,766,990 Ohio 24 1,463,573 5 325,138 8 645,184 37 2,433,895 Oklahoma 1 61,983 — — 19 1,502,667 20 1,564,650 Oregon 8 549,012 1 65,165 10 737,843 19 1,352,020 Pennsylvania 21 1,547,076 9 678,998 34 2,497,016 64 4,723,090 Rhode Island 2 134,752 — — 3 241,095 5 375,847 South Carolina 23 1,713,004 11 708,571 27 2,272,571 61 4,694,146 Tennessee 22 1,855,296 13 880,621 12 898,630 47 3,634,547 Texas 111 9,108,367 27 2,124,488 85 7,491,410 223 18,724,265 Utah 10 697,387 — — 24 1,950,333 34 2,647,720 Virginia 53 4,267,954 9 703,835 26 1,735,604 88 6,707,393 Washington 9 684,906 — — 13 1,060,316 22 1,745,222 Washington, DC 1 99,939 1 103,553 4 310,872 6 514,364 Wisconsin — — 4 370,993 11 856,701 15 1,227,694 Totals 1,133 82,541,557 318 24,304,920 887 69,224,297 2,338 176,070,774 (1) REIT owned property count includes one store owned in a consolidated joint venture. 16
Added
The following table presents additional information regarding net rentable square feet and the number of stores by state: As of December 31, 2023 REIT Owned JV Owned Managed Total Location Property Count (1) Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet Alabama 37 2,913,201 2 150,859 12 757,497 51 3,821,557 Arizona 46 3,431,613 26 2,091,172 43 3,513,713 115 9,036,498 California 218 17,876,246 50 3,715,231 126 11,806,094 394 33,397,571 Colorado 27 1,890,949 13 937,765 32 2,338,587 72 5,167,301 Connecticut 23 1,754,071 8 714,457 14 948,070 45 3,416,598 Delaware — — 2 143,640 3 228,651 5 372,291 Florida 245 18,448,238 56 4,653,439 164 12,618,124 465 35,719,801 Georgia 119 9,050,883 23 1,892,103 49 3,686,856 191 14,629,842 Hawaii 14 942,069 — — 3 159,569 17 1,101,638 Idaho 2 131,569 — — 2 201,847 4 333,416 Illinois 105 7,534,278 12 940,032 44 3,311,178 161 11,785,488 Indiana 91 3,935,511 1 57,777 25 1,790,294 117 5,783,582 Iowa — — — — 2 175,614 2 175,614 Kansas 1 50,219 2 108,921 5 416,764 8 575,904 Kentucky 15 1,065,563 1 51,800 15 1,179,886 31 2,297,249 Louisiana 10 771,538 — — 25 1,777,779 35 2,549,317 Maine 5 353,767 — — 12 750,918 17 1,104,685 Maryland 44 3,473,618 11 899,878 47 3,381,481 102 7,754,977 Massachusetts 64 4,059,829 16 984,594 36 2,388,706 116 7,433,129 Michigan 8 673,399 4 309,052 15 1,186,708 27 2,169,159 Minnesota 8 709,829 8 646,659 14 1,009,746 30 2,366,234 Mississippi 7 560,879 — — 10 736,463 17 1,297,342 Missouri 28 2,240,243 7 509,322 20 1,583,234 55 4,332,799 Nebraska — — — — 4 371,900 4 371,900 Nevada 33 2,907,229 9 840,819 11 1,059,569 53 4,807,617 New Hampshire 17 1,274,725 2 84,165 20 871,125 39 2,230,015 New Jersey 88 7,033,287 33 2,610,319 55 4,290,839 176 13,934,445 New Mexico 11 714,415 10 681,770 15 1,084,218 36 2,480,403 New York 79 5,693,262 28 2,316,671 84 5,883,153 191 13,893,086 North Carolina 52 3,732,706 8 620,612 37 2,666,196 97 7,019,514 Ohio 50 3,357,288 5 325,617 22 1,661,267 77 5,344,172 Oklahoma 4 268,833 — — 20 1,493,518 24 1,762,351 Oregon 8 550,155 2 166,638 7 467,124 17 1,183,917 Pennsylvania 31 2,359,752 12 966,346 51 3,741,143 94 7,067,241 Rhode Island 6 351,451 1 95,844 6 473,601 13 920,896 South Carolina 40 2,977,927 11 708,382 39 3,198,894 90 6,885,203 Tennessee 29 2,410,329 16 1,091,936 24 1,719,250 69 5,221,515 Texas 241 19,927,466 71 5,456,117 122 10,409,683 434 35,793,266 Utah 10 733,895 — — 31 2,512,983 41 3,246,878 Virginia 73 5,956,916 10 759,116 34 2,367,593 117 9,083,625 Washington 14 1,090,894 2 199,770 16 1,262,293 32 2,552,957 Washington, DC 1 100,203 1 104,189 6 538,309 8 742,701 Wisconsin 1 97,938 9 883,232 15 1,245,006 25 2,226,176 Totals 1,905 143,406,183 472 36,718,244 1,337 103,265,443 3,714 283,389,870 (1) Includes two consolidated joint ventures and excludes approximately 17,900 units related to Bargold Storage Systems, LLC ("Bargold").
Added
See Note 5 in the Notes to the Condensed Consolidated Financial Statements. 19

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed3 unchanged
Biggest changeIssuer Purchases of Equity Securities In October 2020, our board of directors authorized a three-year share repurchase program allowing the repurchase of shares with an aggregate value up to $400.0 million. During the year ended December 31, 2022, we repurchased 381,786 shares at an average price of $165.03 per share, paying a total of $63.0 million.
Biggest changeIssuer Purchases of Equity Securities In November 2023, our board of directors authorized a three-year share repurchase program allowing the repurchase of shares with an aggregate value up to $500.0 million. During the year ended December 31, 2023, no shares were repurchased.
At February 22, 2023, we had 480 holders of record of our common stock. Certain shares of the Company are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
At February 22, 2024, we had 833 holders of record of our common stock. Certain shares of the Company are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded under the symbol “EXR” on the New York Stock Exchange ("NYSE") since our IPO on August 17, 2004. On February 22, 2023, the closing price of our common stock as reported by the NYSE was $154.30.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded under the symbol “EXR” on the New York Stock Exchange ("NYSE") since our IPO on August 17, 2004. On February 22, 2024, the closing price of our common stock as reported by the NYSE was $141.39.
As of December 31, 2022, we had remaining authorization to repurchase shares with an aggregate value up to $337.0 million. Unregistered Sales of Equity Securities All unregistered sales of equity securities during the year ended December 31, 2022 have previously been disclosed in filings with the SEC. Item 6. Selected Financial Data Not required. 17
As of December 31, 2023, we had remaining authorization to repurchase shares with an aggregate value up to $500.0 million. Unregistered Sales of Equity Securities All unregistered sales of equity securities during the year ended December 31, 2023 have previously been disclosed in filings with the SEC. Item 6. Selected Financial Data Not required. 20

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

35 edited+8 added−10 removed55 unchanged
Biggest changeA summary of cash flows along with significant components are as follows: For the Year Ended December 31, 2022 2021 2020 Net cash provided by operating activities $ 1,238,139 $ 952,436 $ 771,232 Net cash used in investing activities $ (1,648,459) $ (837,540) $ (955,427) Net cash provided by (used in) financing activities $ 431,861 $ (166,711) $ 241,471 Significant components of net cash flow included: Net income $ 921,156 $ 877,758 $ 517,582 Depreciation and amortization $ 288,316 $ 241,879 $ 224,444 Acquisition, development and redevelopment of stores $ (1,353,510) $ (1,289,524) $ (387,448) Cash paid for business combination $ (157,302) $ — $ — Gain on real estate transactions $ (14,249) $ (140,760) $ (18,075) Investment in unconsolidated real estate entities $ (118,963) $ (54,602) $ (64,792) Issuance and purchase of notes receivable $ (529,245) $ (317,482) $ (313,355) Investment in debt securities $ — $ — $ (300,000) Proceeds from sale of notes receivable $ 210,048 $ 172,002 $ 62,764 Principal payments received from notes receivable $ 283,636 $ 51,463 $ 10,102 Proceeds from the sale of common stock, net of offering costs $ — $ 273,189 $ 103,468 Proceeds from sale of real estate assets and investments in real estate ventures $ 39,367 $ 572,728 $ 44,024 Net proceeds from our debt financing and repayment activities $ 1,376,411 $ 206,691 $ 691,270 Repurchase of common stock $ (63,008) $ — $ (67,873) Proceeds from issuance of public bonds, net $ 396,100 $ 1,040,349 $ — Dividends paid on common stock $ (805,311) $ (600,994) $ (467,765) We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next twelve months.
Biggest changeA summary of cash flows along with significant components are as follows: For the Year Ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 1,402,474 $ 1,238,139 $ 952,436 Net cash used in investing activities (1,818,256) (1,648,459) (837,540) Net cash provided by (used in) financing activities 423,130 431,861 (166,711) Significant components of net cash flow included: Net income $ 850,453 $ 921,156 $ 877,758 Depreciation and amortization 506,053 288,316 241,879 Acquisition, development and redevelopment of stores (420,892) (1,353,510) (1,289,524) Life Storage Merger, net of cash acquired (1,182,411) — — Cash paid for business combination — (157,302) — Gain on real estate transactions — (14,249) (140,760) Investment in unconsolidated real estate entities (180,279) (118,963) (54,602) Issuance and purchase of notes receivable (330,499) (529,245) (317,482) Proceeds from sale of notes receivable 167,495 210,048 172,002 Principal payments received from notes receivable 142,192 283,636 51,463 Proceeds from the sale of common stock, net of offering costs — — 273,189 Proceeds from sale of real estate assets and investments in real estate ventures 2,132 39,367 572,728 Net proceeds from our debt financing and repayment activities 1,574,019 1,376,411 206,691 Repurchase of common stock — (63,008) — Proceeds from issuance of public bonds, net — — — Dividends paid on common stock (1,046,341) (805,311) (600,994) We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next twelve months.
A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds under our existing lines of credit, curtail planned capital expenditures, or seek other additional sources of financing. 26 LIQUIDITY AND CAPITAL RESOURCES Financing Strategy We will continue to employ leverage in our capital structure in amounts reviewed from time to time by our board of directors.
A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds under our existing lines of credit, curtail planned capital expenditures, or seek other additional sources of financing. 29 LIQUIDITY AND CAPITAL RESOURCES Financing Strategy We will continue to employ leverage in our capital structure in amounts reviewed from time to time by our board of directors.
We may not have identified all material facts and circumstances that affect impairment of our stores. No material impairments were recorded in the year ended December 31, 2022. We evaluate goodwill for impairment at least annually and whenever events, circumstances, and other related factors indicate that fair value of the related reporting unit may be less than the carrying value.
We may not have identified all material facts and circumstances that affect impairment of our stores. No material impairments were recorded in the year ended December 31, 2023. We evaluate goodwill for impairment at least annually and whenever events, circumstances, and other related factors indicate that fair value of the related reporting unit may be less than the carrying value.
We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market 27 conditions, our liquidity requirements, contractual restrictions and other factors.
We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market 30 purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
During 2022 and 2021, 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.
During 2023 and 2022, 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.
If we are determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated within 18 our financial statements. Otherwise, our investment is generally accounted for under the equity method.
If we are determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated within 21 our financial statements. Otherwise, our investment is generally accounted for under the equity method.
For a discussion of such risk factors, see the section in this Form 10-K entitled “Risk Factors.” Dollar amounts in thousands, except share and per share data, unless otherwise stated. OVERVIEW We are a fully integrated, self-administered and self-managed real estate investment trust (“REIT”), formed to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”).
For a discussion of such risk factors, see the section in this Form 10-K entitled “Risk Factors.” Dollar amounts in thousands, except share and per share data, unless otherwise stated. OVERVIEW We are a fully integrated, self-administered and self-managed REIT, formed to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”).
We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing stores, for general working capital or to purchase additional interests in partnerships or joint ventures or for other purposes when we believe it is advisable. As of December 31, 2022, we had $92,868 available in cash and cash equivalents.
We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing stores, for general working capital or to purchase additional interests in partnerships or joint ventures or for other purposes when we believe it is advisable. As of December 31, 2023, we had $99,062 available in cash and cash equivalents.
The total principal balance of bridge loans receivable as of December 31, 2022 was $491,879, compared to $279,042 as of December 31, 2021. The increase in interest income during the year ended December 31, 2022 was primarily the result of the higher bridge loan balances along with higher interest rates.
The total principal balance of bridge loans receivable as of December 31, 2023 was $594,727, compared to $491,879 as of December 31, 2022. The increase in interest income during the year ended December 31, 2023 was primarily the result of the higher bridge loan balances along with higher interest rates.
Same-store expenses increased for the three months and year ended December 31, 2022 compared to the same periods in 2021 due to increases in payroll, credit card processing fees, utilities, property taxes and insurance.
Same-store expenses increased for the year ended December 31, 2023 compared to the year ended 2022 due to increases in payroll, credit card processing fees, utilities, property taxes and insurance.
As of December 31, 2022, the ratio of total fixed-rate debt and other instruments to total debt was 64.7% (including $1,837,714 on which we have interest rate swaps that have been included as fixed-rate debt).
As of December 31, 2022, the ratio of total fixed-rate debt and other instruments to total debt was 64.7% (including $1,837,714 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of total debt at December 31, 2023 and 2022 was 4.6% and 4.1%, respectively.
As of December 31, 2022, the weighted average interest rate for all fixed rate debt was 3.4%, and the weighted average interest rate on all variable rate debt was 5.5%. As of December 31, 2021, the weighted average interest rate for all fixed rate debt was 3.1%, and the weighted average interest rate on all variable rate debt was 1.3%.
As of December 31, 2023, the weighted average interest rate for all fixed rate debt was 3.9%, and the weighted average interest rate on all variable rate debt was 6.6%. As of December 31, 2022, the weighted average interest rate for all fixed rate debt was 3.4%, and the weighted average interest rate on all variable rate debt was 5.5%.
RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements affecting our business, see Item 8, “Financial Statements and Supplementary Data–Recently Issued Accounting Standards.” 19 RESULTS OF OPERATIONS Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Overview Results for the year ended December 31, 2022 included the operations of 1,451 stores (1,132 wholly-owned, one in a consolidated joint venture, and 318 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2021, which included the operations of 1,268 stores (981 wholly-owned, four in a consolidated joint venture, and 283 in joint ventures accounted for using the equity method).
RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements affecting our business, see Item 8, “Financial Statements and Supplementary Data–Recently Issued Accounting Standards.” 22 RESULTS OF OPERATIONS Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Overview Results for the year ended December 31, 2023 included the operations of 2,377 stores (1,903 wholly-owned, two in a consolidated joint venture, and 472 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2022, which included the operations of 1,451 stores (1,132 wholly-owned, one in a consolidated joint venture, and 318 in joint ventures accounted for using the equity method).
The following table presents the calculation of FFO for the periods indicated: For the Year Ended December 31, 2022 2021 2020 Net income attributable to common stockholders $ 860,688 $ 827,649 $ 481,779 Adjustments: Real estate depreciation 263,923 229,133 214,345 Amortization of intangibles 13,623 4,420 1,900 Gain on real estate transactions (14,249) (140,760) (18,075) Unconsolidated joint venture real estate depreciation and amortization 16,644 11,954 9,021 Unconsolidated joint venture gain on sale of real estate assets and purchase of partner's interest — (6,251) — Distributions paid on Series A Preferred Operating Partnership units (2,288) (2,288) (2,288) Income allocated to Operating Partnership noncontrolling interests 60,468 50,109 35,803 Funds from operations attributable to common stockholders and unit holders $ 1,198,809 $ 973,966 $ 722,485 23 SAME-STORE RESULTS Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Our same-store pool for the periods presented consists of 867 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented.
The following table presents the calculation of FFO for the periods indicated: For the Year Ended December 31, 2023 2022 2021 Net income attributable to common stockholders $ 803,198 $ 860,688 $ 827,649 Adjustments: Real estate depreciation 418,149 263,923 229,133 Amortization of intangibles 59,295 13,623 4,420 Gain on real estate transactions — (14,249) (140,760) Unconsolidated joint venture real estate depreciation and amortization 24,400 16,644 11,954 Unconsolidated joint venture gain on sale of real estate assets and purchase of partner's interest — — (6,251) Distributions paid on Series A Preferred Operating Partnership units (159) (2,288) (2,288) Income allocated to Operating Partnership noncontrolling interests 47,255 60,468 50,109 Funds from operations attributable to common stockholders and unit holders $ 1,352,138 $ 1,198,809 $ 973,966 26 SAME-STORE RESULTS Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Our same-store pool for the periods presented consists of 913 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented.
Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and we believe FFO more accurately reflects the value of our real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc.
We believe FFO is a meaningful disclosure as a supplement to net earnings. Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and we believe FFO more accurately reflects the value of our real estate assets.
Tenant Reinsurance —Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. The increase in tenant reinsurance expense for the year ended December 31, 2022 was due primarily to the increase in total number of stores operated compared to the prior year and major storm events that occurred causing an increase in claim payouts.
Tenant Reinsurance —Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. The increase in tenant reinsurance expense for the year ended December 31, 2023 was due primarily to the increase in total number of stores operated compared to the prior year.
Interest Expense— The increase in interest expense during the year ended December 31, 2022 was the result of higher overall debt and a higher average interest rate when compared to the same period in the prior year.
We recognized a total gain of $14,249 related to the sale of these assets. Interest Expense— The increase in interest expense during the year ended December 31, 2023 was the result of higher overall debt and a higher average interest rate when compared to the same period in the prior year.
The same-store expense growth rate for the year ended December 31, 2022 is amplified by negative expense growth in the 2021 comparable period. 24 The following table presents a reconciliation of same-store net operating income to net income as presented on our condensed consolidated statements of operations for the periods indicated: For the Year Ended December 31, 2022 2021 Net Income $ 921,156 $ 877,758 Adjusted to exclude: Gain on real estate transactions (14,249) (140,760) Equity in earnings and dividend income from unconsolidated real estate entities (41,428) (32,358) Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets — (6,251) Interest expense 219,171 166,183 Depreciation and amortization 288,316 241,879 Income tax expense 20,925 20,324 Transaction related costs 1,548 — General and administrative 129,251 102,194 Management fees, other income and interest income (153,326) (115,967) Net tenant insurance (151,971) (140,620) Non same-store rental revenue (211,408) (111,302) Non same-store operating expense 96,147 56,890 Total same-store net operating income $ 1,104,132 $ 917,970 Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020 The same-store results for the years ended December 31, 2021 compared to December 31, 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021 on page 21, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2022. 25 CASH FLOWS Cash flows from operating activities increased as expected due to our continued growth in revenues and through the increase in the number of properties we own and operate.
The same-store expense growth rate for the year ended December 31, 2023 is amplified by negative expense growth in the 2022 comparable period. 27 The following table presents a reconciliation of same-store net operating income to net income as presented on our condensed consolidated statements of operations for the periods indicated: For the Year Ended December 31, 2023 2022 Net Income $ 850,453 $ 921,156 Adjusted to exclude: Gain on real estate transactions — (14,249) Equity in earnings and dividend income from unconsolidated real estate entities (54,835) (41,428) Interest expense 419,035 219,171 Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notes 18,786 — Depreciation and amortization 506,053 288,316 Income tax expense 21,559 20,925 Transaction costs — 1,548 Life Storage Merger transition costs 66,732 — General and administrative 146,408 129,251 Management fees, other income and interest income (186,843) (153,326) Net tenant insurance (176,806) (151,971) Non same-store rental revenue (660,292) (139,370) Non same-store operating expense 235,870 73,772 Total same-store net operating income $ 1,186,120 $ 1,153,795 Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The same-store results for the years ended December 31, 2022 compared to December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 20, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2023. 28 CASH FLOWS Cash flows from operating activities increased as expected due to our continued growth in revenues and through the increase in the number of properties we own and operate.
As of December 31, 2022, we had $7,364,424 face value of debt, resulting in a debt to total enterprise value ratio of 25.8%. As of December 31, 2021, we had $5,984,113 face value of debt, resulting in a debt to total enterprise value ratio of 15.6%.
As of December 31, 2023, we had $11,346,105 face value of debt, resulting in a debt to total enterprise value ratio of 24.2%. As of December 31, 2022, we had $7,364,424 face value of debt, resulting in a debt to total enterprise value ratio of 25.8%.
As of December 31, 2021, the ratio of total fixed-rate debt and other instruments to total debt was 75.3% (including $1,983,145 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of total debt at December 31, 2022 and 2021 was 4.1% and 2.6%, respectively.
As of December 31, 2023, the ratio of total fixed-rate debt and other instruments to total debt was 73.4% (including $1,448,566 on which we have interest rate swaps that have been included as fixed-rate debt).
The following table presents operating data for our same-store portfolio: For the Year Ended December 31, Percent 2022 2021 Change Same-store rental revenues $ 1,443,327 $ 1,229,688 17.4% Same-store operating expenses $ 339,195 $ 311,718 8.8% Same-store net operating income $ 1,104,132 $ 917,970 20.3% Same-store square foot occupancy as of year end 94.2 % 95.3 % Properties included in same-store 867 867 Same-store revenues for the year ended December 31, 2022 increased compared to the same periods in 2021 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy.
The following table presents operating data for our same-store portfolio: For the Year Ended December 31, Percent 2023 2022 Change Same-store rental revenues $ 1,562,286 $ 1,515,365 3.1% Same-store operating expenses $ 376,166 $ 361,570 4.0% Same-store net operating income $ 1,186,120 $ 1,153,795 2.8% Same-store square foot occupancy as of year end 93.0 % 94.1 % Properties included in same-store 913 913 Same-store revenues for the year ended December 31, 2023 increased compared to the same periods in 2022 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy.
Income Tax Expense— For the year ended December 31, 2022 , the increase in income tax expense was the result of an increase in income earned by our TRS when compared to the same period in the prior year. 22 Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020 The results of operations for the years ended December 31, 2021 compared to December 31, 2020 was included in our Annual Report on Form 10-K for the year ended December 31, 2021 on page 21, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2022.
Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The results of operations for the years ended December 31, 2022 compared to December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 21, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2022. 25 FUNDS FROM OPERATIONS Funds from operations ("FFO") provides relevant and meaningful information about our operating performance that is necessary, along with net income and cash flows, for an understanding of our operating results.
In January 2021, we received a Baa2 rating from Moody's Investors Service and in July 2019, we obtained a BBB/Stable rating from S&P. We intend to manage our balance sheet to preserve such ratings. Certain of our real estate assets are pledged as collateral for our debt.
In January 2021, we received a Baa2 rating from Moody's Investors Service and in July 2019, we obtained a BBB/Stable rating from S&P which was upgraded to BBB+/Stable in July 2023 in connection with the Life Storage Merger. We intend to manage our balance sheet to preserve such ratings.
Management Fees and Other Income —Management fees and other income 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 year ended December 31, 2022 was primarily due to an increase in the number of stores managed.
We operated 3,714 stores at December 31, 2023, compared to 2,338 stores at December 31, 2022. Management Fees and Other Income —Management fees and other income represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income.
Tenant reinsurance expense included a $3,000 charge for tenant reinsurance claims related to damages incurred from Hurricane Ian. We operated 2,338 stores at December 31, 2022, compared to 2,096 stores at December 31, 2021. Transaction Related Costs —This represents the costs that were incurred as part of the acquisition of Bargold Storage Systems, LLC ("Bargold").
We operated 3,714 stores at December 31, 2023, compared to 2,338 stores at December 31, 2022. Transaction Costs —This represents the costs that were incurred as part of the acquisition of Bargold.
To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits, as applicable. We added a total of 37 stores to new and existing joint ventures for the year ended December 31, 2022 resulting in higher earnings when compared to the prior year.
To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits, as applicable.
We have a total of 908 unencumbered stores as defined by our public bonds. Our unencumbered asset value is calculated as $17,142,473 and our total asset value is calculated as $22,155,942 according to the calculations as defined by our public bonds. We are subject to certain restrictive covenants relating to our outstanding debt.
Certain of our real estate assets are pledged as collateral for our debt. We have a total of 1671 unencumbered stores as defined by our public bonds. Our unencumbered asset value is calculated as $31,869,102 and our total asset value is calculated as $37,529,884 according to the calculations as defined by our public bonds.
We were in compliance with all financial covenants at December 31, 2022.
We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at December 31, 2023.
We acquired 153 stores during the year ended December 31, 2022, and acquired 74 stores during the year ended December 31, 2021. 21 Other Income and Expenses The following table presents information on other revenues and expenses for the years indicated: For the Year Ended December 31, 2022 2021 $ Change % Change Gain on real estate transactions $ 14,249 $ 140,760 $ (126,511) (89.9) % Interest expense (219,171) (166,183) (52,988) 31.9 % Interest income 69,422 49,703 19,719 39.7 % Equity in earnings and dividend income from unconsolidated real estate entities 41,428 32,358 9,070 28.0 % Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets — 6,251 (6,251) 100.0 % Income tax expense (20,925) (20,324) (601) 3.0 % Total other expense, net $ (114,997) $ 42,565 $ (157,562) (370.2) % Gain on Real Estate Transactions — During the year ended December 31, 2022 we sold two stores.
We acquired 153 stores during the year ended December 31, 2022. 24 Other Income and Expenses The following table presents information on other revenues and expenses for the years indicated: For the Year Ended December 31, 2023 2022 $ Change % Change Gain on real estate transactions $ — $ 14,249 $ (14,249) (100.0) % Interest expense (419,035) (219,171) (199,864) 91.2 % Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notes (18,786) — (18,786) 100.0 % Interest income 84,857 69,422 15,435 22.2 % Equity in earnings and dividend income from unconsolidated real estate entities 54,835 41,428 13,407 32.4 % Income tax expense (21,559) (20,925) (634) 3.0 % Total other expense, net $ (319,688) $ (114,997) $ (204,691) 178.0 % Gain on Real Estate Transactions — During the year ended, December 31, 2022, we sold two stores.
General and Administrative— General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, travel and professional fees. These expenses are recognized as incurred. Our overall expense has increased due to acquisitions, business combinations and growth through our joint venture partners and managed portfolio.
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. No other material trends in specific travel or other expenses were observed.
Information on the total face value of debt and the average interest rate for the years ended December 31, 2022 and December 31, 2021 is set forth in the following table: For the Year Ended December 31, 2022 2021 Total face value of debt $ 7,364,424 $ 5,984,113 Average interest rate 4.1 % 2.6 % Interest Income— Interest income represents interest earned on bridge loans and debt securities, income earned on notes receivable from common and preferred Operating Partnership unit holders and amounts earned on cash and cash equivalents deposited with financial institutions.
Interest Income— Interest income represents interest earned on bridge loans and debt securities, income earned on notes receivable from common and preferred Operating Partnership unit holders and amounts earned on cash and cash equivalents deposited with financial institutions.
As of December 31, 2022, we managed 1,206 stores for third parties and joint ventures compared to 1,115 stores as of December 31, 2021. 20 Expenses The following table presents information on expenses for the years indicated: For the Year Ended December 31, 2022 2021 $ Change % Change Property operations $ 435,342 $ 368,608 $ 66,734 18.1 % Tenant reinsurance 33,560 29,488 4,072 13.8 % Transaction related costs 1,548 — 1,548 — General and administrative 129,251 102,194 27,057 26.5 % Depreciation and amortization 288,316 241,879 46,437 19.2 % Total expenses $ 888,017 $ 742,169 $ 145,848 19.7 % Property Operations —The increase in property operations expense consists primarily of an increase of $32,242 at stabilized stores due to increased payroll, credit card processing fees, utilities, property taxes and insurance.
As of December 31, 2023, we managed 1,811 stores for third parties and joint ventures compared to 1,206 stores as of December 31, 2022. 23 Expenses The following table presents information on expenses for the years indicated: For the Year Ended December 31, 2023 2022 $ Change % Change Property operations $ 612,036 $ 435,342 $ 176,694 40.6 % Tenant reinsurance 58,874 33,560 25,314 75.4 % Transaction costs — 1,548 (1,548) (100.0) Life Storage Merger transition costs 66,732 — 66,732 — % General and administrative 146,408 129,251 17,157 13.3 % Depreciation and amortization 506,053 288,316 217,737 75.5 % Total expenses $ 1,390,103 $ 888,017 $ 502,086 56.5 % Property Operations —The increase in property operations expense consists primarily of an increase of $153,712 associated with the Life Storage Merger and other acquisitions completed in 2023.
Revenues The following table presents information on revenues earned for the years indicated: For the Year Ended December 31, 2022 2021 $ Change % Change Property rental $ 1,654,735 $ 1,340,990 $ 313,745 23.4 % Tenant reinsurance 185,531 170,108 15,423 9.1 % Management fees and other income 83,904 66,264 17,640 26.6 % Total revenues $ 1,924,170 $ 1,577,362 $ 346,808 22.0 % Property Rental— The increase in property rental revenues for the year ended December 31, 2022 was primarily the result of an increase of $220,629 at our stabilized stores related to high occupancy and increased rents to existing customers.
Revenues The following table presents information on revenues earned for the years indicated: For the Year Ended December 31, 2023 2022 $ Change % Change Property rental $ 2,222,578 $ 1,654,735 $ 567,843 34.3 % Tenant reinsurance 235,680 185,531 50,149 27.0 % Management fees and other income 101,986 83,904 18,082 21.6 % Total revenues $ 2,560,244 $ 1,924,170 $ 636,074 33.1 % Property Rental— The increase in property rental revenues for the year ended December 31, 2023 was primarily the result of an increase of $507,054 associated with our merger with Life Storage on July 20, 2023, (the "Life Storage Merger" or "Merger") and other acquisitions completed in 2023.
Property rental revenue also increased by $100,601 associated with acquisitions completed in 2022 and 2021. We acquired 153 stores during the year ended December 31, 2022 and we acquired 74 stores during the year ended December 31, 2021.
We acquired 757 wholly-owned stores in the Merger and an additional 14 stores during the year ended December 31, 2023. We acquired 153 stores during the year ended December 31, 2022.
Tenant Reinsurance —The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated and the higher average occupancy across the portfolio. We operated 2,338 stores at December 31, 2022, compared to 2,096 stores at December 31, 2021.
The increase for the year ended December 31, 2023 was primarily due to an increase in the number of stores managed.
Removed
Property rental revenue also increased by $5,431 during the year ended December 31, 2022 as a result of increases in occupancy at our lease-up stores. These increases were offset by approximately $15,460 related to the sale of 16 stores into a new joint venture and 16 stores to a third party during 2021.
Added
In addition to the increase attributable to the Merger, property rental revenues increased by $46,712 due to operating results at our stabilized stores and increased by $7,523 as a result of increases in occupancy at our lease-up stores. Tenant Reinsurance —The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated.
Removed
The increase was also attributed to $34,547 related to acquisitions completed in 2022 and 2021. We acquired 153 stores during the year ended December 31, 2022 and acquired 74 stores during the year ended December 31, 2021. The increase was partially offset by a decrease in expense of $6,934 related to property sales.
Added
We acquired 757 wholly-owned stores in the merger and an additional 14 stores during the year ended December 31, 2023. We acquired 153 stores during the year ended December 31, 2022. Additionally, property operations expense increased $22,097 at stabilized stores due to increased marketing expense, credit card processing fees and insurance.
Removed
During 2021, we experienced higher than average turnover and extended times to fill. We experienced wage pressure which led to increases in wages of approximately 10% nationwide. During 2022, we continued to see these trends but to a lesser extent and as such we do not expect these trends to continue in 2023.
Added
Life Storage Merger Transition Costs— Represents the costs that were incurred as part of the Life Storage Merger primarily consisting of severance paid as part of employment agreements with certain employees and officers of Life Storage. General and Administrative— General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, travel and professional fees.
Removed
No other material trends in specific travel or other expenses were observed. Depreciation and Amortization —Depreciation and amortization expense increased as a result of the acquisition of new stores.
Added
Depreciation and Amortization —Depreciation and amortization expense increased primarily as a result of the acquisition of new stores. We acquired 757 wholly-owned stores in the Life Storage Merger and an additional 14 wholly-owned stores during the year ended December 31, 2023.
Removed
We recognized a total gain of $14,249 related to the sale of these assets. During the first quarter of 2021, we sold 16 stores to a newly established unconsolidated joint venture for a total sales price of $168,885 resulting in a gain of $63,477.
Added
Information on the total face value of debt and the average interest rate for the years ended December 31, 2023 and December 31, 2022 is set forth in the following table: For the Year Ended December 31, 2023 2022 Total face value of debt $ 11,346,105 $ 7,364,424 Average interest rate 4.6 % 4.1 % Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes— Represents the amortization of the discount recorded to present the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.
Removed
Additionally, we sold 16 stores during the fourth quarter of 2021 to a third party for a total sales price of $204,500 resulting in a gain of $73,854.
Added
We added a total of 154 stores to new and existing joint ventures (145 stores from the Life Storage Merger) during the year ended December 31, 2023 resulting in higher earnings when compared to the prior year. Dividend income represents dividends from our investment in preferred stock of SmartStop Self Storage REIT, Inc. and Strategic Storage Trust VI, Inc.
Removed
Dividend income represents dividends from our $200,000 investment in preferred stock of SmartStop. Equity in Earnings of Unconsolidated Real Estate Ventures—Gain on Sale of Real Estate Assets and Purchase of Joint Venture Partner's Interest— In June 2021, we sold our interest in two unconsolidated single store joint ventures to our joint ventures partner.
Added
Income Tax Expense— For the year ended December 31, 2023 , the increase in income tax expense was the result of an increase in income earned by our TRS when compared to the same period in the prior year.
Removed
We received proceeds of $1,888 in cash and recorded a gain of $525. Also, as of June 2021, the WICNN JV LLC and GFN JV LLC joint ventures sold all 17 of the stores owned by the joint ventures to a third party. Subsequent to the sales, these joint ventures were dissolved.
Added
FFO is defined by the National Association of Real Estate Investment Trusts, Inc.
Removed
As a result of these transactions, we recorded a gain of $5,739.
Removed
FUNDS FROM OPERATIONS Funds from operations ("FFO") provides relevant and meaningful information about our operating performance that is necessary, along with net income and cash flows, for an understanding of our operating results. We believe FFO is a meaningful disclosure as a supplement to net earnings.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed4 unchanged
Biggest changeAs of December 31, 2022, we had approximately $7,364,424 in total face value debt, of which approximately $2,602,228 was subject to variable interest rates (excluding debt with interest rate swaps).
Biggest changeAs of December 31, 2023, we had approximately $11,346,105 in total face value debt, of which approximately $3,023,152 was subject to variable interest rates (excluding debt with interest rate swaps).
Interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments between two parties based on a contractual underlying notional amount, but do not involve the exchange of the underlying notional amounts. See our Derivatives footnote in our Notes to consolidated financial statements in Item 8 for additional information about our use of derivative contracts. 28
Interest rate swaps involve the exchange of fixed-rate and variable-rate interest payments between two parties based on a contractual underlying notional amount, but do not involve the exchange of the underlying notional amounts. See our Derivatives footnote in our Notes to consolidated financial statements in Item 8 for additional information about our use of derivative contracts. 31
If benchmark index rates were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $26,022 annually. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.
If benchmark index rates were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $30,232 annually. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments.

Other EXR 10-K year-over-year comparisons