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What changed in National Storage Affiliates Trust's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of National Storage Affiliates Trust'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.

+307 added−326 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-27)

Top changes in National Storage Affiliates Trust's 2023 10-K

307 paragraphs added · 326 removed · 249 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

72 edited+16 added−16 removed74 unchanged
Biggest changeAs of December 31, 2022, we owned a geographically diversified portfolio of 916 self storage properties, located in 39 states and Puerto Rico, comprising approximately 58.3 million rentable square feet, configured in approximately 453,000 storage units.
Biggest changeAs of December 31, 2023, we owned a geographically diversified portfolio of 809 self storage properties located in 38 states and Puerto Rico, comprising approximately 51.9 million rentable square feet, configured in approximately 407,000 storage units, which excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties located in eight states, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties located in seven states, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8) in 2024.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value.
Many of these markets have multiple barriers to entry against increased supply, including zoning restrictions against new construction and new construction costs that we believe are higher than our properties' fair market value.
We are a self storage REIT with a unique structure that supports our differentiated external growth strategy. Our PRO structure appeals to operators who are looking for access to growth capital while maintaining an economic stake in the self storage properties that each manages on our behalf.
We are a self storage REIT with a unique PRO structure that supports our differentiated external growth strategy. Our PRO structure appeals to operators who are looking for access to growth capital while maintaining an economic stake in the self storage properties that each manages on our behalf.
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 (the "2026 Notes") and $90.0 million of 3.00% senior unsecured notes due May 4, 2031 (the "May 2031 Notes").
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 (the "May 2026 Notes") and $90.0 million of 3.00% senior unsecured notes due May 4, 2031 (the "May 2031 Notes").
As a result, potential targets who are tax-sensitive might favor us as a suitor. Our primary national competitors in many of our markets for both tenants and acquisition opportunities include local and regional operators, institutional investors, private equity funds, as well as the other public self storage REITs, including Public Storage, CubeSmart, Extra Space Storage Inc. and Life Storage, Inc.
As a result, potential targets who are tax-sensitive might favor us as a suitor. Our primary national competitors in many of our markets for both tenants and acquisition opportunities include local and regional operators, institutional investors, private equity funds, as well as the other public self storage REITs, including Public Storage, CubeSmart, and Extra Space Storage Inc.
The credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and the June 2029 Term Loan Facility each contain the same financial covenants and customary affirmative and negative covenants that, among other things, could limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
The credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and the June 2029 Term Loan Facility each contain the same financial covenants and customary affirmative and negative covenants that, among other things, could limit the Company's ability to make distributions or certain investments, incur debt, incur liens and enter into certain transactions.
Our structure thus offers PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Our PRO structure thus offers PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
We believe that future operators will be attracted to our unique structure, providing them with lower cost of capital, better economies of scale, and greater operational and overhead efficiencies while preserving their existing property management platforms.
We believe that future operators will be attracted to our unique PRO structure, providing them with lower cost of capital, better economies of scale, and greater operational and overhead efficiencies while preserving their existing property management platforms.
Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions, including, among others, the following: • the interest rate of the proposed financing; • the extent to which the financing impacts our flexibility in managing our properties; • prepayment penalties and restrictions on refinancing; • the purchase price of properties we acquire with debt financing; • our long-term objectives with respect to the financing; • our target investment returns; • the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover expected debt service payments; 13 Table of Contents • overall level of consolidated indebtedness; • timing of debt maturities; • provisions that require recourse and cross-collateralization; • corporate credit ratios including debt service coverage, debt to total market capitalization and debt to undepreciated assets; and • the overall ratio of fixed- and variable-rate debt.
Although our board of trustees has not adopted a policy which limits the total amount of indebtedness that we may incur, it will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed and variable-rate, and in making financial decisions, including, among others, the following: • the interest rate of the proposed financing; • the extent to which the financing impacts our flexibility in managing our properties; • prepayment penalties and restrictions on refinancing; • the purchase price of properties we acquire with debt financing; • our long-term objectives with respect to the financing; • our target investment returns; • the ability of particular properties, and the Company as a whole, to generate cash flow sufficient to cover expected debt service payments; • overall level of consolidated indebtedness; • timing of debt maturities; • provisions that require recourse and cross-collateralization; • corporate credit ratios including debt service coverage, debt to total market capitalization and debt to undepreciated assets; and • the overall ratio of fixed- and variable-rate debt.
Southern is led by Bob McIntosh and Peter Cowie, who are active real estate operators with more than 30 years of self storage experience. • Blue Sky, which is a strategic partnership between Argus Professional Storage Management and Uplift Development Group (formerly known as GYS Development LLC) and is based in the mountain west, is our PRO responsible for covering portions of the southeast, midwest, and southwest regions, including portions of Kansas, Georgia and Texas.
Southern is led by Bob McIntosh and Peter Cowie, who are active real estate operators with more than 40 years of self storage experience. • Blue Sky, which is a strategic partnership between Argus Professional Storage Management and Uplift Development Group (formerly known as GYS Development LLC) and is based in the mountain west, is our PRO responsible for covering portions of the southeast, midwest, and southwest regions, including portions of Kansas, Georgia and Texas.
We have a credit agreement with a lender for a term loan facility that matures in April 2029 (the "April 2029 Term Loan Facility") and is separate from the credit facility, 2023 Term Loan Facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million.
We have a credit agreement with a lender for a term loan facility that matures in April 2029 (the "April 2029 Term Loan Facility") and is separate from the credit facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million.
Over 70% of our consolidated portfolio is located in the top 100 MSAs, based on our 2022 net operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy.
Over 70% of our consolidated portfolio is located in the top 100 MSAs, based on our 2023 net operating income ("NOI"). We believe that these properties are primarily located in high quality growth markets that have attractive supply and demand characteristics and are less sensitive to the fluctuations of the general economy.
A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. The ADA or these other laws may also apply to our website. For additional information on the ADA, see "Item 1A.
A number of additional U.S. federal, state and local laws may also require modifications to our properties, or restrict certain further renovations of the properties, with respect to access thereto by disabled persons. The ADA or these other laws may also apply to our websites. For additional information on the ADA, see "Item 1A.
We believe that our structure creates the right financial incentives to align the interest of our PROs with those of our public shareholders.
We believe that our PRO structure creates the right financial incentives to align the interest of our PROs with those of our public shareholders.
Acquire Built-in Captive Pipeline of Target Properties from Existing PROs. We have an attractive, high quality potential acquisition pipeline of over 110 self storage properties valued at approximately $1.5 billion that will continue to drive our future growth.
Acquire Built-in Captive Pipeline of Target Properties from Existing PROs. We have an attractive, high quality potential acquisition pipeline of over 110 self storage properties valued at approximately $1.7 billion that will continue to drive our future growth.
We completed our initial public offering in 2015 and our common shares of beneficial interest, $0.01 par value per share ("common shares"), are listed on the New York Stock Exchange under the symbol "NSA." 4 Table of Contents Our executive chairman of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc.
We completed our initial public offering in 2015 and our common shares of beneficial interest, $0.01 par value per share ("common shares"), are listed on the New York Stock Exchange under the symbol "NSA." 4 Table of Contents Our vice chairperson of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc.
Blue Sky managed 41 of our properties in Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Minnesota, Montana, North Carolina, Texas, Wisconsin and Wyoming as of December 31, 2022.
Blue Sky managed 41 of our properties in Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Kentucky, Minnesota, Montana, North Carolina, Texas, Wisconsin and Wyoming as of December 31, 2023.
Moove In is led by John Gilliland, who currently serves on the board of directors for the Large Owners Council of the Self Storage Association, and a past Chairman of the Self Storage Association. • Hide-Away, which is based in Sarasota, Florida, is our PRO responsible for covering the western Florida market.
Moove In is led by John Gilliland, who currently serves on the board of directors for the Large Owners Council of the Self Storage Association, and a past Chairman of the Self Storage Association. 6 Table of Contents • Hide-Away, which is based in Sarasota, Florida, is our PRO responsible for covering the western Florida market.
When considering a PRO candidate, we consider various factors, including the size of the potential PRO's portfolio, the quality and location of its properties, its market exposure, its operating expertise, its ability to grow its business, and its reputation with industry participants. 11 Table of Contents Strategic Joint Venture Arrangements.
When considering a PRO candidate, we consider various factors, including the size of the potential PRO's portfolio, the quality and location of its properties, its market exposure, its operating expertise, its ability to grow its business, and its reputation with industry participants. Strategic Joint Venture Arrangements.
As of December 31, 2022, the June 2029 Term Loan Facility had a variable effective interest rate of 5.37%. We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
As of December 31, 2023, the June 2029 Term Loan Facility had an effective interest rate of 5.37%. We have an expansion option under the June 2029 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $300.0 million.
Our PROs The Company had nine PROs as of December 31, 2022: Optivest Properties LLC and its controlled affiliates ("Optivest"), Move It Self Storage and its controlled affiliates ("Move It"), Guardian Storage Centers LLC and its controlled affiliates ("Guardian"), Southern Storage Management Systems, Inc. d/b/a Southern Self Storage ("Southern"), Blue Sky Self Storage LLC, a strategic partnership between Argus Professional Storage Management and Uplift Development Group (formerly known as GYS Development LLC) ("Blue Sky"), affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage ("Moove In"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Hide-Away"), Arizona Mini Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), and an affiliate of Shader Brothers Corporation d/b/a Personal Mini Storage ("Personal Mini").
Our PROs The Company had eight PROs as of December 31, 2023: Optivest Properties LLC and its controlled affiliates ("Optivest"), Guardian Storage Centers LLC and its controlled affiliates ("Guardian"), Southern Storage Management Systems, Inc. d/b/a Southern Self Storage ("Southern"), Blue Sky Self Storage LLC, a strategic partnership between Argus Professional Storage Management and Uplift Development Group (formerly known as GYS Development LLC) ("Blue Sky"), affiliates of Investment Real Estate Management, LLC d/b/a Moove In Self Storage ("Moove In"), Hide-Away Storage Services, Inc. and its controlled affiliates ("Hide-Away"), Arizona Mini Storage Management Company d/b/a Storage Solutions and its controlled affiliates ("Storage Solutions"), and an affiliate of Shader Brothers Corporation d/b/a Personal Mini Storage ("Personal Mini").
Moove In managed 38 of our properties in Connecticut, Iowa, Maryland, Massachusetts, New Jersey, New York and Pennsylvania as of December 31, 2022.
Moove In managed 38 of our properties in Connecticut, Iowa, Maryland, Massachusetts, New Jersey, New York and Pennsylvania as of December 31, 2023.
Storage Solutions managed 11 of our properties in Arizona and Nevada as of December 31, 2022. Storage Solutions is led by its founder, Bill Bohannan, who is one of the largest operators in Phoenix and has more than 35 years of self storage acquisition, development and management experience. Mr.
Storage Solutions managed 11 of our properties in Arizona and Nevada as of December 31, 2023. Storage Solutions is led by its founder, Bill Bohannan, who is one of the largest operators in Phoenix and has more than 40 years of self storage acquisition, development and management experience. Mr.
A key component of this strategy is to capitalize on the local market expertise and knowledge of regional self storage operators by maintaining the continuity of their roles as property managers. As of December 31, 2022, our PROs managed 385 of our properties.
A key component of this strategy is to capitalize on the local market expertise and knowledge of regional self storage operators by maintaining the continuity of their roles as property managers. As of December 31, 2023, our PROs managed 333 of our properties.
Guardian is led by John Minar, who has nearly 40 years of self storage acquisition, rehabilitation, ownership, operations and development experience. 6 Table of Contents • Southern, which is based in Palm Beach Gardens, Florida, is one of our PROs responsible for covering portions of Arizona, New Mexico and the southeast region, including New Orleans, the Florida Panhandle, southern Georgia and Puerto Rico.
Guardian is led by John Minar, who has more than 40 years of self storage acquisition, rehabilitation, ownership, operations and development experience. • Southern, which is based in Palm Beach Gardens, Florida, is one of our PROs responsible for covering portions of Arizona, New Mexico and the southeast region, including New Orleans, the Florida Panhandle, southern Georgia and Puerto Rico.
Of these properties, 301 were acquired by us from our PROs, 614 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8).
Of these properties, 306 were acquired by us from our PROs, 502 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8).
Hide-Away managed 25 of our properties in western Florida as of December 31, 2022.
Hide-Away managed 25 of our properties in western Florida as of December 31, 2023.
In general, we expect to fund our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances. As of December 31, 2022, our unsecured credit facility provided for total borrowings of $1.550 billion (the "credit facility").
In general, we expect to fund our property acquisitions through a combination of borrowings under bank credit facilities (including term loans and revolving facilities), property-level debt, issuances of OP equity and public and private equity and debt issuances. 11 Table of Contents As of December 31, 2023, our unsecured credit facility provided for total borrowings of $1.955 billion (the "credit facility").
We intend to leverage our property management platform to provide property and asset management services for future strategic joint ventures, generating additional operating profits and third party fee income. In addition, we consider the 75% third-party interest in our unconsolidated real estate ventures, which currently own 185 properties, to present a potential acquisition opportunity.
We intend to leverage our property management platform to provide property and asset management services for future strategic joint ventures, generating additional operating profits and third party fee income. In addition, we consider the 75% third-party interest in our unconsolidated real estate ventures, which as of December 31, 2023 owned 185 properties, to present a potential acquisition opportunity.
Optivest managed 84 of our properties located in Arizona, California, Massachusetts, Nevada, New Hampshire, New Mexico, Texas and Utah as of December 31, 2022.
Optivest managed 86 of our properties located in Arizona, California, Massachusetts, Nevada, New Hampshire, New Mexico, Texas and Utah as of December 31, 2023.
Southern managed 48 of our properties in Arizona, Louisiana, the Florida Panhandle, New Mexico, southern Georgia, and Puerto Rico as of December 31, 2022.
Southern managed 49 of our properties in Arizona, Louisiana, the Florida Panhandle, New Mexico, southern Georgia, and Puerto Rico as of December 31, 2023.
The following is a summary of our 2022 consolidated acquisition activity (dollars in thousands): Number of Number of Rentable State Properties Units Square Feet Fair Value 2022 Acquisitions: Georgia 11 5,737 813,287 $ 158,134 Florida 7 3,604 460,574 104,350 Pennsylvania 5 2,818 374,654 65,078 New Mexico 4 1,559 229,454 20,162 South Carolina 4 2,391 314,063 71,338 Texas 4 2,491 320,287 29,790 Arkansas 2 1,206 196,925 16,897 Colorado 2 671 107,328 14,106 Other (1) 6 4,492 396,477 89,321 Total 45 24,969 3,213,049 $ 569,176 (1) Self storage properties in other states acquired during the year ended December 31, 2022 include Alabama, Connecticut, Minnesota, Missouri, New York and Virginia.
The following is a summary of our 2022 consolidated acquisition activity (dollars in thousands): Number of Number of Rentable State Properties Units Square Feet Fair Value 2022 Acquisitions: Georgia 11 5,737 813,287 $ 158,134 Florida 7 3,604 460,574 104,350 Pennsylvania 5 2,818 374,654 65,078 Texas 4 2,491 320,287 29,790 South Carolina 4 2,391 314,063 71,338 New Mexico 4 1,559 229,454 20,162 Arkansas 2 1,206 196,925 16,897 Colorado 2 671 107,328 14,106 Other (1) 6 4,492 396,477 89,321 Total 45 24,969 3,213,049 $ 569,176 (1) Self storage properties in other states acquired during the year ended December 31, 2022 include Alabama, Connecticut, Minnesota, Missouri, New York and Virginia. 8 Table of Contents Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure.
As of December 31, 2022, we had the entire amounts drawn on Term Loan A, Term Loan B, Term Loan C, Term Loan D and Term Loan E and we had $496.0 million of outstanding borrowings under the Revolver, and the capacity to borrow an additional $147.8 million under the Revolver while remaining in compliance with the credit facility's financial covenants.
As of December 31, 2023, we had the entire amounts drawn on Term Loan B, Term Loan C, Term Loan D and Term Loan E and we had $381.0 million of outstanding borrowings under the Revolver, and the capacity to borrow an additional $562.6 million under the Revolver while remaining in compliance with the credit facility's financial covenants.
As of December 31, 2022, we had an expansion option under the credit facility, which, if exercised in full, would have provided for a total credit facility of $1.750 billion.
As of December 31, 2023, we had an expansion option under the credit facility, which, if exercised in full, would have provided for a total credit facility of $2.5 billion.
Aligned Incentive Structure with Shareholder Downside Protection. Our structure promotes operator accountability as subordinated performance units issued to our PROs in exchange for the contribution of their properties are entitled to distributions only after those properties satisfy minimum performance thresholds.
Our PRO structure promotes operator accountability as subordinated performance units issued to our PROs in exchange for the contribution of their properties are entitled to distributions only after those properties satisfy minimum performance thresholds.
The credit facility consists of the following components: (i) a revolving line of credit (the "Revolver") which provided for a total borrowing commitment up to $650.0 million, under which we could borrow, repay and re-borrow amounts, (ii) a $125.0 million tranche A term loan facility (the "Term Loan A"), (iii) a $250.0 million tranche B term loan facility (the "Term Loan B"), (iv) a $225.0 million tranche C term loan facility (the "Term Loan C"), (v) a $175.0 million tranche D term loan facility (the "Term Loan D") and (vi) a $125.0 million tranche E term loan facility (the "Term Loan E").
The credit facility consists of the following components: (i) a revolving line of credit (the "Revolver") which provided for a total borrowing commitment up to $950.0 million, under which we could borrow, repay and re-borrow amounts, (ii) a $275.0 million tranche B term loan facility (the "Term Loan B"), (iii) a $325.0 million tranche C term loan facility (the "Term Loan C"), (iv) a $275.0 million tranche D term loan facility (the "Term Loan D") and (v) a $130.0 million tranche E term loan facility (the "Term Loan E").
We consider a property to be in our captive pipeline if it (i) is under a management service agreement with one of our PROs, (ii) meets our property quality criteria, and (iii) is either required to be offered to us under the applicable facilities portfolio management agreement or a PRO has a reasonable basis to believe that the controlling owner of the property intends to sell the property in the next seven years.
We consider a property to be in our captive pipeline if it (i) is under a management service agreement with one of our PROs, (ii) meets our property quality criteria, and (iii) is either required to be offered to us under the applicable facilities portfolio management agreement or a PRO has a reasonable basis to believe that the controlling owner of the property intends to sell the property in the next seven years. 10 Table of Contents Our PROs have management service agreements with all of the properties in our captive pipeline and hold controlling and non-controlling ownership interests in some of these properties.
On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033 (the "November 2033 Notes").
On January 28, 2022, our operating partnership issued $125.0 million of 2.96% senior unsecured notes due November 30, 2033 (the "November 2033 Notes"). On September 28, 2022, our operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032 (the "November 2032 Notes").
Guardian managed 56 of our properties located in Arizona, California and Nevada as of December 31, 2022.
Guardian managed 58 of our properties located in Arizona, California and Nevada as of December 31, 2023.
Our common shares are listed on the New York Stock Exchange under the symbol "NSA." 16 Table of Contents
Our common shares are listed on the New York Stock Exchange under the symbol "NSA."
We benefit from the local market knowledge and active presence of our PROs, allowing us to build and foster important customer and industry relationships. These local relationships provide attractive off-market acquisition opportunities that we believe will continue to fuel additional external growth.
Bohannan is recognized in the industry as a self storage acquisition, development and management specialist. We benefit from the local market knowledge and active presence of our PROs, allowing us to build and foster important customer and industry relationships. These local relationships provide attractive off-market acquisition opportunities that we believe will continue to fuel additional external growth.
We believe our structure provides us with a competitive growth advantage over self storage companies that do not offer property owners the ability to participate in the performance and potential future growth of their managed portfolios. We believe that our national platform, which includes our PRO structure and property management platform, has significant potential for continued external and internal growth.
We believe our PRO structure provides us with a competitive growth advantage over self storage companies that do not offer property owners the ability to participate in the performance and potential future growth of their managed portfolios.
Hide-Away is led by its founder, Steve Wilson, one of the early developers of the self storage business, who served for more than 35 years as the President of Hide-Away and its related entities, and is a past Chairman of the Self Storage Association. • Storage Solutions, which is based in Chandler, Arizona, is our PRO responsible for covering portions of the Arizona and Nevada markets.
Hide-Away is led by its founder, Steve Wilson, one of the early developers of the self storage business, who served for more than 40 years as the President of Hide-Away and its related entities, and is a past Chairman of the Self Storage Association. • Personal Mini, which is based in Orlando, Florida, is our PRO responsible for covering portions of the central Florida market.
During the year ended December 31, 2021, we acquired 229 consolidated self storage properties, of which 22 were acquired by us from our PROs and 207 were acquired by us from third-party sellers.
During the year ended December 31, 2022, we acquired 45 consolidated self storage properties, of which five were acquired by us from our PROs and 40 were acquired by us from third-party sellers.
This 75% third-party share of gross real estate assets is approximately $1.6 billion based on the historical book value of the joint ventures. Were we to pursue an acquisition of these interests, it could potentially drive our future growth. Our Financing Strategy We expect to maintain a flexible approach in financing new property acquisitions.
This 75% third-party share of gross real estate assets is approximately $1.7 billion based on the historical book value of the joint ventures. Were we to pursue an acquisition of these interests, it could potentially drive our future growth.
Optivest is run by its co-founder, Warren Allan, who has more than 25 years of financial and operational management experience in the self storage industry and is recognized as a self storage acquisition and development specialist. • Move It, which was based in Dallas, Texas, was one of our PROs responsible for covering portions of the Texas and southeast markets.
Optivest is run by its co-founder, Warren Allan, who has more than 30 years of financial and operational management experience in the self storage industry and is recognized as a self storage acquisition and development specialist. • Guardian, which is based in Irvine, California, is one of our PROs responsible for covering portions of the southern California and southwest regions.
We have a credit agreement with a lender for a term loan facility that matures in December 2028 (the "2028 Term Loan Facility") and is separate from the credit facility and 2023 Term Loan Facility in an aggregate amount of $75.0 million.
We have a credit agreement with a lender for a term loan facility that matures in December 2028 (the "2028 Term Loan Facility") and is separate from the credit facility in an aggregate amount of $75.0 million. As of December 31, 2023 the entire amount was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%.
A complete listing of, and additional information about, our self storage properties is included in Item 2 of this report. During the year ended December 31, 2022, we acquired 45 consolidated self storage properties, of which five were acquired by us from our PROs and 40 were acquired by us from third-party sellers.
A complete listing of, and additional information about, our self storage properties is included in Item 2 of this report. During the year ended December 31, 2023, we acquired 20 consolidated self storage properties and annexes to existing properties, of which 19 were acquired by us from our PROs and one was acquired by us from a third-party seller.
Our business and growth strategies to achieve these objectives are as follows: Maximize Property Level Cash Flow. We strive to maximize the cash flows at our properties by leveraging the economies of scale provided by our national platform, including through the implementation of new ideas derived from our Technology and Best Practices Group.
We strive to maximize the cash flows at our properties by leveraging the economies of scale provided by our national platform, including through the implementation of new ideas derived from our Technology and Best Practices Group.
Therefore, our PROs are incentivized to select acquisitions that are expected to exceed minimum performance thresholds, thereby increasing the value of their subordinated equity stake.
Therefore, our PROs are incentivized to select acquisitions that are expected to exceed minimum performance thresholds, thereby increasing the value of their subordinated equity stake. We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver.
In addition, the Company has sufficient scale for various centralized functions, including financial reporting, the operation of call centers, expanding cell tower leasing, a national credit card processing program, marketing, information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller, individual operators.
In addition, the Company has sufficient scale for various centralized functions, including financial reporting, the operation of call centers, expanding cell tower leasing, a national credit card processing program, marketing, information technology, legal support, and capital market functions, to achieve substantial cost savings over smaller, individual operators. 9 Table of Contents Our national platform utilizes advanced technology for our data warehouse program, Internet marketing, our centralized call centers, financial and property analytic dashboards, revenue optimization analytics and expense management tools to enhance operational performance.
As of December 31, 2022 the entire amount was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%. We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
Risk Factors—Risks Related to Our Business—Costs associated with complying with the ADA may result in unanticipated expenses." Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto. 14 Table of Contents Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property.
Risk Factors—Risks Related to Our Business—Costs associated with complying with the ADA may result in unanticipated expenses." Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, as well as subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto.
As of December 31, 2022, we held ownership interests in and operated a geographically diversified portfolio of 1,101 self storage properties, located in 42 states and Puerto Rico, comprising approximately 71.8 million rentable square feet, configured in approximately 564,000 storage units.
We held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units as of December 31, 2023, excluding 39 self storage properties classified as held for sale to be sold to a third party in 2024.
As of December 31, 2022, we had 1,155 employees, which includes employees of our property management platform but does not include persons employed by our PROs. As of December 31, 2022, our PROs, collectively, had approximately 700 full-time and part-time employees involved in management, operations, and reporting with respect to our self storage property portfolio.
As of December 31, 2023, our PROs, collectively, had approximately 600 full-time and part-time employees involved in management, operations, and reporting with respect to our self storage property portfolio.
We held ownership interests in and operated a geographically diversified portfolio of 1,101 self storage properties, located in 42 states and Puerto Rico, comprising approximately 71.8 million rentable square feet, configured in approximately 564,000 storage units as of December 31, 2022.
As of December 31, 2023, we held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units, which excludes 39 self storage properties classified as held for sale to be sold to a third party in 2024.
As of December 31, 2022 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%. 12 Table of Contents We have a June 2029 Term Loan Facility that matures in June 2029 (the "June 2029 Term Loan Facility") and is separate from the credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million.
We have a June 2029 Term Loan Facility that matures in June 2029 (the "June 2029 Term Loan Facility") and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million.
We may be required to comply with various state privacy statutes in connection with the operation of our business. REIT Qualification We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015.
In addition, we may be required to comply with federal, state and local laws, rules and regulations in connection with our communications with our tenants or prospective tenants, including with respect to available units, reservations, payments due, and other matters. 14 Table of Contents REIT Qualification We have elected and we believe that we have qualified to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, (the "Code"), commencing with our taxable year ended on December 31, 2015.
As of January 1, 2023, we have completed three retirement events: SecurCare effective March 31, 2020, Kevin Howard Real Estate, Inc., d/b/a Northwest Self Storage and its controlled affiliates ("Northwest") effective January 1, 2022 and Move It Self Storage and its controlled affiliates ("Move It") effective January 1, 2023. 5 Table of Contents As a result of Move It's retirement, effective January 1, 2023, management of our 72 properties in the Move It managed portfolio was transferred to us and the Move It brand name and related intellectual property was internalized by us.
As of December 31, 2023, we have completed three retirement events: SecurCare effective March 31, 2020, Kevin Howard Real Estate, Inc., d/b/a Northwest Self Storage and its controlled affiliates ("Northwest") effective January 1, 2022 and Move It Self Storage and its controlled affiliates ("Move It") effective January 1, 2023.
As a result of Northwest's retirement, effective January 1, 2022, management of our properties in the Northwest managed portfolio was transferred to us and the related Northwest brand name and intellectual property was internalized by us, and we discontinued payment of any supervisory and administrative fees and reimbursements to Northwest.
As a result of Move It's retirement, effective January 1, 2023, management of our properties in the Move It managed portfolio was transferred to us and the Move It brand name and related intellectual property was internalized by us, and we discontinued payment of any supervisory and administrative fees and reimbursements to Move It. 5 Table of Contents Our Property Management Platform Through our property management platform, we direct, manage and control the day-to-day operations and affairs of certain consolidated properties and our unconsolidated real estate ventures under our iStorage, SecurCare, Northwest and Move It brands.
We have successfully recruited established operators across the United States with a history of efficient property management and a track record of successful acquisitions. Our structure and differentiated strategy have enabled us to build a substantial captive pipeline (our "captive pipeline") from existing operators as well as potentially create external growth from the recruitment of additional PROs.
Our structure and differentiated strategy have enabled us to build a substantial captive pipeline of potential acquisition opportunities (our "captive pipeline") from existing operators as well as potentially create external growth from the recruitment of additional PROs. Aligned Incentive Structure with Shareholder Downside Protection.
We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver. 10 Table of Contents Our Business and Growth Strategies By capitalizing on our competitive strengths, we seek to increase scale, achieve optimal revenue-producing occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth.
Our Business and Growth Strategies By capitalizing on our competitive strengths, we seek to increase scale, achieve optimal revenue-producing occupancy and rent levels, and increase long-term shareholder value by achieving sustainable long-term growth. Our business and growth strategies to achieve these objectives are as follows: Maximize Property Level Cash Flow.
Personal Mini is led by Marc Smith, a self storage investor who has been involved in all facets of the self storage business. Mr. Smith is a past Chairman of the Self Storage Association, and also previously served as president of the Southeast Region of the Self Storage Association.
Personal Mini managed 25 of our properties in central Florida as of December 31, 2023. Personal Mini is led by Marc Smith, a self storage investor who has been involved in all facets of the self storage business. Mr.
Distributions paid by us generally will not be eligible for taxation at the preferential U.S. federal income tax rates that currently apply to certain distributions received by individuals from taxable corporations, unless such distributions are attributable to dividends received by us from a TRS. 15 Table of Contents Competition We compete with many other entities engaged in real estate investment activities for customers and acquisitions of self storage properties and other assets, including national, regional, and local owners, operators, and developers of self storage properties.
Distributions paid by us generally will not be eligible for taxation at the preferential U.S. federal income tax rates that currently apply to certain distributions received by individuals from taxable corporations, unless such distributions are attributable to dividends received by us from a TRS.
Serving as our on-the-ground acquisition teams, our PROs now have access to our broader financing sources and lower cost of capital, while our national platform allows them to benefit from economies of scale to drive operating efficiencies in a rapidly evolving, technology-driven industry. 7 Table of Contents Our Consolidated Properties We seek to own properties that are well located in high quality sub-markets with highly accessible street access and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that are less sensitive to the fluctuations of the general economy.
Serving as our on-the-ground acquisition teams, our PROs now have access to our broader financing sources and lower cost of capital, while our national platform allows them to benefit from economies of scale to drive operating efficiencies in a rapidly evolving, technology-driven industry.
On September 28, 2022, our operating partnership issued $200.0 million of 5.06% senior unsecured notes due November 16, 2032 (the "November 2032 Notes" and together with the 2026 Notes, 2029 Notes, August 2030 Notes, November 2030 Notes, May 2031 Notes, August 2031 Notes, November 2031 Notes, August 2032 Notes, May 2033 Notes, November 2033 Notes and 2036 Notes, the "Senior Unsecured Notes") in a private placement to certain institutional investors.
As of December 31, 2023, the July 2028 Notes had an effective interest rate of 5.75%. 12 Table of Contents On October 5, 2023, our operating partnership issued $65.0 million of 6.46% senior unsecured notes due October 5, 2026 (the "October 2026 Notes"), $100.0 million of 6.55% senior unsecured notes due October 5, 2028 (the "October 2028 Notes"), $35.0 million of 6.66% senior unsecured notes due October 5, 2030 (the "October 2030 Notes") and $50.0 million of 6.73% senior unsecured notes due October 5, 2033 (the "October 2033 Notes" and together with the May 2026 Notes, October 2026 Notes, July 2028 Notes, October 2028 Notes, 2029 Notes, August 2030 Notes, October 2030 Notes, November 2030 Notes, May 2031 Notes, August 2031 Notes, November 2031 Notes, August 2032 Notes, November 2032 Notes, May 2033 Notes, November 2033 Notes and 2036 Notes, the "Senior Unsecured Notes") in a private placement to certain institutional investors.
Regulation General Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment. Changes in any of these laws, ordinances or regulations could increase the potential liability existing or created by tenants or others on our properties.
Changes in any of these laws, ordinances or regulations could increase the potential liability existing or created by tenants or others on our properties.
We believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry. 2018 Joint Venture As of December 31, 2022, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.8 million rentable square feet, configured in over 64,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2022, our 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.6 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states. 9 Table of Contents Our Competitive Strengths We believe our property management platform combined with our unique PRO structure allows us to differentiate ourselves from other self storage operators, and the following competitive strengths enable us to effectively compete against our industry peers: High Quality Properties in Key Growth Markets.
The 2023 JV Agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24 month period starting in December 2023, with options to extend the investment time period by two additional six month periods. 2018 Joint Venture As of December 31, 2023, our 2018 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated 104 self storage properties containing approximately 7.8 million rentable square feet, configured in over 64,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2023, our 2016 Joint Venture (as defined in Note 5 to the consolidated financial statements in Item 8), in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
As of December 31, 2022, our property management platform managed and controlled 531 of our consolidated properties and 185 of our unconsolidated real estate venture properties.
As of December 31, 2023, our property management platform managed and controlled 532 of our consolidated properties, which excludes 39 properties classified as held for sale to be sold to a third party in 2024, and 185 of our unconsolidated real estate venture properties.
Dividend Reinvestment Plan In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate in the plan to have their cash dividends reinvested in additional common shares.
Dividend Reinvestment Plan In the future, we may adopt a dividend reinvestment plan that will permit shareholders who elect to participate in the plan to have their cash dividends reinvested in additional common shares. 13 Table of Contents Regulation General Generally, self storage properties are subject to various laws, ordinances and regulations, including those relating to lien sale rights and procedures, public accommodations, insurance, and the environment.
As of December 31, 2022, approximately 62% of our employees were women and 42% of our senior management team (Director level and above) were women, including Tamara Fischer, our Chief Executive Officer and member of our Board of Trustees.
As of December 31, 2023, approximately 63% of our employees were women and 32% of our senior management team (Director level and above) were women, including Tamara Fischer, our Executive Chairperson of our Board of Trustees. 15 Table of Contents As of December 31, 2023, we had 1,108 employees, which includes employees of our property management platform but does not include persons employed by our PROs.
As of December 31, 2022 the entire amount was outstanding under the 2023 Term Loan Facility with an effective interest rate of 2.83%. We had an expansion option under the 2023 Term Loan Facility, which, if exercised in full, would have provided for total borrowings in an aggregate amount of $400.0 million.
As of December 31, 2023 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
Removed
In addition, we will no longer pay supervisory and administrative fees and reimbursements to Move It and on January 1, 2023, we issued a notice of non-voluntary conversion to cause all subordinated performance units related to Move It's managed portfolio to convert into OP units.
Added
We believe that our national platform, which includes our PRO structure and property management platform, has significant potential for continued external and internal growth.
Removed
As part of the internalization, a majority of Move It's employees were offered and provided employment by us to continue managing Move It's portfolio of properties as members of our existing property management platform.
Added
Smith is a past Chairman of the Self Storage Association, and also previously served as president of the Southeast Region of the Self Storage Association. • Storage Solutions, which is based in Chandler, Arizona, is our PRO responsible for covering portions of the Arizona and Nevada markets.
Removed
Most of Northwest's employees were hired by us as members of our existing property management platform.
Added
Our Consolidated Properties We seek to own properties that are well located in high quality sub-markets with highly accessible street access and attractive supply and demand characteristics, providing our properties with strong and stable cash flows that we believe are less sensitive to the fluctuations of the general economy.
Removed
Our Property Management Platform Through our property management platform, we direct, manage and control the day-to-day operations and affairs of certain consolidated properties and our unconsolidated real estate ventures under our iStorage, SecurCare and Northwest brands and, commencing on January 1, 2023, our Move It brand.
Added
The following is a summary of our 2023 consolidated acquisition activity (dollars in thousands): 7 Table of Contents Number of Number of Rentable State/Territory Properties Units Square Feet Fair Value 2023 Acquisitions: Florida 15 7,388 905,157 $ 144,355 California (1) 1 1,038 140,947 28,291 Texas 1 502 67,000 8,406 Arizona 1 489 54,885 16,181 Nevada 1 460 61,856 12,213 Puerto Rico 1 443 46,069 16,180 Georgia (1) — 159 22,950 3,237 Louisiana (2) — — — 436 Pennsylvania (2) — — — 151 Total 20 10,479 1,298,864 $ 229,450 (1) Includes annexes to existing properties.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+10 added−37 removed141 unchanged
Biggest changeIf we are unable to obtain external sources of capital, we may not be able to acquire properties when strategic opportunities exist, satisfy our debt obligations or make cash distributions to our shareholders that would permit us to qualify as a REIT or avoid paying tax on all of our net taxable income. 26 Table of Contents Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness, make cash distributions to our shareholders, and acquire or sell properties and our decision to hedge against interest rate risk might not be effective.
Biggest changeIf we are unable to obtain external sources of capital, or if such capital is not available on acceptable terms, we may not be able to acquire properties when strategic opportunities exist, satisfy our debt obligations or make cash distributions to our shareholders that would permit us to qualify as a REIT or avoid paying tax on all of our net taxable income.
The Maryland Control Share Acquisition Act provides that holders of "control shares" of a Maryland real estate investment trust acquired in a "control share acquisition" have no voting rights with respect to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our trustees who are also our employees.
The Maryland Control Share Acquisition Act (the "MCSAA") provides that holders of "control shares" of a Maryland real estate investment trust acquired in a "control share acquisition" have no voting rights with respect to such shares except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our trustees who are also our employees.
Increases in income or other taxes generally are not passed through to tenants under leases and may reduce or negatively impact our net income, funds from operations ("FFO"), cash flows, financial condition, ability to pay or refinance our debt obligations, ability to make cash distributions to shareholders, and the trading price of our securities.
Increases in income or other taxes generally are not passed through to tenants under leases and may reduce or negatively impact our net income, funds from operations ("FFO"), core FFO, cash flows, financial condition, ability to pay or refinance our debt obligations, ability to make cash distributions to shareholders, and the trading price of our securities.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained by the following significant risks: 17 Table of Contents • we face competition from national, regional and local owners, operators and developers of self storage properties, which may result in higher property acquisition prices and reduced yields; • we may not be able to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • we may fail to finance an acquisition on favorable terms or at all; • we may spend more time and incur more costs than budgeted to make necessary improvements or renovations to, and to integrate and operate, acquired properties; and • we may acquire properties 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, tax liabilities, claims by persons dealing with the former owners of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of the properties.
Our ability to acquire properties on favorable terms and successfully integrate and operate them, including integrating them into our financial and operational reporting infrastructure in a timely manner, may be constrained by the following significant risks: • we face competition from national, regional and local owners, operators and developers of self storage properties, which may result in higher property acquisition prices and reduced yields; • we may not be able to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • we may fail to finance an acquisition on favorable terms or at all; • we may spend more time and incur more costs than budgeted to make necessary improvements or renovations to, and to integrate and operate, acquired properties; and • we may acquire properties 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, tax liabilities, claims by persons dealing with the former owners of the properties and claims for indemnification by general partners, trustees, officers and others indemnified by the former owners of the properties.
The MGCL, our bylaws and our declaration of trust contain provisions that may discourage, delay or make more difficult a change in our control. We are subject to the Maryland Business Combination Act.
The MGCL, our bylaws and our declaration of trust contain provisions that may discourage, delay or make more difficult a change in our control. We are subject to the Maryland Business Combination Act (the "MBCA").
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; • to satisfy our debt obligations, we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; • our debt level could place us at a competitive disadvantage compared to our competitors with less debt; and • we may violate our restrictive covenants or otherwise default on our obligations, which may entitle our creditors to accelerate our debt obligations, foreclose on our properties securing our debt, enforce our guarantees and/or trigger default on our other indebtedness.
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; 24 Table of Contents • to satisfy our debt obligations, we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms; • our debt level could place us at a competitive disadvantage compared to our competitors with less debt; and • we may violate our restrictive covenants or otherwise default on our obligations, which may entitle our creditors to accelerate our debt obligations, foreclose on our properties securing our debt, enforce our guarantees and/or trigger default on our other indebtedness.
As a result, their time and efforts may be diverted from the management of our properties, which could adversely affect the execution of our business plan and our operating results. 23 Table of Contents When a PRO elects or is required to "retire" we may become exposed to new and additional costs and risks.
As a result, their time and efforts may be diverted from the management of our properties, which could adversely affect the execution of our business plan and our operating results. 22 Table of Contents When a PRO elects or is required to "retire" we may become exposed to new and additional costs and risks.
Our ability to pay dividends will depend upon, among other factors: • the operational and financial performance of our properties; • capital expenditures with respect to existing and newly acquired properties; • general and administrative expenses associated with our operation as a publicly-held REIT; • maintenance of our REIT qualification; • the amount of, and the interest rates on, our debt and the ability to refinance our debt; • the absence of significant expenditures relating to environmental and other regulatory matters; and • other risk factors described in this Annual Report on Form 10-K.
Our ability to pay dividends will depend upon, among other factors: • the operational and financial performance of our properties; • capital expenditures with respect to existing and newly acquired properties; 29 Table of Contents • general and administrative expenses associated with our operation as a publicly-held REIT; • maintenance of our REIT qualification; • the amount of, and the interest rates on, our debt and the ability to refinance our debt; • the absence of significant expenditures relating to environmental and other regulatory matters; and • other risk factors described in this Annual Report on Form 10-K.
These amounts are based on historical financial information for the trailing twelve months ended December 31, 2022. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period.
These amounts are based on historical financial information for the trailing twelve months ended December 31, 2023. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period.
The following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties: • business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics; • periods of economic slowdown, recession, or inflationary environments, declining demand for self storage generally or in a particular area or the public perception that any of these events may occur; • local or regional real estate market conditions, such as competing properties or products, the oversupply of self storage, or vacancies or changes in self storage space market rents; • perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the neighborhoods in which they are located; and • other events affecting or shifting consumer discretionary spending.
The following adverse developments, among others, in the markets in which we do business may adversely affect the operating performance of our properties or our financial results: • business layoffs or downsizing, industry slowdowns, relocation of businesses and changing demographics; • periods of economic slowdown, recession, high interest rates, or inflationary environments, declining demand for self storage generally or in a particular area or the public perception that any of these events may occur; • local or regional real estate market conditions, such as competing properties or products, the oversupply of self storage, or vacancies or changes in self storage space market rents; • perceptions by prospective tenants of the safety, convenience and attractiveness of our properties and the neighborhoods in which they are located; and • other events affecting or shifting consumer discretionary spending.
We cannot assure you that we will have funds available to correct those defects or to make those improvements. Our business could be harmed if key personnel terminate their employment with us. Our success depends, to a significant extent, on the continued services of Arlen D. Nordhagen, Tamara D. Fischer, David G. Cramer and Brandon S.
We cannot assure you that we will have funds available to correct those defects or to make those improvements. Our business could be harmed if key personnel terminate their employment with us. Our success depends, to a significant extent, on the continued services of Arlen D. Nordhagen, Tamara D. Fischer, David G. Cramer, Brandon S. Togashi, William S.
Further, there can be no assurance that any procedural protections we implement to address these or other conflicts of interest will result in optimal outcomes for us and our shareholders. 24 Table of Contents The partnership agreement of our operating partnership contains provisions that may delay, defer or prevent a change in control.
Further, there can be no assurance that any procedural protections we implement to address these or other conflicts of interest will result in optimal outcomes for us and our shareholders. The partnership agreement of our operating partnership contains provisions that may delay, defer or prevent a change in control.
No single customer represented a significant concentration of our 2022 revenues. However, our property portfolio consists solely of self storage properties and is therefore subject to risks inherent in investments in a single industry.
No single customer represented a significant concentration of our 2023 revenues. However, our property portfolio consists solely of self storage properties and is therefore subject to risks inherent in investments in a single industry.
Changes to law or regulations or the passage of new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information. We face possible risks and costs associated with the effects of climate change and severe weather.
Changes to law or regulations or the passage of new laws affecting privacy, if applicable to our business, could impose additional costs and liability on us and could limit our use and disclosure of such information. 19 Table of Contents We face possible risks and costs associated with the effects of climate change and severe weather.
As a result, such events could have a material adverse effect on our financial condition, results of operations and cash flows and harm our business reputation or have such effects on our PROs. Costs associated with complying with the ADA may result in unanticipated expenses.
As a result, such events could have a material adverse effect on our financial condition, results of operations and cash flows and harm our business reputation or have such effects on our PROs. 18 Table of Contents Costs associated with complying with the ADA may result in unanticipated expenses.
If this resolution is repealed or our board does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
If this resolution is repealed or our board does not approve a business combination, the MBCA may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
As interest rates increase, our debt service obligations on variable-rate debt increase even though the amount borrowed remains the same, while our net income, cash flows, and our ability to pay cash distributions to our shareholders correspondingly decrease.
If interest rates increase, our debt service obligations on variable-rate debt will increase even though the amount borrowed remains the same, while our net income, cash flows, and our ability to pay cash distributions to our shareholders correspondingly decrease.
These provisions, as well as other 25 Table of Contents provisions of our declaration of trust and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our shareholders.
These provisions, as well as other provisions of our declaration of trust and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our shareholders.
The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control.
The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates, supply and demand, and others, that are beyond our control.
Climate change and severe weather may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable, by increasing the costs of energy, maintenance, repair of fire, water and/or wind damage, and snow removal at our properties.
Climate change and severe weather may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance, utilities or other important vendor services on terms we find acceptable, by increasing the costs of energy, maintenance, repair of fire, water and/or wind damage, and snow removal at our properties.
Accordingly, certain major decisions relating to joint ventures, including decisions relating to, among other things, the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy, are often made by a majority vote of the investors or by separate agreements that are reached with respect to individual decisions.
Accordingly, certain major decisions relating to joint ventures, including decisions relating to, among other things, the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy, are often made by a majority vote of the investors or by separate agreements.
Adverse economic or other conditions in the markets in which we do business, particularly in our markets in Texas, California, Florida, Oregon, and Georgia, which accounted for approximately 19%, 14%, 9%, 8%, and 6%, respectively, of our total rental and other property-related revenues for the year ended December 31, 2022, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts.
Adverse economic or other conditions in the markets in which we do business, particularly in our markets in Texas, California, Florida, Georgia, and Oregon, which accounted for approximately 17%, 12%, 11%, 6%, and 6%, respectively, of our total rental and other property-related revenues for the year ended December 31, 2023, may lower our occupancy levels and limit our ability to maintain or increase rents or require us to offer rental discounts.
Impact of the COVID-19, future variants thereof or other highly infectious or contagious diseases and the response of governments to combat the spread of these disease, could, among other things, affect our tenants ability to meet their obligations to us, impact consumer discretionary spending, reduce new move-ins, compel complete or partial closures and operational changes at our properties, reduce demand for growth opportunities, such as acquiring new properties or adding new PROs, and interrupt the availability of our and our PROs' personnel.
The impact of such crises and the response of governments to combat the spread of these diseases, could, among other things, affect our tenants ability to meet their obligations to us, impact consumer discretionary spending, reduce new move-ins, compel complete or partial closures and operational changes at our properties, reduce demand for growth opportunities, such as acquiring new properties or adding new PROs, and interrupt the availability of our and our PROs' personnel.
In addition, such decisions may be subject to the risk that the partners or co-venturers may make business, financial or management decisions with which we do not agree or take risks or otherwise act in a manner that does not serve our best interests.
In addition, such decisions may be subject to the risk that the partners or co-venturers may make certain decisions with which we do not agree or otherwise act in a manner that does not serve our best interests.
Nordhagen and any of his affiliates and associates and (3) any person acting in concert with the foregoing. As a result, such persons may be able to enter into business combinations with us that may not be in the best interests of our shareholders without compliance by us with the moratorium supermajority vote requirements and other provisions of the statute.
As a result, such persons may be able to enter into business combinations with us that may not be in the best interests of our shareholders without compliance by us with the moratorium supermajority vote requirements and other provisions of the statute.
Privacy concerns could result in regulatory changes that may harm our business. Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate have imposed or in the future may impose restrictions and requirements on the use of personal information by those collecting such information.
Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate have imposed or in the future may impose restrictions and requirements on the use of personal information by those collecting such information.
In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. Any of these taxes would decrease operating cash flow to our shareholders.
In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT.
In addition, our operating partnership may issue OP units, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A Preferred Shares") and subordinated performance units, which are only convertible into OP units beginning two years following the initial issuance of the applicable series and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. 31 Table of Contents Notwithstanding the two-year lock out period on conversions of subordinated performance units into OP units, if such subordinated performance units were convertible into OP units as of December 31, 2022, each subordinated performance unit would on average hypothetically convert into 1.72 OP units, or into an aggregate of approximately 21.5 million OP units.
In addition, our operating partnership may issue OP units, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into common shares after an agreed period of time and certain other conditions, preferred units of limited partnership interest, which are redeemable for cash or, at our option exchangeable on a one-for-one basis into our 6.000% Series A cumulative redeemable preferred shares of beneficial interest ("Series A Preferred Shares") and subordinated performance units, which are only convertible into OP units beginning two years following the initial issuance of the applicable series and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations.
If we amend our bylaws to repeal the exemption from the Maryland Control Share Acquisition Act, the Maryland Control Share Acquisition Act also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.
Our bylaws exempt from the MCSAA acquisitions of our shares by any person. If we amend our bylaws to repeal the exemption from MCSAA, the MCSAA also may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating such an offer.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders. 28 Table of Contents Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
Changes in federal, state, and local legislation and regulation as well as international pacts or treaties based on concerns about climate change could result in increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to severe weather) without a corresponding increase in revenue, which may result in adverse impacts to our net income.
There can be no assurance that climate change and severe weather, or the potential impacts of these events on our vendors, will not have a material adverse effect on our properties, operations, or business Changes in federal, state, and local legislation and regulation as well as international pacts or treaties based on concerns about climate change could result in increased capital expenditures on our existing properties (for example, to improve their energy efficiency and/or resistance to severe weather) without a corresponding increase in revenue, which may result in adverse impacts to our net income.
Our board has adopted a resolution exempting from the Maryland Business Combination Act any business combinations between us and (1) any other person, provided that the business combination is first approved by our board (including a majority of disinterested trustees), (2) Arlen D.
Our board has adopted a resolution exempting from the MBCA any business combinations between us and (1) any other person, provided that the business combination is first approved by our board (including a majority of disinterested trustees), (2) Arlen D. Nordhagen and any of his affiliates and associates and (3) any person acting in concert with the foregoing.
If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result. The on-going COVID-19 pandemic or the future outbreak of any other highly infectious or contagious diseases, could adversely impact or cause significant disruption to our financial condition, results of operations and cash flows.
If any of the foregoing were to occur, our business, financial condition and results of operations could suffer as a result. Public health and other crisis, such as a highly infectious or contagious disease, could adversely impact or cause significant disruption to our financial condition, results of operations and cash flows.
If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.
If we fail to comply with these asset requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. 27 Table of Contents To meet these tests, we may be required to take or forgo taking actions that we would otherwise consider advantageous.
In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net taxable income (excluding net capital gain).
Any of these taxes would decrease operating cash flow to our shareholders. 26 Table of Contents In order to qualify as a REIT, we must distribute to our shareholders each calendar year at least 90% of our net taxable income (excluding net capital gain).
There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future.
There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability.
Legislative or regulatory tax changes related to REITs could materially and adversely affect our business. At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect.
The payment by our operating partnership of income tax would reduce significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including us. 30 Table of Contents Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
The payment by our operating partnership of income tax would reduce significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including us.
We invest in strategic joint ventures that subject us to additional risks. Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy is to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios through a promoted return structure.
Some of our investments are, and in the future may be, structured as strategic joint ventures. Part of our strategy is to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios through a promoted return structure. These arrangements are driven by the magnitude of capital required to complete the acquisitions and maintain the acquired portfolios.
The tenant insurance and tenant protection plan businesses, including the payments associated with these arrangements, are in some cases subject to state-specific governmental regulation.
Some of our PROs earn access fees in connection with these arrangements. We receive a portion of the fees from these PROs. The tenant insurance and tenant protection plan businesses, including the payments associated with these arrangements, are in some cases subject to state-specific governmental regulation.
We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our properties.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow. We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our properties.
As of December 31, 2022, we had approximately $3.6 billion of debt outstanding, of which approximately $621.0 million, or 17.5%, is subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps). During 2022, the U.S.
As of December 31, 2023, we had approximately $3.7 billion of debt outstanding, of which approximately $511.0 million, or 14.0%, is subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).
Similarly, in response to facing severe budgetary problems, many states and jurisdictions are considering or implementing changes in laws such as increasing sales taxes, increasing the potential liability for environmental conditions existing on properties, increasing the restrictions on discharges or other conditions, or mandating paid family leave for employees, which may result in significant unanticipated expenditures, which could result in similar adverse effects. 18 Table of Contents Our storage leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease our units and we may be unable to do so on attractive terms, on a timely basis or at all.
Similarly, in response to facing severe budgetary problems, many states and jurisdictions are considering or implementing changes in laws such as increasing sales taxes, increasing the potential liability for environmental conditions existing on properties, increasing the restrictions on discharges or other conditions, or mandating paid family leave for employees, which may result in significant unanticipated expenditures, which could result in similar adverse effects.
Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability. 19 Table of Contents We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements that are in some cases subject to state-specific governmental regulation, which may adversely affect our results.
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements that are in some cases subject to state-specific governmental regulation, which may adversely affect our results. We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements with regulated insurance companies and our tenants.
Risks Related to Our Qualification as a REIT Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow to our shareholders.
Moreover, the presence of such covenants could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders. 25 Table of Contents Risks Related to Our Qualification as a REIT Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of operating cash flow to our shareholders.
The REIT provisions of the Code may limit our ability to hedge our assets and operations.
Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities. The REIT provisions of the Code may limit our ability to hedge our assets and operations.
We compete with many other entities engaged in real estate investment activities for tenants, including national, regional and local owners, operators and developers of self storage properties. Actions by our competitors may decrease or prevent increases in the occupancy and rental rates, while increasing the operating expenses of our properties.
We compete with many other entities engaged in real estate investment activities for tenants, including national, regional and local owners, operators and developers of self storage properties.
Increases in taxes and regulatory compliance costs, including as a result of changes in law or property reassessments, may reduce our income and adversely impact our cash flows.
Actions by our competitors may decrease or prevent increases in the occupancy and rental rates, while increasing the operating expenses, of our properties. 17 Table of Contents Increases in taxes and regulatory compliance costs, including as a result of changes in law or property reassessments, may reduce our income and adversely impact our cash flows.
These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.
These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders. 23 Table of Contents Certain provisions of the Maryland General Corporation Law (the "MGCL") and of our bylaws and our declaration of trust could inhibit a change in our control and have an adverse impact on the price of our shares.
These arrangements are driven by the magnitude of capital required to complete the acquisitions and maintain the acquired portfolios. Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions.
Such arrangements involve risks not present where a third party is not involved, including the possibility that partners or co-venturers might become bankrupt or otherwise fail to fund their share of required capital contributions. Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and or in competition with us.
Although these arrangements are managed by our property management platform and/or certain of our PROs who have developed marketing programs and management procedures to navigate the regulatory environment, as a result of regulatory or private action in any jurisdiction in which we operate, we may be temporarily or permanently suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations.
As a result of such action, we may be temporarily or permanently suspended from continuing some or all of our tenant insurance- and/or tenant protection plan-related activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations. Privacy concerns could result in regulatory changes that may harm our business.
In addition, unless we were eligible for certain statutory relief provisions, we could not re-elect to be taxed as a REIT until the fifth calendar year following the year in which we failed to qualify. 28 Table of Contents Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.
Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to make distributions to our shareholders. In addition, unless we were eligible for certain statutory relief provisions, we could not re-elect to be taxed as a REIT until the fifth calendar year following the year in which we failed to qualify.
Any of the above events may reduce our rental revenues, impair our operating results, and reduce our ability to satisfy our debt service obligations and make cash distributions to our shareholders, and the effect of the foregoing may be greater than it would be were our investments not limited to a single industry.
Any of the above events may reduce our rental revenues, impair our operating results, and reduce our ability to satisfy our debt service obligations and make cash distributions to our shareholders, and the effect of the foregoing may be greater than it would be were our investments not limited to a single industry. 16 Table of Contents We may not be successful in identifying and consummating suitable acquisitions, adding additional suitable new PROs, or integrating and operating such acquisitions, including integrating them into our financial and operational reporting infrastructure and internal control framework in a timely manner, which may impede our growth.
Notwithstanding these agreements, there can be no assurance that any of them will remain employed by us. The loss of services of one or more members of our senior management team could harm our business and our prospects. This risk may be heightened during periods of tight labor market conditions.
The loss of services of one or more members of our senior management team could harm our business and our prospects. This risk may be heightened during periods of tight labor market conditions. 20 Table of Contents We invest in strategic joint ventures that subject us to additional risks.
Payment of these taxes generally could materially and adversely affect our income, cash flow, results of operations, financial condition, liquidity and prospects, and could adversely affect the value of our common shares and our ability to make distributions to our shareholders. 29 Table of Contents Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments, and in some situations, to maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments, and in some situations, to maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
Additionally, partners or co-venturers might at any time have economic or other business interests or goals different from us and or in competition with us. 21 Table of Contents Joint ventures generally provide for a reduced level of control over an acquired project because governance rights are shared with others.
Joint ventures generally provide for a reduced level of control over an acquired project because governance rights are shared with others.
The subordinated performance units are entitled to distributions exclusively tied to the performance of each PRO's managed portfolios but only after minimum performance thresholds are satisfied. Our issuance of such units, however, may have been and could be based on inaccurate valuations and thus misallocated, which would limit or eliminate the effectiveness of our intended incentive-based program.
The subordinated performance units are entitled to distributions exclusively tied to the performance of each PRO's managed portfolios but only after minimum performance thresholds are satisfied.
In addition, we may enter into agreements with future PROs that contain the same or similar restrictions or that impose such restrictions for different periods. 22 Table of Contents Our ability to terminate our facilities portfolio management agreements ("FPMAs") and asset management agreements ("AMAs") with a PRO is limited, which may adversely affect our ability to execute our business plan.
Our issuance of such units, however, may have been and could be based on inaccurate valuations and thus misallocated, which would limit or eliminate the effectiveness of our intended incentive-based program. 21 Table of Contents Our ability to terminate our facilities portfolio management agreements ("FPMAs") and asset management agreements ("AMAs") with a PRO is limited, which may adversely affect our ability to execute our business plan.
Togashi and the other members of our senior management team. We have entered into employment agreements with Mr. Nordhagen, Ms. Fischer, Mr. Cramer and Mr. Togashi and these employment agreements provide for an initial term of employment and automatic one-year extensions thereafter unless either party provides at least 90 days' notice of non-renewal.
Cowan, Derek Bergeon and Tiffany S. Kenyon and the other members of our senior management team. We have entered into employment agreements with Mr. Nordhagen, Ms. Fischer, Mr. Cramer, Mr. Togashi, Mr. Cowan, Mr. Bergeon and Ms.
Accordingly, the amount of property taxes we pay in the future may increase substantially from what we have paid in the past or from what we expected in connection with our underwriting activities, which could adversely impact our operating results, cash flow, and our ability to pay any expected dividends to our shareholders.
While no such initiative has yet been successful, to the extent a similar future initiative is successful, our property tax expense could increase substantially, which could adversely impact our operating results, cash flow, and our ability to pay any expected dividends to our shareholders.
Risks Related to Our Structure and Our Relationships with Our PROs Some of our PROs have limited experience operating under our capital structure, and we may not be able to achieve the desired outcomes that the structure is intended to produce. Some of our PROs have limited experience operating under our capital structure.
Furthermore, any terrorist attacks, armed conflicts or active-shooter situations could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Risks Related to Our Structure and Our Relationships with Our PROs We may not be able to achieve the desired outcomes that the PRO structure is intended to produce.
Removed
We may not be successful in identifying and consummating suitable acquisitions, adding additional suitable new PROs, or integrating and operating such acquisitions, including integrating them into our financial and operational reporting infrastructure and internal control framework in a timely manner, which may impede our growth.
Added
From time to time, proposals have been made to remove certain limits on annual real estate tax increases of assessed value of real property in California, where we currently have 87 consolidated properties and 12 unconsolidated properties.
Removed
For example, in November 2020, there was an initiative in California, which did not pass, to remove certain limits on annual real estate tax increases of assessed value of real property. To the extent a similar future initiative is successful, it would increase the assessed value and/or tax rates applicable to self storage properties in California.
Added
Our storage leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease our units and we may be unable to do so on attractive terms, on a timely basis or at all.
Removed
We currently have 86 consolidated properties and 12 unconsolidated properties in California.
Added
Kenyon, which provide for an initial term of employment and automatic one-year extensions thereafter unless either party provides at least 90 days' notice of non-renewal. Notwithstanding these agreements, there can be no assurance that any of them will remain employed by us.
Removed
We and certain of our PROs have tenant insurance- and/or tenant protection plan-related arrangements with regulated insurance companies and our tenants. Some of our PROs earn access fees in connection with these arrangements. We receive a portion of the fees from these PROs.
Added
We face various risks related to public health and other crises, such as the future outbreak of a highly infectious or contagious disease.
Removed
We rely on a limited number of vendors to provide key services, such as the provision of utilities, at certain of our properties. Our business and property operations may be adversely affected if these vendors fail to adequately provide key services at our properties as a result of unanticipated events, including those resulting from climate change.
Added
As a result, such crises could adversely impact our financial condition, results of operations and cash flows. Terrorist attacks, active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.
Removed
If a vendor fails to adequately provide utilities or other important services, we may experience significant interruptions in service and disruptions to business operations at our properties, incur remediation costs, and become subject to claims and damage to our reputation.
Added
Terrorist attacks at or against our stores, our interests, the United States or abroad, may negatively impact our operations and the value of our securities. Attacks, armed conflicts or active-shooter situations could negatively impact the demand for self-storage and increase of insurance coverage for our stores, which could reduce our profitability and cash flow.
Removed
There can be no assurance that climate change and severe weather, or the potential impacts of these events on our vendors, will not have a material adverse effect on our properties, operations, or business. 20 Table of Contents Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow.
Added
Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness, make cash distributions to our shareholders, and acquire or sell properties and our decision to hedge against interest rate risk might not be effective.
Removed
We face various risks related to pandemics, epidemics and other outbreaks of highly infectious or contagious diseases, including the on-going COVID-19 pandemic. New COVID-19 variants continue to emerge and have spread locally, regionally, nationally, and globally.
Added
Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flow.
Removed
The severity of new variants remains uncertain and there is no guarantee that governments and businesses in the future will not reinstate many of the more restrictive safety protocols that were implemented at various times over the last three years.
Added
Payment of these taxes generally could materially and adversely affect our income, cash flow, results of operations, financial condition, liquidity and prospects, and could adversely affect the value of our common shares and our ability to make distributions to our shareholders.
Removed
There is no assurance that current or future variants will be contained or that the recommended safety protocols, including the use of vaccines, will continue to be effective or available in the long term.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth summary information regarding our consolidated properties by state as of December 31, 2022. 33 Number of Number of Rentable % of Rentable Period-end State/Territory Properties Units Square Feet Square Feet Occupancy Texas 196 90,141 12,602,136 21.6 % 90.6 % California (1) 86 51,347 6,487,571 11.1 % 89.4 % Georgia 71 32,814 4,465,136 7.7 % 87.6 % Oregon 70 29,230 3,657,604 6.3 % 87.2 % Florida 64 38,339 4,256,408 7.3 % 89.6 % North Carolina 41 19,882 2,490,362 4.3 % 92.1 % Arizona 33 18,196 2,098,763 3.6 % 87.6 % Oklahoma 33 15,296 2,142,607 3.7 % 91.9 % Louisiana (1) 31 13,842 1,718,977 3.0 % 88.7 % Kansas 23 8,568 1,187,718 2.0 % 90.9 % Colorado 22 9,489 1,197,530 2.1 % 88.4 % Pennsylvania 22 10,367 1,292,539 2.2 % 83.2 % Indiana 21 10,993 1,441,137 2.5 % 88.0 % Washington 19 6,635 871,435 1.5 % 87.5 % Alabama 15 7,851 1,135,159 1.9 % 78.9 % New Hampshire 15 7,120 889,101 1.5 % 93.1 % Nevada 14 7,090 899,003 1.5 % 87.8 % Puerto Rico 14 12,404 1,341,803 2.3 % 94.4 % Ohio 13 5,501 729,012 1.3 % 87.7 % Tennessee 13 6,064 777,645 1.3 % 86.5 % Missouri 12 5,291 678,550 1.2 % 86.4 % Illinois 10 6,383 718,202 1.2 % 89.7 % New Mexico 10 5,504 718,262 1.2 % 90.9 % South Carolina 9 4,218 540,007 0.9 % 85.5 % Maryland 8 4,564 493,184 0.8 % 80.5 % Massachusetts 7 4,842 522,347 0.9 % 85.0 % Kentucky 5 2,788 412,651 0.7 % 82.6 % New Jersey 5 2,738 351,747 0.6 % 92.1 % Idaho 5 1,446 271,127 0.5 % 93.6 % Arkansas 5 2,650 401,620 0.7 % 83.9 % Mississippi 4 1,180 152,461 0.3 % 87.5 % Virginia 4 1,776 221,551 0.4 % 88.2 % Minnesota 4 1,201 193,020 0.3 % 85.8 % Iowa 3 3,103 414,322 0.7 % 74.2 % Connecticut 3 1,181 140,770 0.2 % 84.2 % New York 2 1,676 172,745 0.3 % 79.1 % Montana 1 438 59,900 0.1 % 90.0 % Wyoming 1 424 56,500 0.1 % 88.6 % Wisconsin 1 378 59,672 0.1 % 89.5 % Utah 1 310 46,300 0.1 % 90.0 % Total/Weighted Average 916 453,260 58,306,584 100.0 % 88.8 % (1) Six of the California properties and two of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases.
Biggest changeThe following table sets forth summary information regarding our consolidated properties by state as of December 31, 2023. 32 Number of Number of Rentable % of Rentable Period-end State/Territory Properties Units Square Feet Square Feet Occupancy Texas 172 79,045 10,986,692 21.2 % 87.3 % California (1) 87 52,410 6,629,212 12.8 % 84.8 % Florida 76 43,946 4,975,310 9.6 % 85.7 % Oregon 70 29,217 3,657,543 7.0 % 84.0 % Georgia 50 22,173 3,022,988 5.8 % 81.8 % Arizona 34 18,858 2,175,802 4.2 % 84.2 % North Carolina 34 16,758 2,097,487 4.0 % 85.6 % Oklahoma 33 15,300 2,143,482 4.1 % 86.2 % Louisiana (1) 25 11,450 1,388,385 2.7 % 83.7 % Pennsylvania 22 10,435 1,296,060 2.5 % 87.1 % Colorado 22 9,488 1,197,510 2.3 % 85.3 % Washington 19 6,633 871,169 1.7 % 82.7 % Puerto Rico 15 12,852 1,388,637 2.7 % 92.9 % Nevada 15 7,557 962,182 1.9 % 86.8 % New Hampshire 15 7,117 888,611 1.7 % 89.7 % Kansas 14 4,924 670,702 1.3 % 88.0 % Indiana 12 6,533 828,453 1.6 % 83.6 % Alabama 11 6,036 907,914 1.7 % 77.8 % New Mexico 10 5,500 716,307 1.4 % 86.8 % Maryland 8 4,564 493,184 1.0 % 86.6 % Massachusetts 7 5,014 538,005 1.0 % 82.1 % Illinois 6 4,227 425,361 0.8 % 82.2 % Tennessee 5 2,550 349,663 0.7 % 87.4 % Kentucky 5 2,784 412,051 0.8 % 78.7 % New Jersey 5 2,743 352,338 0.7 % 84.5 % Idaho 5 1,454 271,511 0.5 % 83.8 % Arkansas 5 2,604 401,820 0.8 % 78.4 % South Carolina 4 2,059 254,853 0.5 % 83.9 % Minnesota 4 1,198 192,770 0.4 % 83.7 % Missouri 3 1,244 153,606 0.3 % 90.0 % Virginia 3 1,382 174,915 0.3 % 83.8 % Iowa 3 3,100 414,442 0.8 % 74.6 % Connecticut 3 1,182 141,090 0.3 % 82.1 % New York 2 1,713 174,591 0.3 % 81.3 % Ohio 1 951 112,555 0.2 % 84.8 % Montana 1 438 60,250 0.1 % 95.5 % Wyoming 1 424 56,500 0.1 % 85.7 % Wisconsin 1 378 59,672 0.1 % 85.1 % Utah 1 312 46,500 0.1 % 87.7 % Total/Weighted Average (2) 809 406,553 51,890,123 100.0 % 85.3 % (1) Six of the California properties and one of the Louisiana properties are subject to non-cancelable leasehold interest agreements that are classified as operating leases.
Number of Number of Rentable % of Rentable Period-end State Properties Units Square Feet Square Feet Occupancy Florida 27 15,052 1,710,868 12.7 % 91.3 % Michigan 25 15,952 2,022,498 15.0 % 88.3 % New Jersey 15 10,526 1,226,238 9.1 % 83.6 % Alabama 14 5,519 825,832 6.1 % 88.7 % Ohio 14 9,378 1,124,322 8.3 % 86.8 % California 12 6,642 779,402 5.8 % 90.3 % Georgia 11 6,132 872,108 6.5 % 89.4 % Texas 11 9,160 998,046 7.4 % 90.5 % Other (1) 56 32,608 3,909,784 29.1 % 88.6 % Total 185 110,969 13,469,098 100.0 % 88.6 % (1) Other states in the unconsolidated real estate ventures include Arizona, Delaware, Illinois, Massachusetts, Minnesota, Mississippi, Nevada, New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee and Virginia.
Number of Number of Rentable % of Rentable Period-end State Properties Units Square Feet Square Feet Occupancy Florida 27 15,032 1,716,479 12.7 % 82.4 % Michigan 25 15,930 2,017,998 15.0 % 86.7 % New Jersey 15 10,789 1,253,588 9.3 % 84.7 % Alabama 14 5,517 825,238 6.1 % 86.4 % Ohio 14 9,375 1,124,347 8.3 % 84.7 % California 12 6,648 779,342 5.8 % 85.5 % Georgia 11 6,132 872,058 6.5 % 84.2 % Texas 11 9,113 997,098 7.4 % 89.4 % Other (1) 56 32,592 3,906,901 28.9 % 84.9 % Total 185 111,128 13,493,049 100.0 % 85.2 % (1) Other states in the unconsolidated real estate ventures include Arizona, Delaware, Illinois, Massachusetts, Minnesota, Mississippi, Nevada, New York, Oklahoma, Pennsylvania, Rhode Island, Tennessee and Virginia.
Item 2. Properties As of December 31, 2022, we held ownership interests in and operated a geographically diversified portfolio of 1,101 self storage properties, located in 42 states and Puerto Rico, comprising approximately 71.8 million rentable square feet, configured in approximately 564,000 storage units.
Properties As of December 31, 2023, we held ownership interests in and operated a geographically diversified portfolio of 1,050 self storage properties located in 42 states and Puerto Rico, comprising approximately 68.6 million rentable square feet, configured in approximately 542,000 storage units, which excludes 39 self storage properties classified as held for sale to be sold to a third party in 2024.
Of these properties, we consolidated 916 self storage properties that contain approximately 58.3 million rentable square feet and we held a 25% ownership interest in 185 unconsolidated real estate venture properties that contain approximately 13.5 million rentable square feet.
Of these properties, we reported 809 wholly-owned self storage properties on a consolidated basis that contain approximately 51.9 million rentable square feet, which excludes an additional 56 self storage properties classified as held for sale that were contributed to the 2024 Joint Venture, and we held a 25% ownership interest in 185 unconsolidated real estate venture properties that contain approximately 13.5 million rentable square feet.
See "Note 13. Leases" in Item 8. "Financial Statements and Supplementary Data." 34 The following table sets forth summary information regarding our unconsolidated real estate venture properties by state as of December 31, 2022.
"Financial Statements and Supplementary Data." (2) Excludes self storage properties classified as held for sale consisting of (i) 39 self storage properties, comprising approximately 2.4 million rentable square feet, configured in approximately 18,000 storage units to be sold to a third party in 2024 and (ii) 56 self storage properties, comprising approximately 3.2 million rentable square feet, configured in approximately 24,000 storage units that were contributed to the 2024 Joint Venture in 2024. 33 The following table sets forth summary information regarding our unconsolidated real estate venture properties by state as of December 31, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−5 removed9 unchanged
Biggest changeFollowing a specified lock up period after the date of issuance set forth above, the OP units issued by the operating partnership may be redeemed from time to time by holders for a cash amount per OP unit equal to the market value of an equivalent number of common shares.
Biggest changeOn October 24, 2023, the operating partnership issued 35,446 Series SO subordinated performance units to affiliates of Southern, one of the Company's existing PROs, in exchange for cash in connection with the acquisition of a self storage property from an unrelated third party. 35 Table of Contents Following a specified lock up period after the date of issuance set forth above, the OP units issued by the operating partnership may be redeemed from time to time by holders for a cash amount per OP unit equal to the market value of an equivalent number of common shares.
Our tax return for the year ended December 31, 2022 has not yet been filed and consequently, the taxability information presented for our dividends paid in 2022 is based upon management's estimate.
Our tax return for the year ended December 31, 2023 has not yet been filed and consequently, the taxability information presented for our dividends paid in 2023 is based upon management's estimate.
Holders As of February 24, 2023, the Company had 82 record holders of its common shares. The 82 holders of record do not include the beneficial owners of common shares whose shares are held by a broker or bank. Such information was obtained from our transfer agent and registrar.
Holders As of February 26, 2024, the Company had 83 record holders of its common shares. The 83 holders of record do not include the beneficial owners of common shares whose shares are held by a broker or bank. Such information was obtained from our transfer agent and registrar.
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On July 11, 2022, the Company approved a share repurchase program authorizing the repurchase of up to $400.0 million of the Company's common shares.
These issuances were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On July 11, 2022, the Company approved a share repurchase program authorizing the repurchase of up to $400.0 million of the Company's common shares, under which $256,892 of commons shares remain available for repurchase.
Unregistered Sales of Equity Securities During the three months ended December 31, 2022, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 13,184 common shares to satisfy redemption requests from certain limited partners.
Unregistered Sales of Equity Securities During the three months ended December 31, 2023, the Company, in its capacity as general partner of its operating partnership, caused the operating partnership to issue 186,003 common shares to satisfy redemption requests from certain limited partners.
As of February 24, 2023, other than those OP units held by the Company, 41,482,271 OP units were outstanding (including 665,056 outstanding Long-Term Incentive Plan Units ("LTIP units") and 2,120,491 outstanding OP units in certain consolidated subsidiaries of the operating partnership ("DownREIT OP units"), which are convertible into, or exchangeable for, OP units on a one-for-one basis, subject to certain conditions).
As of February 26, 2024, other than those OP units held by the Company, 40,514,212 OP units were outstanding (including 787,284 outstanding Long-Term Incentive Plan Units ("LTIP units") and 2,120,491 outstanding OP units in certain consolidated subsidiaries of the operating partnership ("DownREIT OP units"), which are convertible into, or exchangeable for, OP units on a one-for-one basis, subject to certain conditions).
The following table summarizes the taxability of our dividends per common share for the year ended December 31, 2022: Year Ended December 31, 2022 Ordinary Income $ 1.767988 82.2 % Return of Capital 0.382012 17.8 % Total $ 2.150000 100.0 % Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this Annual Report on Form 10-K.
The following table summarizes the taxability of our dividends per common share for the year ended December 31, 2023: Year Ended December 31, 2023 Ordinary Income $ 1.653434 74.2 % Capital Gain 0.239048 10.7 % Return of Capital 0.337518 15.1 % Total $ 2.230000 100.0 % Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference to Item 12 of Part III of this Annual Report on Form 10-K.
The table below summarizes all of our repurchases of common shares during three months ended December 31, 2022: Period Total number of shares purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs October 1 - October 31, 2022 — $ — — $ 350,018.045 November 1 - November 30, 2022 — — — 350,018,045 December 1 - December 31, 2022 1,032,251 38.73 1,032,251 310,038,724 Total/Weighted Average 1,032,251 $ 38.73 1,032,251 $ 310,038,724 37 Table of Contents Performance Graph The following chart compares the yearly cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the Nareit All Equity REIT Index as provided by Nareit for the period beginning December 31, 2017 and ending December 31, 2022.
The table below summarizes all of our repurchases of common shares during three months ended December 31, 2023: Period Total number of shares purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs October 1 - October 31, 2023 — $ — — $ 27,591,757 November 1 - November 30, 2023 852,771 32.05 852,771 256,892 December 1 - December 31, 2023 — — — 275,256,892 Total/Weighted Average 852,771 $ 32.05 852,771 $ 275,256,892 36 Table of Contents Performance Graph The following chart compares the yearly cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 and (iii) the Nareit All Equity REIT Index as provided by Nareit for the period beginning December 31, 2018 and ending December 31, 2023.
Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 National Storage Affiliates Trust $ 100 $ 101 $ 134 $ 150 $ 296 $ 162 S&P 500 100 96 126 149 192 157 Russell 2000 100 89 112 134 154 122 Nareit All Equity REIT Index 100 96 123 117 165 124 The foregoing item assumes $100.00 invested on December 31, 2017, with dividends reinvested.
Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 National Storage Affiliates Trust $ 100 $ 132 $ 148 $ 293 $ 160 $ 195 S&P 500 100 131 156 200 164 207 Russell 2000 100 126 151 173 138 161 Nareit All Equity REIT Index 100 129 122 172 129 144 The foregoing item assumes $100.00 invested on December 31, 2018, with dividends reinvested.
On October 7, 2022, the operating partnership issued 95,000 OP units to an affiliate of Hide-Away, one of the Company's existing PROs, as partial consideration for the acquisition of a self storage property.
On October 6, 2023, the operating partnership issued 179,354 Series A-1 preferred units to affiliates of Optivest, one of the Company's existing PROs, as partial consideration for the acquisition of a self storage property. In addition, 7,600 LTIP units that were previously granted to Optivest and an affiliate of Optivest vested in connection with this transaction.
Removed
On October 28, 2022, the operating partnership issued 57,716 subordinated performance units to an affiliate of Moove In, one of the Company's existing PROs, in exchange for cash. On November 8, 2022, the operating partnership issued 64,125 subordinated performance units to an affiliate of Moove In, one of the Company's existing PROs, in exchange for cash.
Added
On December 1, 2023, the Company approved a new share repurchase program authorizing, but not obligating, the repurchase of up to $275.0 million of the Company's common shares.
Removed
On November 8, 2022, the operating partnership issued 333,333 OP units to an unrelated third party as partial consideration for the acquisition of a self storage property.
Removed
On February 21, 2023, the operating partnership issued 276,980 subordinated performance units to an affiliate of Guardian, one of the Company's existing PROs, as partial consideration for the acquisition of a self storage property. 36 Table of Contents Effective as of January 1, 2023, in connection with the retirement of Move It, as described above in this Form 10-K, 926,623 Series MI subordinated performance units converted into 2,545,063 OP units as a non-voluntary conversion in connection with Move It's retirement.
Removed
Of these, (i) Mr. Nordhagen, our executive chairman, received 448,047 OP units upon conversion of 163,128 Series MI subordinated performance units and (ii) Mr. Cramer, our president and chief operating officer, received 204,943 OP units upon the conversion of 74,617 Series MI subordinated performance units.
Removed
Also, effective as of January 1, 2023, a company owned and controlled by Mark Van Mourick, one of our trustees, received 95,036 OP units upon a voluntary conversion of 32,796 Series OV subordinated performance units.

Item 7. Management's Discussion & Analysis

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

98 edited+30 added−19 removed82 unchanged
Biggest changeWe categorize our capital expenditures broadly into three primary categories: • recurring capital expenditures, which represent the portion of capital expenditures that are deemed to replace the consumed portion of acquired capital assets and extend their useful life; • value enhancing capital expenditures, which represent the portion of capital expenditures that are made to enhance the revenue and value of an asset from its original purchase condition; and • acquisitions capital expenditures, which represent the portion of capital expenditures capitalized during the current period that were identified and underwritten prior to a property's acquisition. 51 Table of Contents The following table presents a summary of the capital expenditures for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated statements of cash flows for the periods presented (dollars in thousands): Year Ended December 31, 2022 2021 2020 Recurring capital expenditures $ 11,794 $ 9,500 $ 6,057 Value enhancing capital expenditures 11,732 8,738 4,026 Acquisitions capital expenditures 19,215 11,185 6,064 Total capital expenditures 42,741 29,423 16,147 Change in accrued capital spending 57 (1,846) 248 Capital expenditures per statement of cash flows $ 42,798 $ 27,577 $ 16,395 Financing Activities Cash provided by our financing activities was $154.6 million for the year ended December 31, 2022 compared to $1.7 billion for the year ended December 31, 2021.
Biggest changeThe following table presents a summary of the capital expenditures for these categories, along with a reconciliation of the total for these categories to the capital expenditures reported in the accompanying consolidated statements of cash flows for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Recurring capital expenditures $ 16,957 $ 11,794 $ 9,500 Value enhancing capital expenditures 6,364 11,732 8,738 Acquisitions capital expenditures 9,649 19,215 11,185 Total capital expenditures 32,970 42,741 29,423 Change in accrued capital spending 1,260 57 (1,846) Capital expenditures per statement of cash flows $ 34,230 $ 42,798 $ 27,577 Financing Activities Cash used in our financing activities was $557.2 million for the year ended December 31, 2023 compared to $154.6 million of cash provided by financing activities for the year ended December 31, 2022.
We believe NOI is useful to investors in evaluating our operating performance because: • NOI is one of the primary measures used by our management and our PROs to evaluate the economic productivity of our properties, including our ability to lease our properties, increase pricing and occupancy and control our property operating expenses; • NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of our capital structure; and • We believe NOI helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of the cost basis of our assets from our operating results. 47 Table of Contents There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income (loss).
We believe NOI is useful to investors in evaluating our operating performance because: • NOI is one of the primary measures used by our management and our PROs to evaluate the economic productivity of our properties, including our ability to lease our properties, increase pricing and occupancy and control our property operating expenses; • NOI is widely used in the real estate industry and the self storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods, the book value of assets, and the impact of our capital structure; and • We believe NOI helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of the cost basis of our assets from our operating results. 46 Table of Contents There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income (loss).
For a summary of our financial covenants and additional detail regarding our credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and June 2029 Term Loan Facility, please see Note 8 to the consolidated financial statements in Item 8. 2029 and August 2031 Senior Unsecured Notes On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in a private placement to certain institutional investors.
For a summary of our financial covenants and additional detail regarding our credit facility, 2028 Term Loan Facility, April 2029 Term Loan Facility and June 2029 Term Loan Facility, please see Note 8 to the consolidated financial statements in Item 8. 2029 and August 2031 Senior Unsecured Notes On August 30, 2019, our operating partnership issued $100.0 million of 3.98% senior unsecured notes due August 30, 2029 and $50.0 million of 4.08% senior unsecured notes due August 30, 2031 in a private placement to certain institutional investors.
Some of these limitations are: • EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs; • EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; • EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and 49 Table of Contents • other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
Some of these limitations are: • EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures, contractual commitments or working capital needs; • EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; 48 Table of Contents • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; • Adjusted EBITDA excludes equity-based compensation expense, which is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; • EBITDA and Adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and • other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
We have an April 2029 Term Loan Facility that matures in April 2029 and is separate from the credit facility, 2023 Term Loan Facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million. As of December 31, 2022 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
We have an April 2029 Term Loan Facility that matures in April 2029 and is separate from the credit facility and 2028 Term Loan Facility in an aggregate amount of $100.0 million. As of December 31, 2023 the entire amount was outstanding under the April 2029 Term Loan Facility with an effective interest rate of 4.27%.
Historically, our highest level of occupancy has typically been in July, while our lowest level of occupancy has typically been in February. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.
Historically, our highest level of occupancy has typically been in July, while our lowest level of occupancy has typically been in February. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year. 57
Examples of such other expenses include: 55 Table of Contents (i) corporate-level general and administrative expenses; (ii) out-of-pocket costs, expenses and fees of our operating partnership, whether or not capitalized; (iii) the costs and expenses of organizing and operating our operating partnership; (iv) amounts paid or due in respect of any loan or other indebtedness of our operating partnership during such period; (v) extraordinary expenses of our operating partnership not previously or otherwise deducted under item (ii) above; (vi) any third-party costs and expenses associated with identifying, analyzing, and presenting a proposed property to us and/or our operating partnership; and (vii) reserves to meet anticipated operating expenditures, debt service or other liabilities, as determined by us.
Examples of such other expenses include: (i) corporate-level general and administrative expenses; (ii) out-of-pocket costs, expenses and fees of our operating partnership, whether or not capitalized; (iii) the costs and expenses of organizing and operating our operating partnership; (iv) amounts paid or due in respect of any loan or other indebtedness of our operating partnership during such period; (v) extraordinary expenses of our operating partnership not previously or otherwise deducted under item (ii) above; (vi) any third-party costs and expenses associated with identifying, analyzing, and presenting a proposed property to us and/or our operating partnership; and (vii) reserves to meet anticipated operating expenditures, debt service or other liabilities, as determined by us.
We define Core FFO as FFO, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments consist of acquisition costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, casualty-related expenses or losses and adjustments for unconsolidated partnerships and joint ventures.
We define Core FFO as FFO, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments consist of acquisition costs, gains on debt forgiveness, gains (losses) on early extinguishment of debt, casualty-related expenses, losses, and related recoveries and adjustments for unconsolidated partnerships and joint ventures.
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 and $90.0 million of 3.00% senior unsecured notes due May 4, 2031. 53 Table of Contents November 2030, November 2031, November 2033 and 2036 Senior Unsecured Notes On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030, $175.0 million of 2.81% senior unsecured notes due November 30, 2031 and $75.0 million of 3.06% senior unsecured notes due November 30, 2036.
On July 26, 2021, our operating partnership issued $35.0 million of 2.16% senior unsecured notes due May 4, 2026 and $90.0 million of 3.00% senior unsecured notes due May 4, 2031. 52 Table of Contents November 2030, November 2031, November 2033 and 2036 Senior Unsecured Notes On December 14, 2021, our operating partnership issued $75.0 million of 2.72% senior unsecured notes due November 30, 2030, $175.0 million of 2.81% senior unsecured notes due November 30, 2031 and $75.0 million of 3.06% senior unsecured notes due November 30, 2036.
These amounts are based on historical financial information for the trailing twelve months ended December 31, 2022. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period.
These amounts are based on historical financial information for the trailing twelve months ended December 31, 2023. The hypothetical conversion is calculated by dividing the average cash available for distribution, or CAD, per subordinated performance unit by 110% of the CAD per OP unit over the same period.
This structure offers our PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
Our PRO structure offers our PROs a unique opportunity to serve as regional property managers for their managed portfolios and directly participate in the potential upside of those properties while simultaneously diversifying their investment to include a broader portfolio of self storage properties.
We have a June 2029 Term Loan Facility that matures in June 2029 and is separate from the credit facility, 2023 Term Loan Facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million. As of December 31, 2022 the June 2029 Term Loan Facility had a variable effective interest rate of 5.37%.
We have a June 2029 Term Loan Facility that matures in June 2029 and is separate from the credit facility, 2028 Term Loan Facility, and April 2029 Term Loan Facility in an aggregate amount of $285.0 million. As of December 31, 2023, the June 2029 Term Loan Facility had an effective interest rate of 5.37%.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021 should be read in conjunction with the accompanying consolidated financial statements included in Item 8.
The following discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 should be read in conjunction with the accompanying consolidated financial statements included in Item 8.
We expect to meet our long-term liquidity requirements with operating cash flow, cash on hand, secured and unsecured indebtedness, and the issuance of equity and debt securities. 50 Table of Contents The availability of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing.
We expect to meet our long-term liquidity requirements with operating cash flow, cash on hand, secured and unsecured indebtedness, and the issuance of equity and debt securities. The availability of credit and its related effect on the overall economy may affect our liquidity and future financing activities, both through changes in interest rates and access to financing.
The discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2021 compared to the year ended December 31, 2020, can be found in Part II, "Item 7.
The discussion and analysis of the results of our operations and financial condition for the year ended December 31, 2022 compared to the year ended December 31, 2021, can be found in Part II, "Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 25, 2022. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 27, 2023. Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation.
Of these properties, 301 were acquired by us from our PROs, 614 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture. Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure.
Of these properties, 306 were acquired by us from our PROs, 502 were acquired by us from third-party sellers and one was acquired by us from the 2016 Joint Venture. Our Unconsolidated Real Estate Ventures We seek to opportunistically partner with institutional funds and other institutional investors to acquire attractive portfolios utilizing a promoted return structure.
Our executive chairman of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr.
Our vice chairperson of the board of trustees and former chief executive officer, Arlen D. Nordhagen, co-founded SecurCare Self Storage, Inc. in 1988 to invest in and manage self storage properties. While growing SecurCare to over 150 self storage properties, Mr.
Sources of Liquidity and Capital Resources As of December 31, 2022, we had $35.3 million in cash and cash equivalents, compared to $25.0 million as of December 31, 2021. Our cash flows from operations result primarily from the ownership and management of self-storage facilities as described in Part I, Item 1, "Business".
Sources of Liquidity and Capital Resources As of December 31, 2023, we had $65.0 million in cash and cash equivalents, compared to $35.3 million as of December 31, 2022. Our cash flows from operations result primarily from the ownership and management of self-storage facilities as described in Part I, Item 1, "Business".
The subordinated allocation for the outstanding subordinated performance units is 6%. As of December 31, 2022, an aggregate of $244.3 million of unreturned capital contributions has been allocated to the various series of subordinated performance units. Thereafter, any additional operating cash flow is allocated to OP unitholders and the applicable series of subordinated performance units equally.
The subordinated allocation for the outstanding subordinated performance units is 6%. As of December 31, 2023, an aggregate of $211.3 million of unreturned capital contributions has been allocated to the various series of subordinated performance units. Thereafter, any additional operating cash flow is allocated to OP unitholders and the applicable series of subordinated performance units equally.
Over time, largely through our unconsolidated real estate ventures and internalization of three of our largest PROs, SecurCare, Northwest and, following January 1, 2023, Move It, we have developed a full service internally-staffed property management platform to complement our PRO structure.
Over time, largely through our unconsolidated real estate ventures and internalization of three of our largest PROs, SecurCare, Northwest and Move It, we have developed a full service internally-staffed property management platform to complement our PRO structure.
Our Structure Through our property management platform, we direct, manage and control the day-to-day operations and affairs of certain consolidated properties and our unconsolidated real estate ventures under our iStorage, Northwest, SecurCare and, following January 1, 2023, Move It brands.
Our Structure Through our property management platform, we direct, manage and control the day-to-day operations and affairs of certain consolidated properties and our unconsolidated real estate ventures under our iStorage, Northwest, SecurCare and Move It brands.
Our sources of financing cash flows for the year ended December 31, 2022 primarily consisted of $962.0 million of borrowings under the Revolver, $285.0 million of borrowings under our June 2029 Term Loan, $125.0 million from the issuance of the November 2033 Notes and $200.0 million from the issuance of the November 2032 Notes.
Our sources of financing cash flows for the year ended December 31, 2022 primarily consisted of $1.6 billion of borrowings (which included $962.0 million of borrowings under the Revolver, $285.0 million from our June 2029 Term Loan, $200.0 million from the issuance of the November 2032 Notes and $125.0 million from the issuance of the November 2033 Notes).
On February 22, 2023, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share and Series A-1 preferred unit to shareholders and unitholders of record as of March 15, 2023.
On February 15, 2024, our board of trustees also declared cash distributions of $0.375 per Series A Preferred Share, Series B Preferred Share and Series A-1 preferred unit to shareholders and unitholders of record as of March 15, 2024.
The Revolver, Term Loan A, Term Loan B, Term Loan C, Term Loan D and Term Loan E were not subject to any scheduled reduction or amortization payments prior to maturity. As of December 31, 2022, we had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $1.750 billion.
The Revolver, Term Loan B, Term Loan C, Term Loan D and Term Loan E are not subject to any scheduled reduction or amortization payments prior to maturity. As of December 31, 2023, we had an expansion option under the credit facility, which, if exercised in full, would provide for a total credit facility of $2.5 billion.
(4) Represents the dilutive effect of the forward offering from the application of the treasury stock method. 46 Table of Contents The following table presents a reconciliation of earnings per share - diluted to FFO and Core FFO per share and unit for the periods presented: Year Ended December 31, 2022 2021 2020 Earnings per share - diluted $ 0.99 $ 0.98 $ 0.53 Impact of the difference in weighted average number of shares (1) (0.28) 0.18 (0.16) Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method (2) 0.62 — 0.30 Add real estate depreciation and amortization 1.79 1.38 1.17 Add Company's share unconsolidated venture real estate depreciation and amortization 0.13 0.14 0.15 Subtract gain on sale of self storage properties (0.05) — — FFO attributable to subordinated performance unitholders (0.46) (0.44) (0.30) FFO per share and unit 2.74 2.24 1.69 Add acquisition costs and Company's share of unconsolidated real estate venture acquisition costs 0.02 0.02 0.02 Add casualty-related expenses 0.05 — — Core FFO per share and unit $ 2.81 $ 2.26 $ 1.71 (1) Adjustment accounts for the difference between the weighted average number of shares used to calculate diluted earnings per share and the weighted average number of shares used to calculate FFO and Core FFO per share and unit.
(4) Represents the dilutive effect of the forward offering from the application of the treasury stock method. 45 Table of Contents The following table presents a reconciliation of earnings per share - diluted to FFO and Core FFO per share and unit for the periods presented: Year Ended December 31, 2023 2022 2021 Earnings per share - diluted $ 1.48 $ 0.99 $ 0.98 Impact of the difference in weighted average number of shares (1) 0.23 (0.28) 0.18 Impact of GAAP accounting for noncontrolling interests, two-class method and treasury stock method (2) — 0.62 — Add real estate depreciation and amortization 1.73 1.79 1.38 Add Company's share unconsolidated venture real estate depreciation and amortization 0.13 0.13 0.14 Subtract gain on sale of self storage properties (0.52) (0.05) — FFO attributable to subordinated performance unitholders (0.38) (0.46) (0.44) FFO per share and unit 2.67 2.74 2.24 Add acquisition costs and Company's share of unconsolidated real estate venture acquisition costs 0.01 0.02 0.02 Add casualty-related expenses — 0.05 — Add loss on early extinguishment of debt 0.01 — — Core FFO per share and unit $ 2.69 $ 2.81 $ 2.26 (1) Adjustment accounts for the difference between the weighted average number of shares used to calculate diluted earnings per share and the weighted average number of shares used to calculate FFO and Core FFO per share and unit.
On February 22, 2023, our board of trustees declared a cash dividend and distribution, respectively, of $0.55 per common share and OP unit to shareholders and OP unitholders of record as of March 15, 2023.
On February 15, 2024, our board of trustees declared a cash dividend and distribution, respectively, of $0.56 per common share and OP unit to shareholders and OP unitholders of record as of March 15, 2024.
We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver. 39 Table of Contents Our PROs We had nine PROs as of December 31, 2022: Optivest, Move It, Guardian, Southern, Blue Sky, Moove In, Hide Away, Storage Solutions and Personal Mini.
We expect that our shareholders will benefit from the higher levels of property performance that our PROs are incentivized to deliver. 38 Table of Contents Our PROs We had eight PROs as of December 31, 2023: Optivest, Guardian, Southern, Blue Sky, Moove In, Hide Away, Storage Solutions and Personal Mini.
During the year ended December 31, 2022, we recorded $7.7 million of equity in earnings from our unconsolidated real estate ventures compared to $5.3 million for the year ended December 31, 2021.
During the year ended December 31, 2023, we recorded $7.6 million of equity in earnings from our unconsolidated real estate ventures compared to $7.7 million for the year ended December 31, 2022.
Cash Distributions from our Operating Partnership Under the LP Agreement of our operating partnership, to the extent that we, as the general partner of our operating partnership, determine to make distributions to the partners of our operating partnership out of the operating cash flow or capital transaction proceeds generated by a real property portfolio managed by one of our PROs, the holders of the series of subordinated performance units that relate to such portfolio are entitled to share in such distributions.
Such dividends and distributions are expected to be paid on March 29, 2024. 54 Table of Contents Cash Distributions from our Operating Partnership Under the LP Agreement of our operating partnership, to the extent that we, as the general partner of our operating partnership, determine to make distributions to the partners of our operating partnership out of the operating cash flow or capital transaction proceeds generated by a real property portfolio managed by one of our PROs, the holders of the series of subordinated performance units that relate to such portfolio are entitled to share in such distributions.
Cash used in investing activities was $2.0 billion for the year ended December 31, 2021 compared to $509.7 million for the year ended December 31, 2020.
Cash used in investing activities was $584.2 million for the year ended December 31, 2022 compared to $2.0 billion for the year ended December 31, 2021.
August 2030 and 2032 Senior Unsecured Notes On October 22, 2020, our operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 in a private placement to certain institutional investors. 2026, May 2031 and May 2033 Senior Unsecured Notes On May 26, 2021, our operating partnership issued $55.0 million of 3.10% senior unsecured notes due May 4, 2033.
August 2030 and August 2032 Senior Unsecured Notes On October 22, 2020, our operating partnership issued $150.0 million of 2.99% senior unsecured notes due August 5, 2030 and $100.0 million of 3.09% senior unsecured notes due August 5, 2032 in a private placement to certain institutional investors.
Our national platform allows us to capture cost savings by eliminating redundancies and utilizing economies of scale across the property management platforms of our PROs while also providing greater access to lower-cost capital. Effective January 1, 2022, Northwest elected to retire as one of our PROs.
Our national platform allows us to capture cost savings by eliminating redundancies and utilizing economies of scale across the property management platforms of our PROs while also providing greater access to lower-cost capital. Effective January 1, 2023, Move It Self Storage and its controlled affiliates, elected to retire as one our PROs.
As of December 31, 2022, our same store portfolio consisted of 628 self storage properties.
As of December 31, 2023, our same store portfolio consisted of 724 self storage properties.
The primary uses of cash for the year ended December 31, 2022 were for our acquisition of 45 self storage properties for cash consideration of $496.4 million, capital expenditures of $42.8 million and capital contributions of $55.0 million to fund the self storage property acquisitions of our 2016 Joint Venture and 2018 Joint Venture.
The primary uses of cash for the year ended December 31, 2022 were for our acquisition of 45 self storage properties for cash consideration of $496.4 million, capital contributions of $55.0 million to fund the self storage property acquisitions of our 2016 Joint Venture and 2018 Joint Venture and capital expenditures of $42.8 million. 50 Table of Contents Capital expenditures totaled $34.2 million, $42.8 million and $27.6 million during the years ended December 31, 2023, 2022 and 2021 respectively.
We earn certain customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all proceeds from such programs.
As of December 31, 2023, our PROs managed the day-to-day operations of 333 of our consolidated properties. We earn certain customary fees for managing and operating the properties in the unconsolidated real estate ventures and we facilitate tenant insurance and/or tenant warranty protection programs for tenants at these properties in exchange for half of all proceeds from such programs.
When an entity is not deemed to be a VIE, we consider the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights. We consolidate all entities that are VIEs and of which the Company is deemed to be the primary beneficiary.
When an entity is not deemed to be a VIE, we consider the provisions of additional guidance to determine whether the general partner controls a limited partnership or similar entity when the limited partners have certain rights.
During the year ended December 31, 2022, we repurchased 1,986,175 common shares for approximately $90.1 million. During the year ended December 31, 2022, after receiving notices of redemption from certain OP unitholders, we elected to issue 627,896 common shares to such holders in exchange for 627,896 OP units in satisfaction of the operating partnership's redemption obligations.
During the year ended December 31, 2023, after receiving notices of redemption from certain OP unitholders, we elected to issue 1,275,854 common shares to such holders in exchange for 1,275,854 OP units in satisfaction of the operating partnership's redemption obligations.
We believe that to further understand our performance, FFO and Core FFO should be compared with our reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements. 45 Table of Contents The following table presents a reconciliation of net income to FFO and Core FFO for the periods presented (in thousands, except per share and unit amounts): Year Ended December 31, 2022 2021 2020 Net income $ 183,765 $ 146,935 $ 79,478 Add (subtract): Real estate depreciation and amortization 231,870 156,930 115,757 Company's share of unconsolidated real estate venture real estate depreciation and amortization 17,072 15,408 15,297 Gain on sale of self storage properties (5,466) — — Mark-to-market changes in value on equity securities — — 142 Distributions to preferred shareholders and unitholders (14,510) (14,070) (14,055) FFO attributable to subordinated performance unitholders (1) (58,838) (49,810) (29,708) FFO attributable to common shareholders, OP unitholders, and LTIP unitholders 353,893 255,393 166,911 Add: Acquisition costs 2,745 1,941 2,424 Casualty-related expenses (2) 6,388 — — Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders $ 363,026 $ 257,334 $ 169,335 Weighted average shares and units outstanding - FFO and Core FFO: (3) Weighted average shares outstanding - basic 91,239 81,195 66,547 Weighted average restricted common shares outstanding 27 33 30 Weighted average effect of outstanding forward offering agreement (4) — 100 60 Weighted average OP units outstanding 35,421 30,127 29,863 Weighted average DownREIT OP unit equivalents outstanding 1,925 1,925 1,906 Weighted average LTIP units outstanding 514 542 543 Total weighted average shares and units outstanding - FFO and Core FFO 129,126 113,922 98,949 FFO per share and unit $ 2.74 $ 2.24 $ 1.69 Core FFO per share and unit $ 2.81 $ 2.26 $ 1.71 (1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
We believe that to further understand our performance, FFO and Core FFO should be compared with our reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements. 44 Table of Contents The following table presents a reconciliation of net income to FFO and Core FFO for the periods presented (in thousands, except per share and unit amounts): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 Add (subtract): Real estate depreciation and amortization 220,737 231,870 156,930 Company's share of unconsolidated real estate venture real estate depreciation and amortization 17,083 17,072 15,408 Gain on sale of self storage properties (63,910) (5,466) — Distributions to preferred shareholders and unitholders (20,330) (14,510) (14,070) FFO attributable to subordinated performance unitholders (1) (49,040) (58,838) (49,810) FFO attributable to common shareholders, OP unitholders, and LTIP unitholders 341,528 353,893 255,393 Add: Acquisition costs 1,659 2,745 1,941 Casualty-related (recoveries) expenses (2) (522) 6,388 — Loss on early extinguishment of debt 758 — — Core FFO attributable to common shareholders, OP unitholders, and LTIP unitholders $ 343,423 $ 363,026 $ 257,334 Weighted average shares and units outstanding - FFO and Core FFO: (3) Weighted average shares outstanding - basic 86,846 91,239 81,195 Weighted average restricted common shares outstanding 25 27 33 Weighted average effect of outstanding forward offering agreement (4) — — 100 Weighted average OP units outstanding 38,302 35,421 30,127 Weighted average DownREIT OP unit equivalents outstanding 2,120 1,925 1,925 Weighted average LTIP units outstanding 553 514 542 Total weighted average shares and units outstanding - FFO and Core FFO 127,846 129,126 113,922 FFO per share and unit $ 2.67 $ 2.74 $ 2.24 Core FFO per share and unit $ 2.69 $ 2.81 $ 2.26 (1) Amounts represent distributions declared for subordinated performance unitholders and DownREIT subordinated performance unitholders for the periods presented.
We expect to fund short-term liquidity requirements from our operating cash flow, cash on hand and borrowings under our credit facility. Our long-term liquidity needs consist primarily of the repayment of debt, property acquisitions, and capital expenditures. We acquire properties through the use of cash, preferred units, OP units and subordinated performance units in our operating partnership or DownREIT partnerships.
Our long-term liquidity needs consist primarily of the repayment of debt, property acquisitions, and capital expenditures. We acquire properties through the use of cash, preferred units, OP units and subordinated performance units in our operating partnership or DownREIT partnerships.
This increase was primarily attributable to incremental revenue from 45 self storage properties acquired during the year ended December 31, 2022 and from 229 self storage properties acquired during 2021 (partially offset by the disposition of two self storage properties), increases in management fees and other revenue from our unconsolidated real estate ventures.
This increase was primarily attributable to incremental revenue from 20 self storage properties acquired during the year ended December 31, 2023 and from 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023 and increases in management fees and other revenue from our unconsolidated real estate ventures.
Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to noncontrolling interests.
Due to the stated liquidation priorities and because the HLBV method incorporates non-cash items such as depreciation expense, in any given period, income or loss may be allocated disproportionately to noncontrolling interests. Net income attributable to noncontrolling interests was $80.3 million for the year ended December 31, 2023, compared to $80.0 million for the year ended December 31, 2022.
We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
As of December 31, 2023, $75.0 million was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%. We have an expansion option under the 2028 Term Loan Facility, which, if exercised in full, would provide for total borrowings in an aggregate amount up to $125.0 million.
The increase in same store property operating expenses was a result of increases in property tax, utilities and marketing costs during the year ended December 31, 2022. 48 Table of Contents The following table presents a reconciliation of net income to NOI for the periods presented (dollars in thousands): Year Ended December 31, 2022 2021 2020 Net income $ 183,765 $ 146,935 $ 79,478 (Subtract) add: Management fees and other revenue (27,624) (24,374) (23,038) General and administrative expenses 59,311 51,001 43,640 Other 8,537 2,853 808 Depreciation and amortization 233,158 158,312 117,174 Interest expense 110,599 72,062 62,595 Equity in (earnings) of unconsolidated real estate ventures (7,745) (5,294) (265) Acquisition costs 2,745 1,941 2,424 Income tax expense 4,689 1,690 1,671 Gain on sale of self storage properties (5,466) — — Non-operating expense 951 906 1,211 Net operating income $ 562,920 $ 406,032 $ 285,698 Our consolidated NOI shown in the table above does not include our proportionate share of NOI for our unconsolidated real estate ventures.
The following table presents a reconciliation of net income to NOI for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 (Subtract) add: Management fees and other revenue (34,411) (27,624) (24,374) General and administrative expenses 59,281 59,311 51,001 Other 11,108 8,537 2,853 Depreciation and amortization 221,993 233,158 158,312 Interest expense 166,147 110,599 72,062 Equity in earnings of unconsolidated real estate ventures (7,553) (7,745) (5,294) Loss on early extinguishment of debt 758 — — Acquisition costs 1,659 2,745 1,941 Income tax expense 1,590 4,689 1,690 Gain on sale of self storage properties (63,910) (5,466) — Non-operating expense 1,016 951 906 Net operating income $ 594,666 $ 562,920 $ 406,032 Our consolidated NOI shown in the table above does not include our proportionate share of NOI for our unconsolidated real estate ventures.
The preferred allocation and subordinated allocation with respect to capital transaction proceeds for each portfolio is equal to the preferred allocation and subordinated allocation for distributions of operating cash flow with respect to that portfolio. Thereafter, any additional capital transaction proceeds are allocated to OP unitholders and the applicable series of subordinated performance units equally.
The preferred allocation and subordinated allocation with respect to capital transaction proceeds for each portfolio is equal to the preferred allocation and subordinated allocation for distributions of operating cash flow with respect to that portfolio.
The following discussion relates to changes in cash due to operating, investing, and financing activities, which are presented in our consolidated statements of cash flows included in Item 8 of this report.
The following discussion relates to changes in cash due to operating, investing, and financing activities, which are presented in our consolidated statements of cash flows included in Item 8 of this report. Operating Activities Cash provided by our operating activities was $441.6 million for the year ended December 31, 2023 compared to $443.8 million the year ended December 31, 2022.
Following the allocation described above, we, as the general partner of our operating partnership, will generally cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated performance units to the holders of such series of subordinated performance units.
Thereafter, any additional capital transaction proceeds are allocated to OP unitholders and the applicable series of subordinated performance units equally. 56 Table of Contents Following the allocation described above, we, as the general partner of our operating partnership, will generally cause our operating partnership to distribute the amounts allocated to the relevant series of subordinated performance units to the holders of such series of subordinated performance units.
In addition, we expect to declare a cash distribution in the first quarter of 2023 to our subordinated performance unitholders of record as of March 15, 2023. Such dividends and distributions are expected to be paid on March 30, 2023.
In addition, we expect to declare a cash distribution in the first quarter of 2024 to our subordinated performance unitholders of record as of March 15, 2024.
Our primary uses of financing cash flows for the year ended December 31, 2021 were for principal payments on existing debt of $1.3 billion (which included $1.3 billion of principal repayments under the Revolver and $3.9 million in fixed rate mortgage principal payments, and $3.8 million of scheduled fixed rate mortgage principal payments), distributions to common shareholders of $131.7 million, distributions to noncontrolling interests of $102.2 million, and distributions to preferred shareholders of $13.1 million.
Our primary uses of financing cash flows for the year ended December 31, 2023 were for principal payments on existing debt of $1.2 billion (which included $1.1 billion of principal repayments, including constructive repayments, under the Revolver, $73.5 million in fixed rate mortgage repayments, $50.2 million of constructive repayments of term loan borrowings within our credit facility, and $3.3 million of scheduled fixed rate mortgage principal amortization payments), common share repurchases of $310.2 million, distributions to common shareholders of $190.9 million, distributions to noncontrolling interests of $141.5 million and distributions to preferred shareholders of $19.0 million.
Our subordinated performance units are only convertible into OP units following a two year lock-out period and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations. 57 Table of Contents Notwithstanding the two-year lock out period on conversions of subordinated performance units into OP units, if such subordinated performance units were convertible into OP units as of December 31, 2022, each subordinated performance unit would on average hypothetically convert into 1.72 OP units, or into an aggregate of approximately 21.5 million OP units.
Our subordinated performance units are only convertible into OP units following a two year lock-out period and then (i) at the holder's election only upon the achievement of certain performance thresholds relating to the properties to which such subordinated performance units relate or (ii) at our election upon a retirement event of a PRO that holds such subordinated performance units or upon certain qualifying terminations.
Self Storage Properties and Customer In-Place Leases Self storage properties are carried at historical cost less accumulated depreciation and any impairment losses. When self storage properties are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values.
When self storage properties are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values.
As discussed in Note 3 to the consolidated financial statements in Item 8, during the year ended December 31, 2022, the Company also issued (i) 3,911,260 OP units upon the non-voluntary conversion of 2,078,357 subordinated performance units in connection with Northwest's retirement, (ii) 235,241 OP units upon the voluntary conversion of 82,611 subordinated performance units and (iii) 192,296 OP units upon the conversion of an equivalent number of LTIP units.
As discussed in Note 3 to the consolidated financial statements in Item 8, during the year ended December 31, 2023, the Company also issued (i) 2,545,063 OP units upon the non-voluntary conversion of 926,623 subordinated performance units in connection with Move It's retirement, (ii) 481,811 OP units upon the voluntary conversion of 397,000 subordinated performance units and (iii) 128,487 OP units upon the conversion of an equivalent number of LTIP units.
We also issued 393,614 subordinated performance units upon the conversion of 800,556 OP units. Dividends and Distributions During the year ended December 31, 2022, the Company paid $195.7 million of distributions to common shareholders, $13.4 million of distributions to preferred shareholders and distributed $141.0 million to noncontrolling interests.
During the year ended December 31, 2023, we issued 195,573 DownREIT OP units issued upon the voluntary conversion of 203,637 DownREIT subordinated performance units. Dividends and Distributions During the year ended December 31, 2023, the Company paid $190.9 million of distributions to common shareholders, $19.0 million of distributions to preferred shareholders and distributed $141.5 million to noncontrolling interests.
(2) Under the amended credit facility effective January 3, 2023, the Company has an expansion option which if exercised in full, would provide an additional $545.0 million of borrowing capacity.
(2) Under the credit facility, the Company has an expansion option which if exercised in full, would provide an additional $545 million of borrowing capacity. (3) The Company has the ability to extend the $275 million term loan facility maturing in the next 12 months an additional six months to January 2025.
Annualized total portfolio rental revenues (including fees and net of any discounts and uncollectible customer amounts) divided by average occupied square feet ("average annualized rental revenue per occupied square foot") increased from $13.01, for the year ended December 31, 2021 to $14.83, or 14.0%, for the year ended December 31, 2022, driven primarily by increased contractual lease rates for in-place tenants.
Annualized total portfolio rental revenues (including fees and net of any discounts and uncollectible customer amounts) divided by average occupied square feet ("average annualized rental revenue per occupied square foot") increased from $14.83, for the year ended December 31, 2022 to $15.24, or 2.8%, for the year ended December 31, 2023, driven primarily by increased contractual lease rates for in-place tenants. 41 Table of Contents Other Property-Related Revenue Other property-related revenue represents ancillary income from our self storage properties, such as tenant insurance-related access fees and sales of storage supplies.
(in thousands) Next 12 Months Beyond 12 Months Total Senior Unsecured Notes (1) $ — $ 1,230,000 $ 1,230,000 Revolving line of credit (2) — 496,000 496,000 Term loan facilities (2)(3) 300,000 1,235,000 1,535,000 Fixed rate mortgage notes payable 76,813 222,757 299,570 Total $ 376,813 $ 3,183,757 $ 3,560,570 (1) We believe we have access to additional financing and refinancing, if needed.
(dollars in thousands) Next 12 Months Beyond 12 Months Total Senior Unsecured Notes (1) $ — $ 1,600,000 $ 1,600,000 Revolving line of credit (2) — 381,000 381,000 Term loan facilities (2)(3) 275,000 1,190,000 1,465,000 Fixed rate mortgage notes payable 19,908 202,849 222,757 Total $ 294,908 $ 3,373,849 $ 3,668,757 (1) We believe we have access to additional financing and refinancing, if needed.
Any distribution of operating cash flow allocated to the OP unitholders will be made at our discretion (and paid as dividends to holders of our common shares at the discretion of our board of trustees). 56 Table of Contents Under the LP Agreement of our operating partnership, capital transactions are transactions that are outside the ordinary course of our operating partnership's business, involve the sale, exchange, other disposition, or refinancing of any property, and are designated as capital transactions by us, as the general partner.
Under the LP Agreement of our operating partnership, capital transactions are transactions that are outside the ordinary course of our operating partnership's business, involve the sale, exchange, other disposition, or refinancing of any property, and are designated as capital transactions by us, as the general partner.
Because the majority of tenant leases are on a month-to-month basis, this intangible asset represents the estimated value of the leases in effect on the acquisition date.
Because the majority of tenant leases are on a month-to-month basis, this intangible asset represents the estimated value of the leases in effect on the acquisition date. This intangible asset is amortized to expense using the straight-line method over 12 months, the estimated average remaining rental period for the leases.
The Revolver was set to mature in January 2024; provided that we had the ability to extend to July 2024 by paying an extension fee of 0.075% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance.
The Revolver is set to mature in January 2027; provided that we may elect up to two times to extend the maturity by six months each up to January 2028 by paying an extension fee for each such election of 0.0625% of the total borrowing commitment thereunder at the time of extension and meeting other customary conditions with respect to compliance.
Our operating cash flow increased primarily due to operating cash flows from 229 self storage properties acquired during the year ended December 31, 2021 that generated cash flow for the entire year ended December 31, 2022 and 45 self storage properties that were acquired during the year ended December 31, 2022.
The decrease was partially offset by operating cash flows from 45 self storage properties acquired during the year ended December 31, 2022 that generated cash flow for the entire year ended December 31, 2023 and 20 self storage properties and annexes to existing properties acquired during the year ended December 31, 2023.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented (dollars in thousands): Year Ended December 31, 2022 2021 2020 Net income $ 183,765 $ 146,935 $ 79,478 Add: Depreciation and amortization 233,158 158,312 117,174 Company's share of unconsolidated real estate venture depreciation and amortization 17,072 15,408 15,297 Income tax expense 4,689 1,690 1,671 Interest expense 110,599 72,062 62,595 EBITDA 549,283 394,407 276,215 Add: Acquisition costs 2,745 1,941 2,424 Gain on sale of self storage properties (5,466) — — Casualty-related expenses (recoveries) 6,388 — — Equity-based compensation expense 6,258 5,462 4,278 Adjusted EBITDA $ 559,208 $ 401,810 $ 282,917 Liquidity and Capital Resources Liquidity Overview Liquidity is the ability to meet present and future financial obligations.
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods presented (dollars in thousands): Year Ended December 31, 2023 2022 2021 Net income $ 236,988 $ 183,765 $ 146,935 Add: Depreciation and amortization 221,993 233,158 158,312 Company's share of unconsolidated real estate venture depreciation and amortization 17,083 17,072 15,408 Interest expense 166,147 110,599 72,062 Income tax expense 1,590 4,689 1,690 Loss on early extinguishment of debt 758 — — EBITDA 644,559 549,283 394,407 Add (subtract): Acquisition costs 1,659 2,745 1,941 Gain on sale of self storage properties (63,910) (5,466) — Casualty-related (recoveries) expenses (1) (522) 6,388 — Equity-based compensation expense (2) 6,679 6,258 5,462 Adjusted EBITDA $ 588,465 $ 559,208 $ 401,810 (1) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations.
Other Property-Related Revenue Same store other property-related revenue remained consistent decreasing by $0.3 million, or 1.5%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Other Property-Related Revenue Same store portfolio other property-related revenue increased $2.8 million, or 13.5%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented. Rental Revenue Rental revenue increased by $207.3 million, or 38.3%, for the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Total revenue increased despite a decrease in total portfolio average occupancy from 91.9% for the year ended December 31, 2022 to 88.0% for the year ended December 31, 2023. Average occupancy is calculated based on the average of the month-end occupancy immediately preceding the period presented and the month-end occupancies included in the respective period presented.
Second, an amount is allocated to the holders of the series of subordinated performance units relating to such property portfolio in order to provide such holders with an allocation (together with prior distributions of capital transaction proceeds) on their unreturned capital contributions.
As of December 31, 2023, our operating partnership had an aggregate of $2,774.5 million of unreturned capital contributions with respect to common shareholders and OP unitholders, with respect to the various property portfolios. 55 Table of Contents Second, an amount is allocated to the holders of the series of subordinated performance units relating to such property portfolio in order to provide such holders with an allocation (together with prior distributions of capital transaction proceeds) on their unreturned capital contributions.
Cash Flows At December 31, 2022, we had $35.3 million in cash and cash equivalents and $6.9 million of restricted cash, an increase in cash and cash equivalents of $10.3 million and an increase in restricted cash of $4.0 million from December 31, 2021.
Cash Flows At December 31, 2023, we had $65.0 million in cash and cash equivalents and $22.7 million of restricted cash, an increase in cash and cash equivalents of $29.7 million and an increase in restricted cash of $15.8 million from December 31, 2022.
Management Fees and Other Revenue Management fees and other revenue, which are primarily related to managing and operating the unconsolidated real estate ventures, were $27.6 million for the year ended December 31, 2022, compared to $24.4 million for the year ended December 31, 2021, an increase of $3.2 million or 13.3%.
Management Fees and Other Revenue Management fees and other revenue, which includes revenue related to managing and operating the unconsolidated real estate ventures and other revenue from our tenant insurance programs, increased $6.8 million, or 24.6%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
(2) These casualty-related expenses are recorded in the line item "Other" included in operating expense in the accompanying consolidated statement of operations.
(2) Casualty-related recoveries in 2023 relate to casualty-related expenses incurred in 2022 and are recorded in the line item "Other" within operating expenses in our consolidated statement of operations.
The increase in rental revenue was primarily attributable to incremental rental revenue of $17.7 million from 45 self storage properties acquired during 2022, and $127.6 million from 229 self storage properties acquired during 2021.
The increase in rental revenue was primarily attributable to incremental rental revenue of $11.7 million from 20 self storage properties acquired during 2023, and $18.9 million from 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023.
The increase in property operating expenses was primarily attributable to incremental property operating expenses of $5.0 million from 45 self storage properties acquired during 2022, and $43.9 million from 229 self storage properties acquired during 2021. 42 Table of Contents General and Administrative Expenses General and administrative expenses increased $8.3 million, or 16.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
The increase in property operating expenses was primarily attributable to incremental property operating expenses of $3.8 million from 20 self storage properties acquired during 2023, and $6.6 million from 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023.
This intangible asset is amortized to expense using the straight-line method over 12 months, the estimated average remaining rental period for the leases. 44 Table of Contents Non-GAAP Financial Measures FFO and Core FFO Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance.
Non-GAAP Financial Measures FFO and Core FFO Funds from operations, or FFO, is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance.
In the event of certain market conditions, we may require additional liquidity, which would require us to evaluate available alternatives and take appropriate actions. 54 Table of Contents Equity Transactions Issuance and Repurchase of Common Shares On July 11, 2022, we approved a share repurchase program authorizing, but not obligating, the repurchase of up to $400.0 million of the Company's common shares from time to time.
Issuance and Repurchase of Common Shares On July 11, 2022, we approved a share repurchase program authorizing, but not obligating, the repurchase of up to $400.0 million of the Company's common shares from time to time.
We have a 2028 Term Loan Facility that matures in December 2028 and is separate from the credit facility and 2023 Term Loan Facility in an aggregate amount of $75.0 million. As of December 31, 2022 the entire amount was outstanding under the 2028 Term Loan Facility with an effective interest rate of 4.62%.
As of December 31, 2023, we would have had the capacity to borrow remaining Revolver commitments of $562.6 million while remaining in compliance with the credit facility's financial covenants. We have a 2028 Term Loan Facility that matures in December 2028 and is separate from the credit facility in an aggregate amount of $75.0 million.
These increases were partially offset by higher cash payments for interest expense. Investing Activities Cash used in investing activities was $584.2 million for the year ended December 31, 2022 compared to $2.0 billion for the year ended December 31, 2021.
Investing Activities Cash provided by investing activities was $161.1 million for the year ended December 31, 2023 compared to $584.2 million of cash used in investing activities for the year ended December 31, 2022.
Our primary uses of financing cash flows for the year ended December 31, 2022 were for principal payments on existing debt of $960.4 million (which included $956.0 million of principal repayments under the Revolver and $4.4 million in fixed rate mortgage payments), distributions to common shareholders of $195.7 million, distributions to noncontrolling interests of $141.0 million and distributions to preferred shareholders of $13.4 million.
Our primary uses of financing cash flows for the year ended December 31, 2022 were for principal payments on existing debt of $960.4 million (which included $956.0 million of principal repayments under the Revolver and $4.4 million in fixed rate mortgage principal payments), distributions to common shareholders of $195.7 million, distributions to noncontrolling interests of $141.0 million, and distributions to preferred shareholders of $13.4 million. 51 Table of Contents Credit Facility and Term Loan Facilities As of December 31, 2023, our credit facility provided for total borrowings of $1.955 billion, consisting of five components: (i) a Revolver which provides for a total borrowing commitment up to $950.0 million, whereby we may borrow, repay and re-borrow amounts under the Revolver, (ii) a $275.0 million Term Loan B, (iii) a $325.0 million Term Loan C, (iv) a $275.0 million Term Loan D and (v) a $130.0 million Term Loan E.
As of December 31, 2022, $125.0 million was outstanding under the Term Loan A with an effective interest rate of 3.74%, $250.0 million was outstanding under the Term Loan B with an effective interest rate of 2.94%, $225.0 million was outstanding under the Term Loan C with an effective interest rate of 2.91%, $175.0 million was outstanding under the Term Loan D with an effective interest rate of 3.12% and $125.0 million was outstanding under the Term Loan E with an effective interest rate of 5.59%.
As of December 31, 2023, $275.0 million was outstanding under the Term Loan B with an effective interest rate of 3.28%, $325.0 million was outstanding under the Term Loan C with an effective interest rate of 4.07%, $275.0 million was outstanding under the Term Loan D with an effective interest rate of 4.05% and $130.0 million was outstanding under the Term Loan E with an effective interest rate of 4.93%.
Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions, capital expenditures, general and administrative expenses and principal and interest on our outstanding indebtedness. A further short-term liquidity requirement relates to distributions to our common and preferred shareholders and holders of preferred units, OP units, subordinated performance units, LTIP units, DownREIT OP units and DownREIT subordinated performance units.
A further short-term liquidity requirement relates to distributions to our common and preferred shareholders and holders of preferred units, OP units, subordinated performance units, LTIP units, DownREIT OP units and DownREIT subordinated performance units. We expect to fund short-term liquidity requirements from our operating cash flow, cash on hand and borrowings under our credit facility.
Depreciation and Amortization Depreciation and amortization increased $74.8 million, or 47.3%, for the year ended December 31, 2022, compared to the year ended December 31, 2021. This increase was primarily attributable to incremental depreciation expense related to the 45 self storage properties acquired during 2022 and 229 self storage properties acquired during 2021.
This decrease was primarily attributable to amortization expense for customer in-place leases decreasing from $34.4 million for the year ended December 31, 2022 to $8.3 million for the year ended December 31, 2023, and partially offset by the incremental depreciation expense related to the 20 self storage properties acquired during 2023 and 45 self storage properties acquired during 2022, that were owned during the entire year ended December 31, 2023.
We believe there is significant opportunity for continued external growth by partnering with institutional investors seeking to deploy capital in the self storage industry. 2018 Joint Venture As of December 31, 2022, our 2018 Joint Venture, in which we have a 25% interest, owned and operated a portfolio of 104 properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states. 2016 Joint Venture As of December 31, 2022, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.6 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states. 40 Table of Contents Results of Operations When reviewing our results of operations it is important to consider the timing of acquisition activity.
The agreement allows for equity capital contributions of up to $400 million from the 2023 JV Members over a 24-month period starting in December 2023, with options to extend the investment time period by two additional six-month periods. 2018 Joint Venture As of December 31, 2023, our 2018 Joint Venture, in which we have a 25% interest, owned and operated a portfolio of 104 properties containing approximately 7.8 million rentable square feet, configured in approximately 64,000 storage units and located across 17 states. 2016 Joint Venture 39 Table of Contents As of December 31, 2023, our 2016 Joint Venture, in which we have a 25% ownership interest, owned and operated a portfolio of 81 properties containing approximately 5.7 million rentable square feet, configured in approximately 47,000 storage units and located across 13 states.
Property Operating Expenses Same store property operating expenses were $140.7 million for the year ended December 31, 2022 compared to $134.3 million for the year ended December 31, 2021, an increase of $6.4 million, or 4.8%.
This increase primarily resulted from an increase in tenant insurance revenue. 47 Table of Contents Property Operating Expenses Same store portfolio property operating expenses increased $8.0 million, or 4.7%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Our primary source of liquidity is cash flow from our operations. Additional sources are proceeds from equity and debt offerings, debt financings including additional borrowing capacity under the credit facility, and expansion options available under the 2028 Term Loan Facility, the June 2029 Term Loan Facility, and our credit facility.
Additional sources are proceeds from dispositions of self storage properties, equity and debt offerings, debt financings including additional borrowing capacity under the credit facility, and expansion options available under the 2028 Term Loan Facility, the June 2029 Term Loan Facility, and our credit facility. 49 Table of Contents Our short-term liquidity requirements consist primarily of property operating expenses, property acquisitions, capital expenditures, general and administrative expenses and principal and interest on our outstanding indebtedness.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe make limited use of other derivative financial instruments and we do not use them for trading or other speculative purposes. As of December 31, 2022, we had $621.0 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).
Biggest changeWe make limited use of other derivative financial instruments and we do not use them for trading or other speculative purposes. Further, we may reduce our debt subject to variable rates to decrease our exposure to interest rate risk.
However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure. 58
However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.
If our reference rates (currently one-month LIBOR and SOFR) were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable-rate debt (excluding variable-rate debt subject to interest rate swaps) would decrease or increase future earnings and cash flows by approximately $6.2 million annually.
If our reference rates (currently Daily Simple SOFR) were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable-rate debt (excluding variable-rate debt subject to interest rate swaps) would decrease or increase future earnings and cash flows by approximately $5.1 million annually.
Added
As of December 31, 2023, we had $511.0 million of debt subject to variable interest rates (excluding variable-rate debt subject to interest rate swaps).

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