What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-02-26 · 268 added, 281 removed, 1254 unchanged (30% of the section changed)

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AND SCHEDULES

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Fir m (PCAOB ID:

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

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Purchase price allocation

Description of the Matter For the year ended December 31, 2020, the Company completed the acquisition of 23 self-storage properties (“stores”) for a total purchase price of $296.7 million.

Description of the Matter For the year ended December 31, 2021, the Company completed the acquisition of 70 self-storage properties (“stores”) for a total purchase price of $1.1 billion.

As further discussed in Note 2 of the consolidated financial statements, the transactions were accounted for as asset acquisitions, and the purchase price was allocated to the real estate assets acquired based on their relative fair values, which are estimated using unobservable inputs.

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For example, we tested controls over the determination of the fair value of the land and building assets, including the controls over the review of the valuation models and the underlying assumptions used to develop such estimates.

For the 2020 store acquisitions described above, our procedures included evaluating the Company’s valuation methodologies and testing the significant assumptions used to determine the fair value of the assets acquired.

We tested the completeness and accuracy of the underlying data by, among other things, recalculating the current replacement cost of buildings and comparing the adjustments for the age, class, height, square footage, condition, location, and turnkey factor with the acquired assets to industry publications.

We also compared significant assumptions, including prices per square foot to third-party sources such as recent land sales.

For the 2021 store acquisitions described above, our procedures included, but were not limited to, evaluating the Company’s valuation methodologies and evaluating the significant assumptions used to determine the fair value of the assets acquired.

For certain of these asset acquisitions, we tested the completeness and accuracy of the underlying data by, among other things, recalculating the current replacement cost of buildings and comparing the adjustments for the age, class, height, square footage, condition, location, and turnkey factor with the acquired assets to industry publications.

Additionally, we also compared significant assumptions, including prices per square foot to third-party sources such as recent land sales.

For certain of these asset acquisitions, we involved our valuation specialists to assist in the assessment of the methodology utilized by the Company, in addition to performing corroborative analyses to assess whether the conclusions in the valuation were supported by observable market data.

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Notes payable, net $ 1,320,755 $ 2,283,454

Exchangeable senior notes, net — 569,513

Unsecured term loans, net 1,741,926 1,194,383

Unsecured senior notes, net 2,360,066 1,319,466

Revolving lines of credit 535,000 949,000

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Interest income 49,703 15,192 7,467

Income before equity in earnings of unconsolidated real estate ventures and income tax expense 509,031 451,157 441,872

Income before equity in earnings and dividend income from unconsolidated real estate ventures and income tax expense 859,473 509,031 451,157

Equity in earnings and dividend income from unconsolidated real estate entities 32,358 22,361 11,274

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest 6,251 — —

Income tax expense ( 20,324 ) ( 13,810 ) ( 11,308 )

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Stockholders' Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Noncontrolling Interests and Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Noncontrolling Interests and Equity

Shares Par Value

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Repayment of receivable for preferred operating units pledged as collateral on loan — 1,211 — — — — — — 1,211

Issuance of Operating Partnership units in conjunction with acquisitions 1,877 — — — — — — 1,877

Redemption of Operating Partnership units for stock — ( 13,057 ) — 340,182 — 13,057 — — —

Redemption of Operating Partnership units for cash — ( 1,126 ) — — — ( 1,432 ) — — ( 2,558 )

Conversion of Preferred C Units in the Operating Partnership for Common Operating Partnership Units ( 4,374 ) 4,374 — — — — — — —

Issuance of Preferred D Units in the Operating Partnership in conjunction with acquisitions 28,022 — — — — — — — 28,022

Noncontrolling interest in consolidated joint venture — — 173 — — — — — 173

Repurchase of equity portion of 2013 exchangeable senior notes — — — — — ( 31,251 ) — — ( 31,251 )

Net income (loss) 12,492 18,711 ( 47 ) — — — — 419,967 451,123

Other comprehensive income 12 58 — — — — 1,360 — 1,430

Other comprehensive loss ( 407 ) ( 2,820 ) — — — — ( 63,616 ) — ( 66,843 )

Distributions to Operating Partnership units held by noncontrolling interests ( 12,881 ) ( 21,362 ) — — — — — — ( 34,243 )

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Stockholders' Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Noncontrolling Interests and Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Noncontrolling Interests and Equity

Shares Par Value

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Issuance of common stock upon the exercise of options — — — 134,930 1 4,758 — — 4,759

Restricted stock grants issued — — — 109,081 2 — — — 2

Issuance of common stock in connection with share based compensation — — — 143,187 1 16,280 — — ` 16,281

Restricted stock grants cancelled — — — ( 5,083 ) — — — — —

Issuance of common stock, net of offering costs — — — 899,048 9 103,459 — — 103,468

Compensation expense related to stock-based awards — — — — — 13,051 — — 13,051

Repayment of receivable for preferred operating units pledged as collateral on loan — 1,211 — — — — — — 1,211

Buyback of common stock, net of offering costs — — — ( 826,797 ) ( 8 ) — — ( 67,865 ) ( 67,873 )

Redemption of Operating Partnership units for stock — ( 4,572 ) — 123,993 1 4,571 — — —

Issuance of Preferred D Units in the Operating Partnership in conjunction with acquisitions 28,022 — — — — — — — 28,022

Conversion of Preferred C Units in the Operating Partnership for Common Operating Partnership Units ( 4,374 ) 4,374 — — — — — — —

Repurchase of equity portion of 2015 exchangeable senior notes — — — 1,323,781 14 ( 14 ) — — —

Repayment of receivable with Preferred operating units pledged as collateral on loan — 16,213 — — — — — — 16,213

Redemption of Preferred B Units in the Operating Partnership for cash ( 1,000 ) — — — — — — — ( 1,000 )

Redemption of Preferred D Units in the Operating Partnership for stock ( 2,724 ) — — 30,495 1 2,723 — — —

Noncontrolling interest in consolidated joint venture — — 66 — — — — — 66

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Stockholders' Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Income Accumulated Deficit Total Noncontrolling Interests and Equity

Preferred Operating Partnership Operating Partnership Other Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Noncontrolling Interests and Equity

Shares Par Value

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Issuance of common stock, net of offering costs — — — 2,185,685 22 273,167 — — 273,189

Buyback of common stock, net of offering costs — — — ( 826,797 ) ( 8 ) — — ( 67,865 ) ( 67,873 )

Redemption of Operating Partnership units for stock — ( 6,373 ) — 165,652 2 6,371 — — —

Repurchase of equity portion of 2015 exchangeable senior notes — — — 1,323,781 14 ( 14 ) — — —

Repayment of receivable with Preferred operating units pledged as collateral on loan — 16,213 — — — — — — 16,213

Redemption of Preferred B Units in the Operating Partnership for cash ( 1,000 ) — — — — — — — ( 1,000 )

Redemption of Preferred D Units in the Operating Partnership for stock ( 2,724 ) — — 30,495 1 2,723 — — —

Redemption of Preferred B Units in the Operating Partnership for stock ( 2,834 ) — — 15,265 1 2,833 — — —

Redemption of Operating Partnership units for cash — ( 173 ) — — — ( 615 ) — — ( 788 )

Repayment of receivable with Operating Partnership units pledged as collateral — 411 — — — — — — 411

Issuance of Operating Partnership units in conjunction with acquisitions — 188,319 — — — — — — 188,319

Issuance of Preferred D units in the Operating Partnership in conjunction with acquisitions 88,074 — — — — — — — 88,074

Purchase of remaining equity interest in existing consolidated joint venture — — — — — ( 18,141 ) — — ( 18,141 )

Noncontrolling interest in consolidated joint venture — — ( 82 ) — — — — — ( 82 )

Net income (loss) 14,697 35,414 ( 2 ) — — — — 827,649 877,758

Other comprehensive loss ( 456 ) ( 3,103 ) — — — — ( 70,127 ) — ( 73,686 )

Other comprehensive income 366 2,412 — — — — 56,547 — 59,325

Distributions to Operating Partnership units held by noncontrolling interests ( 13,245 ) ( 25,849 ) — — — — — — ( 39,094 )

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Gain on real estate transactions ( 140,760 ) ( 18,075 ) ( 1,205 )

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest ( 6,251 ) —

Distributions from unconsolidated real estate ventures in excess of earnings 7,035 6,893 6,358

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Development and redevelopment of real estate assets ( 56,226 ) ( 67,300 ) ( 53,717 )

Proceeds from sale of real estate assets 44,024 11,254 52,458

Proceeds from sale of real estate assets and investments in real estate ventures 572,728 44,024 11,254

Investment in unconsolidated real estate entities ( 54,602 ) ( 64,792 ) ( 197,759 )

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Principal payments on notes payable to trusts — — ( 30,928 )

Proceeds from issuance of public bonds, net 1,040,349 — —

Deferred financing costs ( 10,698 ) ( 4,052 ) ( 2,986 )

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Repurchase of common stock — ( 67,873 ) —

Proceeds from principal payments on note receivable collateralized by Preferred OP Units 16,213 — —

Proceeds from principal payments on notes receivable collateralized by OP Units and Preferred OP Units 411 16,213 —

Redemption of Operating Partnership units held by noncontrolling interests ( 788 ) ( 1,000 ) —

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Common stock and paid-in capital 6,373 4,005 13,057

Establishment of operating lease right of use assets and lease liabilities

Contribution of Preferred OP Units to unconsolidated real estate venture

Investments in unconsolidated real estate ventures $ — $ — $ ( 28,022 )

Value of Preferred Operating Partnership units issued — — 28,022

Redemption of Preferred Operating Partnership units for common stock

Preferred Operating Partnership units $ ( 2,834 ) $ ( 2,724 ) $ —

Additional paid-in capital 2,834 2,724 —

Issuance of Preferred OP Units for additional investment in unconsolidated real estate venture

Preferred OP Units $ — $ — $ 4,374

Common OP Units — — ( 4,374 )

Acquisition and establishment of operating lease right of use assets and lease liabilities

Real estate assets - operating lease right-of-use assets $ 6,655 $ 8,014 $ 277,557

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Real estate assets, net $ 318,036 $ 41,491 $ 21,066

Value of Operating Partnership units issued — — ( 1,877 )

Value of Operating Partnership and Preferred Operating Partnership units issued ( 276,393 ) — —

Notes payable assumed ( 20,028 ) — ( 17,157 )

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Accounts payable and accrued expenses ( 1,323 ) ( 656 ) ( 3,804 )

Contribution of Preferred OP Units to unconsolidated real estate venture

Investments in unconsolidated real estate ventures $ — $ ( 28,022 ) $ —

Value of Preferred Operating Partnership units issued — 28,022 —

Redemption of Preferred Operating Partnership units for common stock

Preferred Operating Partnership units $ ( 2,724 ) $ — $ —

Additional paid-in capital 2,724 — —

Issuance of Preferred OP Units for additional investment in unconsolidated real estate venture

Preferred OP Units $ — $ 4,374 $ 6,851

Common OP Units — ( 4,374 ) ( 6,851 )

See accompanying notes

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts in thousands, except store and share data, unless otherwise stated

DESCRIPTION OF BUSINESS

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In addition, the Company managed 828 stores for third parties bringing the total number of stores which it owns and/or manages to 2,096 .

These stores are located in 40 states, Washington, D.C.

and Puerto Rico.

These stores are located in 41 states and Washington, D.C.

The Company also offers tenant reinsurance at its owned and managed stores that insures the value of goods in the storage units.

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All intercompany balances and transactions have been eliminated in consolidation.

For comparison purposes, the Company has reclassified a portion of Notes payable, net to Unsecured term loans, net and Unsecured senior notes, net on the Consolidated Balance Sheets as of December 31, 2020, to conform to the presentation as of December 31, 2021.

Variable Interest Entities

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If the Company is determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated with the Company’s financial statements.

As of December 31, 2020 and 2019, the Company had no consolidated VIEs.

The Company had one consolidated VIE consisting of four stores as of December 31, 2021 and no consolidated VIEs as of December 31, 2020.

The Company’s investments in real estate joint ventures, where the Company has significant influence, but not control, and joint ventures which are VIEs in which the Company is not the primary beneficiary, are recorded under the equity method of accounting on the accompanying consolidated financial statements.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts in thousands, except store and share data, unless otherwise stated

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The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of December 31, 2021 or 2020.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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In addition, the Company reviews stores in the lease-up stage and compares actual operating results to original projections.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

When the Company determines that an event that may indicate impairment has occurred, the Company compares the carrying value of the related long-lived assets to the undiscounted future net operating cash flows attributable to the assets.

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Fixed rate notes receivable $ 105,954 $ 104,251 $ 114,145 $ 104,000

Fixed rate notes payable $ 3,816,530 $ 3,637,220 $ 3,511,151 $ 3,417,928

Exchangeable senior notes $ — $ — $ 673,831 $ 575,000

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Fixed rate debt $ 4,643,072 $ 4,506,435 $ 3,816,530 $ 3,637,220

Real Estate Assets

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Major replacements and betterments that improve or extend the life of the asset are capitalized and depreciated over their estimated useful lives.

Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between five and 39 years.

Depreciation is

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between five and 39 years.

The purchase of stores are considered asset acquisitions.

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The Company capitalizes certain costs during the application development stage when developing software for internal use.

As of December 31, 2020 and 2019, unamortized software costs were $ 22,708 and $ 22,354 , respectively.

During the year ended December 31, 2020, the Company recorded amortization expense of $ 1,571 relating to capitalized software costs.

As of December 31, 2021 and 2020, unamortized software costs were $ 20,280 and $ 22,708 .

During the year ended December 31, 2021 and 2020, the Company recorded amortization expense of $ 2,428 and $ 1,571 , respectively, relating to capitalized software costs.

No significant amortization of software costs was recorded prior to 2020 as the software was still in the application development stage.

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Late charges, administrative fees and merchandise sales are recognized as income when earned.

Equity in earnings of unconsolidated real estate ventures is recognized based on the Company's ownership interest in the earnings of each of the unconsolidated real estate entities.

Interest income is recognized as earned.

The Company's management fees are earned subject to the terms of the related management services agreements ("MSAs").

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The Company’s exposure per claim is limited by the maximum amount of coverage chosen by each tenant.

The Company purchases reinsurance for losses exceeding a set amount for any one event.

The Company does not currently have any amounts recoverable under the reinsurance arrangements.

EXTRA SPACE STORAGE INC.

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For the years ended December 31, 2021, 2020 and 2019 there were no anti-dilutive shares outstanding.

For the year ended December 31, 2018, options to purchase approximately 36,075 shares of common stock were excluded from the computation of earnings per share as their effect would have been anti-dilutive.

For the purposes of computing the diluted impact of the potential exchange of the Preferred OP Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the intent and ability to settle the redemption in shares, the Company divided the total liquidation value of the Preferred OP Units by the average share price of $ 161.98 for the year ended December 31, 2021.

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Series B Units 246,618 400,771 393,189

Series C Units (1)

Series D Units 726,037 1,143,547 1,081,369

972,655 8,273,612 1,474,558

(1) The remainder of the Series C Units were converted to OP Units on April 25, 2019.

EXTRA SPACE STORAGE INC.

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Amounts in thousands, except store and share data, unless otherwise stated

The Operating Partnership had $ 575,000 of its 3.125 % Exchangeable Senior Notes due 2035 (the “2015 Notes”) issued and outstanding prior to their redemption in November 2020.

As of December 31, 2021 and 2020 the Operating Partnership had no exchangeable senior notes issued or outstanding.

In October and November 2020, a portion of the 3.125 % Exchangeable Senior Notes due 2035 (the “2015 Notes”) were exchanged for cash and shares of the Company's common stock and the remaining 2015 Notes were redeemed for cash.

The 2015 Notes could potentially have had a dilutive impact on the Company's earnings per share calculations.

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The Company had irrevocably agreed to pay only cash for the accreted principal amount of the 2015 Notes relative to its exchange obligations, but retained the right to satisfy the exchange obligation in excess of the accreted principal amount in cash and/or common stock.

Though the Company has retained that right, Accounting Standards Codification (“ASC”) 260, “Earnings per Share,” requires an assumption that shares would be used to pay the exchange obligation in excess of the accreted principal amount, and requires that those shares be included in the Company’s calculation of weighted average common shares outstanding for the diluted earnings per share computation.

Although the Company had retained that right to satisfy the exchange obligation in excess of the accreted principal amount of the 2015 Notes in cash and/or common stock, Accounting Standards Codification (“ASC”) 260, “Earnings per Share,” required an assumption that shares would be used to pay the exchange obligation in excess of the accreted principal amount, and required that those shares be included in the Company’s calculation of weighted average common shares outstanding for the diluted earnings per share computation.

For the year ended December 31, 2021, the Company had repaid the principal and accrued interest of its 2015 Notes, and therefore, no shares relating to the 2015 Notes were included in the computation of diluted earnings per share.

For the years ended December 31, 2019 and 2018, 993,114 and zero shares, respectively, related to the 2015 Notes were included in the computation of diluted earnings per share.

For the years ended December 31, 2020 and 2019, zero and 993,114 shares, respectively, related to the 2015 Notes were included in the computation of diluted earnings per share.

For the purposes of computing the diluted impact on earnings per share of the potential exchange of Series A Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the positive intent and ability to settle at least $ 101,700 of the instrument in cash (or net settle a portion of the Series A Units against the related outstanding note receivable), only the amount of the instrument in excess of $ 101,700 is considered in the calculation of shares contingently issuable for the purposes of computing diluted earnings per share as allowed by ASC 260-10-45-46.

Accordingly, the number of shares included in the computation for diluted earnings per share related to the Series A Units is equal to the number of Series A Units outstanding, with no additional shares included related to the $ 101,700 fixed amount.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The computation of earnings per share is as follows for the periods presented:

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In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases (Topic 842)," which modifies the accounting for leases, intending to increase transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased financial statement disclosure of leasing arrangements.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

requires entities to recognize a liability for their lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term.

ASU 2016-02 requires entities to recognize a liability for their lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term.

ASU 2016-02 became effective for annual and interim periods beginning after December 15, 2018.

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The Company recognized lease liabilities totaling $ 104,863 and right-of-use assets related to operating leases totaling $ 95,506 as of the adoption date.

Refer to footnote 14 for further discussion of the Company's leases.

Refer to Note 14 for further discussion of the Company's leases.

In June 2016, the FASB issued ASU 2016-13, " Financial Instruments - Credit Losses (Topic 326):

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The adoption of this standard by the Company did not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)." ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting " (“ASU 2020-04”).

ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met.

ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024.

The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

The Company also elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes are made to applicable debt and derivative contracts.

Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope, which refines the scope of Topic 848 and clarifies some of its guidance.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)." ASU 2020-06 simplifies the accounting for convertible instruments and contracts in an entity's own equity, and amended related earnings per share guidance.

The guidance in ASU 2020-06 becomes effective for fiscal years beginning after December 15, 2021.

Early adoption is permitted no earlier than the fiscal years beginning after December 15, 2020.

The guidance may be adopted on a modified or fully retrospective basis.

The Company is currently assessing the impact of the adoption of ASU 2020-06 on its consolidated financial statements .

REAL ESTATE ASSETS

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Real estate under development/redevelopment 59,248 67,443

Net real estate assets $ 7,893,802 $ 7,696,864

Real estate assets held for sale included in net real estate assets $ 103,624 $ 2,947

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

As of December 31, 2020, the Company had 16 stores classified as held for sale.

The estimated fair value less selling costs of these assets is greater than the carrying value of the assets, and therefore no loss has been recorded related to these assets.

Real estate assets, net $ 8,834,649 $ 7,893,802

Real estate assets held for sale included in real estate assets, net $ 8,436 $ 103,624

As of December 31, 2021, the Company had one store classified as held for sale.

The estimated fair value less selling costs of this asset is greater than the carrying value of the asset, and therefore no loss has been recorded related to this asset.

Assets held for sale are included in the self-storage operations segment of the Company’s segment information.

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Amortization related to the tenant relationships and lease rights was $ 4,778 , $ 2,258 , and $ 6,614 for the years ended December 31, 2021, 2020 and 2019, respectively.

The remaining balance of the unamortized lease rights will be amortized over the next eight to 41 years.

The remaining balance of the unamortized lease rights will be amortized over the next seven to 40 years.

Accumulated amortization related to intangibles was $ 130,561 and $ 129,385 as of December 31, 2021 and 2020, respectively.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

PROPERTY ACQUISITIONS AND DISPOSITIONS

Store Acquisition

The following table shows the Company’s acquisitions of stores for the years ended December 31, 2021 and 2020.

The table excludes purchases of raw land or improvements made to existing assets.

The table excludes purchases of raw land and improvements made to existing assets.

Consideration Paid Total

Quarter Number of Stores Total Cash Paid Loan Assumed Finance Lease Liability Investments in Real Estate Ventures Net Liabilities/ (Assets) Assumed Real estate assets

Quarter Number of Stores Total Cash Paid Loan Assumed Finance Lease Liability Investments in Real Estate Ventures Net Liabilities/ (Assets) Assumed Value of OP Units Issued Real estate assets

Total 2021 74 $ 1,344,575 $ 1,011,483 $ 20,028 $ 26,998 $ 5,383 $ 4,293 $ 276,390 $ 1,344,575

Total 2020 23 $ 296,725 $ 254,111 $ — $ 41,491 $ — $ 1,123 $ — $ 296,725

(1) Store acquisitions during the year ended December 31, 2021 included the acquisition of five stores previously held in joint venture where the Company held a noncontrolling interest.

The Company purchased its partner's equity interest in these joint ventures, and the properties owned by the joint ventures became wholly owned by the Company.

In addition, store acquisitions include the acquisition of two stores that were subject to finance land leases.

The right-of-use assets associated with these leases are included in real estate assets above.

(2) Store acquisitions during the year ended December 31, 2020 include the acquisition of three stores that were subject to finance land leases.

The right-of-use assets associated with these leases are included in real estate assets above.

(2) Store acquisitions during the year ended December 31, 2019 include the acquisition of 12 stores previously held in joint ventures where the Company held a noncontrolling interest.

The Company purchased its partners' remaining equity interests in the joint ventures, and the properties owned by the joint ventures became wholly owned by the Company.

No gain or loss was recognized as a result of these acquisitions.

Store Disposals

Store Dispositions

On December 16, 2021 the Company sold 16 stores that had been classified as held for sale for total cash consideration of $ 200,292 .

The Company recorded a gain of $ 73,854 .

On March 1, 2021 the Company sold 16 stores that had been classified as held for sale to a newly established unconsolidated joint venture.

The Company received $ 132,759 and maintained a 55 % interest in the new joint venture valued at $ 33,878 .

The Company recognized a gain of $ 63,477 related to the sale of these properties.

On December 18, 2020, the Company sold four stores located in Florida that had been classified as held for sale for a total sale price of $ 46,592 .

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The Company recorded a gain on the sale of $ 1,205 .

On August 16, 2018, the Company sold a store located in California that had been classified as held for sale for $ 40,235 in cash.

The Company recorded a gain on the sale of $ 30,671 .

INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

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The Company initially records these investments at cost and subsequently adjusts for cash contributions, distributions and net equity in income or loss, which is allocated in accordance with the provisions of the applicable partnership or joint venture agreement.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

In these joint ventures, the Company and the joint venture partner generally receive a preferred return on their invested capital.

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The net equity of certain joint ventures is less than zero because distributions have exceeded the Company's investment in and share of income from these joint ventures.

This is generally the result of financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.

This is generally the result of

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.

Net Investments in unconsolidated real estate entities and Cash distributions in unconsolidated real estate ventures consist of the following:

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VRS Self Storage, LLC 16 45 % 54 % ( 14,269 ) 17,186

ESS-NYFL JV LP 11 16 % 26 % 12,211 13,320

ESS-CA TIVS JV LP (3)

16 55 % 60 % 32,288 —

GFN JV, LLC (2)

— 10 % 30 % — 18,397

ESS-NYFL JV LP 11 16 % 24 % 11,796 12,211

PRISA Self Storage LLC 85 4 % 4 % 8,792 8,815

Alan Jathoo JV LLC 9 10 % 10 % 7,621 7,780

Storage Portfolio IV JV LLC 27 10 % 30 % 40,174 —

Storage Portfolio III JV LLC 5 10 % 30 % 5,596 5,726

3 unchanged sentences

Storage Portfolio I LLC 24 34 % 49 % ( 40,168 ) ( 39,144 )

PR II EXR JV LLC 18 25 % 25 % 70,403 —

Other minority owned stores 13 10 - 50 %

5 unchanged sentences

(1) Includes pro-rata equity ownership share and promoted interest.

(2) In October 2019, the Company invested $ 150,000 in shares of newly issued convertible preferred stock of SmartStop, with an additional commitment to purchase up to $ 50,000 of the preferred shares over the 12 months after the original purchase.

In October 2020 the Company purchased the additional $ 50,000 in SmartStop convertible preferred stock that was previously committed.

(2) In June 2021, the WICNN JV LLC and GFN JV, LLC joint ventures sold all 17 of the stores owned by the joint ventures to a third party.

Subsequent to the sales, these joint ventures were dissolved.

As a result of these transactions, the Company recorded a gain of $ 5,739 , which is included in Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest in the Company's consolidated statements of operations.

(3) The Company sold 16 operating stores to this newly formed joint venture in March 2021.

The Company received cash of $ 132,759 and an interest in the new joint venture valued at $ 33,556 .

This joint venture is unconsolidated and the Company accounts for its investment under the equity method of accounting as the Company does not have voting control but does exercise significant influence over the joint venture.

(4) The Company invested in shares of convertible preferred stock of SmartStop.

The dividend rate for the preferred shares is 6.25 % per annum, subject to increase after five years .

The preferred shares are generally not redeemable for five years , except in the case of a change of control or initial listing of SmartStop.

Dividend income from this investment is included in equity in earnings and dividend income from unconsolidated real estate entities on the Company's consolidated statements of operations.

(3) The Company had $ 31,500 and $ 15,450 of preferred equity in the WICNN JV LLC and GFN JV, LLC joint ventures, respectively, as of December 31, 2020.

The Company earns an 8.0 % return on its preferred equity in these joint ventures, which has priority over other distributions.

In accordance with ASC 810, the Company reviews all of its joint venture relationships annually to ensure that there are no entities that require consolidation.

As of December 31, 2020, there were no previously unconsolidated entities that were required to be consolidated as a result of this review.

Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's consolidated statement of operations.

In June 2021, the Company sold its interest in two unconsolidated joint ventures to its joint venture partner.

The Company received proceeds of $ 1,888 in cash, and recorded a gain of $ 525 which is included in Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest in the Company's condensed consolidated statements of operations.

The Company also purchased its joint venture partners' interests in two unconsolidated joint ventures.

EXTRA SPACE STORAGE INC.

1 unchanged sentence

Amounts in thousands, except store and share data, unless otherwise stated

The Company entered into several new unconsolidated real estate ventures during the years ended December 31, 2019 and 2018.

The Company did not enter into any new joint ventures during the year ended December 31, 2020.

The Company accounts for its investment in the following ventures under the equity method of accounting.

Information about these real estate ventures is summarized as follows:

Number of Stores Equity ownership % Total initial investment

For the Year Ended December 31, 2019 16 10.0 % - 50.0 %

For the Year Ended December 31, 2018 28 10.0 % - 25.0 %

During the year ended December 31, 2020, the Company contributed a total of $ 14,792 to its existing joint ventures primarily relating to the purchase of one operating store and five stores acquired at the issuance of certificate of occupancy as well as for other operational and capital needs.

In January 2019, the Company purchased its joint venture partners' interests in the Extra Space West One LLC and

Extra Space West Two LLC joint ventures, which owned a total of 12 stores.

The Company paid $ 172,505 of cash to

acquire the equity interests, and subsequent to this acquisition, the Company owned 100.0 % of the joint ventures and

the related stores.

On April 30, 2018, the Company acquired its partner's interest in the WCOT Self Storage LLC joint venture.

The Company paid cash of $ 115,797 and assumed a loan of $ 87,500 .

The 14 properties owned by this joint venture became wholly-owned properties of the Company subsequent to this acquisition.

In accordance with ASC 810, the Company reviews all of its joint venture relationships annually to ensure that there are no entities that require consolidation.

As of December 31, 2021, there were no previously unconsolidated entities that were required to be consolidated as a result of this review.

The Company entered into two new unconsolidated real estate ventures with a total of 45 stores and a total investment of $ 109,583 during the year ended December 31, 2021.

The Company accounts for its investment in these ventures under the equity method of accounting.

In January 2019, the Company purchased its joint venture partners' interests in the Extra Space West One LLC and Extra Space West Two LLC joint ventures, which owned a total of 12 stores.

The Company paid $ 172,505 of cash to acquire the equity interests, and subsequent to this acquisition, the Company owned 100.0 % of the joint ventures and the related stores.

Equity in earnings and dividend income from unconsolidated real estate entities consists of the following:

13 unchanged sentences

Equity in earnings of PR EXR Self Storage, LLC 491 ( 211 ) ( 443 )

Equity in earnings of WCOT Self Storage LLC — — 359

Equity in earnings of Extra Space West Two LLC — — 1,042

Equity in earnings of Extra Space West One LLC — — 2,526

Equity in earnings of Storage Portfolio IV JV LLC 112 — —

Equity in earnings of ESS-CA TIVS JV LP 1,274 — —

Equity in earnings of PR II EXR JV LLC ( 8 ) — —

Equity in earnings of other minority owned stores 2,450 1,258 ( 438 )

16 unchanged sentences

Notes Receivable-Bridge Loans 279,042 187,368

Notes Receivable-Senior Mezzanine Loan 101,553 —

Notes Receivable-Senior Mezzanine Loan, net 102,079 101,553

Dividends Receivable 38,066 4,889

7 unchanged sentences

If the investment isn't retired after five years , the preferred dividends increase annually.

In July 2020, the Company purchased a senior mezzanine note receivable with a principal amount of $ 103,000 .

This note receivable bears interest at 5.5 %, matures in December 2023 and is collateralized through an entity interest in which it or its subsidiaries wholly own 62 storage facilities.

The Company paid cash of $ 101,142 for the note receivable and accounts for the discount at amortized cost.

The discount is being amortized over the term of the note receivable.

In February 2022, the Company sold this note receivable to a junior mezzanine lender, which exercised its right to buy the Company's position for the full principal balance plus interest due.

The Company provides bridge loan financing to third-party self-storage operators.

2 unchanged sentences

The Company intends to sell the majority of the mortgage receivables and keep the mezzanine receivables to maturity.

During the year ended December 31, 2020, the Company sold a total principal amount of $ 63,088 of its mortgage bridge loans receivable to third parties for a total of $ 62,764 in cash.

Subsequent to December 31, 2020, the Company sold a total of $ 76,241 principal amount of mortgage bridge loans to third parties for total cash of $ 75,707 .

In July 2020, the Company purchased a senior mezzanine note receivable with a principal amount of $ 103,000 .

This note receivable bears interest at 5.5 %, and matures in December 2023.

The Company paid cash of $ 101,142 for the loan receivable and accounts for the discount at amortized cost.

The discount is being amortized over the term of the loan receivable.

During the year ended December 31, 2021, the Company sold a total principal amount of $ 172,566 of its mortgage bridge loans receivable to third parties for a total of $ 172,002 in cash and closed on $ 317,482 in new mortgage and mezzanine bridge loan.

EXTRA SPACE STORAGE INC.

1 unchanged sentence

Amounts in thousands, except store and share data, unless otherwise stated

NOTES PAYABLE AND REVOLVING LINES OF CREDIT

The components of notes payable are summarized as follows:

Notes Payable December 31, 2020 December 31, 2019 Fixed Rate Variable Rate Basis Rate (2)

In May 2021, the Operating Partnership executed its initial public bond issuance by selling $ 450.0 million principal amount of 2.550 % Senior Notes due 2031 (the "Notes Due 2031").

Interest on the Notes Due 2031 is paid semi-annually in arrears on June 1 and December 1 of each year.

The Notes Due 2031 will mature on June 1, 2031, and the Operating Partnership may redeem the Notes Due 2031 at its option and sole discretion at any time prior to March 31, 2031 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

In September 2021, the Operating Partnership executed a public bond issuance by selling $ 600.0 million principal amount of 2.350 % Senior Notes due 2032 (the "Notes Due 2032").

Interest on the Notes Due 2032 is paid semi-annually in arrears on March 15 and September 15 of each year.

The Notes Due 2032 will mature on March 15, 2032, and the Operating Partnership may redeem the Notes Due 2032 at its option and sole discretion at any time prior to March 15, 2032 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

The Operating Partner may redeem the Notes Due 2031 and/or the Notes Due in 2032 in whole at any time or in part from time to time, at the Operating Partnership’s option and sole discretion, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) a make-whole premium calculated in accordance with the indenture governing the notes, plus, in each case, accrued and unpaid interest thereon to, but not including, the applicable redemption date.

Notwithstanding the foregoing, on or after the date three months prior to the maturity date of the applicable notes, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date.

Certain events are considered events of default, which may result in the accelerated maturity of the Notes Due 2031 and/or the Notes Due 2032, including, among other things, a default for 30 days in the payment of any installment of interest under the notes or a default in the payment of the principal amount or redemption price due with respect to the notes, when the same become due and payable.

The Notes Due 2031 and the Notes Due 2032 are unsecured, and are fully and unconditionally guaranteed by the Company, ESS Holdings Business Trust I, and ESS Holdings Business Trust II (the "Guarantors," and together with the Operating Partnership, the "Obligated Group"), on a joint and several basis.

The guarantee of the Notes Due 2031 and the Notes Due 2032 will be a senior unsecured obligation of each Guarantor.

The Guarantors have no material operations separate from the operation of the Operating Partnership and no material assets, other than their respective investments directly or indirectly in the Operating Partnership, and therefore the assets, liabilities, and results of operations of the Obligated Group are not materially different than those reported in the Company's financial statements.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The components of term debt are summarized as follows:

Term Debt December 31, 2021 December 31, 2020 Fixed Rate Variable Rate (2)

Maturity Dates

Secured fixed rate notes payable (1)

Secured fixed-rate (1)

$ 930,830 $ 1,112,220 2.46 % - 4.23 %

February 2021 - February 2030

Secured variable rate notes payable (1)

June 2022 - February 2030

Secured variable-rate (1)

392,679 1,081,551 1.10 % - 2.45 %

Libor plus 1.3 % - 2.0 %

April 2021 - August 2028

Unsecured fixed rate notes payable 2,525,000 2,052,521 2.80 % - 4.39 %

October 2023 - October 2030

Unsecured variable rate notes payable 100,000 47,480 1.04 %

Libor plus 0.9 %

April 2022 - May 2027

Unsecured fixed-rate 3,575,000 2,525,000 2.02 % - 4.39 %

February 2024 - March 2032

Unsecured variable-rate 550,000 100,000 1.05 %

February 2024 - October 2026

Total 5,448,509 4,818,771

2 unchanged sentences

(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.

(2) 30-day USD LIBOR

At December 31, 2020, the terms of the credit agreement originally entered into on October 14, 2016 (the "Credit Agreement") and amended and restated on December 7, 2018, July 1, 2019, and December 20, 2019, are as follows:

(2) Basis rate is 30-day USD LIBOR

At December 31, 2021, the terms of the Second Amended and Restated Credit Agreement dated June 22, 2021 (the "Credit Agreement") are as follows:

Debt Capacity Maturity Date

Revolving Credit Facility $ 650,000 January 2023

Revolving Credit Facility $ 1,250,000 June 2025

Tranche 1 Term Loan Facility (1)

6 unchanged sentences

255,000 June 2026

Tranche 5 Term Loan Facility (1)

425,000 February 2024

(1) The term loan amounts have been fully drawn as of December 31, 2021.

The Company may request an extension of the term of the Revolving Credit Facility for up to two additional periods of six months each, after satisfying certain conditions.

Pursuant to the terms of the Credit Agreement, the Company may request an extension of the term of the revolving credit facility for up to two additional periods of six months each, after satisfying certain conditions.

As of December 31, 2021, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) LIBOR plus the applicable Eurodollar rate margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0 %, (b) the federal funds rate plus 0.50 %, (c) U.S.

Bank’s prime rate or (d) the Eurodollar rate plus 1.00 %.

Per the Credit Agreement, the applicable Eurodollar rate margin and applicable base rate margin are based on the Company’s achieved debt rating pursuant to the ‘Investment Grade Election,’ with the Eurodollar rate margin ranging from 0.75 % to 2.25 % per annum and the applicable base rate margin ranging from 0.00 % to 1.25 % per annum.

Per the Credit Agreement, the applicable Eurodollar rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the Eurodollar rate margin ranging from 0.7 % to 2.25 % per annum and the applicable base rate margin ranging from 0.00 % to 0.60 % per annum.

The Credit Agreement is guaranteed by the Company and is not secured by any assets of the Company.

4 unchanged sentences

Amounts in thousands, except store and share data, unless otherwise stated

The following table summarizes the scheduled maturities of notes payable, excluding available extensions, at December 31, 2020:

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at December 31, 2021:

2022 $ 311,412

Thereafter 2,904,632

Real estate assets are pledged as collateral for the secured loans.

Of the Company’s $ 4,818,771 principal amount of notes payable outstanding at December 31, 2020, $ 1,969,323 was recourse due to guarantees or other security provisions.

All of the Company’s lines of credit are guaranteed by the Company.

1 unchanged sentence

As of December 31, 2021

Revolving Lines of Credit Amount Drawn Capacity Interest Rate Origination Date Maturity Basis Rate (1)

Credit Line 1 (2)

$ 102,000 $ 140,000 1.6 % 6/4/2010 7/1/2021 LIBOR plus 1.45 %

Revolving Lines of Credit Amount Drawn Capacity Interest Rate Maturity Basis Rate (1)

Credit Line 1 (2)

10 unchanged sentences

Rate is subject to change based on our investment grade rating.

(5) Unsecured.

One twelve -month extension available.

The Company is exposed to certain risk arising from both its business operations and economic conditions.

3 unchanged sentences

The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Cash Flow Hedges of Interest Rate Risk

4 unchanged sentences

A portion of these changes is excluded from accumulated other comprehensive income as it is allocated to noncontrolling interests.

During the years ended December 31, 2020, 2019 and 2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

During the years ended December 31, 2021, 2020 and 2019,

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

During 2022, the Company estimates that $ 28,070 will be reclassified as an increase to interest expense.

7 unchanged sentences

Asset / Liability Derivatives

December 31, 2020 December 31, 2019

Derivatives designated as hedging instruments:

December 31, 2021 December 31, 2020

Other assets $ 271 $ —

10 unchanged sentences

Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

As of December 31, 2021, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $ 41,331 .

1 unchanged sentence

If the Company had breached any of these provisions as of December 31, 2021, it could have been required to cash settle its obligations under these agreements at their termination value of $ 41,331 .

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

NOTES PAYABLE TO TRUSTS

13 unchanged sentences

The net amount was equal to the notes payable that the Trusts owed to third parties for their investments in the Trusts’ preferred securities.

The Company had no consolidated VIEs during the years ended December 31, 2020 or December 31, 2019.

EXCHANGEABLE SENIOR NOTES

8 unchanged sentences

The holders of the 2015 Notes had the right to require the Operating Partnership to repurchase the 2015 Notes for cash, in whole or in part, on October 1 of the years 2020, 2025 and 2030, (unless the Operating Partnership had called the 2015 Notes for redemption), and upon the occurrence of certain designated events, in each case for a repurchase price equal to 100 % of the principal amount of the 2015 Notes plus accrued and unpaid interest.

Additionally, the 2015 Notes could have been exchanged during any calendar quarter, if the last reported sale price of the common stock of the

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Company was greater than or equal to 130 % of the exchange price for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter.

Additionally, the 2015 Notes could have been exchanged during any calendar quarter, if the last reported sale price of the common stock of the Company was greater than or equal to 130 % of the exchange price for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter.

The Company redeemed all outstanding 2015 Notes on November 2, 2020.

On June 21, 2013, the Operating Partnership issued $ 250,000 of its 2013 Notes at a 1.5 % discount, or $ 3,750 .

Costs incurred to issue the 2013 Notes were approximately $ 1,672 .

These costs were amortized as an adjustment to interest expense over five years , which represented the estimated term based on the first available redemption date.

The 2013 Notes bore interest at 2.375 % per annum and contained an exchange settlement feature.

The Operating Partnership redeemed all remaining outstanding 2013 Notes on July 5, 2018.

GAAP requires entities with convertible debt instruments that may be settled entirely or partially in cash upon conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s economic interest cost.

The Company therefore accounted for the liability and equity component of the 2015 Notes separately.

The equity components were included in paid-in capital in stockholders’ equity in the consolidated balance sheets, and the value of the equity components were treated as original issue discount for purposes of accounting for the debt components.

The equity components were included in paid-in capital in stockholders’ equity in the consolidated balance sheets, and the value of the

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

equity components were treated as original issue discount for purposes of accounting for the debt components.

The discount was amortized as interest expense over the remaining period of the debt through its first redemption date, October 1, 2020 for the 2015 Notes.

1 unchanged sentence

nonconvertible debt) at the time of issuance.

Information about the 2015 Notes, including the total carrying amounts of the equity component, the principal amount of the liability component, the unamortized discount and net carrying amount, was as follows for the periods indicated:

December 31, 2020 December 31, 2019

Carrying amount of equity component $ — $ 22,597

Principal amount of liability component $ — $ 575,000

Unamortized discount - equity component — ( 3,675 )

Unamortized debt issuance costs — ( 1,812 )

Net carrying amount of liability component $ — $ 569,513

The amount of interest cost recognized relating to the contractual interest rate and the amortization of the discount on the liability component for the Notes were as follows for the periods indicated:

5 unchanged sentences

Repurchase of 2015 Notes

During the year ended December 31, 2018, the Company repurchased a total principal amount of $ 49,259 of the 2013 Notes, which represented all of the remaining principal amount outstanding.

The Company paid cash of $ 80,270 for the total of the principal amount and the exchange value in excess of the principal amount.

Repurchase of 2015 Notes

On October 1, 2020, the holders of $ 71,513 principal amount of the 2015 Notes exchanged their Notes.

3 unchanged sentences

Also on November 2, 2020, the Company redeemed the remaining $ 55 of outstanding principal amount of the 2015 Notes for cash.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The Company allocated the value of the consideration paid to repurchase the 2013 Notes and the 2015 Notes (1) to the extinguishment of the liability component and (2) to the reacquisition of the equity component.

15 unchanged sentences

Gain/(loss) on repurchase $ — $ — $ —

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

STOCKHOLDERS’ EQUITY

3 unchanged sentences

The transfer agent and registrar for the Company’s common stock is American Stock Transfer & Trust Company.

On May 15, 2019, the Company filed its current $ 500,000 "at the market" equity program with the Securities and Exchange Commission using a shelf registration statement on Form S-3, and entered into separate equity distribution agreements.

Under the terms of the current equity distribution agreements, the Company may from time to time offer and sell shares of common stock, up to the aggregate offering price of $ 500,000 , through its sales agents.

During the year ended December 31, 2020, the Company sold 899,048 shares of common stock under its "at the market" equity program at an average sales price of $ 116.42 per share, resulting in net proceeds of $ 103,468 .

At December 31, 2020, the Company had $ 193,951 available for issuance under the current equity distribution agreements.

Subsequent to year end, the Company sold 585,685 shares of common stock at an average sales price of $ 115.90 , resulting in net proceeds of $ 67,204 .

On August 9, 2021, the Company filed its $ 800,000 "at the market" equity program with the Securities and Exchange Commission using a shelf registration statement on Form S-3, and entered into separate equity distribution agreements with ten sales agents.

No shares have been sold under the current "at the market" equity program.

From January 1, 2021, through August 8, 2021, the Company sold 585,685 shares of common stock under its prior "at the market" equity program at an average sales price of $ 115.90 per share resulting in net proceeds of $ 66,617 .

On March 23, 2021, the Company sold 1,600,000 shares of its common stock in a registered offering structured as a bought deal at a price of $ 129.13 per share resulting in net proceeds of $ 206,572 .

During the year ended December 31, 2020, the Company sold 899,048 shares of common stock at an average sales price of $ 116.42 per share, resulting in net proceeds of $ 103,468 .

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

In November 2017, the Company's board of directors authorized a three-year share repurchase program to allow for the repurchase of shares with an aggregate value up to $ 400,000 .

During the year ended December 31, 2020, the Company repurchased 826,797 shares at an average price of $ 82.09 per share, paying a total of $ 67,873 .

On October 15, 2020, the Company's board of directors authorized a new share repurchase program allowing the repurchase of shares with an aggregate value up to $ 400,000 , which replaced the Company's prior share repurchase program, which was set to expire on November 8, 2020.

As of December 31, 2020, the Company had remaining authorization to repurchase shares with an aggregate value of $ 400,000 .

On October 15, 2020, the Company's board of directors authorized a new share repurchase program allowing for the repurchase of shares with an aggregate value up to $ 400,000 .

No shares were repurchased during the year ended December 31, 2021.

NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS

8 unchanged sentences

The partnership agreement of the Operating Partnership (as amended, the "Partnership Agreement") provides for the designation and issuance of the OP Units.

Noncontrolling interests in Preferred OP Units were presented net of notes receivable from preferred Operating Partnership unit holders of $ 100,000 as of December 31, 2020 and 2019, respectively, as more fully described below.

As of December 31, 2021 and 2020, noncontrolling interests in Preferred OP Units were presented net of notes receivable from Preferred Operating Partnership unit holders of $ 100,000 as of December 31, 2021 and 2020, respectively, as more fully described below.

The balances for each of the specific preferred OP units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

December 31, 2021 December 31, 2020

Series A Units $ 15,606 $ 13,788

Series B Units 38,068 40,902

Series D Units 205,436 117,362

$ 259,110 $ 172,052

Series A Participating Redeemable Preferred Units

The Partnership Agreement provides for the designation and issuance of the Series A Units.

The Series A Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation.

The Series A Units were issued in June 2007.

1 unchanged sentence

The remaining balance participates in distributions with, and has a liquidation value equal to, that of the common OP Units.

The Series A Units became redeemable at the option of the holder on September 1, 2008, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock.

The Series A Units are redeemable at the option of the holder, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock.

As a result of the redemption of 114,500 Series A Units in October 2014, the remaining fixed liquidation value was reduced to $ 101,700 which represents 875,480 Series A Units.

On April 18, 2017, the holder of the Series A Units and the Operating Partnership agreed to reduce the fixed priority return on the Series A Units from 5.0 % to 2.3 % in exchange for a reduction in the interest rate of the related loan, as more fully described below.

The Partnership Agreement provides for the designation and issuance of the Series A Units.

The Series A Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation.

On June 25, 2007, the Operating Partnership loaned the holders of the Series A Units $ 100,000 .

The note receivable bears interest at 2.1 %.

On April 18, 2017, a loan amendment was signed modifying the maturity date of the loan to the later of the death of the Series A Unit holder or his spouse and also lowering the interest rate of the loan from 4.9 % to 2.1 %.

The loan amendment was determined to be a loan modification under GAAP, and therefore no change in value was recognized.

The loan is secured by the borrower’s Series A Units.

1 unchanged sentence

The Series A Units are shown on the balance sheet net of the $ 100,000 loan because the borrower under the loan is also the holder of the Series A Units.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Series B Redeemable Preferred Units

4 unchanged sentences

These distributions are cumulative.

The Series B Units are redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash or shares of its common stock.

The Series B Units rank junior to the Series A Units, on parity with the Series C Units and Series D Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation.

On August 17, 2020, 40,000 Series B Units were redeemed for a total of $ 1,000 in cash.

The Series B Units became redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash or shares of its common stock.

On August 31, 2021, 113,360 Series B Units were redeemed for 15,265 shares of common stock.

Series C Convertible Redeemable Preferred Units

2 unchanged sentences

The Series C Units were issued in 2013 and 2014 and had a liquidation value of $ 42.10 per unit.

From issuance to the fifth anniversary of issuance, each Series C Unit holder received quarterly distributions equal to the quarterly distribution for common OP Unit plus $ 0.18 .

These distributions were cumulative.

The Series C Units became redeemable at the option of the holder one year from the date of issuance, which redemption obligation could be satisfied at the Company’s option in cash or shares of its common stock.

The Series C Units were convertible into common OP Units at the option of the holder one year from the date of issuance, at a rate of 0.9145 common OP Units per Series C Unit converted.

This conversion option expired upon the fifth anniversary of the date of issuance.

In December 2014, the Operating Partnership loaned holders of the Series C Units $ 20,230 .

2 unchanged sentences

On December 1, 2018, certain holders of the Series C Units converted their Series C Units into common OP Units, with a total of 407,996 Series C Units being converted into a total of 373,113 common OP Units.

As part of this conversion, the holders of the Series C Units agreed to pledge the common OP Units received in the conversion as collateral on the loan receivable to replace the Series C Units that were converted.

As of December 31, 2018, the total outstanding balance of the loan receivable was $ 19,735 , of which $ 8,644 was shown as a reduction of the noncontrolling interests related to the Series C Units and $ 11,091 was shown as a reduction of the noncontrolling interests related to the common OP Units on the Company's consolidated balance sheets.

On April 25, 2019, the remaining 296,020 Series C Units were converted into 270,709 OP Units.

On April 25, 2019, the remaining

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

296,020 Series C Units were converted into 270,709 OP Units.

The remaining outstanding balance of the loan receivable of $ 1,900 and $ 2,311 is shown as a reduction of the noncontrolling interests related to the OP Units as of December 31, 2021 and December 31, 2020, respectively.

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The Series D Units rank junior to the Series A Units, on parity with the Series B Units and Series C Units, and senior to all other partnership interest of the Operating Partnership with respect to distributions and liquidation.

The Series D Units have been issued at various times from 2014 to 2019.

During the year ended December 31, 2019, the Operating Partnership issued a total of 1,120,924 Series D Units valued at $ 28,022 in conjunction with joint venture acquisitions.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The Series D Units have a liquidation value of $ 25.00 per unit, for a current fixed liquidation value of $ 205,435 which represents 8,217,422 Series D Units.

1 unchanged sentence

These distributions are cumulative.

The Series D Units will become redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock.

The Series D Units become redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock.

In addition, certain of the Series D Units are exchangeable for common OP Units until the tenth anniversary of the date of issuance, with the number of common OP Units to be issued equal to $ 25.00 per Series D Unit, divided by the value of a share of common stock as of the exchange date.

The Series D Units have been issued at various times from 2014 to 2021.

During the year ended December 31, 2021, the Operating Partnership issued a total of 3,522,937 Series D Units valued at $ 88,073 in conjunction with store acquisitions.

NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP AND OTHER NONCONTROLLING INTERESTS

1 unchanged sentence

The Company’s interest in its stores is held through the Operating Partnership.

Between its general partner and limited partner interests, the Company held a 94.2 % majority ownership interest therein as of December 31, 2020.

Between its general partner and limited partner interests, the Company held a 93.9 % majority ownership interest in the Operating Partnership as of December 31, 2021.

The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.1 % are held by certain former owners of assets acquired by the Operating Partnership.

As of December 31,2021 and December 31, 2020, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of notes receivable of $ 1,900 and $ 2,311 , respectively, because the borrowers under the loan receivable are also holders of OP Units (Note 12).

This loan receivable bears interest at 5.0 % per annum and matures on December 15, 2024.

The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company.

Alternatively, the Company may, at its sole discretion, elect to acquire those OP Units in exchange for shares of its common stock on a one -for-one basis, subject to anti-dilution adjustments provided in the Operating Partnership agreement.

The ten-day average closing stock price at December 31, 2020, was $ 114.15 and there were 5,800,785 OP Units outstanding.

OP Units are redeemable at the option of the holder, which redemption may be satisfied at the Company's option in cash based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption, or shares of the Company's common stock on a one -for-one basis, subject to anti-dilution adjustments provided in the Operating Partnership agreement.

As of December 31, 2021, the ten-day average closing stock price was $ 220.58 and there were 6,528,436 OP Units outstanding.

Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on December 31, 2021 and the Company elected to pay the OP Unit holders cash, the Company would have paid $ 1,440,042 in cash consideration to redeem the units.

8 unchanged sentences

OP Units issued upon redemption of Series C Units — — 270,709

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

On December 1, 2018, 373,113 common OP Units were issued in the conversion of 407,996 Series C Units.

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If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The Company has evaluated the terms of the common OP Units and classifies the noncontrolling interest represented by the common OP Units as stockholders’ equity in the accompanying consolidated balance sheets.

2 unchanged sentences

Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interest of third parties in two consolidated joint ventures as of December 31, 2020.

One joint venture owns two stores in Texas and two stores in Colorado, and the other owns a store in Pennsylvania and a store in New Jersey.

The voting interests of the third-party owners are between 5.0 % and 20.0 %.

Other noncontrolling interests represent the ownership interest of partners in two consolidated joint ventures as of December 31, 2021.

One joint venture owns four stores in Georgia and the other owns one property under development in Florida.

The voting interests of the partners are 10% or less.

On August 25, 2021, the Company purchased for $ 12,215 in cash the remaining third party ownership interest in a previously consolidated joint venture that owned two operating stores.

On December 15, 2021, the Company purchased for $ 6,100 in cash the remaining third party ownership interest in previously consolidated joint venture that owned four operating stores.

The Company adopted ASC 842, "Leases," effective January 1, 2019 on a modified retrospective basis as allowed under the standard and thus prior periods have not been restated.

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Right-of-use assets associated with finance leases are included in real estate assets, net and finance lease liabilities are included in other liabilities on the Company's consolidated balance sheets.

During the year ended December 31, 2020, the Company recorded new finance lease right-of-use assets and finance lease liabilities totaling $ 41,491 associated with the acquisition of three stores with land leases.

The Company also recorded finance lease right-of-use assets and finance lease liabilities of $ 8,605 upon the completion of construction of a store with a land lease.

During the year ended December 31, 2021, the Company recorded new finance lease right-of-use assets and finance lease liabilities totaling $ 26,998 associated with the acquisition of two stores with land leases.

The Company also recorded a finance lease right-of-use asset and a finance lease liability of $ 40,916 related to a corporate office lease.

In June and August 2019, the Company entered into new triple-net lease agreements to lease land and buildings at 22 and five operating stores, respectively.

These leases are categorized as operating leases, and have contractual lease terms of 25 years, but have termination options after 10 years that result in lease terms of 10 years under ASC 842.

The Company recorded new operating lease right-of-use assets and operating lease liabilities of $ 127,532 and $ 52,224 , respectively, in conjunction with these new lease agreements.

The Company recorded

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

new operating lease right-of-use assets and operating lease liabilities of $ 127,532 and $ 52,224 , respectively, in conjunction with these new lease agreements.

The Company is lessee under several types of lease agreements.

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• Leases of its corporate offices and call center.

These leases have original lease terms between 5.3 and 12.1 years, with no extension options.

These leases have original lease terms between five and 14 years, with no extension options.

Subsequent to year-end the Company modified and extended the lease of its corporate offices to add additional space and extend the lease until 2034.

8 unchanged sentences

Several of the leases of real estate at the Company’s stores include escalation clauses based on an index or rate, such as the Consumer Price Index (CPI).

The Company included these lease payments in its calculations of right-of-use assets and

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

liabilities based on the prevailing index or rate as of the adoption date.

The Company included these lease payments in its calculations of right-of-use assets and liabilities based on the prevailing index or rate as of the adoption date.

The Company will recognize changes to these variable lease payments in earnings in the period of change.

4 unchanged sentences

The Company has a signed lease agreement for a store in California.

The store is under construction by the lessor, and the Company will take possession of the leased asset upon completion of construction, which is estimated to be completed in mid- 2021.

The store is under construction by the lessor, and the Company will take possession of the leased asset upon completion of construction, which is estimated to be completed in 2022.

The lease term is 15 years from the lease commencement date, with three 10 -year extension options and one 5 -year extension option.

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Weighted average discount rate - operating leases 3.63 % 3.66 %

The Company recorded lease expense of $ 8,229 related to operating leases in the years ended December 31, 2018.

The following table presents information about the Company’s undiscounted cash flows on an annual basis for operating and finance leases, including a reconciliation of the undiscounted cash flows to the finance lease and operating lease liabilities recognized in the Company’s consolidated balance sheets:

9 unchanged sentences

Lease liabilities $ 233,356 $ 124,537 $ 357,893

The Company elected the package of practical expedients upon adoption of ASC 842, which allows for the application of the standard solely to the transition period in 2019 and does not require application to prior fiscal comparative periods resented.

Disclosures required under the previous leasing standard are presented for prior years.

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Outstanding at December 31, 2021 9,272 $ 82.47 3.98 $ 1,338

Vested and Expected to Vest 71,594 $ 74.54 4.61 $ 1,823

Vested 9,272 $ 82.47 3.98 $ 1,338

Ending Exercisable 9,272 $ 82.47 3.98 $ 1,338

20 unchanged sentences

7,690 4.15 85.99 7,690 85.99

$ 65.45 - $ 65.45

2,900 4.13 65.45 2,900 65.45

$ 73.52 - $ 73.52

50,000 4.58 73.52 50,000 73.52

$ 85.99 - $ 85.99

14,412 5.15 85.99 14,412 85.99

71,594 4.61 $ 74.54 71,594 $ 74.54

The Company recorded compensation expense relating to outstanding options of $ 0 , $ 27 and $ 364 in general and administrative expense for the years ended December 31, 2021, 2020 and 2019, respectively.

7 unchanged sentences

The fair value of common stock awards is determined based on the closing trading price of the Company’s common stock on the grant date.

A summary of the Company’s employee and director share grant activity is as follows:

EXTRA SPACE STORAGE INC.

1 unchanged sentence

Amounts in thousands, except store and share data, unless otherwise stated

A summary of the Company’s employee and director share grant activity is as follows:

Restricted Stock Grants Shares Weighted-Average Grant-Date Fair Value

13 unchanged sentences

Performance-based Stock Units

In 2017, the CNG Committee changed its compensation for executives to issue performance-based stock units (the "PSUs") as a replacement for stock option awards.

The PSUs granted to executives represent the right to earn shares of the Company's common stock.

The performance-based stock units (the "PSUs") granted to executives represent the right to earn shares of the Company's common stock.

These awards have two financial performance components:

8 unchanged sentences

Granted 45,242 129.38

Released ( 30,071 ) $ 112.16

Unvested at December 31, 2020 123,311 $ 104.25

2 unchanged sentences

Unvested at December 31, 2021 135,408 $ 111.69

The Company recorded $ 7,048 , $ 3,514 and $ 1,873 of expense in general and administrative expense in its statement of operations related to PSUs granted to employees and directors for the years ended December 31, 2020, 2019 and 2018, respectively.

The Company estimated the fair value of the PSUs as of the grant date, using the closing trading price of the Company's common stock on the grant date to value the FFO Target portion.

A Monte Carlo simulation model was used to calculate the fair value of the TSR Target portion of the PSUs, using the following assumptions:

EXTRA SPACE STORAGE INC.

1 unchanged sentence

Amounts in thousands, except store and share data, unless otherwise stated

The Company recorded $ 8,043 , $ 7,048 and $ 3,514 of expense in general and administrative expense in its statement of operations related to PSUs granted to employees for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company estimated the fair value of the PSUs as of the grant date, using the closing trading price of the Company's common stock on the grant date to value the FFO Target portion.

A Monte Carlo simulation model was used to calculate the fair value of the TSR Target portion of the PSUs, using the following assumptions:

For the Year Ended December 31,

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Total tax expense $ 16,856 $ 3,468 $ 20,324

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

For the Year Ended December 31, 2020

4 unchanged sentences

Total tax expense $ 10,537 $ 3,273 $ 13,810

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

For the Year Ended December 31, 2019

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Total provision $ 20,324 2.3 % $ 13,810 2.6 % $ 11,308 2.5 %

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

The major sources of temporary differences stated at their deferred tax effects are as follows:

2 unchanged sentences

Fixed assets $ ( 30,499 ) $ ( 27,374 )

Operating lease right-of-use assets ( 2,223 ) ( 2,475 )

Operating and Finance lease right-of-use assets ( 6,016 ) ( 2,223 )

Other ( 61 ) ( 72 )

5 unchanged sentences

Stock compensation 3,076 2,635

Operating lease liabilities 2,232 2,478

Operating and Finance lease liabilities 7,936 2,232

SmartStop TRS — 219

7 unchanged sentences

The tax years 2017 through 2020 remain open related to the state returns, and 2018 through 2020 for the federal returns.

EXTRA SPACE STORAGE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

SEGMENT INFORMATION

29 unchanged sentences

Total segment net operating income $ 1,113,002 $ 916,974 $ 893,138

Other components of net income (loss):

Other components of net income:

Property management fees and other income 66,264 52,129 49,890

6 unchanged sentences

Equity in earnings and dividend income from unconsolidated real estate entities 32,358 22,361 11,274

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest 6,251 — —

Income tax expense ( 20,324 ) ( 13,810 ) ( 11,308 )

1 unchanged sentence

COMMITMENTS AND CONTINGENCIES

As of December 31, 2020, the Company was under agreement to acquire ten stores at a total purchase price of $ 165,500 .

Of these stores, all ten are scheduled to close in 2021.

Additionally, the Company is under agreement to acquire one store in 2021 with a joint venture partner, for a total investment of $ 1,600 .

As of December 31, 2021, the Company was under agreement to acquire nine stores at a total purchase price of $ 136,491 .

These stores are scheduled to close in 2022.

Additionally, the Company is under agreement to acquire three stores in 2022 with joint venture partners, for a total investment of $ 5,850 .

The Company is involved in various legal proceedings and is subject to various claims and complaints arising in the ordinary course of business.

3 unchanged sentences

The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties.

The Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period, notwithstanding the fact that the Company is currently vigorously defending any legal proceedings against it.

As of December 31, 2020, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business.

In the opinion of

EXTRA SPACE STORAGE INC.

1 unchanged sentence

Amounts in thousands, except store and share data, unless otherwise stated

management, such litigation, claims and complaints are not expected to have a material adverse effect on the Company’s financial condition or results of operations.

vigorously defending any legal proceedings against it.

As of December 31, 2021, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business.

In the opinion of management, such litigation, claims and complaints are not expected to have a material adverse effect on the Company’s financial condition or results of operations.

Although there can be no assurance, the Company is not aware of any material environmental liability, for which it believes it will be ultimately responsible, that could have a material adverse effect on its financial condition or results of operations.

1 unchanged sentence

EXTRA SPACE STORAGE INC.

Real Estate and Accumulated Depreciation

(Dollars in thousands)

As of December 31, 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amounts in thousands, except store and share data, unless otherwise stated

Building and Improvements Initial Cost Adjustments and Costs to Land and Building Subsequent to Acquisition Gross carrying amount at December 31, 2021

72 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data