What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-10-31 compared with 2025-08-01 · 70 added, 58 removed, 257 unchanged (33% of the section changed)

33 unchanged sentences

We consider a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80% or more for one calendar year.

As of June 30, 2025, we owned or had ownership interests in 2,430 operating stores.

As of September 30, 2025, we owned or had ownership interests in 2,427 operating stores.

Of these stores, 2,005 are wholly-owned, 11 are in consolidated joint ventures, and 411 are in unconsolidated joint ventures.

4 unchanged sentences

Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.

As of June 30, 2025, approximately 2,465,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit.

As of September 30, 2025, approximately 2,460,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit.

Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends.

Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time.

For same-stores as of June 30, 2025, the average length of stay for tenants who have vacated was approximately 17.1 months.

For same-stores as of September 30, 2025, the average length of stay for tenants who have vacated was approximately 17.0 months.

Our store portfolio is made up of different types of construction and building configurations.

1 unchanged sentence

The following table presents additional information regarding net rentable square feet and the number of stores by state:

June 30, 2025

September 30, 2025

REIT Owned Joint Venture Owned Managed Total

46 unchanged sentences

Totals 2,016 152,502,634 411 31,843,072 1,811 142,541,813 4,238 326,887,519

(1) Includes 11 consolidated joint ventures.

(1) Includes 11 stores in consolidated joint ventures.

RESULTS OF OPERATIONS

Amounts in thousands, except store and share data

Comparison of the three and six months ended June 30, 2025 and 2024

Results for the three and six months ended June 30, 2025 included the operations of 2,430 stores (2,005 wholly-owned, 11 in consolidated joint ventures, and 414 in joint ventures accounted for using the equity method) compared to the results for the three and six months ended June 30, 2024, which included the operations of 2,389 stores (1,912 wholly-owned, five in consolidated joint ventures, and 472 in joint ventures accounted for using the equity method).

Comparison of the three and nine months ended September 30, 2025 and 2024

Results for the three and nine months ended September 30, 2025 included the operations of 2,427 stores (2,005 wholly-owned, 11 in consolidated joint ventures, and 411 in joint ventures accounted for using the equity method) compared to the results for the three and nine months ended September 30, 2024, which included the operations of 2,401 stores (1,934 wholly-owned, seven in consolidated joint ventures, and 460 in joint ventures accounted for using the equity method).

The following table presents information on revenues earned for the periods indicated:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

3 unchanged sentences

Total revenues $ 858,460 $ 824,804 $ 33,656 4.1 % $ 2,520,075 $ 2,435,006 $ 85,069 3.5 %

Property rental— The increase in property rental revenues for the three and six months ended June 30, 2025 was primarily the result of an increase of $30,049 and $47,591, respectively, associated with acquisitions completed in 2024 and acquisitions completed in the first six months of 2025.

The increase in revenue resulting from these acquisitions was partially offset by decreases in rental revenue of $6,027 and $10,663, respectively, due to property dispositions for the three and six months ended June 30, 2025.

We acquired 58 wholly-owned stores in 2024 and an additional 45 wholly-owned stores during the six months ended June 30, 2025.

Property rental— The increase in property rental revenues for the three and nine months ended September 30, 2025 was primarily the result of an increase of $32,063 and $78,672, respectively, associated with acquisitions completed in 2024 and acquisitions completed in the first nine months of 2025.

The increase in revenue resulting from these acquisitions was partially offset by decreases in rental revenue of $5,882 and $15,601, respectively, due to property dispositions for the three and nine months ended September 30, 2025.

We acquired 58 wholly-owned stores and disposed of six wholly-owned stores in 2024, and we acquired 46 wholly-owned stores and disposed of 12 wholly-owned stores during the nine months ended September 30, 2025.

Tenant reinsurance— The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated.

We operated 4,179 stores at June 30, 2025 compared to 3,812 stores at June 30, 2024.

We operated 4,238 stores at September 30, 2025 compared to 3,862 stores at September 30, 2024.

Management fees and other income— Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income.

The increase for the three and six months ended June 30, 2025 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year.

As of June 30, 2025, we managed 2,163 stores for unconsolidated joint ventures and third parties, compared to 1,895 stores as of June 30, 2024.

The increase for the three and nine months ended September 30, 2025 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year.

As of September 30, 2025, we managed 2,222 stores for unconsolidated joint ventures and third parties, compared to 1,921 stores as of September 30, 2024.

The following table presents information on expenses for the periods indicated:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

4 unchanged sentences

Total expenses $ 474,212 $ 461,341 $ 12,871 2.8 % $ 1,408,024 $ 1,376,295 $ 31,729 2.3 %

Property operations— The increase in property operations expense during the three and six months ended June 30, 2025 consists primarily of an increase of $14,612 and $24,624, respectively, related to acquisitions completed in 2024 and acquisitions completed in the first six months of 2025.

We acquired 58 wholly-owned stores in 2024 and an additional 45 wholly-owned stores during the six months ended June 30, 2025.

Additionally, for the three and six months ended June 30,

2025 there was an increase of $12,220 and $22,501, respectively at our same-store properties primarily due to an increase in property tax expense.

Property operations— The increase in property operations expense during the three and nine months ended September 30, 2025 consists primarily of an increase of $14,738 and $38,855, respectively, related to acquisitions completed in 2024 and acquisitions completed in the first nine months of 2025.

We acquired 58 wholly-owned stores in 2024 and an additional 46 wholly-owned stores during the nine months ended September 30, 2025.

Additionally, for the three and nine months ended September 30, 2025, there was an increase of $9,184 and $31,215, respectively, at our same-store properties primarily due to an increase in payroll and benefits, marketing, repairs and maintenance, and property tax expenses.

Tenant reinsurance— Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance and is subject to volatility due to increased claims arising when significant events occur at stores.

1 unchanged sentence

These expenses are recognized as incurred.

Our overall general and administrative expense has increased primarily as a result of our increased size through acquisitions and growth through our joint venture partners and managed portfolio.

Depreciation and amortization— The company amortizes to expense intangible assets-customer intangibles on a straight-line basis over the average period that a tenant is expected to utilize the facility (currently estimated at 18 months).

Depreciation and amortization expense decreased for both the three and six month periods, due to the customer intangibles associated with our merger with Life Storage being fully expensed in January of this year.

Our overall general and administrative expense increased primarily as a result of our increased size through acquisitions and growth in our managed portfolio.

Depreciation and amortization— We amortize to expense intangible assets-customer intangibles on a straight-line basis over the average period that a tenant is expected to utilize the facility (currently estimated at 18 months).

Depreciation and amortization expense decreased for both the three and nine month periods, primarily due to the customer intangibles associated with our merger with Life Storage being fully expensed in January of this year.

Other Revenues and Expenses

The following table presents information on other revenues and expenses for the periods indicated:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 $ Change % Change 2025 2024 $ Change % Change

Gain (loss) on real estate assets held for sale and sold, net $ (864) $ (54,659) $ 53,795 (98.4) % $ 34,897 $ (54,659) $ 89,556 (163.8) %

Loss on real estate assets held for sale and sold, net $ (105,128) $ (8,961) $ (96,167) 1,073.2 % $ (70,231) $ (63,620) $ (6,611) 10.4 %

Interest expense (149,650) (142,855) (6,795) 4.8 % (438,177) (412,875) (25,302) 6.1 %

2 unchanged sentences

Equity in earnings and dividend income from unconsolidated real estate entities 15,669 16,246 (577) (3.6) % 51,884 48,508 3,376 7.0 %

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and sale of a joint venture interest 9,354 13,730 (4,376) (31.9) % 9,354 13,730 (4,376) (31.9) %

Impairment of Life Storage trade name — (51,763) 51,763 (100.0) % — (51,763) 51,763 (100.0) %

Income tax expense (11,962) (10,857) (1,105) 10.2 % (32,591) (27,443) (5,148) 18.8 %

Total other revenues & expenses, net $ (210,215) $ (160,518) $ (49,697) 31.0 % $ (390,377) $ (436,280) $ 45,903 (10.5) %

Gain on real estate assets held for sale and sold, net— We completed the sale of 12 previously held for sale stores during the six months ended June 30, 2025 resulting in a gain of $38,656 which was partially offset by losses of $3,759.

The loss of $3,759 related to the sale of three land parcels and three properties listed for sale during the six months ended June 30, 2025 where the estimated fair value, net of selling costs, was less than the net carrying value of the assets.

The loss recorded during the three months ended June 30, 2025 related to the sale of one operating property previously listed as held for sale resulting in an additional loss of $864.

During the three months ended June 30, 2024, we listed seven properties for sale.

These properties were recorded at current fair value less selling costs which resulted in an estimated loss of $54,659.

Interest expense— The increase in interest expense during the three and six months ended June 30, 2025 was primarily the result of higher outstanding debt.

As of June 30, 2025, we had approximately $13,169,719 in total face value of debt, compared to approximately $11,803,723 as of June 30, 2024.

Non-cash interest expense related to amortization of discount on unsecured senior notes, net— Represents the amortization of the discount assigned to the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger and net premium from bond offerings, offset by discount from assumed debt.

Loss on real estate assets held for sale and sold, net— As of September 30, 2025, we had 29 properties classified as held for sale.

Of the 29 stores, 27 had an estimated fair value, net of selling costs, less than the carrying value of the assets.

During the three and nine months ended September 30, 2025, we recorded estimated net losses of $105,128 and $108,887, respectively.

Additionally, we completed the sale of 12 previously held for sale stores, resulting in a net gain of $38,656, which partially offset the loss recorded for the nine months ended September 30, 2025.

As of September 30, 2024, we had 17 stores classified as held for sale.

Of the 17 stores, nine had an estimated fair value, net of selling costs, less than the carrying value of the assets.

During the three and nine months ended September 30, 2024, we recorded estimated losses of $8,961 and $63,620, respectively.

Interest expense— The increase in interest expense during the three and nine months ended September 30, 2025 was primarily the result of higher outstanding debt.

As of September 30, 2025, we had approximately $13,162,058 in total face value of debt, compared to approximately $11,827,208 as of September 30, 2024.

Interest income— Interest income represents interest earned on variable interest rate bridge loans, debt securities and on notes receivable from Common Operating Partnership unit holders.

The increase in interest income during the three and six months ended June 30, 2025 was primarily the result of an increase in the amount of bridge loans outstanding.

The balance of bridge loans was $1,542,693 as of June 30, 2025, compared to $1,136,306 as of June 30, 2024.

The increase in interest income during the three and nine months ended September 30, 2025 was primarily the result of an increase in the amount of bridge loans outstanding.

The balance of bridge loans was $1,544,719 as of September 30, 2025, compared to $1,032,244 as of September 30, 2024.

Equity in earnings and dividend income from unconsolidated real estate entities— Equity in earnings of unconsolidated real estate entities represents the income earned through our ownership interests in unconsolidated joint ventures.

1 unchanged sentence

To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits.

The increase for the six months ended June 30, 2025 is primarily due to the transaction in November 2024 in which we acquired additional ownership interest in the HF1 Sovran HHF Storage Holdings LLC and HF2 Sovran HHF Storage Holdings II LLC from our partner in the unconsolidated joint ventures.

The increase for the nine months ended September 30, 2025 is primarily due to the transaction in November 2024 in which we acquired additional ownership interest in the HF1 Sovran HHF Storage Holdings LLC and HF2 Sovran HHF Storage Holdings II LLC from our partner in the unconsolidated joint ventures.

The transaction increased our equity ownership percentages from 20% and 15%, respectively, to 49% in each unconsolidated joint venture.

The decrease for the three months ended June 30, 2025 is primarily due to the acquisition of our partners’ membership interests in the ESS-NYFL JV LP and ESS CA-TIVS JV LP joint ventures, as well as the transfer and distribution of membership interests in the PR II EXR JV LLC joint venture.

The number of unconsolidated joint ventures in which we have ownership interests was 414 as of June 30, 2025, compared to 472 as of June 30, 2024.

The decrease for the three months ended September 30, 2025 is primarily due to the transfer and distribution of membership interests in the PR II EXR JV LLC joint venture in March 2025, the acquisition of our partners’ membership interests in the ESS-NYFL JV LP and ESS CA-TIVS JV LP joint ventures in April 2025, and the sale of our membership interest in the Life Storage Spacemax LLC joint venture in July 2025.

The number of stores in unconsolidated joint ventures in which we have ownership interests was 411 as of September 30, 2025, compared to 460 as of September 30, 2024.

Dividend income represents dividends from our investment in preferred stock of SmartStop and its affiliates.

Income tax expense —The increase in income tax expense for the three and six months ended June 30, 2025 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and sale of a joint venture interest —The net gain of $9,354 for the three and nine months ended September 30, 2025 is due to the sale of our membership interest in the Life Storage Spacemax LLC joint venture, which held six properties, in July 2025.

During the three months ended September 30, 2024, the ESS Bristol Investments LLC joint venture sold five of its eight stores to one of our unconsolidated joint ventures, and we recognized a gain of $10,324 for our pro rata share of the transaction.

Additionally, we sold our membership interest in the Alan Jathoo JV LLC unconsolidated joint venture, which held nine stores, to our partner and recognized a gain of $3,406 as a result of the transaction.

Impairment of Life Storage trade name —During the three months ended September 30, 2024, we decided to operate all our stores under a single brand.

As a result of that decision, we deemed the Life Storage trade name as an intangible asset to be impaired and recognized a loss for the full value of the asset.

Income tax expense —The increase in income tax expense for the three and nine months ended September 30, 2025 was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.

FUNDS FROM OPERATIONS

8 unchanged sentences

The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently.

FFO does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities, as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

FFO does not represent cash generated from operating activities determined in accordance with GAAP and should not be

considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities, as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

The following table presents the calculation of FFO for the periods indicated:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

2 unchanged sentences

Amortization of intangibles 3,037 28,160 17,341 85,581

(Gain) loss on real estate assets held for sale and sold, net 864 54,659 (34,897) 54,659

Loss on real estate assets held for sale and sold, net 105,128 8,961 70,231 63,620

Unconsolidated joint venture real estate depreciation and amortization 7,466 7,922 23,896 23,771

Unconsolidated joint venture gain on sale of real estate assets (9,354) (13,730) (9,354) (13,730)

Income allocated to Operating Partnership noncontrolling interests 8,035 9,735 35,070 30,237

6 unchanged sentences

The following table presents operating data for our same-store portfolio.

For the Three Months Ended June 30, Percent For the Six Months Ended June 30, Percent

For the Three Months Ended September 30, Percent For the Nine Months Ended September 30, Percent

2025 2024 Change 2025 2024 Change

17 unchanged sentences

The following table presents additional information for our same-store portfolio:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Same-store portfolio 2025 2024 2025 2024

3 unchanged sentences

The following table presents a reconciliation of same-store net operating income to net income as presented on our condensed consolidated statements of operations for the periods indicated:

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

1 unchanged sentence

Adjusted to exclude:

(Gain) loss on real estate assets held for sale and sold, net 864 54,659 (34,897) 54,659

Loss on real estate assets held for sale and sold, net 105,128 8,961 70,231 63,620

Equity in earnings and dividend income from unconsolidated real estate entities (15,669) (16,246) (51,884) (48,508)

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and sale of a joint venture interest (9,354) (13,730) (9,354) (13,730)

Interest expense 149,650 142,855 438,177 412,875

3 unchanged sentences

General and administrative 43,479 39,750 134,405 123,373

Impairment of Life Storage trade name — 51,763 — 51,763

Management fees, other income and interest income (76,126) (64,829) (220,038) (179,634)

6 unchanged sentences

Same-store net operating income $ 477,245 $ 489,387 $ 1,418,799 $ 1,451,818

Cash flows from operating activities for the six months ended June 30, 2025 increased when compared to the same period in the prior year.

Cash flows from operating activities for the nine months ended September 30, 2025 increased when compared to the same period in the prior year.

Cash flows used in investing activities relate primarily to our acquisition and development of new stores, sales of stores, investments in unconsolidated real estate entities, and notes receivable from bridge loans and fluctuate depending on our actions in those areas.

1 unchanged sentence

A summary of cash flows along with significant components are as follows:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Net cash provided by operating activities $ 1,482,396 $ 1,479,151

9 unchanged sentences

Issuance of notes receivable, net of sales and principal payments (276,043) (410,396)

Proceeds from unsecured term loans, senior notes, revolving lines of credit and commercial paper 6,440,431 3,263,470

Principal payments on unsecured term loans, senior notes, revolving lines of credit and commercial paper (6,974,943) (3,407,382)

Net proceeds (payments) from unsecured term loans, senior notes, revolving lines of credit and commercial paper (1,344,259) (520,534)

Proceeds from issuance of public bonds, net 1,650,000 1,000,000

1 unchanged sentence

We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next twelve months.

These cash needs include operating expenses, monthly debt service payments, recurring capital expenditures, acquisitions, funding for the bridge loan program, building redevelopments and expansions, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification.

These cash needs include operating expenses, monthly debt service payments, acquisitions, funding for the bridge loan program, recurring capital expenditures, building redevelopments and expansions, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification.

We expect to generate positive cash flow from operations in 2025, and we consider projected cash flows in our sources and uses of cash.

2 unchanged sentences

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2025, we had $125,045 available in cash and cash equivalents.

As of September 30, 2025, we had $111,931 available in cash and cash equivalents.

Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts.

2 unchanged sentences

The following table presents information relating to our debt:

June 30, 2025

September 30, 2025

Total face value of debt $ 13,162,058

10 unchanged sentences

At any point in time, we expect to maintain available commitments under our Credit Facilities in an amount at least equal to the amount of commercial paper notes outstanding.

At June 30, 2025, we had $700,000 in issuances outstanding under the commercial paper program.

At September 30, 2025, we had $540,000 in issuances outstanding under the commercial paper program.

We hold a BBB+/Stable rating from S&P, which was upgraded from BBB/Stable in July 2023 in connection with the Life Storage Merger, and a Baa2/Positive rating from Moody’s Investors Service.

1 unchanged sentence

Certain of our real estate assets are pledged as collateral for our debt.

As of June 30, 2025, we had a total of 1,773 unencumbered stores as defined by our public bonds.

As of September 30, 2025, we had a total of 1,786 unencumbered stores as defined by our public bonds.

Our unencumbered asset value was calculated as $30,315,349 and our total asset value was calculated as $35,717,864 according to the calculations as defined by our public bonds.

We are subject to certain restrictive covenants relating to our outstanding debt.

We were in compliance with all financial covenants at June 30, 2025.

We were in compliance with all financial covenants at September 30, 2025.

Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, dividends to stockholders and distributions to unit holders necessary to maintain our REIT qualification.

7 unchanged sentences

333-278690) previously filed with and declared effective by the Securities and Exchange Commission (the “SEC”) and a prospectus supplement and accompanying prospectus, filed with the SEC.

As of June 30, 2025, no shares have been sold under the Equity Distribution Agreement, which we refer to as our “at the market” equity program.

As of September 30, 2025, no shares have been sold under the Equity Distribution Agreement, which we refer to as our “at the market” equity program.

OFF-BALANCE SHEET ARRANGEMENTS

10 unchanged sentences

The OBBBA permanently extended certain provisions that were enacted in the Tax Cuts and Jobs Act of 2017.

Such extensions included the permanent extension of the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers.

Such extensions included the

permanent extension of the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers.

The OBBBA also increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries (the permissible value of taxable REIT subsidiary securities that a REIT may hold) from 20% to 25% of the value of the REIT’s total assets for taxable years beginning after December 31, 2025.

We are currently evaluating the provisions of the OBBBA, but do not expect the OBBBA to have a material impact on our financial position and/or results of operations.

We are currently evaluating the provisions of the OBBBA, but we do not expect the OBBBA to have a material impact on our financial position and/or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis