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Item 1. Financial Statements

2024-08-02 compared with 2024-05-03 · 173 added, 121 removed, 578 unchanged (34% of the section changed)

3 unchanged sentences

(amounts in thousands, except share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Real estate assets, net $ 24,340,817 $ 24,555,873

20 unchanged sentences

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 211,658,812 and 211,278,803 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 211,927,348 and 211,278,803 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 14,810,938 14,750,388

11 unchanged sentences

(amounts in thousands, except share data)

For the Three Months Ended March 31,

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

2024 2023 2024 2023

Property rental $ 697,100 $ 440,747 $ 1,385,144 $ 874,709

7 unchanged sentences

Total expenses 451,243 238,047 914,954 477,555

Loss on real estate assets held for sale ( 54,659 ) — ( 54,659 ) —

Income from operations 304,761 273,339 640,589 536,881

20 unchanged sentences

(amounts in thousands)

For the Three Months Ended March 31,

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

2024 2023 2024 2023

Net income $ 195,412 $ 215,312 $ 419,486 $ 424,190

7 unchanged sentences

Condensed Consolidated Statement of Noncontrolling Interests and Equity

(amounts in thousands, except share data)

For the three and six months ended June 30, 2024

(unaudited, amounts in thousands, except share data)

Noncontrolling Interest Extra Space Storage Inc.

1 unchanged sentence

Preferred Operating Partnership Operating Partnership Other Shares Par Value Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Noncontrolling Interests and Equity

Balances at December 31, 2022 $ 261,502 $ 556,095 $ 1,080 133,921,020 $ 1,339 $ 3,345,332 $ 48,798 $ ( 135,872 ) $ 4,078,274

Issuance of common stock in connection with share based compensation — — — 89,564 1 5,498 — — 5,499

Taxes paid upon net settlement of share based compensation — ( 7,087 ) — ( 7,449 ) — — ( 7,449 )

Restricted stock grants cancelled — — — ( 2,222 ) — — — — —

Redemption of Preferred A Units in the Operating Partnership for stock and cash ( 16,339 ) — — 851,698 8 11,015 — — ( 5,316 )

Redemption of Preferred D Units in the Operating Partnership for stock ( 22,064 ) — — 154,307 2 22,062 — — —

Balances at March 31, 2024 $ 218,824 $ 763,971 $ 9,137 211,658,812 $ 2,117 $ 14,776,888 $ 28,191 $ ( 510,150 ) $ 15,288,978

Issuance of common stock for share based compensation, exercise of options and taxes paid upon net settlement — — — 71,502 1 6,585 — — 6,586

Offering costs associated with shelf registration — — — — — ( 494 ) — — ( 494 )

Redemption of Operating Partnership units for stock ( 27,518 ) ( 446 ) — 197,034 2 27,959 — — ( 3 )

Noncontrolling interest in consolidated joint venture — — 656 — — — — — 656

Net income (loss) 2,254 10,378 ( 58 ) — — — — 196,304 208,878

Net income 1,933 7,600 7 — — — — 185,872 195,412

Other comprehensive income — ( 56 ) — — — — ( 950 ) — ( 1,006 )

2 unchanged sentences

— — — — — — — ( 343,389 ) ( 343,389 )

Balances at March 31, 2023 $ 222,940 $ 554,015 $ 2,413 135,007,280 $ 1,350 $ 3,376,458 $ 35,081 $ ( 159,556 ) $ 4,032,701

Balances at June 30, 2024 $ 191,306 $ 757,102 $ 9,800 211,927,348 $ 2,120 $ 14,810,938 $ 27,241 $ ( 667,667 ) $ 15,130,840

Balances at December 31, 2023 $ 222,360 $ 791,754 $ 8,914 211,278,803 $ 2,113 $ 14,750,388 $ 17,435 $ ( 379,015 ) $ 15,413,949

1 unchanged sentence

Issuance of common stock, net of offering costs — — — 2,310 — 365 — — 365

Offering costs associated with shelf registration — — — — — ( 494 ) — — ( 494 )

Redemption of Operating Partnership units for stock ( 31,054 ) ( 23,437 ) — 477,806 5 54,486 — — —

5 unchanged sentences

— — — — — — — ( 687,636 ) ( 687,636 )

Balances at June 30, 2024 $ 191,306 $ 757,102 $ 9,800 211,927,348 $ 2,120 $ 14,810,938 $ 27,241 $ ( 667,667 ) $ 15,130,840

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and six months ended June 30, 2023

(unaudited, amounts in thousands, except share data)

Noncontrolling Interest Extra Space Storage Inc.

Stockholders' Equity

Balances at March 31, 2023 $ 222,940 $ 554,015 $ 2,413 135,007,280 $ 1,350 $ 3,376,458 $ 35,081 $ ( 159,556 ) $ 4,032,701

Issuance of common stock in connection with share based compensation — — — 53,823 1 6,939 — — 6,940

Taxes paid upon net settlement of share based compensation — — — ( 573 ) — ( 94 ) — — ( 94 )

Restricted stock grants cancelled — — — ( 1,633 ) — — — — —

Noncontrolling interest in consolidated joint venture — — 709 — — — — — 709

Net income (loss) 2,254 10,691 ( 43 ) — — — — 202,410 215,312

Other comprehensive income — 615 — — — — 11,984 — 12,599

Distributions to Operating Partnership units held by noncontrolling interests ( 2,254 ) ( 11,711 ) — — — — — — ( 13,965 )

Dividends paid on common stock at $ 1.62 per share

— — — — — — — ( 218,795 ) ( 218,795 )

Balances at June 30, 2023 $ 222,940 $ 553,610 $ 3,079 135,058,897 $ 1,351 $ 3,383,303 $ 47,065 $ ( 175,941 ) $ 4,035,407

Balances at December 31, 2022 $ 261,502 $ 556,095 $ 1,080 133,921,020 $ 1,339 $ 3,345,332 $ 48,798 $ ( 135,872 ) $ 4,078,274

Issuance of common stock in connection with share based compensation — — — 143,387 2 12,437 — — 12,439

Taxes paid upon net settlement of share based compensation — — — ( 7,660 ) — ( 7,543 ) — — ( 7,543 )

Restricted stock grants cancelled — — — ( 3,855 ) — — — — —

Redemption of Preferred A Units in the Operating Partnership for stock ( 16,339 ) — — 851,698 8 11,015 — — ( 5,316 )

Redemption of Preferred D Units in the Operating Partnership for stock ( 22,064 ) — — 154,307 2 22,062 — — —

Noncontrolling interest in consolidated joint venture — — 2,100 — — — — — 2,100

Net income (loss) 4,508 21,069 ( 101 ) — — — — 398,714 424,190

Other comprehensive income — ( 178 ) — — — — ( 1,733 ) — ( 1,911 )

Distributions to Operating Partnership units held by noncontrolling interests ( 4,667 ) ( 23,376 ) — — — — — — ( 28,043 )

Dividends paid on common stock at $ 3.24 per share

— — — — — — — ( 438,783 ) ( 438,783 )

Balances at June 30, 2023 $ 222,940 $ 553,610 $ 3,079 135,058,897 $ 1,351 $ 3,383,303 $ 47,065 $ ( 175,941 ) $ 4,035,407

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

6 unchanged sentences

Accrual of interest income added to principal of debt securities and notes receivable ( 16,100 ) ( 16,200 )

Loss on real estate assets held for sale 54,659 —

Distributions from unconsolidated real estate ventures 14,540 7,594

7 unchanged sentences

Development and redevelopment of real estate assets ( 69,384 ) ( 37,244 )

Proceeds from sale of real estate assets and investments in real estate ventures — 1,046

Investment in unconsolidated real estate entities ( 10,789 ) ( 171,126 )

Return of investment in unconsolidated real estate ventures 4,200 —

Issuance and purchase of notes receivable ( 569,268 ) ( 124,103 )

10 unchanged sentences

Redemption of Preferred OP units for cash — ( 5,000 )

Offering costs associated with shelf registration ( 494 ) —

Dividends paid on common stock ( 687,636 ) ( 438,783 )

7 unchanged sentences

Restricted cash included in other assets 6,021 4,867

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

For the Six Months Ended June 30,

$ 105,083 $ 97,735

3 unchanged sentences

$ 81,544 $ 52,913

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

For the Three Months Ended March 31,

Supplemental schedule of cash flow information

7 unchanged sentences

OP Unit Redemption - Cash Proceeds — ( 5,000 )

Redemption of Preferred Operating Partnership units for common stock

Preferred Operating Partnership units $ ( 3,536 ) $ ( 33,403 )

Additional paid-in capital 3,536 $ 33,403

Accrued construction costs and capital expenditures

Acquisition of real estate assets $ 4,754 $ 4,503

Accounts payable and accrued expenses ( 4,754 ) ( 4,503 )

See accompanying notes to unaudited condensed consolidated financial statements.

9 unchanged sentences

The Company invests in stores by acquiring wholly-owned stores or by acquiring an equity interest in real estate entities.

At March 31, 2024, the Company had direct and indirect equity interests in 2,384 stores.

At June 30, 2024, the Company had direct and indirect equity interests in 2,389 stores.

In addition, the Company managed 1,423 stores for third parties, bringing the total number of stores which it owns and/or manages to 3,812 .

These stores are located in 42 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.

The Company offers tenant reinsurance at its owned and managed stores that insures the value of goods in the storage units and also offers bridge loan financing to certain of its third-party self-storage owners.

BASIS OF PRESENTATION

3 unchanged sentences

In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of results that may be expected for the year ending December 31, 2024.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of results that may be expected for the year ending December 31, 2024.

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

1 unchanged sentence

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("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.

As of September 30, 2023, the Company had converted all of its LIBOR-indexed debt and derivatives to SOFR-based indexes (effective with the respective instrument’s next reset date for certain instruments).

For all derivatives in hedge accounting relationships, the elective relief in Topic 848 that allows for the continuation of hedge accounting throughout the transition process was utilized.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07 – Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amended guidance requires the disclosure of incremental segment information, including significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and a reconciliation of segment profit or loss to net income.

The title and position of the CODM must also be disclosed, along with how the CODM uses the reported measures to assess segment performance and to allocate resources.

Pursuant to this ASU, the footnotes to the Company's consolidated financial statements may include incremental disclosures related to its two reportable segments:

(1) self-storage operations and (2) tenant reinsurance.

The compliance with this ASU will be required beginning with the Company's annual report on Form 10-K for the year ending December 31, 2024, followed by interim disclosures in quarterly reports on Form 10-Q thereafter, with early adoption permitted.

The Company expects to adopt this ASU for its annual report on Form 10-K for the year ending December 31, 2024.

FAIR VALUE DISCLOSURES

12 unchanged sentences

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.

However, as of March 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives.

However, as of June 30, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives.

As a result, the Company has determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2024, aggregated by the level in the fair value hierarchy within which those measurements fall.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2024, aggregated by the level in the fair value hierarchy within which those measurements fall.

Fair Value Measurements at Reporting Date Using

2 unchanged sentences

Other liabilities - Cash flow hedge swap agreements $ — $ 77 $ —

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of March 31, 2024 or December 31, 2023.

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of June 30, 2024 or December 31, 2023.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

10 unchanged sentences

If the estimated fair value, net of selling costs, of the assets that have been identified as held for sale is less than the net carrying value of the assets, the Company would recognize a loss on the assets held for sale.

The operations of assets held for sale or sold during the period would be presented as part of normal operations.

As of March 31, 2024, and December 31, 2023, no assets were held for sale.

The Company assesses annually whether there are any indicators that the value of the Company’s investments in unconsolidated real estate entities may be impaired and when events or circumstances indicate that there may be impairment.

The operations of assets held for sale or sold during the period is presented as part of normal operations.

As of June 30, 2024, the Company had seven stores classified as held for sale which are included in real estate assets, net.

The estimated fair value of these assets, net

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

of selling costs, was $ 51,934 , which was less than the net carrying value of the assets and thus the Company recorded a loss of $ 54,659 during the three months ended June 30, 2024.

An investment is impaired if management’s estimate of the fair value of the investment is less than its carrying value.

4 unchanged sentences

No impairments of goodwill were recorded for any period presented herein.

As of March 31, 2024 and December 31, 2023, the Company did not have any assets or liabilities measured at fair value on a nonrecurring basis.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, restricted cash, receivables, other financial instruments included in other assets, accounts payable and accrued expenses, variable-rate notes payable, investments in debt securities and notes receivable, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023 approximate fair value.

Restricted cash is comprised of funds deposited with financial institutions located throughout the United States primarily relating to earnest money deposits on potential acquisitions.

The fair values of the Company’s notes receivable and notes receivable from Preferred and Common Operating Partnership unit holders were based on the discounted estimated future cash flow of the notes (categorized within Level 3 of the fair value hierarchy);

the discount rate used approximated the current market rate for loans with similar maturities and credit quality.

The carrying values of cash and cash equivalents, restricted cash, receivables, other financial instruments included in other assets, accounts payable and accrued expenses, variable-rate notes payable, investments in debt securities and notes receivable, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at June 30, 2024 and December 31, 2023 approximate fair value.

Restricted cash is comprised of funds deposited with financial institutions located throughout the United States primarily relating to operating cash reserve for the Company's captive insurance subsidiary and earnest money deposits on potential acquisitions.

The fair values of the Company’s fixed-rate notes payable were estimated using the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy);

the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality.

The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated:

March 31, 2024 December 31, 2023

The fair values of the Company’s fixed-rate liabilities were as follows for the periods indicated:

June 30, 2024 December 31, 2023

Value Carrying

3 unchanged sentences

The Life Storage Merger

On July 20, 2023, the Company closed its merger with Life Storage (the "Life Storage Merger" or "Merger"), which included 757 wholly-owned stores and one consolidated joint venture store.

On July 20, 2023, the Company closed its merger with Life Storage (the “Life Storage Merger”), which included 757 wholly-owned stores and one consolidated joint venture store.

Under the terms of the Life Storage Merger, Life Storage stockholders and holders of units of the Life Storage operating partnership received 0.895 of a share of common stock (or OP Unit, as applicable) of the Company for each issued and outstanding share (or operating partnership unit) of Life Storage they owned for total equity consideration of $ 11,602,808 , based on the Company's closing share price on July 19, 2023.

8 unchanged sentences

Consideration and Purchase Price Allocation

The Merger was accounted for as an asset acquisition in accordance with ASC Topic 805 which requires that the cost of an acquisition be allocated on a relative fair value basis to the assets acquired and the liabilities assumed.

The Life Storage Merger was accounted for as an asset acquisition in accordance with ASC Topic 805 which requires that the cost of an acquisition be allocated on a relative fair value basis to the assets acquired and the liabilities assumed.

The following table summarizes the fair value of total consideration transferred in the Life Storage Merger:

38 unchanged sentences

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three months ended March 31, 2024 and 2023.

The following table shows the Company’s acquisitions of stores for the three and six months ended June 30, 2024 and 2023.

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

4 unchanged sentences

Q1 2024 6 $ 35,084 $ — $ — $ 171 $ — $ 35,255

Total 2024 9 $ 62,728 $ — $ — $ 268 $ — $ 62,996

Q2 2023 3 32,888 — — 26 — 32,914

Q1 2023 1 13,111 — — 6 — 13,117

Total 2023 4 $ 45,999 $ — $ — $ 32 $ — $ 46,031

REAL ESTATE ASSETS

The components of real estate assets are summarized as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Land $ 4,903,843 $ 4,904,705

8 unchanged sentences

Real estate assets, net $ 24,340,817 $ 24,555,873

The components of other assets are summarized as follows:

Real estate assets held for sale included in real estate assets, net $ 51,934 $ —

As of June 30, 2024, the Company had seven stores classified as held for sale.

The estimated fair value less selling costs of these assets is less than the carrying value of the assets and, therefore, an estimated loss of $ 54,659 related to these assets has been recorded in Loss on real estate assets held for sale on the Company's condensed consolidated statements of operations for the three months ended June 30, 2024.

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

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

March 31, 2024 December 31, 2023

The components of other assets are summarized as follows:

June 30, 2024 December 31, 2023

Goodwill $ 170,811 $ 170,811

20 unchanged sentences

For the purposes of computing the diluted impact of the potential exchange of the Preferred Operating Partnership 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 value of the Preferred Operating Partnership units by the average share price for the period presented.

The average share price for the three months ended March 31, 2024 and 2023 was $ 145.80 and $ 157.15 , respectively.

The following table presents the number of Preferred Operating Partnership units as if converted into potential common shares that were excluded from the computation of earnings per share as their effect would have been anti-dilutive.

For the Three Months Ended March 31,

Equivalent Shares (if converted) Equivalent Shares (if converted)

Series B Units 230,234 213,606

Series D Units 1,272,862 —

1,503,096 213,606

The average share price for the three months ended June 30, 2024 and 2023 was $ 145.78 and $ 150.45 , respectively.

The following table presents the number of Common and Preferred Operating Partnership units as if converted into potential common shares that were excluded from the computation of earnings per share as their effect would have been anti-dilutive.

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

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

2024 2023 2024 2023

Equivalent Shares (if converted) Equivalent Shares (if converted) Equivalent Shares (if converted) Equivalent Shares (if converted)

Common OP Units 8,621,889 — — —

Series B Units 230,266 223,118 230,250 218,259

Series D Units 1,160,861 — 1,216,866 —

10,013,016 223,118 1,447,116 218,259

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

For the Three Months Ended March 31,

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

2024 2023 2024 2023

Net income attributable to common stockholders $ 185,872 $ 202,410 $ 398,984 $ 398,714

3 unchanged sentences

Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units — 12,441 16,336 24,569

Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) — —

Net income for diluted computations $ 185,476 $ 214,851 $ 414,570 $ 423,283

2 unchanged sentences

OP Units — 7,214,649 8,676,813 7,214,649

Series B Units — —

Series D Units — 1,257,366 — 1,233,178

14 unchanged sentences

To the extent that cash or profits in excess of these preferred returns are generated through operations or capital transactions, the Company would receive a higher percentage of the excess cash or profits, as applicable, than its equity interest.

The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets.

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.

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets.

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.

Net investments in unconsolidated real estate entities and cash distributions in unconsolidated real estate ventures consist of the following:

Number of Stores Equity Ownership % Excess Profit % (1)

March 31, December 31,

June 30, December 31,

PRISA Self Storage LLC 85 4 % 4 % $ 9,209 $ 9,435

31 unchanged sentences

(“NexPoint”) and receivables due to the Company under its bridge loan program.

Information about these balances is as follows:

March 31, 2024 December 31, 2023

Information about these balances is as

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

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

June 30, 2024 December 31, 2023

Debt securities - Preferred Stock $ 300,000 $ 300,000

3 unchanged sentences

In November 2020, the Company invested $ 300,000 in the preferred stock of JCAP in connection with the acquisition of JCAP by NexPoint.

This investment consisted of 200,000 Series A Preferred Shares valued at a total of $ 200,000 , and 100,000

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)

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

Series B Preferred Shares valued at a total of $ 100,000 .

This investment consisted of 200,000 Series A Preferred Shares valued at a total of $ 200,000 , and 100,000 Series B Preferred Shares valued at a total of $ 100,000 .

In December 2022, the Company completed a modification with NexPoint Storage Partners (as successor in interest to JCAP) that exchanged the Series A and Series B Preferred Shares for 300,000 Series D Preferred Shares, valued at a total of $ 300,000 .

4 unchanged sentences

If the investment is not retired after six years , the preferred dividends increase annually.

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

These notes receivable consist of mortgage loans receivable, which are collateralized by self-storage properties, and unsecured mezzanine loans receivable.

As of March 31, 2024, 73 % of the notes held are mortgage receivables.

The Company offers bridge loan financing to third-party self-storage owners.

These notes receivable consist of mortgage loans receivable, which are collateralized by self-storage properties, and mezzanine loans receivable, which are secured by equity interest pledges.

As of June 30, 2024, 76 % of the notes held are mortgage receivables.

The Company intends to sell a portion of the mortgage receivables.

These notes receivable typically have a term of three years with two one-year extensions, and have variable interest rates.

During the three months ended March 31, 2024 the Company closed on $ 150,240 in initial loan draws and recorded $ 8,388 of draws for interest payments.

The bridge loans typically have a loan to value ratio between 70 % and 80 % at closing.

During the six months ended June 30, 2024 the Company closed on $ 491,918 in initial loan draws and recorded $ 23,275 of draws for interest payments.

The bridge loans typically have a loan to value ratio between 70 % and 80 %.

None of the debt securities or notes receivable are in past-due or nonaccrual status and the allowance for potential credit losses is immaterial.

The components of term debt are summarized as follows:

Term Debt March 31, 2024 December 31, 2023

Term Debt June 30, 2024 December 31, 2023

Secured notes payable (1)

12 unchanged sentences

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

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at March 31, 2024:

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at June 30, 2024:

2024 $ 248,250

7 unchanged sentences

Thereafter 600,000

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 March 31, 2024, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) Adjusted Term or Daily Simple SOFR plus the applicable 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 SOFR rate plus 1.00 %.

Per the Credit Agreement, the applicable SOFR rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the SOFR rate margin ranging from 0.7 % to 2.2 % per annum and the applicable base rate margin ranging from 0.00 % to 1.20 % per annum.

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

The Company's unsecured debt is subject to certain financial covenants.

As of March 31, 2024, the Company was in compliance with all of its financial covenants.

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

The following table presents information on the Company’s lines of credit, the proceeds of which are used to repay debt and for general corporate purposes, for the periods indicated:

As of March 31, 2024

As of June 30, 2024

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

4 unchanged sentences

$ 948,000 $ 2,140,000

(1) Daily Simple SOFR

(1) Daily Simple Secured Overnight Financing Rate (“SOFR”)

(2) Secured by mortgages on certain real estate assets.

3 unchanged sentences

On August 11, 2023, the capacity was increased by $ 60.0 million.

(4) Basis Rate as of March 31, 2024.

(4) Basis Rate as of June 30, 2024.

Rate is subject to change based on the Company's investment grade rating.

As of March 31, 2024, the Company’s percentage of fixed-rate debt to total debt was 77.2 %.

On June 22, 2023, the Company entered into the Third Amended and Restated Credit Agreement (the “Credit Agreement”).

As of June 30, 2024, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) Adjusted Term or Daily Simple SOFR plus the applicable 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 SOFR rate plus 1.00 %.

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

The Company's unsecured debt is subject to certain financial covenants.

As of June 30, 2024, the Company was in compliance with all of its financial covenants.

As of June 30, 2024, the Company’s percentage of fixed-rate debt to total debt was 75.0 %.

The weighted average interest rates of the Company’s fixed and variable-rate debt were 4.0 % and 6.5 %, respectively.

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

During the three months ended March 31, 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

During the three and six months ended June 30, 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

In the coming 12 months, the Company estimates that $ 20,946 will be reclassified as an increase to interest income.

The Company held 14 active derivative financial instruments, which had a total current notional amount of $ 1,384,038 , as of March 31, 2024 and two forward-starting derivative financial instruments with effective dates of October 31, 2024 and July 14, 2025.

The Company held 14 active derivative financial instruments, which had a total current notional amount of $ 1,383,303 , as of June 30, 2024 and two forward-starting derivative financial instruments with effective dates of October 31, 2024 and July 14, 2025.

Fair Values of Derivative Instruments

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Derivatives designated as hedging instruments:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Other assets $ 31,133 $ 26,183

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No tax effect has been presented as the derivative instruments are held by the Company:

Gain (loss) recognized in OCI for the Three Months Ended March 31, Location of amounts reclassified from OCI into income Gain (loss) reclassified from OCI for the Three Months Ended March 31,

Gain (loss) recognized in OCI for the Three Months Ended June 30, Location of amounts reclassified from OCI into income Gain (loss) reclassified from OCI for the Three Months Ended June 30,

Type 2024 2023 2024 2023

Swap Agreements $ 6,045 $ 23,628 Interest expense $ 7,059 $ 11,033

Gain (loss) recognized in OCI for the Six Months Ended June 30, Location of amounts reclassified from OCI into income Gain (loss) reclassified from OCI for the Six Months Ended June 30,

Type 2024 2023 2024 2023

Swap Agreements $ 25,294 $ 18,065 Interest expense $ 15,076 $ 19,984

EXTRA SPACE STORAGE INC.

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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.

As of March 31, 2024, 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 $ 1,170 .

As of March 31, 2024, the Company had not posted any collateral related to these agreements.

If the Company had breached any of these provisions as of March 31, 2024, it could have been required to cash settle its obligations under these agreements at their termination value of $ 1,170 .

As of June 30, 2024, 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 $ 85 .

As of June 30, 2024, the Company had not posted any collateral related to these agreements.

If the Company had breached any of these provisions as of June 30, 2024, it could have been required to cash settle its obligations under these agreements at their termination value of $ 85 .

STOCKHOLDERS’ EQUITY

On July 20, 2023, the Company issued 76,217,359 shares of its common stock at $ 148.96 for a total value of $ 11,353,338 as part of the Life Storage Merger.

See Acquisition and Disposition note above.

On April 15, 2024, 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 nine sales agents.

On April 15, 2024, 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 an equity distribution agreement with nine sales agents.

No shares have been sold under the current “at the market” equity program, and no shares were sold under the previous “at the market” equity program, which spanned from August 9, 2021 through April 14, 2024.

On November 13, 2023, the Company's board of directors authorized a share repurchase program allowing for the repurchase of shares with an aggregate value up to $ 500,000 .

During the year ended December 31, 2023 and the three months ended March 31, 2024, no shares were repurchased.

As of March 31, 2024, the Company had remaining authorization to repurchase shares with an aggregate value up to $ 500,000 .

During the year ended December 31, 2023 and the six months ended June 30, 2024, no shares were repurchased.

As of June 30, 2024, the Company had remaining authorization to repurchase shares with an aggregate value up to $ 500,000 .

On July 20, 2023, the Company issued 76,217,359 shares of its common stock at $ 148.96 for a total value of $ 11,353,338 as part of the Life Storage Merger.

See Acquisitions and Dispositions note above.

NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS

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Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount and (2) the redemption value as of the end of the period in which the determination is made.

At March 31, 2024 and December 31, 2023, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets.

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

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.

1 unchanged sentence

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

March 31, 2024 December 31, 2023

At June 30, 2024 and December 31, 2023, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets.

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

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:

June 30, 2024 December 31, 2023

Series B Units $ 33,567 $ 33,567

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

As of March 31, 2024 and December 31, 2023, there were no outstanding Series A Units.

As of June 30, 2024 and December 31, 2023, there were no outstanding Series A Units.

Series B Redeemable Preferred Units

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

As of March 31, 2024 and December 31, 2023, there were no outstanding Series C Units.

As of June 30, 2024 and December 31, 2023, there were no outstanding Series C Units.

Series D Redeemable Preferred Units

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In addition, certain of the Series D Units are exchangeable for OP Units at the option of the holder until the tenth anniversary of the date of issuance, with the number of 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.

During January 2024, 141,435 Series D Units were redeemed for 21,627 shares of common stock.

During the six months ended June 30, 2024, 1,242,168 Series D Units were redeemed for 213,661 shares of common stock.

EXTRA SPACE STORAGE INC.

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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 95.4 % ownership interest in the Operating Partnership as of March 31, 2024.

Between its general partner and limited partner interests, the Company held a 95.5 % ownership interest in the Operating Partnership as of June 30, 2024.

The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 4.5 % are held by certain former owners of assets acquired by the Operating Partnership.

As of March 31, 2024 and December 31, 2023, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $ 1,900 because a borrower under the note receivable is also a holder of OP Units.

As of June 30, 2024 and December 31, 2023, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $ 1,900 because a borrower under the note receivable is also a holder of OP Units.

This note receivable originated in December 2014, bears interest at 5.0 % per annum and matures on December 15, 2024.

1 unchanged sentence

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 Partnership Agreement.

As of March 31, 2024, the ten-day average closing price of the Company's common stock was $ 141.47 and there were 8,626,449 OP Units outstanding.

Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on March 31, 2024 and the Company elected to pay the OP Unit holders cash, the Company would have paid $ 1,220,384 in cash consideration to redeem the units.

As of June 30, 2024, the ten-day average closing price of the Company's common stock was $ 157.24 and there were 8,621,449 OP Units outstanding.

Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on June 30, 2024 and the Company elected to pay the OP Unit holders cash, the Company would have paid $ 1,355,637 in cash consideration to redeem the units.

OP Unit activity is summarized as follows for the periods presented:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

OP Units redeemed for common stock 264,145 —

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Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interest of partners in nine consolidated joint ventures as of March 31, 2024.

Three joint ventures each own one operating store and the other six joint ventures each have a property under development.

The voting interest of each partner is between 2.0 % and 17.0 %.

Based on the facts and circumstances of each of the Company’s joint ventures, the Company has determined that one of the joint ventures at March 31, 2024 was a variable interest entity (“VIE”) in accordance with ASC 810, “Consolidation.” The Company has consolidated that joint venture as it was determined that the Company has the power to direct the activities of the joint venture and is the primary beneficiary of the joint venture.

Other noncontrolling interests represent the ownership interest of partners in nine consolidated joint ventures as of June 30, 2024.

Five joint ventures each own one operating store and the other four joint ventures each have properties under development.

The voting interests of the partners are 17.0 % or less.

Based on the facts and circumstances of each of the Company’s joint ventures, the Company has determined that one of the joint ventures at June 30, 2024 was a variable interest entity (“VIE”) in accordance with ASC 810, “Consolidation.” The Company has consolidated that joint venture as it was determined that the Company has the power to direct the activities of the joint venture and is the primary beneficiary of the joint venture.

EXTRA SPACE STORAGE INC.

8 unchanged sentences

NOI for the Company's tenant reinsurance segment represents tenant reinsurance revenues less tenant reinsurance expense.

The self-storage operations activities include rental operations of wholly-owned stores and self-storage units acquired in the Bargold transaction.

The self-storage operations activities include rental operations of wholly-owned stores and self-storage units acquired in the Bargold transaction on June 1, 2022.

The Company's consolidated revenues equal total segment revenues plus property management fees and other income.

3 unchanged sentences

Financial information for the Company’s business segments is set forth below:

For the Three Months Ended March 31,

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

2024 2023 2024 2023

Self-Storage Operations $ 697,100 $ 440,747 $ 1,385,144 $ 874,709

24 unchanged sentences

COMMITMENTS AND CONTINGENCIES

As of March 31, 2024, the Company was under agreement to acquire four stores at a total purchase price of $ 46,114 .

As of June 30, 2024, the Company was under agreement to acquire four stores at a total purchase price of $ 49,166 .

All four stores are scheduled to close in 2024.

Additionally, the Company is under agreement to acquire one store with joint venture partners, for a total investment of $ 1,600 which is scheduled to close in 2024.

As of March 31, 2024, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business.

As of June 30, 2024, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business.

Because litigation is inherently unpredictable, the outcome of these matters cannot presently be determined with any degree of certainty.

6 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-Q

Item 1. Financial Statements