Extra Space Storage Inc.
−Removed: (“we,” “our,” “us” or the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) formed as a Maryland corporation on April 30, 2004, to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”).
+Added: (“we,” “our,” “us” or the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) formed as a Maryland corporation on April 30, 2004.
We closed our initial public offering (“IPO”) on August 17, 2004.
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These companies were reorganized after the consummation of our IPO and various formation transactions.
−Removed: As of December 31, 2021 we owned and/or operated 2,096 stores in 41 states, and Washington, D.C., comprising approximately 160.9 million square feet of net rentable space in approximately 1.5 million units.
−Removed: We operate in two distinct segments:
−Removed: (1) self-storage operations;
−Removed: and (2) tenant reinsurance.
−Removed: Our self-storage operations activities include rental operations of wholly-owned stores.
−Removed: Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in our stores.
−Removed: For more information and comparative financial and other information on our reportable business segments, refer to the segment information footnote in the notes to the consolidated financial statements in Item 8 of this Form 10-K.
+Added: Our executive management team and board of directors have extensive experience and ownership positions in the Company.
Substantially all of our business is conducted through Extra Space Storage LP (the “Operating Partnership”).
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federal tax, with certain exceptions, on our REIT taxable income that is distributed to our stockholders.
+Added: Our principal offices are located at 2795 East Cottonwood Parkway, Suite 300, Salt Lake City, Utah 84121, telephone number (801) 365-4600.
+Added: Our internet address is www.extraspace.com.
We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (the “SEC”).
You may obtain copies of these documents by visiting the SEC’s website at www.sec.gov.
−Removed: In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website at www.extraspace.com, or by contacting our Secretary at our principal offices, which are located at 2795 East Cottonwood Parkway, Suite 300, Salt Lake City, Utah 84121, telephone number (801) 365-4600.
−Removed: Members of our executive management team have significant experience in all aspects of the self-storage industry.
−Removed: Our executive management team and their years of industry experience are as follows:
−Removed: Margolis, Chief Executive Officer, 17 years;
−Removed: Scott Stubbs, Executive Vice President and Chief Financial Officer, 21 years;
−Removed: Samrat Sondhi, Executive Vice President and Chief Marketing Officer, 19 years;
−Removed: Gwyn McNeal, Executive Vice President and Chief Legal Officer, 16 years;
−Removed: Matt Herrington, Executive Vice President and Chief Operations Officer, 14 years;
−Removed: Noah Springer, Executive Vice President and Chief Strategy and Partnership Officer, 16 years;
−Removed: Zach Dickens, Executive Vice President and Chief Investment Officer, 19 years.
−Removed: Our executive management team and board of directors have an ownership position in the Company with executive officers and directors owning approximately 2,054,059 shares or 1.5% of our outstanding common stock as of February 22, 2022.
−Removed: Industry & Competition
+Added: In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through the Investor Relations section of our website.
+Added: Self-Storage Operations
+Added: We own, operate, manage, provide lending to, acquire, develop and redevelop self-storage properties (“stores”).
+Added: We operate and manage our business by evaluating the operating performance of the properties for our entire portfolio which includes wholly-owned stores, stores in which we have a partial ownership interest and managed stores.
Stores offer month-to-month rental of storage space for personal or business use.
−Removed: Tenants typically rent fully enclosed spaces that vary in size and typically range from 5 feet by 5 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet.
−Removed: Tenants have responsibility for moving their items into and out of their units.
−Removed: Stores generally have on-site managers who supervise and run the day-to-day operations, providing tenants with assistance as needed.
−Removed: Self-storage provides a convenient way for individuals and businesses to store their possessions due to life changes, or simply because of a need for storage space.
−Removed: The mix of residential tenants using a store is determined by a store’s local demographics and often includes people who are experiencing life changes such as downsizing their living space or others who
−Removed: are not yet settled into a permanent residence.
−Removed: Items that tenants place in self-storage are typically furniture, household items and appliances.
−Removed: Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods.
−Removed: Our research has shown that tenants choose a store based primarily on the convenience of the site to their home or business, making high-density, high-traffic population centers ideal locations for stores.
−Removed: A store’s visibility on the internet, price, perceived security, cleanliness, and the general professionalism of the store managers and staff are also contributing factors to a store’s ability to successfully secure rentals.
−Removed: Although most stores are leased to tenants on a month-to-month basis, tenants tend to continue their leases for extended periods of time.
−Removed: The self-storage business is subject to seasonal fluctuations.
−Removed: A greater portion of revenues and profits are typically realized from May through September.
−Removed: Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March.
−Removed: The self-storage industry is a mature industry that has seen the average occupancy continue to increase.
−Removed: According to the Self-Storage Almanac (the “Almanac”), the national average physical occupancy rate was 90.2% of net rentable square feet in 2015, compared to an average physical occupancy rate of 94.5% in 2021.
−Removed: Our average occupancy for wholly-owned stores for 2021 was 94.8%.
−Removed: The industry is also characterized by fragmented ownership.
−Removed: According to the Almanac, as of the end of 2021, the top ten self-storage companies in the United States operated approximately 21.9% of the total U.S.
−Removed: stores, and the top 50 self-storage companies operated approximately 27.9% of the total U.S.
−Removed: We believe this fragmentation will contribute to continued consolidation at some level in the future.
−Removed: We believe that we are well positioned to compete for acquisitions.
−Removed: We have encountered competition when we have sought to acquire existing operating stores, especially for brokered portfolios.
−Removed: Competitive bidding practices have been commonplace between both public and private entities, and this will likely continue.
−Removed: We are the second largest self-storage operator in the United States.
−Removed: Our four primary competitors who are public self-storage REITs are CubeSmart, Life Storage, National Storage Affiliates and Public Storage.
+Added: As of December 31, 2022, we owned and/or operated 2,338 stores in 41 states, and Washington, D.C., comprising approximately 176.1 million square feet of net rentable space in approximately 1.6 million units.
+Added: Other Operations
+Added: Our tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in our stores.
+Added: Our customers have the option of purchasing insurance from a non-affiliated insurance company to cover certain losses to their goods stored at our facilities, as well as those we manage for third parties.
+Added: A wholly-owned, consolidated subsidiary fully reinsures such policies and thereby assumes all risk of losses under these policies and receives reinsurance premiums substantially equal to the premiums collected from our tenants, from the non-affiliated insurance company.
+Added: As of December 31, 2022, we managed 887 stores for third party owners.
+Added: Our management business enables us to generate increased revenues through management fees as well as expand our geographic footprint, data sophistication and scale with little capital investment.
+Added: We believe this expanded footprint enables us to reduce our operating costs through economies of scale.
+Added: In addition, we see our management business as a potential future acquisition pipeline.
+Added: We have a bridge lending program, under which we provide financing to third party self storage owners for operating properties that we manage.
+Added: This program helps us increase our management business, create additional potential future acquisition opportunities, and strengthen our relationships with partners, all while generating interest and fee income.
+Added: We generally originate mortgage loans and mezzanine loans, with the intent to sell many of the mortgage loans to third parties, while retaining our interests in the mezzanine loans.
+Added: As of December 31, 2022, the total principal balance of bridge loans receivable was $491.9 million.
+Added: We have made investments in preferred stock of other self-storage companies.
+Added: These investments benefit us by providing dividend income, increasing our management business, and creating additional potential future acquisition opportunities through relationships with the companies in which we invest.
+Added: Operating Segments
+Added: We operate in two distinct segments:
+Added: (1) self-storage operations;
+Added: and (2) tenant reinsurance.
+Added: Our self-storage operations activities include rental operations of wholly-owned stores.
+Added: Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in our stores.
+Added: For more information and comparative financial and other information on our reportable business segments, refer to the segment information footnote in the notes to the consolidated financial statements in Item 8 of this Form 10-K.
Long-Term Growth and Investment Strategies
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We pursue revenue-generating and expense-minimizing opportunities in our operations.
−Removed: Our revenue management team seeks to maximize revenue by responding to changing market conditions through our advanced technology systems' ability to provide real-time, interactive rental rate and discount management.
−Removed: Our size allows us greater ability than the majority of our competitors to implement more effective online marketing programs, which we believe will attract more customers to our stores at a lower net cost.
+Added: We seek to maximize revenue by responding to changing market conditions through our advanced technology systems' ability to provide real-time, interactive rental rate and discount management.
+Added: Our size allows us greater ability than the majority of our competitors to implement more dynamic online marketing programs, which we believe will attract more customers to our stores at a lower net cost.
We continually analyze our portfolio to look for long-term value-enhancing opportunities.
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We also purchase stores at the completion of construction from third party developers, who build to our specifications.
−Removed: These stores purchased at completion of construction (a "Certificate of Occupancy store"), create additional
−Removed: long-term value for our stockholders.
+Added: These stores purchased at completion of construction (a "Certificate of Occupancy store"), create additional long-term value for our stockholders.
We are typically able to acquire these assets at a lower price than a stabilized store, and expect greater long term returns on these stores on average.
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We expect that this trend will continue as we continue to acquire Certificate of Occupancy stores.
−Removed: Grow our management business
−Removed: Our management business enables us to generate increased revenues through management fees as well as expand our geographic footprint, data sophistication and scale with little capital investment.
−Removed: We believe this expanded footprint enables us to reduce our operating costs through economies of scale.
−Removed: In addition, we see our management business as a future acquisition pipeline.
−Removed: We pursue strategic relationships with owners whose stores would enhance our portfolio in the event an opportunity arises to acquire such stores.
−Removed: Expand our bridge loan program
−Removed: To broaden the opportunities available, we have a bridge lending program, under which we provide financing to operating properties that we manage.
−Removed: This program helps us increase our management business, create additional future acquisition opportunities, and strengthen our relationships with partners, all while generating interest and fee income.
−Removed: We generally originate mortgage loans and mezzanine loans, with the intent to sell many of the mortgage loans to third parties, while retaining our interests in the mezzanine loans.
−Removed: Invest in other self-storage businesses selectively
−Removed: We have made investments in preferred stock of other self-storage companies.
−Removed: These investments benefit us by providing dividend income, increasing our management business, and creating additional future acquisition opportunities through relationships with the companies in which we invest.
−Removed: We may pursue additional investment opportunities as they become available.
Financing of Our Long-Term Growth Strategies
−Removed: Acquisition and Development Financing
As a REIT, we are required to distribute at least 90%of our REIT taxable income to our stockholders.
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We expect to maintain a flexible approach to financing growth.
−Removed: We plan to finance future acquisitions through a diverse capital optimization strategy which includes but is not limited to:
+Added: We plan to finance future acquisitions, store development and our bridge loan program through a diverse capital optimization strategy which includes but is not limited to:
cash generated from operations, borrowings under our revolving lines of credit (the "Credit Lines"), secured and unsecured financing, equity offerings, joint ventures and the sale of stores.
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We will continue to utilize a combination of secured and unsecured financing for future store acquisitions and development.
−Removed: As of December 31, 2021, we had $1.3 billion of secured notes payable and $4.1 billion of unsecured notes payable outstanding compared to $2.2 billion of secured notes payable and $3.2 billion of unsecured notes payable and senior exchangeable notes outstanding as of December 31, 2020.
+Added: As of December 31, 2022, we had $1.3 billion of secured notes payable and $5.1 billion of unsecured notes payable outstanding.
Equity - We have an active "at the market" ("ATM") program for selling stock.
We sell stock under the ATM program from time to time to raise capital when we believe conditions are advantageous.
−Removed: During the year ended December 31, 2021, we issued 585,685 shares of common stock through our ATM program and received net proceeds of approximately $66.6 million.
−Removed: We also sold 1,600,000 shares of common stock in a registered offering structured as a bought deal at a price of $129.13 per share resulting in net proceeds of $206.6 million.
−Removed: During the year ended December 31, 2020, we issued 899,048 shares of common stock through our ATM program and received net proceeds of approximately $103.5 million.
+Added: During the year ended December 31, 2022, we didn't issue or sell any shares of common stock.
We view equity interests in our Operating Partnership as another source of capital that can provide an attractive tax planning opportunity to sellers of real estate.
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However, we may sell more stores or interests in stores in the future in response to changing economic, financial or investment conditions.
−Removed: For the year ended December 31, 2021, we sold 16 stores for $200.3 million.
−Removed: For the year ended December 31, 2020, we sold four stores located in Florida for $46.6 million.
−Removed: For the year ended December 31, 2019, we sold one store located in New York for $11.3 million.
+Added: For the year ended December 31, 2022, we sold two stores for $38.7 million.
+Added: Industry & Competition
+Added: We are the second largest self-storage operator in the United States.
+Added: Our four primary competitors who are public self-storage REITs are CubeSmart, Life Storage, National Storage Affiliates and Public Storage.
+Added: Stores offer month-to-month rental of storage space for personal or business use.
+Added: Tenants typically rent fully enclosed spaces that vary in size and typically range from 5 feet by 5 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet.
+Added: Tenants have responsibility for moving their items into and out of their units.
+Added: Stores generally have on-site managers who supervise and run the day-to-day operations, providing tenants with assistance as needed.
+Added: Self-storage provides a convenient way for individuals and businesses to store their possessions due to life changes, or simply because of a need for storage space.
+Added: The mix of residential tenants using a store is determined by a store’s local demographics and often includes people who are experiencing life changes such as downsizing their living space or others who are not yet settled into a permanent residence.
+Added: Items that tenants place in self-storage are typically furniture, household items and appliances.
+Added: Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods.
+Added: Our research has shown that tenants choose a store based primarily on the convenience of the site to their home or business, making high-density, high-traffic population centers ideal locations for stores.
+Added: A store’s visibility on the internet, price, perceived security, cleanliness, and the general professionalism of the store managers and staff are also contributing factors to a store’s ability to successfully secure rentals.
+Added: Although most stores are leased to tenants on a month-to-month basis, tenants tend to continue their leases for extended periods of time.
+Added: The self-storage business is subject to seasonal fluctuations.
+Added: A greater portion of revenues and profits are typically realized from May through September.
+Added: Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March.
+Added: The self-storage industry is a mature industry that has seen the average occupancy continue to increase.
+Added: According to the Self-Storage Almanac (the “Almanac”), the national average physical occupancy rate was 90.2% of net rentable square feet in 2015, compared to an average physical occupancy rate of 93.4% in 2022.
+Added: Our average occupancy for wholly-owned stores for 2022 was 93.3%.
+Added: The industry is also characterized by fragmented ownership.
+Added: According to the Almanac, as of the end of 2022, the top ten self-storage companies in the United States operated approximately 24.2% of the total U.S.
+Added: stores, and the top 50 self-storage
+Added: companies operated approximately 31.9% of the total U.S.
+Added: We believe this fragmentation will contribute to continued consolidation at some level in the future.
+Added: We believe that we are well positioned to compete for acquisitions.
+Added: We have encountered competition when we have sought to acquire existing operating stores, especially for brokered portfolios.
+Added: Competitive bidding practices have been commonplace between both public and private entities, and this will likely continue.
Generally, stores are subject to various laws, ordinances and regulations, including regulations relating to lien sale rights and procedures and the Americans with Disabilities Act of 1990.
−Removed: Changes in any of these laws or regulations, as well as changes in laws, such as the Comprehensive Environmental Response and Compensation Liability Act, which increase the potential liability for environmental conditions or circumstances existing or created by tenants or others on stores, or laws affecting development, construction, operation, upkeep, safety and taxation may result in significant unanticipated expenditures, loss of stores or other impairments to operations, which would adversely affect our financial position, results of operations or cash flows.
+Added: Changes in any of these laws or regulations, as well as changes in laws, such as the Comprehensive Environmental Response and Compensation Liability Act, which increase the potential liability for environmental conditions or circumstances existing or created by tenants or others on stores, or laws affecting development, construction, operation, limitations on rent increases due to state of emergency or similar orders, upkeep, safety and taxation may result in significant unanticipated expenditures, loss of stores or other impairments to operations, which would adversely affect our financial position, results of operations or cash flows.
In addition, noncompliance with any of these laws, ordinances or regulations could result in the imposition of fines or an award of damages to private litigants and also could require substantial capital expenditures to ensure compliance.
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Compensation, Health and Well Being
−Removed: The Company offers competitive health benefits and encourages its employees to participate in employee health and wellness programs.
+Added: We offer competitive health benefits and encourage our employees to participate in employee health and wellness programs.
Over 58% of our employees who are enrolled in our health plan participate in these programs.
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In order to attract and retain diverse top talent, we offer training and development opportunities for our employees.
−Removed: In 2021, we invested in training and development for our employees, which included leadership training, communication training,
−Removed: individual learning plans, site manager training and mentorship programs.
−Removed: Our field employees received on aver age 8 ho urs of training in 2021 and each new hire received an average of 82 hours of training in 2021.
−Removed: Additionally, the Company provides its employees with an education assistance program through Western Governors University that allows our employees a path to an undergraduate degree in business or information technology through scholarships and other assistance.
−Removed: The Company has always valued the safety of our employees and provides regular training for our employees to increase safety at our sites.
−Removed: During 2021, we continued to make masks and other protective equipment available to our employees.
−Removed: We also paid out more than $500,000 to employees in an effort to encourage our employees to get vaccinated against COVID-19.
−Removed: In addition, we paid out more than $380,000 in relief pay to our employees who were unable to work due to testing positive for COVID-19.
−Removed: Diversity and Inclusion
−Removed: The Company values diversity and inclusion and undertakes a wide spectrum of initiatives to attract and retain a diverse workforce.
−Removed: During 2021, the Company launched four employee resource groups that provide our employees a space to build community by celebrating their culture, providing mentoring opportunities and developing educational content for Extra Space.
−Removed: The Company will continue to implement and pursue diversity and inclusion initiatives and goals that allow us to attract and retain top talent, improve employee engagement, increase innovation and customer insight and enhance the quality of our decision making.
−Removed: Forbes Magazine recently named the Company as a Best Employer for Diversity in 2020.
+Added: In 2022, we invested in training and development for our employees, which included leadership training, communication training, individual learning plans, site manager training and mentorship programs.
+Added: Our field employees received an aver age of eight ho urs of training and each new hire received an average of 82 hours of training in 2022.
+Added: Additionally, we provide our employees with an education assistance program through Western Governors University that allows our employees a path to an undergraduate degree in business or information technology through scholarships and other assistance.
+Added: Diversity, Equity and Inclusion
+Added: We value diversity, equity and inclusion and undertake a wide spectrum of initiatives to attract and retain a diverse workforce.
+Added: During 2022, we expanded participation in our employee resource groups that provide our employees a space to build community by celebrating their culture, providing mentoring opportunities and developing educational content for Extra Space.
+Added: We will continue to implement and pursue diversity, equity and inclusion initiatives and tracking that allow us to attract and retain diverse top talent, improve employee engagement, increase innovation and customer insight and enhance the quality of our decision making.
+Added: We also launched a formal internship program with Project Destined to support a more diverse talent pipeline into real estate professions.
+Added: Utah Business Magazine recently recognized us as one of the top 100 Companies Championing Women.
Our employee population is approximately 47% female and approximately 44% have self-identified as people of color:
Black or African American (16%), Hispanic or Latino (20%), Asian (2.4%), of two or more races (4.2%), Native American (0.6%), and Pacific Islander (0.5%).
−Removed: We believe that our emphasis on training and development, employee safety, employee health and well-being, and a commitment to diversity and inclusion leads to an increase in employee productivity and positions us to attract and retain top diverse talent.
+Added: We believe that our emphasis on training and development, employee safety, employee health and well-being, and a commitment to diversity, equity and inclusion leads to an increase in employee productivity and positions us to attract and retain top diverse talent.
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.