What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-02 · 154 added, 110 removed, 641 unchanged (29% of the section changed)

3 unchanged sentences

(amounts in thousands, except share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Real estate assets, net $ 24,385,492 $ 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, 211,927,348 and 211,278,803 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 500,000,000 shares authorized, 211,981,742 and 211,278,803 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 14,823,018 14,750,388

11 unchanged sentences

(amounts in thousands, except share data)

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

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

2024 2023 2024 2023

5 unchanged sentences

Tenant reinsurance 17,510 19,130 55,646 37,701

Life Storage Merger transition costs — 54,174 — 54,174

General and administrative 39,750 37,406 123,373 107,011

2 unchanged sentences

Loss on real estate assets held for sale ( 8,961 ) — ( 63,620 ) —

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

Income from operations 302,739 299,792 943,328 836,673

4 unchanged sentences

Equity in earnings and dividend income from unconsolidated real estate entities 16,246 15,043 48,508 38,602

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

Income tax expense ( 10,857 ) ( 6,944 ) ( 27,443 ) ( 17,238 )

14 unchanged sentences

(amounts in thousands)

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

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

2024 2023 2024 2023

8 unchanged sentences

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and six months ended June 30, 2024

For the three and nine months ended September 30, 2024

(unaudited, amounts in thousands, except share data)

2 unchanged sentences

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

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

Issuance of common stock for share based compensation, exercise of options and taxes paid upon net settlement — — — 10,515 — 8,224 — — 8,224

1 unchanged sentence

Redemption of Operating Partnership units for stock — ( 3,884 ) — 43,879 — 3,884 — — —

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

Noncontrolling interest in consolidated joint ventures — — 825 — — — — — 825

Net income 1,932 7,800 3 — — — — 193,210 202,945

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

Other comprehensive loss — ( 986 ) — — — — ( 23,901 ) — ( 24,887 )

Distributions to Operating Partnership units held by noncontrolling interests ( 1,932 ) ( 13,896 ) — — — — — — ( 15,828 )

1 unchanged sentence

— — — — — — — ( 343,408 ) ( 343,408 )

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 September 30, 2024 $ 191,306 $ 746,136 $ 10,628 211,981,742 $ 2,120 $ 14,823,018 $ 3,340 $ ( 817,865 ) $ 14,958,683

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

9 unchanged sentences

— — — — — — — ( 1,031,044 ) ( 1,031,044 )

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 September 30, 2024 $ 191,306 $ 746,136 $ 10,628 211,981,742 $ 2,120 $ 14,823,018 $ 3,340 $ ( 817,865 ) $ 14,958,683

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and six months ended June 30, 2023

For the three and nine months ended September 30, 2023

(unaudited, amounts in thousands, except share data)

2 unchanged sentences

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

Issuance of common stock in connection with share based compensation — — — 1,253 — 6,994 — — 6,994

1 unchanged sentence

Restricted stock grants cancelled — — — ( 3,128 ) — — — — —

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

Redemption of Operating Partnership units for stock — ( 163 ) — 2,119 — 163 — — —

Life Storage Merger issuance of common stock and Operating Partnership units — 249,470 — 76,217,359 762 11,352,576 — — 11,602,808

Noncontrolling interest in consolidated joint ventures — — 5,209 — — — — — 5,209

Net income (loss) 2,253 8,284 ( 31 ) — — — — 188,350 198,856

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

Other comprehensive loss — ( 111 ) — — — — ( 2,153 ) — ( 2,264 )

Distributions to Operating Partnership units held by noncontrolling interests ( 2,254 ) ( 12,706 ) — — — — — — ( 14,960 )

1 unchanged sentence

— — — — — — — ( 265,286 ) ( 265,286 )

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 September 30, 2023 $ 222,939 $ 798,384 $ 8,257 211,276,086 $ 2,113 $ 14,742,973 $ 44,912 $ ( 252,877 ) $ 15,566,701

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

2 unchanged sentences

Restricted stock grants cancelled — — — ( 6,983 ) — — — — —

Redemption of Operating Partnership units for stock — ( 163 ) — 2,119 — 163 — — —

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

Life Storage Merger issuance of common stock and Operating Partnership units — 249,470 — 76,217,359 762 11,352,576 — — 11,602,808

Noncontrolling interest in consolidated joint ventures — — 7,309 — — — — — 7,309

Net income (loss) 6,761 29,353 ( 132 ) — — — — 587,064 623,046

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

Other comprehensive loss — ( 289 ) — — — — ( 3,886 ) — ( 4,175 )

Distributions to Operating Partnership units held by noncontrolling interests ( 6,921 ) ( 36,082 ) — — — — — — ( 43,003 )

1 unchanged sentence

— — — — — — — ( 704,069 ) ( 704,069 )

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 September 30, 2023 $ 222,939 $ 798,384 $ 8,257 211,276,086 $ 2,113 $ 14,742,973 $ 44,912 $ ( 252,877 ) $ 15,566,701

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

For the three and nine months ended September 30, 2023

(unaudited, amounts in thousands, except share data)

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(amounts in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

6 unchanged sentences

Accrual of interest income added to principal of debt securities and notes receivable ( 23,455 ) ( 30,127 )

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

Impairment of Life Storage trade name 51,763 —

Loss on real estate assets held for sale 63,620 —

7 unchanged sentences

Acquisition of real estate assets and improvements ( 361,126 ) ( 197,333 )

Life Storage Merger, net of cash acquired — ( 1,182,411 )

Development and redevelopment of real estate assets ( 100,507 ) ( 66,533 )

12 unchanged sentences

Deferred financing costs ( 12,633 ) ( 51,359 )

Proceeds from share issuances and redemption of stock options for cash, net 366 —

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

Proceeds from share issuances 365 —

Offering costs associated with shelf registration ( 522 ) —

Redemption of Preferred A Units for cash — ( 5,000 )

Contributions from noncontrolling interests 15 —

Dividends paid on common stock ( 1,031,044 ) ( 704,069 )

Distributions to noncontrolling interests ( 48,053 ) ( 43,003 )

Net cash used in financing activities ( 269,572 ) ( 316,763 )

Net decrease in cash, cash equivalents, and restricted cash ( 23,539 ) ( 44,822 )

Net cash (used in) provided by financing activities ( 612,406 ) 723,479

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 10,758 ) 125,386

Cash, cash equivalents, and restricted cash, beginning of the period 105,083 97,735

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

For the Nine Months Ended September 30,

Cash, cash equivalents, and restricted cash, end of the period $ 94,325 $ 223,121

2 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

26 unchanged sentences

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

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

At September 30, 2024, the Company had direct and indirect equity interests in 2,401 stores.

In addition, the Company managed 1,461 stores for third parties, bringing the total number of stores which it owns and/or manages to 3,862 .

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

Operating results for the three and nine months ended September 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.

15 unchanged sentences

This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash

The fair values of interest rate swaps are determined using the

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts.

The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves.

3 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 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.

However, as of September 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 June 30, 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 September 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 $ — $ 6,093 $ —

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.

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of September 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 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

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

As of September 30, 2024, the Company had 17 stores classified as held for sale which are included in real estate assets, net.

Of the 17 stores, nine had an

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.

estimated fair value, net of selling costs, of $ 70,952 .

During the nine months ended September 30, 2024, the Company recorded a loss of $ 63,620 as the fair value of these nine stores was less than the net carrying value.

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.

6 unchanged sentences

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 June 30, 2024 and December 31, 2023 approximate fair value.

The carrying values of cash and cash equivalents, restricted cash, receivables, other financial instruments included in other assets, net, accounts payable and accrued expenses, variable-rate notes payable, investments in debt securities and notes receivable, revolving lines of credit and other liabilities reflected in the condensed consolidated balance sheets at September 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.

2 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Value Carrying

47 unchanged sentences

The trade name is an indefinite lived asset and as such is not amortized.

During the three months ended September 30, 2024, the Company decided to operate

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

all stores under a single brand.

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

• Unsecured senior notes – Unsecured senior notes were recorded at fair value using readily available market data.

The below-market value of debt is recorded as a debt discount and reported as a reduction of the unsecured senior notes balance on the condensed consolidated balance sheets.

The discount is amortized using effective interest method as an increase to interest expense over the remaining terms of the unsecured senior notes.

The below-market value of debt is recorded as a debt discount and reported as a reduction of the unsecured senior notes, net balance on the condensed consolidated balance sheets.

The discount is amortized using the effective interest method as an increase to interest expense over the remaining terms of the unsecured senior notes.

• Other assets and liabilities – The carrying values of cash, accounts receivable, prepaids and other assets, accounts payable, accrued expenses and other liabilities represented the fair values.

Store Acquisitions

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

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

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

1 unchanged sentence

Clarifying the Definition of a Business .”

Period Number of Stores Cash Paid Finance Lease Liability Investments in Real Estate Ventures Net Liabilities/ (Assets) Assumed Value of Equity Issued Real estate assets

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

Q3 2024 11 $ 159,196 $ — $ — $ — $ 1,431 $ — $ 160,627

Q2 2024 3 27,644 — — — 97 $ — 27,741

Q1 2024 6 35,084 — — — 171 $ — 35,255

Total 2024 20 $ 221,924 $ — $ — $ — $ 1,699 $ — $ 223,623

1 unchanged sentence

Q2 2023 3 32,888 — — — 26 — 32,914

Q1 2023 1 13,111 — — — 6 — 13,117

Total 2023 7 $ 64,577 $ — $ — $ — $ 118 $ — $ 64,695

EXTRA SPACE STORAGE INC.

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

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

REAL ESTATE ASSETS

The components of real estate assets are summarized as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 4,923,702 $ 4,904,705

9 unchanged sentences

Real estate assets held for sale included in real estate assets, net $ 131,527 $ —

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.

In September 2024, the Company amended existing triple-net lease agreements for land and buildings related to 27 stores that had initially been entered into in June and August 2019.

The Company also entered into new triple-net lease agreements for land and buildings related to 12 additional stores.

Both the initial 27 stores and the additional 12 stores added to the triple net lease structure are categorized as operating leases and have been presented in real estate assets - operating lease right-of-use assets and operating lease liabilities on the Company's condensed consolidated balance sheets.

As of September 30, 2024, the Company had 17 stores classified as held for sale which are included in real estate assets, net.

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

During the three and nine months ended September 30, 2024, the Company recorded estimated losses of $ 8,961 and $ 63,620 , respectively, in loss on real estate assets held for sale on the Company's condensed consolidated statements of operations.

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

EXTRA SPACE STORAGE INC.

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

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

The components of other assets are summarized as follows:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Goodwill $ 170,811 $ 170,811

8 unchanged sentences

$ 495,861 $ 597,700

During the three months ended September 30, 2024, the Company decided to operate all stores under a single brand.

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

A loss of $ 51,763 for the write-off of the asset and related costs has been recorded in impairment

EXTRA SPACE STORAGE INC.

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

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

of Life Storage trade name on the Company's condensed consolidated statements of operations for the three months ended September 30, 2024.

The trade name was originally recorded at fair value based on royalty payments avoided had the trade name been owned by a third party.

This was determined using market royalty rates and a discounted cash flow analysis under the relief-from-royalty method.

Intangible assets are included in the self-storage operations segment of the Company’s segment information.

EARNINGS PER COMMON SHARE

3 unchanged sentences

Diluted earnings per common share measures the performance of the Company over the reporting period while giving effect to all potential common shares that were dilutive and outstanding during the period.

The denominator includes the weighted average number of basic shares and the number of additional common shares that would have been outstanding if the potential common shares that were dilutive had been issued, and is calculated using either the two-class, treasury stock or as if-converted method, whichever is most dilutive.

The denominator includes the weighted average number of basic shares and the number of additional common shares that would have been outstanding if the potential common shares that were dilutive had been issued, and is calculated using the two-class, treasury stock or if-converted method, whichever is most dilutive.

Potential common shares are securities (such as options, Series A Participating Redeemable Preferred Units (“Series A Units”), Series B Redeemable Preferred Units (“Series B Units”), Series D Redeemable Preferred Units (“Series D Units” and, together with the Series A Units and Series B Units, the “Preferred OP Units”) and common Operating Partnership units (“OP Units”)) that do not have a current right to participate in earnings of the Company but could do so in the future by virtue of their option, redemption or conversion right.

4 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 June 30, 2024 and 2023 was $ 145.78 and $ 150.45 , respectively.

The average share price for the three months ended September 30, 2024 and 2023 was $ 168.78 and $ 134.24 , 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.

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

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,

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

2024 2023 2024 2023

4 unchanged sentences

1,133,472 10,201,034 1,330,456 9,177,170

EXTRA SPACE STORAGE INC.

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

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

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

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

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

2024 2023 2024 2023

2 unchanged sentences

Earnings for basic computations 192,818 188,046 591,053 586,133

Earnings and dividends allocated to participating securities — 323 — 627

Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units 7,800 — 24,136 —

3 unchanged sentences

OP Units 8,597,656 — 8,651,915 —

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

Unvested restricted stock awards included for treasury stock method — 221,380 — 212,723

Shares related to dilutive stock options 2,778 3,576 3,199 4,078

12 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.

EXTRA SPACE STORAGE INC.

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

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.

1 unchanged sentence

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.

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

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

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)

June 30, December 31,

September 30, December 31,

PRISA Self Storage LLC 85 4 % 4 % $ 9,110 $ 9,435

13 unchanged sentences

119 10 %- 50 %

314,864 317,104

SmartStop Self Storage REIT, Inc.

6 unchanged sentences

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

(2) In August 2024, the ESS Bristol Investments LLC unconsolidated joint venture sold five of its eight stores to another of the Company's unconsolidated joint ventures, and the Company recognized a gain of $ 10,324 for its pro rata share of the transaction.

The Company then acquired its partner's membership interest in the remaining three stores held by ESS Bristol Investments LLC, which is now presented under real estate assets, net on the Company's condensed consolidated balance sheets.

(3) In September 2024, the Company sold its membership interest in the Alan Jathoo JV LLC unconsolidated joint venture, which held nine stores, to its partner in such joint venture and recognized a gain of $ 3,406 on the transaction.

This gain and the gain from the ESS Bristol Investments LLC transaction are presented in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and sale of a joint venture interest on the Company's condensed consolidated statements of operations for the three months ended September 30, 2024.

(4) In October 2019, the Company invested $ 200,000 in shares of convertible preferred stock of SmartStop with a dividend rate of 6.25 % per annum, subject to increase after five years .

3 unchanged sentences

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

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 condensed consolidated statements of operations.

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

INVESTMENTS IN DEBT SECURITIES AND NOTES RECEIVABLE

6 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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

10 unchanged sentences

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

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 offers bridge loan financing to certain of its third-party self-storage owners.

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

As of September 30, 2024, 71 % 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 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.

During the nine months ended September 30, 2024, the Company sold a total principal amount of $ 175,335 of its mortgage bridge loans receivable to third parties for a total of $ 175,335 in cash, closed on $ 636,215 in initial loan draws and recorded $ 39,709 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.

During the three months ended September 30, 2024, one of the notes receivable entered nonaccrual status.

None of the other notes receivable are in past-due or nonaccrual status.

The allowance for potential credit losses is immaterial.

The components of term debt are summarized as follows:

Term Debt June 30, 2024 December 31, 2023

Term Debt September 30, 2024 December 31, 2023

Secured notes payable (1)

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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 June 30, 2024:

2024 $ 248,250

2025 1,119,521

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

2026 1,409,525

7 unchanged sentences

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 June 30, 2024

As of September 30, 2024

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

10 unchanged sentences

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

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

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

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

1 unchanged sentence

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 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.

As of September 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 %.

2 unchanged sentences

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 %.

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

As of September 30, 2024, the Company’s percentage of fixed-rate debt to total debt was 78.3 %.

The weighted average interest rates of the Company’s fixed and variable-rate debt were 4.0 % and 6.0 %, respectively.

14 unchanged sentences

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

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.

During the three and nine months ended September 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 $ 7,681 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 $ 1,383,303 , as of June 30, 2024 and two forward-starting derivative financial instruments with effective dates of October 31, 2024 and July 14, 2025.

The Company held 14 active derivative financial instruments, which had a total current notional amount of $ 1,382,568 as of September 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

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets:

The table below presents the fair values of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets:

Asset / Liability Derivatives

Derivatives designated as hedging instruments:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Other assets $ 11,716 $ 26,183

3 unchanged sentences

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

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

Type 2024 2023 2024 2023

Swap Agreements $ ( 17,931 ) $ 9,146 Interest expense $ 6,965 $ 11,415

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,

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

Type 2024 2023 2024 2023

7 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.

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 .

As of September 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 $ 5,423 .

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

If the Company had breached any of these provisions as of September 30, 2024, it could have been required to cash settle its obligations under these agreements at their termination value of $ 5,423 .

STOCKHOLDERS’ EQUITY

2 unchanged sentences

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 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 .

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

As of September 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.

11 unchanged sentences

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

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.

At September 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

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 are as follows:

September 30, 2024 December 31, 2023

Series B Units $ 33,567 $ 33,567

4 unchanged sentences

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

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

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

Series B Redeemable Preferred Units

9 unchanged sentences

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

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

Series D Redeemable Preferred Units

6 unchanged sentences

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

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

EXTRA SPACE STORAGE INC.

4 unchanged sentences

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 95.5 % ownership interest in the Operating Partnership as of June 30, 2024.

Between its general partner and limited partner interests, the Company held a 95.6 % ownership interest in the Operating Partnership as of September 30, 2024.

The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 4.4 % are held by certain former owners of assets acquired by the Operating Partnership.

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.

As of September 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 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.

As of September 30, 2024, the ten-day average closing price of the Company's common stock was $ 180.16 and there were 8,577,570 OP Units outstanding.

Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on September 30, 2024 and the Company elected to pay the OP Unit holders cash, the Company would have paid $ 1,545,335 in cash consideration to redeem the units.

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

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

OP Units redeemed for common stock 308,024 —

OP Units issued in conjunction with business combination and acquisitions — 1,674,748

Value of OP Units issued in conjunction with business combination and acquisitions $ — $ 249,470

GAAP requires a company to present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section, but separate from the company’s equity.

5 unchanged sentences

Other Noncontrolling Interests

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.

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

There are a total of 13 stores in consolidated joint ventures, seven of which are operating and the other six of which are 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.

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 September 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.

14 unchanged sentences

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

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

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

2024 2023 2024 2023

13 unchanged sentences

Management fees and other income $ 29,882 $ 28,019 $ 89,888 $ 71,609

Life Storage Merger transition costs — ( 54,174 ) — ( 54,174 )

General and administrative expense ( 39,750 ) ( 37,406 ) ( 123,373 ) ( 107,011 )

Depreciation and amortization expense ( 195,046 ) ( 152,338 ) ( 586,821 ) ( 309,914 )

Loss on real estate assets held for sale ( 8,961 ) — ( 63,620 ) —

Interest expense ( 142,855 ) ( 122,899 ) ( 412,875 ) ( 289,370 )

2 unchanged sentences

Equity in earnings and dividend income from unconsolidated real estate entities 16,246 15,043 48,508 38,602

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets 13,730 — 13,730 —

Impairment of trade name ( 51,763 ) — ( 51,763 ) —

Income tax expense ( 10,857 ) ( 6,944 ) ( 27,443 ) ( 17,238 )

Net income $ 202,945 $ 198,856 $ 622,431 $ 623,046

COMMITMENTS AND CONTINGENCIES

As of September 30, 2024, the Company was under agreement to acquire seven stores at a total purchase price of $ 74,300 .

Acquisitions of all seven stores are scheduled to close in 2024.

EXTRA SPACE STORAGE INC.

1 unchanged sentence

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

COMMITMENTS AND CONTINGENCIES

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.

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.

As of September 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