What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 109 added, 77 removed, 228 unchanged (45% of the section changed)

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For a complete discussion of forward-looking statements, see the section in this Form 10-K entitled “Statements Regarding Forward-Looking Information.” Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion.

For a discussion of such risk factors, see the section in this Form 10-K entitled “Risk Factors.” Dollar amounts in thousands, except share and per share data, unless otherwise stated.

For a discussion of such risk factors, see the section in this Form 10-K entitled “Risk Factors.” Dollar amounts are in thousands, except share and per share data, unless otherwise stated.

We are a fully integrated, self-administered and self-managed REIT, formed to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”).

We derive substantially all of our revenues from our two segments:

storage operations and tenant reinsurance.

Primary sources of revenue for our storage operations segment include rents received from tenants under leases at each of our wholly-owned stores.

self-storage operations and tenant reinsurance.

Primary sources of revenue for our self-storage operations segment include rents received from tenants under leases at each of our wholly-owned stores.

Our operating results depend materially on our ability to lease available self-storage units, to actively manage unit rental rates, and on the ability of our tenants to make required rental payments.

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To maximize the performance of our stores, we employ industry-leading revenue management systems.

Developed by our management team, these systems enable us to analyze, set and adjust rental rates in real time across our portfolio in order to respond to changing market conditions.

Developed by our management team, these systems enable us to analyze, set and adjust rental rates daily across our portfolio in order to respond to changing market conditions.

We believe our systems and processes allow us to more pro-actively manage revenues.

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REAL ESTATE ASSETS:

We account for the acquisition of stores, including by merger and other acquisitions of real estate, in accordance with ASC 805-10, " Business Combinations." We use our judgment to determine if assets acquired meet the definition of a business or if the acquisition should be considered an asset acquisition.

We account for the acquisition of stores, including by merger and other acquisitions of real estate, in accordance with ASC 805-10, “ Business Combinations.

” We use our judgment to determine if assets acquired meet the definition of a business or if the acquisition should be considered an asset acquisition.

We must make significant assumptions and estimates in determining the fair value of the tangible and intangible assets and liabilities acquired and consideration transferred.

These fair value estimates are sensitive to:

price of land per square foot and current replacement cost estimates, including adjustments for the age, class, height, square footage, condition, location, and turnkey factor.

These fair value estimates are sensitive to price of land per square foot and current replacement cost estimates, including adjustments for the age, class, height, square footage, condition, location, and turnkey factor.

These assumptions and estimates require judgment, and therefore others could come to materially different conclusions as to the estimated fair values, which could result in differences in depreciation and amortization expense, gains and losses on the sale of real estate assets, and real estate and intangible asset values.

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If the fair value of the reporting unit is determined to exceed the aggregate carrying amount, no impairment charge is recorded.

Otherwise, an impairment charge is recorded to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value.

Otherwise, an impairment charge is recorded for the amount in which the carrying value of the reporting unit exceeds the fair value.

No impairments were recorded in our evaluations for any period presented herein.

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Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023

Results for the year ended December 31, 2023 included the operations of 2,377 stores (1,903 wholly-owned, two in a consolidated joint venture, and 472 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2022, which included the operations of 1,451 stores (1,132 wholly-owned, one in a consolidated joint venture, and 318 in joint ventures accounted for using the equity method).

Results for the year ended December 31, 2024 included the operations of 2,436 stores (1,967 wholly-owned, nine in consolidated joint ventures, and 460 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2023, which included the operations of 2,377 stores (1,903 wholly-owned, two in consolidated joint ventures, and 472 in joint ventures accounted for using the equity method).

Material or unusual changes in the results of our operations are discussed below:

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Total revenues $ 3,256,902 $ 2,560,244 $ 696,658 27.2 %

Property Rental— The increase in property rental revenues for the year ended December 31, 2023 was primarily the result of an increase of $507,054 associated with our merger with Life Storage on July 20, 2023, (the "Life Storage Merger" or "Merger") and other acquisitions completed in 2023.

Property Rental— The increase in property rental revenue for the year ended December 31, 2024 was primarily the result of an increase of $570,407 associated with our merger with Life Storage on July 20, 2023, (the “Life Storage Merger” or “Merger”) and other acquisitions completed in 2023 and 2024.

We acquired 757 wholly-owned stores in the Merger and an additional 14 stores during the year ended December 31, 2023.

We acquired 58 stores during the year ended December 31, 2024.

In addition to the increase attributable to the Merger, property rental revenues increased by $46,712 due to operating results at our stabilized stores and increased by $7,523 as a result of increases in occupancy at our lease-up stores.

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

The increase is also attributed to the Life Storage stores being on our platform for a full 12 months in 2024 in comparison with five months in 2023.

In addition to the increase attributable to the Merger, property rental revenue increased by $5,440 due to operating results at our same-store pool and increased by $4,892 as a result of increases in occupancy at our lease-up stores.

Tenant Reinsurance —The increase in tenant reinsurance revenue was due primarily to an increase in the number of stores operated, as well as the Life Storage stores being on our platform for a full 12 months in 2024 in comparison with five months in 2023.

We operated 4,011 stores at December 31, 2024, compared to 3,714 stores at December 31, 2023.

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The increase for the year ended December 31, 2024 was primarily due to an increase in the number of stores managed.

As of December 31, 2023, we managed 1,811 stores for third parties and joint ventures compared to 1,206 stores as of December 31, 2022.

As of December 31, 2024, we managed 2,044 stores for third parties and unconsolidated joint ventures, compared to 1,811 stores as of December 31, 2023.

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

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Tenant reinsurance 73,886 58,874 15,012 25.5 %

Transaction costs — 1,548 (1,548) (100.0)

Life Storage Merger transition costs — 66,732 (66,732) (100.0) %

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Total expenses $ 1,855,873 $ 1,390,103 $ 465,770 33.5 %

Property Operations —The increase in property operations expense consists primarily of an increase of $153,712 associated with the Life Storage Merger and other acquisitions completed in 2023.

Property Operations —The increase in property operations expense consists primarily of an increase of $186,294 associated with the Life Storage Merger and other acquisitions completed in 2023 and 2024.

We acquired 757 wholly-owned stores in the merger and an additional 14 stores during the year ended December 31, 2023.

We acquired 58 stores during the year ended December 31, 2024.

Additionally, property operations expense increased $22,097 at stabilized stores due to increased marketing expense, credit card processing fees and insurance.

The increase is also attributed to the Life Storage stores being on our platform for a full 12 months in 2024 in comparison with five months in 2023.

Additionally, property operations expense increased $23,122 at our same-store pool due to increased marketing expense, payroll, and property taxes.

Tenant Reinsurance —Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance.

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We operated 4,011 stores at December 31, 2024, compared to 3,714 stores at December 31, 2023.

Transaction Costs —This represents the costs that were incurred as part of the acquisition of Bargold.

Life Storage Merger Transition Costs— Represents the costs that were incurred as part of the Life Storage Merger primarily consisting of severance paid as part of employment agreements with certain employees and officers of Life Storage.

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These expenses are recognized as incurred.

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

Our overall General and Administrative expense has increased primarily as a result of our increased size through acquisitions, business combinations and growth through our joint venture partners and managed portfolio.

No other material trends in specific travel or other expenses were observed.

Depreciation and Amortization —Depreciation and amortization expense increased primarily as a result of the acquisition of new stores.

We acquired 58 wholly-owned stores during the year ended December 31, 2024.

We acquired 757 wholly-owned stores in the Life Storage Merger and an additional 14 wholly-owned stores during the year ended December 31, 2023.

We acquired 153 stores during the year ended December 31, 2022.

Other Income and Expenses

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2024 2023 $ Change % Change

Gain on real estate transactions $ — $ 14,249 $ (14,249) (100.0) %

Loss on real estate assets held for sale and sold, net $ (25,906) $ — $ (25,906) 100.0 %

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

Interest expense (551,354) (419,035) (132,319) 31.6 %

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Equity in earnings and dividend income from unconsolidated real estate entities 67,272 54,835 12,437 22.7 %

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and sale of a joint venture interest 13,730 — 13,730 100.0 %

Income tax expense (33,478) (21,559) (11,919) 55.3 %

Total other expense, net $ (500,797) $ (319,688) $ (181,109) 56.7 %

Gain on Real Estate Transactions — During the year ended, December 31, 2022, we sold two stores.

We recognized a total gain of $14,249 related to the sale of these assets.

Interest Expense— The increase in interest expense during the year ended December 31, 2023 was the result of higher overall debt and a higher average interest rate when compared to the same period in the prior year.

Information on the total face value of debt and the average interest rate for the years ended December 31, 2023 and December 31, 2022 is set forth in the following table:

Loss on Real Estate Assets Held for Sale and Sold, Net— During the year ended December 31, 2024, we had 18 stores classified as held for sale.

Of the 18 stores, 10 had an estimated fair value, net of selling costs, which was less than the carrying value of the asset.

As a result, we recorded an estimated loss of $63,250.

On our consolidated statements of operations, this amount is shown net of the sale of a property which generated a gain of $37,344 within gain (loss) on real estate assets held for sale and sold, net.

Impairment of Life Storage Trade Name— During the year ended December 31, 2024, we decided to operate all stores under a single brand.

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

Interest Expense— The increase in interest expense during the year ended December 31, 2024 was primarily the result of higher outstanding debt compared to the same period in the prior year.

Information on the total face value of debt and the weighted average interest rate for the years ended December 31, 2024 and December 31, 2023 is set forth in the following table:

For the Year Ended December 31,

Total face value of debt $ 12,600,661 $ 11,346,105

Average interest rate 4.6 % 4.1 %

Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes— Represents the amortization of the discount recorded to present the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

Interest Income— Interest income represents interest earned on bridge loans and debt securities, income earned on notes receivable from common and preferred Operating Partnership unit holders and amounts earned on cash and cash equivalents deposited with financial institutions.

The total principal balance of bridge loans receivable as of December 31, 2023 was $594,727, compared to $491,879 as of December 31, 2022.

The increase in interest income during the year ended December 31, 2023 was primarily the result of the higher bridge loan balances along with higher interest rates.

Equity in Earnings and Dividend Income from Unconsolidated Real Estate Entities— Equity in earnings of unconsolidated real estate ventures represents the income earned through our ownership interests in unconsolidated real estate ventures.

In joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital.

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

We added a total of 154 stores to new and existing joint ventures (145 stores from the Life Storage Merger) during the year ended December 31, 2023 resulting in higher earnings when compared to the prior year.

Weighted average interest rate 4.4 % 4.6 %

Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes— Represents the amortization of the discount assigned to the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

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

The increase in interest income during the year ended December 31, 2024 was primarily the result of an increase in the amount of bridge loans outstanding.

The balance of bridge loans was $1,244,575 as of December 31, 2024, compared to $594,727 as of December 31, 2023.

Equity in Earnings and Dividend Income from Unconsolidated Real Estate Entities— Equity in earnings of unconsolidated real estate entities represents the income earned through our ownership interests in unconsolidated joint ventures.

In these joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital.

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

The increase compared to 2023 is mainly attributed to the Life Storage stores being on our platform for 12 months in 2024 in comparison with five months in 2023.

Additionally, in November 2024 we acquired additional ownership interest in the HF1 Sovran HHF Storage Holdings LLC and HF2 Sovran HHF Storage Holdings II LLC from our partner in the unconsolidated joint ventures.

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

Dividend income represents dividends from our investment in preferred stock of SmartStop Self Storage REIT, Inc.

and Strategic Storage Trust VI, Inc.

Income Tax Expense— For the year ended December 31, 2023 , the increase in income tax expense was the result of an increase in income earned by our TRS when compared to the same period in the prior year.

Equity in Earnings of Unconsolidated Real Estate Ventures - Gain on Sale of Real Estate Assets and Sale of a Joint Venture Interest— In August 2024, the ESS Bristol Investments LLC joint venture sold five of its eight stores to another unconsolidated joint venture, and we recognized a gain of $10,324 for our pro rata share of the transaction.

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

Income Tax Expense— The increase in income tax expense for the year ended December 31, 2024 was primarily the result of a full year of TRS book income for Life Storage stores, compared to a partial year in 2023, as well as a decrease in permanent tax deductions related to stock awards.

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

The results of operations for the years ended December 31, 2022 compared to December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022 on page 21, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2022.

The results of operations for the years ended December 31, 2023 compared to December 31, 2022 was included in our Annual Report on Form 10-K for the year ended December 31, 2023 on page 23, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2024.

FUNDS FROM OPERATIONS

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Amortization of intangibles 113,886 59,295 13,623

Gain on real estate transactions — (14,249) (140,760)

(Gain) loss on real estate assets held for sale and sold, net 25,906 — (14,249)

Unconsolidated joint venture real estate depreciation and amortization 32,678 24,400 16,644

Unconsolidated joint venture gain on sale of real estate assets and purchase of partner's interest — — (6,251)

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

Distributions paid on Series A Preferred Operating Partnership units — (159) (2,288)

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

We believe that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to:

occupancy, rental revenue growth, operating expense growth, net operating income growth, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments.

We believe that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to, occupancy, rental revenue growth, operating expense growth, net operating income growth, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments.

Same-store results should not be used as a basis for future same-store performance or for the performance of our stores as a whole.

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Same-store rental revenues

Net rental income $ 1,601,455 $ 1,596,015 0.3%

Other operating income $ 64,300 $ 65,689 (2.1)%

Total same-store rental revenues $ 1,665,755 $ 1,661,704 0.2%

Same-store operating expenses

Payroll and benefits $ 95,696 $ 91,329 4.8%

Marketing $ 34,038 $ 30,237 12.6%

Office expense $ 51,606 $ 51,655 (0.1)%

Property operating expense $ 37,646 $ 38,491 (2.2)%

Repairs and maintenance $ 27,934 $ 26,469 5.5%

Property taxes $ 165,617 $ 152,028 8.9%

Insurance $ 19,512 $ 18,718 4.2%

Total same-store operating expenses $ 432,049 $ 408,927 5.7%

Same-store net operating income $ 1,233,706 $ 1,252,777 (1.5)%

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Properties included in same-store 1,071 1,071

Same-store revenues for the year ended December 31, 2023 increased compared to the same periods in 2022 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy.

Same-store expenses increased for the year ended December 31, 2023 compared to the year ended 2022 due to increases in payroll, credit card processing fees, utilities, property taxes and insurance.

The same-store expense growth rate for the year ended December 31, 2023 is amplified by negative expense growth in the 2022 comparable period.

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

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

For the Year Ended December 31,

Same-store portfolio 2024 2023

Average annual rent per occupied square foot, net of discounts and bad debt $ 21.68 $ 21.83

New leases average annual rent per square foot $ 14.49 $ 16.18

Average discounts as a percentage of rental revenues 2.1 % 2.4 %

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

For the Year Ended December 31,

Net Income $ 900,232 $ 850,453

Adjusted to exclude:

Gain on real estate transactions — (14,249)

Loss on real estate assets held for sale and sold, net 25,906 —

Equity in earnings and dividend income from unconsolidated real estate entities (67,272) (54,835)

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

Interest expense 551,354 419,035

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Income tax expense 33,478 21,559

Transaction costs — 1,548

Life Storage Merger transition costs — 66,732

General and administrative 167,398 146,408

Impairment of Life Storage trade name 51,763 —

Management fees, other income and interest income (245,277) (186,843)

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Cash flows from operating activities increased as expected due to our continued growth in revenues and through the increase in the number of properties we own and operate.

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

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

Cash flows from financing activities depend primarily on our debt and equity financing activities.

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Net cash used in investing activities (1,646,920) (1,818,256) (1,648,459)

Net cash provided by (used in) financing activities 423,130 431,861 (166,711)

Net cash (used in) provided by financing activities (202,290) 423,130 431,861

Significant components of net cash flow included:

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Depreciation and amortization 783,023 506,053 288,316

Acquisition, development and redevelopment of stores (420,892) (1,353,510) (1,289,524)

Acquisition and development of real estate assets (779,153) (420,892) (1,353,510)

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

Cash paid for business combination — (157,302) —

Gain on real estate transactions — (14,249) (140,760)

Impairment of Life Storage trade name 51,763 — —

Investment in unconsolidated real estate entities (301,917) (180,279) (118,963)

Issuance and purchase of notes receivable (330,499) (529,245) (317,482)

Proceeds from sale of notes receivable 167,495 210,048 172,002

Principal payments received from notes receivable 142,192 283,636 51,463

Proceeds from the sale of common stock, net of offering costs — — 273,189

Proceeds from sale of real estate assets and investments in real estate ventures 2,132 39,367 572,728

Net proceeds from our debt financing and repayment activities 1,574,019 1,376,411 206,691

Repurchase of common stock — (63,008) —

Issuance of notes receivable, net of sales and principal payments (635,677) (20,812) (35,561)

Proceeds from unsecured term loans, senior notes, revolving lines of credit and commercial paper 8,685,933 7,113,003 5,188,011

Principal payments on unsecured term loans, senior notes, revolving lines of credit and commercial paper (8,724,444) (7,088,984) (4,207,700)

Proceeds from issuance of public bonds, net 1,300,000 1,550,000 396,100

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Although our board of directors has not adopted a policy which limits the total amount of indebtedness that we may incur, we will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed or variable rate.

In making financing decisions, we will consider factors including but not limited to:

In making financing decisions, we will consider factors including but not limited to the following:

• the interest rate of the proposed financing;

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Our indebtedness may be recourse, non-recourse, cross-collateralized, cross-defaulted, secured or unsecured.

In addition, we may invest in stores subject to existing loans collateralized by mortgages or similar liens, or may refinance stores acquired on a leveraged basis.

In addition, we may invest in stores subject to existing loans collateralized by mortgages or similar liens, or we may refinance stores acquired on a leveraged basis.

We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing stores, for general working capital or to purchase additional interests in partnerships or joint ventures or for other purposes when we believe it is advisable.

As of December 31, 2023, we had $99,062 available in cash and cash equivalents.

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

During 2023 and 2022, we experienced no loss or lack of access to our cash or cash equivalents;

however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

As of December 31, 2023, we had $11,346,105 face value of debt, resulting in a debt to total enterprise value ratio of 24.2%.

As of December 31, 2022, we had $7,364,424 face value of debt, resulting in a debt to total enterprise value ratio of 25.8%.

As of December 31, 2023, the ratio of total fixed-rate debt and other instruments to total debt was 73.4% (including $1,448,566 on which we have interest rate swaps that have been included as fixed-rate debt).

As of December 31, 2022, the ratio of total fixed-rate debt and other instruments to total debt was 64.7% (including $1,837,714 on which we have interest rate swaps that have been included as fixed-rate debt).

The weighted average interest rate of total debt at December 31, 2023 and 2022 was 4.6% and 4.1%, respectively.

As of December 31, 2023, the weighted average interest rate for all fixed rate debt was 3.9%, and the weighted average interest rate on all variable rate debt was 6.6%.

As of December 31, 2022, the weighted average interest rate for all fixed rate debt was 3.4%, and the weighted average interest rate on all variable rate debt was 5.5%.

The following table presents information relating to our debt:

December 31, 2024 December 31, 2023

Total face value of debt $ 12,600,661 $ 11,346,105

Total enterprise value ratio 28.4 % 24.2 %

Total fixed-rate debt and other instruments to total debt 75.8% (1)

Weighted average interest rate of total debt 4.4 % 4.6 %

Weighted average interest rate for fixed rate debt

Weighted average interest rate for variable rate debt 5.4 % 6.6 %

(1) $9,555,406 total fixed-rate debt including $1,381,834 on which we have interest rate swaps that have been included as fixed-rate debt.

(2) $8,322,953 total fixed-rate debt including $1,448,566 on which we have interest rate swaps that have been included as fixed-rate debt.

In November 2024, we established our commercial paper program, under which we may issue, repay and re-issue short-term unsecured commercial paper notes.

The aggregate principal amount outstanding under the program at any time cannot exceed $1.0 billion, and the net proceeds of the commercial paper notes are expected to be used for general corporate purposes.

The maturities of the notes generally range from overnight to three months, with a maximum of up to 13 months.

The commercial paper notes are issued under customary terms in the commercial paper market and are issued at a discount from par or, alternatively, can be issued at par and bear varying interest rates on a fixed or floating basis.

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

At December 31, 2024, we had $500 million in issuances outstanding under the commercial paper program.

In January 2021, we received a Baa2 rating from Moody's Investors Service, and in July 2019, we obtained a BBB/Stable rating from S&P which was upgraded to BBB+/Stable in July 2023 in connection with the Life Storage Merger.

We intend to manage our balance sheet to preserve such ratings.

We intend to manage our balance sheet to maintain these ratings.

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

We have a total of 1671 unencumbered stores as defined by our public bonds.

Our unencumbered asset value is calculated as $31,869,102 and our total asset value is calculated as $37,529,884 according to the calculations as defined by our public bonds.

As of December 31, 2024, we had a total of 1,745 unencumbered stores as defined by our public bonds.

Our unencumbered asset value was calculated as $29,846,899 and our total asset value was calculated as $35,767,585 according to the calculations as defined by our public bonds.

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

We were in compliance with all financial covenants at December 31, 2024.

We expect to fund our short-term and long-term liquidity requirements, including operating expenses, recurring capital expenditures, dividends to stockholders, distributions to holders of Operating Partnership units and interest on our outstanding indebtedness, out of our operating cash flow, cash on hand and borrowings under our revolving lines of credit.

In addition, we are pursuing additional sources of financing based on anticipated funding needs.

As of December 31, 2024, we had $138,222 available in cash and cash equivalents.

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

During 2024 and 2023, we experienced no loss or lack of access to our cash and cash equivalents;

however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

In addition, we are pursuing additional sources of financing based on anticipated funding needs and growth assumptions.

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

We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market

purchases, privately negotiated transactions or otherwise.

We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise.

Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

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We may also use Operating Partnership units as currency to fund acquisitions from self-storage owners who desire tax-deferral in their exiting transactions.

On April 15, 2024, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with certain sales agents and forward purchasers named therein.

Under the terms of the Equity Distribution Agreement, we may issue and sell, and the forward purchasers may sell, from time to time through or to the sales agents, shares of our common stock having an aggregate offering price of up to $800 million.

The shares of common stock will be offered pursuant to our effective registration statement on Form S-3 (Registration Statement No.

333-278690) previously filed with and declared effective by the SEC and a prospectus supplement and accompanying prospectus, filed with the SEC.

As of December 31, 2024, no shares had been sold under the Equity Distribution Agreement, which we refer to as our “at the market” equity program.

CONTRACTUAL OBLIGATIONS

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

What changed 10-K

Item 7. Management’s Discussion and Analysis