10-K 1 exr-12312016x10k.htm 10-K Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K
 
(Mark One)
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 .
Commission File Number: 001-32269
 
EXTRA SPACE STORAGE INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
20-1076777
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
2795 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (801) 365-4600
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
 
Name of exchange on which registered
Common Stock, $0.01 par value
 
New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
 
 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
x
  
Accelerated filer
 
o
Non-accelerated filer
 
o  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.
The aggregate market value of the common stock held by non-affiliates of the registrant was $11,138,435,421 based upon the closing price on the New York Stock Exchange on June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that persons whose shares are excluded from the computation are affiliates for any other purpose.
The number of shares outstanding of the registrant’s common stock, $0.01 par value per share, as of February 21, 2017 was 125,912,481.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement to be issued in connection with the registrant’s annual stockholders’ meeting to be held in 2017 are incorporated by reference into Part III of this Annual Report on Form 10-K.




Extra Space Storage Inc.
Annual Report on Form 10-K
For the Year Ended December 31, 2016
Table of Contents
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.

2



Statements Regarding Forward-Looking Information
Certain information set forth in this report contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates,” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation, management’s examination of historical operating trends and estimates of future earnings, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks referenced in “Part I. Item 1A. Risk Factors” below. Such factors include, but are not limited to:
 
•
adverse changes in general economic conditions, the real estate industry and in the markets in which we operate;
•
failure to close pending acquisitions on expected terms, or at all;
•
the effect of competition from new and existing stores or other storage alternatives, which could cause rents and occupancy rates to decline;
•
difficulties in our ability to evaluate, finance, complete and integrate acquisitions and developments successfully and to lease up those stores, which could adversely affect our profitability;
•
potential liability for uninsured losses and environmental contamination;
•
the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results;
•
disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
•
increased interest rates and operating costs;
•
the failure to effectively manage our growth and expansion into new markets or to successfully operate acquired properties and operations;
•
reductions in asset valuations and related impairment charges;
•
the failure of our joint venture partners to fulfill their obligations to us or their pursuit of actions that are inconsistent with our objectives;
•
the failure to maintain our REIT status for U.S. federal income tax purposes;
•
economic uncertainty due to the impact of war or terrorism, which could adversely affect our business plan; and
•
difficulties in our ability to attract and retain qualified personnel and management members.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities.
We disclaim any duty or obligation to update or revise any forward-looking statements set forth in this Annual Report on Form 10-K to reflect new information, future events or otherwise.

3



PART I
Item 1.     Business
General
Extra Space Storage Inc. (“we,” “our,” “us” or the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”) formed as a Maryland corporation on April 30, 2004, to own, operate, manage, acquire, develop and redevelop professionally managed self-storage properties (“stores”). We closed our initial public offering (“IPO”) on August 17, 2004. Our common stock is traded on the New York Stock Exchange under the symbol “EXR.”
We were formed to continue the business of Extra Space Storage LLC and its subsidiaries, which had engaged in the self-storage business since 1977. These companies were reorganized after the consummation of our IPO and various formation transactions. As of December 31, 2016, we held ownership interests in 1,016 operating stores. Of these operating stores, 836 are wholly-owned and 180 are owned in joint venture partnerships. An additional 411 operating stores are owned by third parties and operated by us in exchange for a management fee, bringing the total number of operating stores which we own and/or manage to 1,427. These operating stores are located in 38 states, Washington, D.C. and Puerto Rico and contain approximately 107 million square feet of net rentable space in approximately 960,000 units and currently serve a customer base of approximately 850,000 tenants.
We operate in three distinct segments: (1) rental operations; (2) tenant reinsurance; and (3) property management, acquisition and development. Our rental operations activities include rental operations of stores in which we have an ownership interest. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in our stores. Our property management, acquisition and development activities include managing, acquiring, developing and selling stores.
Substantially all of our business is conducted through Extra Space Storage LP (the “Operating Partnership”). Our primary assets are general partner and limited partner interests in the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT. We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). To the extent we continue to qualify as a REIT we will not be subject to tax, with certain exceptions, on our net taxable income that is distributed to our stockholders.
We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports with the Securities and Exchange Commission (the “SEC”). You may obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330 or by accessing the SEC’s website at www.sec.gov. In addition, as soon as reasonably practicable after such materials are furnished to the SEC, we make copies of these documents available to the public free of charge through our website at www.extraspace.com, or by contacting our Secretary at our principal offices, which are located at 2795 East Cottonwood Parkway, Suite 300, Salt Lake City, Utah 84121, telephone number (801) 365-4600.
Management
Members of our executive management team have significant experience in all aspects of the self-storage industry, having acquired and/or developed a significant number of stores since before our IPO. Our executive management team and their years of industry experience are as follows: Joseph D. Margolis, Chief Executive Officer, 12 years; Scott Stubbs, Executive Vice President and Chief Financial Officer, 16 years; Samrat Sondhi, Executive Vice President and Chief Operating Officer, 13 years; Gwyn McNeal, Executive Vice President and Chief Legal Officer, 11 years; James Overturf, Executive Vice President and Chief Marketing Officer, 18 years; and Kenneth M. Woolley, Executive Chairman, 36 years. Spencer F. Kirk served as our Chief Executive Officer through December 31, 2016 and continues to serve on the Company's board of directors. Joseph D. Margolis succeeded Mr. Kirk as the Company's Chief Executive Officer effective January 1, 2017.
Our executive management team and board of directors have a significant ownership position in the Company with executive officers and directors owning approximately 4,665,566 shares or 3.7% of our outstanding common stock as of February 21, 2017.

4



Industry & Competition
Stores offer month-to-month storage space rental for personal or business use and are a cost-effective and flexible storage alternative. Tenants rent fully enclosed spaces that can vary in size according to their specific needs and to which they have unlimited, exclusive access. Tenants have responsibility for moving their items into and out of their units. Self-storage unit sizes typically range from 5 feet by 5 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet. Stores generally have on-site managers who supervise and run the day-to-day operations, providing tenants with assistance as needed.
Self-storage provides a convenient way for individuals and businesses to store their possessions due to life changes, or simply because of a need for storage space. The mix of residential tenants using a store is determined by a store’s local demographics and often includes people who are looking to downsize their living space or others who are not yet settled into a permanent residence. Items that residential tenants place in self-storage range from cars, boats and recreational vehicles, to furniture, household items and appliances. Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods.
Our research has shown that tenants choose a store based primarily on the convenience of the site to their home or business, making high-density, high-traffic population centers ideal locations for stores. A store’s perceived security and the general professionalism of the site managers and staff are also contributing factors to a site’s ability to successfully secure rentals. Although most stores are leased to tenants on a month-to-month basis, tenants tend to continue their leases for extended periods of time.
The self-storage business is subject to seasonal fluctuations. A greater portion of revenues and profits are realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March.
Since inception in the early 1970’s, the self-storage industry has experienced significant growth. The self-storage industry has also seen increases in occupancy over the past several years. According to the Self-Storage Almanac (the “Almanac”), in 2008, the national average physical occupancy rate was 80.3% of net rentable square feet, compared to an average physical occupancy rate of 91.2% in 2016.
Recently we have encountered competition when we have sought to acquire stores, especially for brokered portfolios. Competitive bidding practices have been commonplace between both public and private entities, and this will likely continue.
The industry is also characterized by fragmented ownership. According to the Almanac, the top ten self-storage companies in the United States operated approximately 19.4% of the total U.S. stores, and the top 50 self-storage companies operated approximately 28.6% of the total U.S. stores as of December 31, 2016. We believe this fragmentation will contribute to continued consolidation at some level in the future. We also believe that we are well positioned to compete for acquisitions.
We are the second largest self-storage operator in the United States. We are one of five public self-storage REITs along with CubeSmart, National Storage Affiliates, Life Storage and Public Storage.
Long-Term Growth and Investment Strategies
Our primary business objectives are to maximize cash flow available for distribution to our stockholders and to achieve sustainable long-term growth in cash flow per share in order to maximize long-term stockholder value. We continue to evaluate a range of growth initiatives and opportunities, including the following:
 
•
Maximize the performance of our stores through strategic, efficient and proactive management. We pursue revenue-generating and expense-minimizing opportunities in our operations. Our revenue management team seeks to maximize revenue by responding to changing market conditions through our advanced technology system’s ability to provide real-time, interactive rental rate and discount management. Our size allows us greater ability than the majority of our competitors to implement more effective online marketing programs, which we believe will attract more customers to our stores at a lower net cost.
•
Acquire self storage stores. Our acquisitions team continues to pursue the acquisition of multi-store portfolios and single stores that we believe can provide stockholder value. We have established a reputation as a reliable, ethical buyer, which we believe enhances our ability to negotiate and close acquisitions. In addition, we believe our status as an UPREIT enables flexibility when structuring deals. We continue to review available acquisitions. As interest rates increase, our expectation is that capitalization rates will also increase and that prices will begin to decrease. We remain

5



a disciplined buyer and only execute acquisitions that we believe will strengthen our portfolio and increase stockholder value.
•
Expand our management business. Our management business enables us to generate increased revenues through management fees and expand our geographic footprint. We believe this expanded footprint enables us to reduce our operating costs through economies of scale. In addition, we see our management business as a future acquisition pipeline. We pursue strategic relationships with owners whose stores would enhance our portfolio in the event an opportunity arises to acquire such stores.

Financing of Our Long-Term Growth Strategies
Acquisition and Development Financing
The following table presents information on our revolving lines of credit (the “Credit Lines”) for the periods indicated. All of our Credit Lines are guaranteed by us (amounts in thousands).
 
As of December 31, 2016
 
 
 
 
 
 
Revolving Lines of Credit
Amount Drawn
 
Capacity
 
Interest Rate
 
Origination Date
 
Maturity
 
Basis Rate (1)
Credit Line 1 (2)
$
3,000

 
$
100,000

 
2.40%
 
6/4/2010
 
6/30/2018
 
LIBOR plus 1.7%
Credit Line 2 (3)(4)
362,000

 
500,000

 
2.20%
 
10/14/2016
 
10/14/2020
 
LIBOR plus 1.4%
 
$
365,000

 
$
600,000

 
 
 
 
 
 
 
 
(1) 30-day USD LIBOR
(2) Secured by mortgages on certain real estate assets. One two-year extension available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of December 31, 2016. Rate is subject to change based on our consolidated leverage ratio.
We expect to maintain a flexible approach in financing new store acquisitions. We plan to finance future acquisitions through a combination of cash, borrowings under the Credit Lines, traditional secured and unsecured mortgage financing, joint ventures and additional debt or equity offerings.
Joint Venture Financing
As of December 31, 2016, we own 180 of our stores through joint ventures with third parties. We generally manage the day-to-day operations of the underlying stores owned in these joint ventures and have the right to participate in major decisions relating to sales of stores or financings by the applicable joint venture. Our joint venture partners typically provide most of the equity capital required for the operation of the respective business. Under the operating agreements for the joint ventures, we maintain the right to receive between 4.0% and 80.0% of the available cash flow from operations after our joint venture partners and the Company have received a predetermined return, and between 4.0% and 75.0% of the available cash flow from capital transactions after our joint venture partners and the Company have received a return of their capital plus such predetermined return. Most joint venture agreements include buy-sell rights, as well as rights of first offer in connection with the sale of stores by the joint venture.
Disposition of Stores
We will continue to review our portfolio for stores or groups of stores that are underperforming or are not strategically located, and determine whether to dispose of these stores to fund other growth. As of December 31, 2016, we had two parcels of land that were categorized as held for sale.
Regulation
Generally, stores are subject to various laws, ordinances and regulations, including regulations relating to lien sale rights and procedures. Changes in any of these laws or regulations, as well as changes in laws, such as the Comprehensive Environmental Response and Compensation Liability Act, which increase the potential liability for environmental conditions or circumstances existing or created by tenants or others on stores, or laws affecting development, construction, operation, upkeep, safety and taxation may result in significant unanticipated expenditures, loss of stores or other impairments to operations, which would adversely affect our financial position, results of operations or cash flows.

6



Under the Americans with Disabilities Act of 1990 (the “ADA”), places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional U.S. federal, state and local laws also exist that may require modifications to the stores, or restrict further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, thereby requiring substantial capital expenditures. To the extent our stores are not in compliance, we are likely to incur additional costs to comply with the ADA.
Insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with the McCarran-Ferguson Act, and are subject to the Gramm-Leach-Bliley Act and the privacy regulations promulgated by the Federal Trade Commission pursuant thereto.
Store management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state.
Changes in any of the laws governing our conduct could have an adverse impact on our ability to conduct our business or could materially affect our financial position, results of operations or cash flows.
Employees
As of February 21, 2017, we had 3,287 employees and believe our relationship with our employees is good. Our employees are not represented by a collective bargaining agreement.
Item 1A.     Risk Factors
An investment in our securities involves various risks. All investors should carefully consider the following risk factors in conjunction with the other information contained in this Annual Report before trading in our securities. If any of the events set forth in the following risks actually occur, our business, operating results, prospects and financial condition could be harmed.
Our performance is subject to risks associated with real estate investments. We are a real estate company that derives our income from operation of our stores. There are a number of factors that may adversely affect the income that our stores generate, including the following:
Risks Related to Our Stores and Operations
Adverse economic or other conditions in the markets in which we do business could negatively affect our occupancy levels and rental rates and therefore our operating results.
Our operating results are dependent upon our ability to maximize occupancy levels and rental rates in our stores. Adverse economic or other conditions in the markets in which we operate may lower our occupancy levels and limit our ability to increase rents or require us to offer rental discounts. If our stores fail to generate revenues sufficient to meet our cash requirements, including operating and other expenses, debt service and capital expenditures, our net income, funds from operations (“FFO”), cash flow, financial condition, ability to make cash distributions to stockholders and the trading price of our securities could be adversely affected. The following factors, among others, may adversely affect the operating performance of our stores:
 
•
the national economic climate and the local or regional economic climate in the markets in which we operate, which may be adversely impacted by, among other factors, industry slowdowns, relocation of businesses and changing demographics;
•
periods of economic slowdown or recession, rising interest rates, or declining demand for self-storage or the public perception that any of these events may occur could result in a general decline in rental rates or an increase in tenant defaults;
•
a decline of the current economic environment;
•
local or regional real estate market conditions, such as competing stores, the oversupply of self-storage or a reduction in demand for self-storage in a particular area;
•
perceptions by prospective users of our stores of the safety, convenience and attractiveness of our stores and the neighborhoods in which they are located;

7



•
increased operating costs, including the need for capital improvements, insurance premiums, real estate taxes and utilities;
•
the impact of environmental protection laws;
•
changes in tax, real estate and zoning laws; and
•
earthquakes, hurricanes and other natural disasters, terrorist acts, civil disturbances or acts of war which may result in uninsured or underinsured losses.
If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected.
Virtually all of our leases are on a month-to-month basis. Any delay in re-letting units as vacancies arise would reduce our revenues and harm our operating results. In addition, lower than expected rental rates upon re-letting could adversely affect our revenues and impede our growth.
We depend upon our on-site personnel to maximize tenant satisfaction at each of our stores, and any difficulties we encounter in hiring, training and maintaining skilled field personnel may harm our operating performance.
We had 2,723 field personnel as of February 21, 2017 in the management and operation of our stores. The general professionalism of our store managers and staff are contributing factors to a store’s ability to successfully secure rentals and retain tenants. We also rely upon our field personnel to maintain clean and secure stores. If we are unable to successfully recruit, train and retain qualified field personnel, the quality of service we strive to provide at our stores could be adversely affected which could lead to decreased occupancy levels and reduced operating performance.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flow.
We maintain comprehensive liability, fire, flood, earthquake, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to our stores. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, hurricanes, tornadoes, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a store. In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. As a result, our operating results may be adversely affected.
Increases in taxes and regulatory compliance costs may reduce our income.
Costs resulting from changes in real estate tax laws generally are not passed through to tenants directly and will affect us. Increases in income, property or other taxes generally are not passed through to tenants under leases and may reduce our net income, FFO, cash flow, financial condition, ability to pay or refinance our debt obligations, ability to make cash distributions to stockholders, and the trading price of our securities. Similarly, changes in laws increasing the potential liability for environmental conditions existing on stores or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which could similarly adversely affect our business and results of operations.
Environmental compliance costs and liabilities associated with operating our stores may affect our results of operations.
Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner’s or operator’s ability to lease, sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of asbestos-containing materials into the air and third parties may seek recovery from owners or operators of real stores for personal injury associated with asbestos-containing materials.
Certain environmental laws also impose liability, without regard to knowledge or fault, for removal or remediation of hazardous substances or other regulated materials upon owners and operators of contaminated property even after they no

8



longer own or operate the property. Moreover, the past or present owner or operator from which a release emanates could be liable for any personal injuries or property damages that may result from such releases, as well as any damages to natural resources that may arise from such releases.
Certain environmental laws impose compliance obligations on owners and operators of real property with respect to the management of hazardous materials and other regulated substances. For example, environmental laws govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions.
No assurances can be given that existing environmental studies with respect to any of our stores reveal all environmental liabilities, that any prior owner or operator of our stores did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more of our stores. There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability.
Costs associated with complying with the Americans with Disabilities Act of 1990 may result in unanticipated expenses.
Under the ADA, places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional U.S. federal, state and local laws may also require modifications to our stores, or restrict certain further renovations of the stores, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. We have not conducted an audit or investigation of all of our stores to determine our compliance and we cannot predict the ultimate cost of compliance with the ADA or other legislation. If one or more of our stores is not in compliance with the ADA or other legislation, then we would be required to incur additional costs to bring the facility into compliance. If we incur substantial costs to comply with the ADA or other legislation, our financial condition, results of operations, cash flow, per share trading price of our securities and our ability to satisfy our debt service obligations and to make cash distributions to our stockholders could be adversely affected.
Our tenant reinsurance business is subject to significant governmental regulation, which may adversely affect our results.
Our tenant reinsurance business is subject to significant governmental regulation. The regulatory authorities generally have broad discretion to grant, renew and revoke licenses and approvals, to promulgate, interpret and implement regulations, and to evaluate compliance with regulations through periodic examinations, audits and investigations of the affairs of insurance providers. As a result of regulatory or private action in any jurisdiction, we may be temporarily or permanently suspended from continuing some or all of our reinsurance activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations.
We face competition for the acquisition of stores and other assets, which may impede our ability to make future acquisitions or may increase the cost of these acquisitions.
We compete with many other entities engaged in real estate investment activities for acquisitions of stores and other assets, including national, regional and local operators and developers of stores. These competitors may drive up the price we pay for stores or other assets we seek to acquire or may succeed in acquiring those stores or assets themselves. In addition, our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater resources, may be willing to pay more or may have a more compatible operating philosophy. In addition, the number of entities and the amount of funds competing for suitable investment in stores may increase. This competition would result in increased demand for these assets and therefore increased prices paid for them. Because of an increased interest in single-store acquisitions among tax-motivated individual purchasers, we may pay higher prices if we purchase single stores in comparison with portfolio acquisitions. If we pay higher prices for stores or other assets, our profitability will be reduced.
We may not be successful in identifying and consummating suitable acquisitions that meet our criteria, which may impede our growth.
Our ability to expand through acquisitions is integral to our business strategy and requires us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategy. We may not be successful in identifying suitable stores or other assets that meet our acquisition criteria or in consummating acquisitions

9



or investments on satisfactory terms or at all. Failure to identify or consummate acquisitions will slow our growth, which could in turn adversely affect our stock price.
Our ability to acquire stores on favorable terms and successfully integrate and operate them may be constrained by the following significant risks:
 
•
competition from local investors and other real estate investors with significant capital, including other publicly-traded REITs and institutional investment funds;
•
competition from other potential acquirers may significantly increase the purchase price which could reduce our profitability;
•
the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions;
•
failure to finance an acquisition on favorable terms or at all;
•
we may spend more than the time and amounts budgeted to make necessary improvements or renovations to acquired stores; and
•
we may acquire stores subject to liabilities without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by persons dealing with the former owners of the stores and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the stores.
In addition, strategic decisions by us, such as acquisitions, may adversely affect the price of our securities.
We may not be successful in integrating and operating acquired stores.
We have acquired many stores in the past, and we expect to continue acquiring stores in the future. If we acquire any stores, we will be required to integrate them into our existing portfolio. The acquired stores may turn out to be less compatible with our growth strategy than originally anticipated, may cause disruptions in our operations or may divert management’s attention away from day-to-day operations, which could impair our operating results as a whole.
Our investments in development and redevelopment projects may not yield anticipated returns, which would harm our operating results and reduce the amount of funds available for distributions.
To the extent that we engage in development and redevelopment activities, we will be subject to the following risks normally associated with these projects:
 
•
we may be unable to obtain financing for these projects on favorable terms or at all;
•
we may not complete development or redevelopment projects on schedule or within budgeted amounts;
•
we may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations; and
•
occupancy rates and rents at newly developed or redeveloped stores may fluctuate depending on a number of factors, including market and economic conditions, and may result in our investment not being profitable.
In deciding whether to develop or redevelop a particular property, we make certain assumptions regarding the expected future performance of the store. We may underestimate the costs necessary to bring the property up to the standards established for its intended market position or may be unable to increase occupancy at a newly developed store as quickly as expected or at all. Any substantial unanticipated delays or expenses could adversely affect the investment returns from these development or redevelopment projects and harm our operating results, liquidity and financial condition, which could result in a decline in the value of our securities.
We may rely on the investments of our joint venture partners for funding certain of our development and redevelopment projects. If our reputation in the self-storage industry changes or the number of investors considering us an attractive strategic partner is otherwise reduced, our ability to develop or redevelop stores could be affected, which would limit our growth.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally

10



identifiable information, and tenant and lease data. We purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant and other sensitive information. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. While, to date, we have not experienced a security breach, this risk has generally increased as the number, intensity and sophistication of such breaches and attempted breaches from around the world have increased. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, divert significant management attention and resources to remedy any damages that result, subject us to liability claims or regulatory penalties and have a material adverse effect on our business and results of operations.
Risks Related to Our Organization and Structure
Our business could be harmed if key personnel with long-standing business relationships in the self-storage industry terminate their employment with us.
Our success depends on the continued services of members of our executive management team, who have substantial experience in the self-storage industry. In addition, our ability to acquire or develop stores in the future depends on the significant relationships our executive management team has developed with our institutional joint venture partners, such as affiliates of Prudential Financial, Inc. There is no guarantee that any of them will remain employed by us. We do not maintain key person life insurance on any of our officers. The loss of services of one or more members of our executive management team could harm our business and our prospects.
We may change our investment and financing strategies and enter into new lines of business without stockholder consent, which may subject us to different risks.
We may change our investment and financing strategies and enter into new lines of business at any time without the consent of our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this document. A change in our investment strategy or our entry into new lines of business may increase our exposure to other risks or real estate market fluctuations.
If other self-storage companies convert to an UPREIT structure or if tax laws change, we may no longer have an advantage in competing for potential acquisitions.
Because we are structured as an UPREIT, we are a more attractive acquirer of stores to tax-motivated sellers than our competitors that are not structured as UPREITs. However, if other self-storage companies restructure their holdings to become UPREITs, this competitive advantage will disappear. In addition, new legislation may be enacted or new interpretations of existing legislation may be issued by the Internal Revenue Service (“IRS”), or the U.S. Treasury Department that could affect the attractiveness of our UPREIT structure so that it may no longer assist us in competing for acquisitions.
Tax indemnification obligations may require the Operating Partnership to maintain certain debt levels.
We have provided certain tax protections to various third parties in connection with their property contributions to the Operating Partnership upon acquisition by the Company, including making available the opportunity to (1) guarantee debt or (2) enter into a special loss allocation and deficit restoration obligation. We have agreed to these provisions in order to assist these contributors in preserving their tax position after their contributions. These obligations may require us to maintain certain indebtedness levels that we would not otherwise require for our business.

Our joint venture investments could be adversely affected by our lack of sole decision-making authority.
As of December 31, 2016, we held interests in 180 operating stores through joint ventures. Some of these arrangements could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers financial conditions and disputes between us and our co-venturers. We expect to continue our joint venture strategy by entering into more joint ventures for the purpose of developing new stores and acquiring existing stores. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity. The decision-making authority regarding the stores we currently hold through joint ventures is either vested exclusively with our joint venture partners, is subject to a majority vote of the joint venture partners or equally shared by us and the joint venture partners. In addition,

11



investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or joint venture. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and efforts on our business. Consequently, actions by or disputes with partners or co-venturers might result in subjecting stores owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers, which could harm our financial condition.
Conflicts of interest could arise as a result of our relationship with our Operating Partnership.
Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, and our Operating Partnership or any partner thereof. Our directors and officers have duties to our Company under applicable Maryland law in connection with their management of our Company. At the same time, we, through our wholly-owned subsidiary, have fiduciary duties, as a general partner, to our Operating Partnership and to the limited partners under Delaware law in connection with the management of our Operating Partnership. Our duties, through our wholly-owned subsidiary, as a general partner to our Operating Partnership and its partners may come into conflict with the duties of our directors and officers to our Company. The partnership agreement of our Operating Partnership does not require us to resolve such conflicts in favor of either our Company or the limited partners in our Operating Partnership. Unless otherwise provided for in the relevant partnership agreement, Delaware law generally requires a general partner of a Delaware limited partnership to adhere to fiduciary duty standards under which it owes its limited partners the highest duties of good faith, fairness, and loyalty and which generally prohibit such general partner from taking any action or engaging in any transaction as to which it has a conflict of interest.
Additionally, the partnership agreement expressly limits our liability by providing that neither we, our direct wholly-owned Massachusetts business trust subsidiary, as the general partner of the Operating Partnership, nor any of our or their trustees, directors or officers, will be liable or accountable in damages to our Operating Partnership, the limited partners or assignees for errors in judgment, mistakes of fact or law or for any act or omission if we, or such trustee, director or officer, acted in good faith. In addition, our Operating Partnership is required to indemnify us, our affiliates and each of our respective trustees, officers, directors, employees and agents to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Operating Partnership, provided that our Operating Partnership will not indemnify for (1) willful misconduct or a knowing violation of the law, (2) any transaction for which such person received an improper personal benefit in violation or breach of any provision of the partnership agreement, or (3) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful.

The provisions of Delaware law that allow the common law fiduciary duties of a general partner to be modified by a partnership agreement have not been resolved in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties that would be in effect under common law were it not for the partnership agreement.
Certain provisions of Maryland law and our organizational documents, including the stock ownership limit imposed by our charter, may inhibit market activity in our stock and could prevent or delay a change in control transaction.
Our charter, subject to certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and to limit any person to actual or constructive ownership of no more than 7.0% (by value or by number of shares, whichever is more restrictive) of our outstanding common stock or 7.0% (by value or by number of shares, whichever is more restrictive) of our outstanding capital stock. Our board of directors, in its sole discretion, may exempt a proposed transferee from the ownership limit. However, our board of directors may not grant an exemption from the ownership limit to any proposed transferee whose ownership could jeopardize our qualification as a REIT. These restrictions on ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT. The ownership limit may delay or impede a transaction or a change of control that might involve a premium price for our securities or otherwise be in the best interests of our stockholders. Different ownership limits apply to the family of Kenneth M. Woolley, certain of his affiliates, family members and estates and trusts formed for the benefit of the foregoing; to Spencer F. Kirk, certain of his affiliates, family members and estates and trusts formed for the benefit of the foregoing; and to certain designated investment entities as defined in our charter.

12



Our board of directors has the power to issue additional shares of our stock in a manner that may not be in the best interest of our stockholders.
Our charter authorizes our board of directors to issue additional authorized but unissued shares of common stock or preferred stock and to increase the aggregate number of authorized shares or the number of shares of any class or series without stockholder approval. In addition, our board of directors may classify or reclassify any unissued shares of common stock or preferred stock and set the preferences, rights and other terms of the classified or reclassified shares. Our board of directors could issue additional shares of our common stock or establish a series of preferred stock that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for our securities or otherwise not be in the best interests of our stockholders.
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter eliminates our directors’ and officers’ liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Our bylaws require us to indemnify our directors and officers for liability resulting from actions taken by them in those capacities to the maximum extent permitted by Maryland law. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors and officers.
To the extent our distributions represent a return of capital for U.S. federal income tax purposes, our stockholders could recognize an increased capital gain upon a subsequent sale of common stock.
Distributions in excess of our current and accumulated earnings and profits and not treated by us as a dividend will not be taxable to a U.S. stockholder under current U.S. federal income tax law to the extent those distributions do not exceed the stockholder’s adjusted tax basis in his, her, or its common stock, but instead will constitute a return of capital and will reduce such adjusted basis. If distributions result in a reduction of a stockholder’s adjusted basis in such holder’s common stock, subsequent sales of such holder’s common stock will result in recognition of an increased capital gain or decreased capital loss due to the reduction in such adjusted basis.
Risks Related to the Real Estate Industry
Our primary business involves the ownership and operation of self-storage stores.
Our current strategy is to own, operate, manage, acquire, develop and redevelop only self-storage stores. Consequently, we are subject to risks inherent in investments in a single industry. Because investments in real estate are inherently illiquid, this strategy makes it difficult for us to diversify our investment portfolio and to limit our risk when economic conditions change. Decreases in market rents, negative tax, real estate and zoning law changes and changes in environmental protection laws may also increase our costs, lower the value of our investments and decrease our income, which would adversely affect our business, financial condition and operating results.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our stores.
Because real estate investments are relatively illiquid, our ability to promptly sell one or more stores in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any store for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a store.
We may be required to expend funds to correct defects or to make improvements before a store can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In acquiring a store, we may agree to transfer restrictions that materially restrict us from selling that store for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that store. These transfer restrictions would impede our ability to sell a store even if we deem it necessary or appropriate.

13



Any investments in unimproved real property may take significantly longer to yield income-producing returns, if at all, and may result in additional costs to us to comply with re-zoning restrictions or environmental regulations.
We have invested in the past, and may invest in the future, in unimproved real property. Unimproved properties generally take longer to yield income-producing returns based on the typical time required for development. Any development of unimproved property may also expose us to the risks and uncertainties associated with re-zoning the land for a higher use or development and environmental concerns of governmental entities and/or community groups. Any unsuccessful investments or delays in realizing an income-producing return or increased costs to develop unimproved real estate could restrict our ability to earn our targeted rate of return on an investment or adversely affect our ability to pay operating expenses which would harm our financial condition and operating results.
Any negative perceptions of the self-storage industry generally may result in a decline in our stock price.
To the extent that the investing public has a negative perception of the self-storage industry, the value of our securities may be negatively impacted, which could result in our securities trading below the inherent value of our assets.

Risks Related to Our Debt Financings
Disruptions in the financial markets could affect our ability to obtain debt financing on reasonable terms and have other adverse effects on us.
Uncertainty in the credit markets may negatively impact our ability to access additional debt financing or to refinance existing debt maturities on favorable terms (or at all), which may negatively affect our ability to make acquisitions and fund development projects. A downturn in the credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell stores or may adversely affect the price we receive for stores that we do sell, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing.
Required payments of principal and interest on borrowings may leave us with insufficient cash to operate our stores or to pay the distributions currently contemplated or necessary to maintain our qualification as a REIT and may expose us to the risk of default under our debt obligations.
As of December 31, 2016, we had approximately $4.4 billion of outstanding indebtedness. We may incur additional debt in connection with future acquisitions and development. We may borrow under our Credit Lines or borrow new funds to finance these future stores. Additionally, we do not anticipate that our internally generated cash flow will be adequate to repay our existing indebtedness upon maturity and, therefore, we expect to repay our indebtedness through refinancings and equity and/or debt offerings. Further, we may need to borrow funds in order to make cash distributions to maintain our qualification as a REIT or to make our expected distributions.
If we are required to utilize our Credit Lines for purposes other than acquisition activity, this will reduce the amount available for acquisitions and could slow our growth. Therefore, our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:
 
•
our cash flow may be insufficient to meet our required principal and interest payments;
•
we may be unable to borrow additional funds as needed or on favorable terms, including to make acquisitions or to continue to make distributions required to maintain our qualification as a REIT;
•
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;
•
because a portion of our debt bears interest at variable rates, an increase in interest rates could materially increase our interest expense;
•
we may be forced to dispose of one or more of our stores, possibly on disadvantageous terms;
•
after debt service, the amount available for cash distributions to our stockholders is reduced;
•
our debt level could place us at a competitive disadvantage compared to our competitors with less debt;
•
we may experience increased vulnerability to economic and industry downturns, reducing our ability to respond to changing business and economic conditions;
•
we may default on our obligations and the lenders or mortgagees may foreclose on our stores that secure their loans and receive an assignment of rents and leases;
•
we may default on our obligations and the lenders or mortgages may enforce our guarantees;

14



•
we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and
•
our default under any one of our mortgage loans with cross-default or cross-collateralization provisions could result in a default on other indebtedness or result in the foreclosures of other stores.

Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness and make cash distributions to our stockholders.
As of December 31, 2016, we had approximately $4.4 billion of debt outstanding, of which approximately $1.3 billion, or 30.0% was subject to variable interest rates (excluding debt with interest rate swaps). This variable rate debt had a weighted average interest rate of approximately 2.3% per annum. Increases in interest rates on this variable rate debt would increase our interest expense, which could harm our cash flow and our ability to pay cash distributions. For example, if market rates of interest on this variable rate debt increased by 100 basis points, the increase in interest expense would decrease future earnings and cash flows by approximately $13.1 million annually.
Failure to hedge effectively against interest rate changes may adversely affect our results of operations.
In certain cases we may seek to manage our exposure to interest rate volatility by using interest rate hedging arrangements. Hedging involves risks, such as the risk that the counterparty may fail to honor its obligations under an arrangement. Failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations and ability to make cash distributions to our stockholders.
Risks Related to Qualification and Operation as a REIT
To maintain our qualification as a REIT, we may be forced to borrow funds on a short-term basis during unfavorable market conditions.
To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our net taxable income each year, excluding net capital gains, and we are subject to regular corporate income taxes to the extent that we distribute less than 100% of our net taxable income each year. In addition, we are subject to a 4% nondeductible excise tax on the amount, if any, by which distributions made by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. While historically we have satisfied these distribution requirements by making cash distributions to our stockholders, a REIT is permitted to satisfy these requirements by making distributions of cash or other property, including, in limited circumstances, its own stock. Assuming we continue to satisfy these distributions requirements with cash, we may need to borrow funds on a short-term basis, or possibly long-term, to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from a difference in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt amortization payments.
Dividends payable by REITs generally do not qualify for reduced tax rates.
The maximum U.S. federal income tax rate for dividends paid by domestic corporations to individual U.S. stockholders is 20%. Dividends paid by REITs, however, are generally not eligible for the reduced rates. The more favorable rates applicable to regular corporate dividends could cause stockholders who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our securities.
In addition, the relative attractiveness of real estate in general may be adversely affected by the favorable tax treatment given to corporate dividends, which could negatively affect the value of our stores.
Possible legislative or other actions affecting REITs could adversely affect our stockholders.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our stockholders. It cannot be predicted whether, when, in what forms, or with what effective dates, the tax laws applicable to us or our stockholders will be changed.

15



The power of our board of directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.
Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our net taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders.
Our failure to qualify as a REIT would have significant adverse consequences to us and the value of our stock.
We believe we operate in a manner that allows us to qualify as a REIT for U.S. federal income tax purposes under the Internal Revenue Code. If we fail to qualify as a REIT or lose our qualification as a REIT at any time, we will face serious tax consequences that would substantially reduce the funds available for distribution for each of the years involved because:
 
•
we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;
•
we also could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and
•
unless we are entitled to relief under applicable statutory provisions, we could not elect to be taxed as a REIT for four taxable years following a year during which we were disqualified.
In addition, if we fail to qualify as a REIT, we will not be required to make distributions to stockholders, and all distributions to stockholders will be subject to tax as regular corporate dividends to the extent of our current and accumulated earnings and profits. This means that our U.S. individual stockholders would be taxed on our dividends at capital gains rates, and our U.S. corporate stockholders would be entitled to the dividends received deduction with respect to such dividends, subject, in each case, to applicable limitations under the Internal Revenue Code. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the relief provisions under the Internal Revenue Code in order to maintain our REIT status, we may nevertheless be required to pay penalty taxes of $50,000 or more for each such failure. As a result of all these factors, our failure to qualify as a REIT also could impair our ability to expand our business and raise capital, and could adversely affect the value of our securities.
Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable Treasury regulations that have been promulgated under the Internal Revenue Code is greater in the case of a REIT that, like us, holds its assets through a partnership. The determination of various factual matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to qualify as a REIT, we must satisfy a number of requirements, including requirements regarding the composition of our assets, the sources of our gross income and the owners of our stock. Our ability to satisfy the asset tests depends upon our analysis of the fair market value of our assets, some of which are not susceptible to precise determination, and for which we will not obtain independent appraisals. Also, we must make distributions to stockholders aggregating annually at least 90% of our net taxable income, excluding capital gains, and we will be subject to income tax at regular corporate rates to the extent we distribute less than 100% of our net taxable income including capital gains. In addition, legislation, new regulations, administrative interpretations or court decisions may adversely affect our investors, our ability to qualify as a REIT for U.S. federal income tax purposes or the desirability of an investment in a REIT relative to other investments. Although we believe that we have been organized and have operated in a manner that is intended to allow us to qualify for taxation as a REIT, we can give no assurance that we have qualified or will continue to qualify as a REIT for tax purposes. We have not requested and do not plan to request a ruling from the Internal Revenue Service regarding our qualification as a REIT.
We will pay some taxes.
Even though we qualify as a REIT for U.S. federal income tax purposes, we will be required to pay some U.S. federal, state and local taxes on our income and property. Extra Space Management, Inc. manages stores for our joint ventures and stores owned by third parties. We, jointly with Extra Space Management, Inc., elected to treat Extra Space Management, Inc. as a taxable REIT subsidiary (“TRS”) of our Company for U.S. federal income tax purposes. A taxable REIT subsidiary is a fully taxable corporation, and may be limited in its ability to deduct interest payments made to us. ESM Reinsurance Limited, a wholly-owned subsidiary of Extra Space Management, Inc., generates income from insurance premiums that are subject to federal income tax and state insurance premiums tax. In addition, we will be subject to a 100% penalty tax on certain amounts if the economic arrangements among our tenants, our taxable REIT subsidiary and us are not comparable to similar arrangements among unrelated parties or if we receive payments for inventory or property held for sale to customers in the

16



ordinary course of business. Also, if we sell property as a dealer (i.e., to customers in the ordinary course of our trade or business), we will be subject to a 100% penalty tax on any gain arising from such sales. While we do not intend to sell stores as a dealer, the IRS could take a contrary position. To the extent that we are, or our taxable REIT subsidiary is, required to pay U.S. federal, state or local taxes, we will have less cash available for distribution to stockholders.
Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.
To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. In order to meet these tests, we may be required to forgo attractive business or investment opportunities. Thus, compliance with the REIT requirements may adversely affect our ability to operate solely to maximize profits.
Item 1B.     Unresolved Staff Comments
None.
Item 2.     Properties
As of December 31, 2016, we owned or had ownership interests in 1,016 operating stores. Of these stores, 836 are wholly-owned and 180 are held in joint ventures. In addition, we managed an additional 411 stores for third parties bringing the total number of stores which we own and/or manage to 1,427. These stores are located in 38 states, Washington, D.C. and Puerto Rico. We receive a management fee generally equal to approximately 6.0% of cash collected from total revenues to manage the joint venture and third party sites. As of December 31, 2016, we owned and/or managed approximately 107 million square feet of rentable space configured in approximately 960,000 separate storage units. Approximately 70% of our stores are clustered around large population centers, such as Atlanta, Baltimore/Washington, D.C., Boston, Chicago, Dallas, Houston, Las Vegas, Los Angeles, Miami, New York City, Orlando, Philadelphia, Phoenix, St. Petersburg/Tampa and San Francisco/Oakland. These markets contain above-average population and income demographics for stores. The clustering of assets around these population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.
We consider a store to be in the lease-up stage after it has been issued a certificate of occupancy, but before it has achieved stabilization. We consider a store to be stabilized once it has achieved either an 80% occupancy rate for a full year measured as of January 1 of the current year, or has been open for three years prior to the January 1 of the current year.

As of December 31, 2016, approximately 850,000 tenants were leasing storage units at the 1,427 operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For stores that were stabilized as of December 31, 2016, the average length of stay was approximately 14.3 months.
The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $15.88 for the year ended December 31, 2016, compared to $14.92 for the year ended December 31, 2015. Average annual rent per square foot for new leases was $17.02 for the year ended December 31, 2016, compared to $15.91 for the year ended December 31, 2015. The average discounts, as a percentage of rental revenues, during these periods were 3.3% and 3.2%, respectively.
Our store portfolio is made up of different types of construction and building configurations depending on the site and the municipality where it is located. Most often sites are what we consider “hybrid” facilities, a mix of both drive-up buildings and multi-floor buildings. We have a number of multi-floor buildings with elevator access only, and a number of facilities featuring ground-floor access only.
The following table presents additional information regarding the occupancy of our stabilized stores by state as of December 31, 2016 and 2015. The information as of December 31, 2015, is on a pro forma basis as though all the stores owned at December 31, 2016, were under our control as of December 31, 2015.
Stabilized Store Data Based on Location
 
 
 
 Company
 
 Pro forma
 
 Company
 
 Pro forma
 
Company
 
Pro forma
 Location
 Number of Stores
 
Number of Units as of
December 31, 2016 (1)
 
Number of Units as of
December 31, 2015
 
Net Rentable Square Feet as of December 31, 2016 (2)
 
Net Rentable Square Feet as of December 31, 2015
 
 Square Foot Occupancy % December 31, 2016
 
 Square Foot Occupancy % December 31, 2015
 Wholly-Owned Stores


 


 


 


 


 


 


Alabama
8

 
4,635

 
4,585

 
556,241

 
559,526

 
89.3
%
 
88.3
%
Arizona
21

 
12,795

 
12,677

 
1,408,358

 
1,414,864

 
91.7
%
 
90.4
%
California
143

 
109,771

 
108,156

 
11,425,653

 
11,399,051

 
93.8
%
 
94.8
%
Colorado
13

 
6,685

 
6,562

 
823,284

 
822,499

 
89.6
%
 
89.4
%
Connecticut
6

 
3,856

 
3,847

 
395,257

 
395,411

 
91.4
%
 
92.7
%
Florida
77

 
55,459

 
54,612

 
5,873,089

 
5,848,836

 
92.6
%
 
92.8
%
Georgia
48

 
28,956

 
28,281

 
3,715,001

 
3,698,127

 
90.4
%
 
90.1
%
Hawaii
9

 
8,534

 
8,445

 
602,171

 
599,373

 
95.2
%
 
92.1
%
Illinois
25

 
17,359

 
17,139

 
1,913,921

 
1,930,543

 
90.1
%
 
89.6
%
Indiana
15

 
7,848

 
7,718

 
940,069

 
944,399

 
91.2
%
 
88.5
%
Kansas
1

 
533

 
532

 
49,999

 
49,991

 
97.6
%
 
91.9
%
Kentucky
10

 
5,874

 
5,840

 
756,870

 
755,610

 
90.0
%
 
86.2
%
Louisiana
2

 
1,406

 
1,406

 
149,930

 
150,090

 
93.7
%
 
92.1
%
Maryland
28

 
21,372

 
21,271

 
2,189,772

 
2,191,424

 
90.6
%
 
91.3
%
Massachusetts
37

 
23,124

 
22,891

 
2,295,634

 
2,305,068

 
91.0
%
 
92.2
%
Minnesota
1

 
765

 
765

 
74,400

 
74,400

 
73.2
%
 
76.7
%
Mississippi
3

 
1,510

 
1,477

 
217,922

 
221,482

 
87.2
%
 
81.9
%
Missouri
6

 
3,292

 
3,238

 
386,161

 
385,961

 
90.7
%
 
93.2
%
Nevada
15

 
9,110

 
9,132

 
1,313,820

 
1,314,665

 
92.9
%
 
89.9
%
New Hampshire
2

 
1,045

 
1,029

 
126,053

 
126,133

 
91.9
%
 
93.0
%
New Jersey
58

 
45,721

 
45,213

 
4,498,968

 
4,495,243

 
92.6
%
 
91.5
%
New Mexico
12

 
6,590

 
6,575

 
748,843

 
750,433

 
91.7
%
 
91.9
%
New York
22

 
20,088

 
20,022

 
1,651,030

 
1,648,534

 
90.1
%
 
91.7
%
North Carolina
11

 
6,876

 
6,806

 
761,677

 
761,323

 
90.5
%
 
92.0
%
Ohio
17

 
9,534

 
9,460

 
1,248,860

 
1,246,238

 
91.7
%
 
91.0
%
Oregon
3

 
2,140

 
2,156

 
250,180

 
250,130

 
91.2
%
 
92.7
%
Pennsylvania
14

 
9,667

 
9,651

 
1,047,731

 
1,044,720

 
90.3
%
 
87.3
%
Rhode Island
2

 
1,280

 
1,235

 
131,421

 
131,356

 
93.9
%
 
91.4
%
South Carolina
20

 
11,331

 
11,228

 
1,509,641

 
1,515,789

 
88.3
%
 
87.5
%
Tennessee
23

 
12,869

 
12,723

 
1,764,606

 
1,781,216

 
90.6
%
 
89.1
%
Texas
85

 
55,509

 
54,871

 
7,151,963

 
7,112,255

 
88.7
%
 
89.3
%
Utah
8

 
4,394

 
4,231

 
543,202

 
523,056

 
88.8
%
 
94.1
%
Virginia
39

 
29,909

 
29,484

 
3,164,742

 
3,163,910

 
90.4
%
 
89.5
%
Washington
7

 
4,301

 
4,285

 
509,278

 
509,358

 
95.2
%
 
91.1
%
Washington, DC
1

 
1,220

 
1,214

 
99,689

 
99,439

 
93.8
%
 
91.5
%
Total Wholly-Owned Stabilized
796

 
547,748

 
541,116

 
60,618,052

 
60,543,119

 
91.4
%
 
91.3
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 Joint-Venture Stores


 


 


 


 


 


 


Alabama
1

 
619

 
601

 
75,356

 
74,866

 
91.2
%
 
93.4
%
Arizona
6

 
3,745

 
3,689

 
429,173

 
428,724

 
94.9
%
 
93.6
%
California
47

 
34,034

 
33,526

 
3,283,592

 
3,277,679

 
94.4
%
 
95.2
%
Colorado
2

 
1,313

 
1,308

 
157,986

 
158,375

 
89.2
%
 
93.9
%
Connecticut
5

 
3,762

 
3,763

 
403,910

 
404,790

 
92.2
%
 
92.8
%
Delaware
1

 
518

 
597

 
64,510

 
71,610

 
93.0
%
 
81.2
%
Florida
12

 
10,010

 
9,894

 
1,003,254

 
1,002,944

 
91.8
%
 
93.8
%
Georgia
1

 
611

 
605

 
81,820

 
81,950

 
85.5
%
 
89.5
%
Illinois
4

 
2,691

 
2,695

 
288,115

 
287,400

 
90.6
%
 
89.6
%
Indiana
1

 
445

 
446

 
56,650

 
57,114

 
94.7
%
 
91.4
%
Kansas
2

 
846

 
846

 
109,375

 
109,165

 
91.4
%
 
90.5
%
Kentucky
3

 
1,377

 
1,449

 
153,895

 
171,525

 
91.6
%
 
85.5
%
Maryland
7

 
5,896

 
5,860

 
529,369

 
529,527

 
90.6
%
 
91.7
%
Massachusetts
9

 
5,111

 
5,008

 
534,107

 
536,027

 
92.1
%
 
91.7
%
Michigan
5

 
3,203

 
3,166

 
396,179

 
395,764

 
92.7
%
 
92.7
%
Missouri
1

 
543

 
538

 
61,375

 
61,075

 
89.2
%
 
91.7
%
Nevada
2

 
1,209

 
1,203

 
123,565

 
123,495

 
94.2
%
 
94.5
%
New Hampshire
2

 
796

 
801

 
83,685

 
85,111

 
90.5
%
 
94.8
%
New Jersey
13

 
10,377

 
10,288

 
1,030,147

 
1,028,267

 
91.2
%
 
92.2
%
New Mexico
2

 
1,046

 
1,048

 
134,371

 
134,115

 
90.5
%
 
91.3
%
New York
8

 
7,721

 
7,668

 
650,917

 
648,615

 
93.1
%
 
93.1
%
Ohio
5

 
2,879

 
2,860

 
381,432

 
381,462

 
90.5
%
 
89.6
%
Oregon
1

 
651

 
655

 
64,970

 
64,970

 
93.7
%
 
94.0
%
Pennsylvania
4

 
2,684

 
2,680

 
312,895

 
311,091

 
90.9
%
 
88.2
%
Tennessee
6

 
3,824

 
3,774

 
474,790

 
474,875

 
92.2
%
 
91.5
%
Texas
10

 
5,795

 
5,725

 
672,669

 
673,611

 
89.8
%
 
93.9
%
Virginia
7

 
5,091

 
5,074

 
514,037

 
513,932

 
88.0
%
 
89.6
%
Washington, DC
1

 
1,694

 
1,547

 
104,450

 
102,488

 
88.1
%
 
89.4
%
Total Joint-Venture Stabilized
168

 
118,491

 
117,314

 
12,176,594

 
12,190,567

 
92.2
%
 
92.8
%

 
 
 
 
 
 
 
 
 
 
 
 
 
 Managed Stores


 


 


 


 


 


 


Alabama
11

 
5,755

 
5,596

 
754,204

 
738,753

 
90.5
%
 
88.0
%
Arizona
2

 
1,122

 
1,055

 
156,791

 
166,623

 
92.8
%
 
96.0
%
California
72

 
49,282

 
48,538

 
5,897,368

 
5,826,771

 
93.5
%
 
92.2
%
Colorado
16

 
8,988

 
8,733

 
1,067,294

 
1,035,678

 
86.8
%
 
85.5
%
Connecticut
2

 
1,414

 
1,312

 
182,140

 
171,775

 
92.4
%
 
93.4
%
Florida
46

 
31,743

 
31,622

 
3,823,063

 
3,838,650

 
92.5
%
 
92.4
%
Georgia
8

 
4,069

 
3,921

 
578,752

 
580,042

 
93.0
%
 
92.5
%
Hawaii
6

 
4,578

 
4,817

 
352,453

 
349,952

 
91.9
%
 
92.5
%
Illinois
11

 
6,489

 
6,518

 
698,319

 
698,247

 
90.4
%
 
83.8
%
Indiana
4

 
2,022

 
2,017

 
238,283

 
237,493

 
91.0
%
 
84.6
%
Kentucky
2

 
1,331

 
1,333

 
218,707

 
219,777

 
89.0
%
 
90.8
%
Louisiana
1

 
987

 
985

 
133,325

 
131,865

 
95.0
%
 
90.9
%
Maryland
19

 
14,008

 
13,924

 
1,370,012

 
1,366,149

 
91.2
%
 
87.5
%
Massachusetts
3

 
1,546

 
1,531

 
182,945

 
182,735

 
93.3
%
 
94.7
%
Michigan
6

 
3,352

 
3,335

 
416,434

 
416,290

 
92.4
%
 
86.3
%
Missouri
4

 
2,154

 
2,215

 
253,639

 
251,792

 
92.3
%
 
80.5
%
Nevada
10

 
7,956

 
7,986

 
944,870

 
944,420

 
91.8
%
 
87.1
%
New Jersey
5

 
3,181

 
3,176

 
307,035

 
309,529

 
91.8
%
 
88.9
%
New Mexico
1

 
819

 
806

 
107,695

 
103,535

 
92.7
%
 
86.4
%
New York
3

 
2,675

 
2,679

 
219,448

 
220,248

 
89.5
%
 
91.2
%
North Carolina
17

 
7,264

 
7,212

 
1,013,263

 
1,012,737

 
92.7
%
 
91.3
%
Ohio
5

 
2,268

 
2,206

 
274,870

 
272,915

 
90.5
%
 
92.7
%
Oklahoma
11

 
5,771

 
5,768

 
959,984

 
960,786

 
80.7
%
 
80.5
%
Oregon
1

 
447

 
455

 
39,430

 
39,419

 
91.1
%
 
97.7
%
Pennsylvania
18

 
10,747

 
10,649

 
1,247,860

 
1,244,340

 
91.3
%
 
90.4
%
South Carolina
4

 
2,619

 
2,609

 
351,148

 
348,771

 
93.1
%
 
89.2
%
Tennessee
4

 
2,152

 
2,125

 
282,263

 
290,183

 
94.0
%
 
90.4
%
Texas
34

 
19,788

 
19,545

 
2,808,646

 
2,730,806

 
85.9
%
 
87.5
%
Utah
5

 
2,760

 
2,532

 
404,827

 
380,047

 
93.6
%
 
92.2
%
Virginia
7

 
4,245

 
4,242

 
437,319

 
437,929

 
89.3
%
 
89.3
%
Washington
3

 
1,552

 
1,561

 
181,697

 
181,769

 
89.1
%
 
87.9
%
Puerto Rico
4

 
2,735

 
2,676

 
289,704

 
286,772

 
87.3
%
 
87.4
%
Total Managed Stabilized
345

 
215,819

 
213,679

 
26,193,788

 
25,976,798

 
90.9
%
 
89.7
%
Total Stabilized Stores
1,309

 
882,058

 
872,109

 
98,988,434

 
98,710,484

 
91.4
%
 
91.0
%

(1)
Represents unit count as of December 31, 2016, which may differ from unit count as of December 31, 2015, due to unit conversions or expansions.
(2)
Represents net rentable square feet as of December 31, 2016, which may differ from net rentable square feet as of December 31, 2015, due to unit conversions or expansions.

The following table presents additional information regarding the occupancy of our lease-up stores by state as of December 31, 2016 and 2015. The information as of December 31, 2015, is on a pro forma basis as though all the stores owned at December 31, 2016, were under our control as of December 31, 2015.

Lease-up Store Data Based on Location
 
 
 
 Company
 
 Pro forma
 
 Company
 
 Pro forma
 
Company
 
Pro forma
 Location
 Number of Stores
 
Number of Units as of
December 31, 2016 (1)
 
Number of Units as of
December 31, 2015
 
Net Rentable Square Feet as of December 31, 2016 (2)
 
Net Rentable Square Feet as of December 31, 2015
 
 Square Foot Occupancy % December 31, 2016
 
 Square Foot Occupancy % December 31, 2015
 Wholly-Owned Stores


 


 


 


 


 


 


Arizona
2

 
1,496

 
894

 
185,887

 
122,092

 
90.5
%
 
72.9
%
California (3)
4

 
2,633

 
1,210

 
260,216

 
133,252

 
73.1
%
 
37.7
%
Connecticut
1

 
1,108

 
1,107

 
89,820

 
89,820

 
92.3
%
 
90.0
%
Florida
2

 
1,238

 
1,235

 
153,893

 
158,283

 
92.9
%
 
67.5
%
Georgia
5

 
3,115

 
1,898

 
352,755

 
219,515

 
67.4
%
 
63.5
%
Illinois
4

 
3,568

 
1,667

 
308,723

 
134,464

 
56.7
%
 
69.8
%
Maryland
1

 
988

 
988

 
103,135

 
103,135

 
94.2
%
 
89.8
%
Massachusetts
3

 
2,719

 
754

 
206,276

 
67,431

 
68.4
%
 
79.8
%
North Carolina
3

 
2,517

 
1,986

 
231,083

 
187,024

 
73.1
%
 
52.3
%
Oregon
1

 
597

 
597

 
76,797

 
76,347

 
96.2
%
 
67.9
%
South Carolina
2

 
1,366

 
1,344

 
137,295

 
137,350

 
82.2
%
 
65.7
%
Texas
10

 
6,112

 
6,131

 
788,381

 
716,894

 
84.8
%
 
68.0
%
Utah
1

 
617

 
—

 
77,336

 
—

 
20.7
%
 
—
%
Virginia
1

 
558

 
502

 
55,900

 
56,405

 
93.6
%
 
89.2
%
Total Wholly-Owned in Lease-up
40

 
28,632

 
20,313

 
3,027,497

 
2,202,012

 
76.9
%
 
67.4
%



 


 


 


 


 


 


 Joint-Venture Stores


 


 


 


 


 


 


Arizona
1

 
603

 
606

 
62,200

 
62,200

 
87.1
%
 
39.2
%
Colorado
1

 
816

 
—

 
84,830

 
—

 
38.1
%
 
—
%
Florida
1

 
637

 
—

 
66,816

 
—

 
1.5
%
 
—
%
New Jersey
1

 
869

 
873

 
74,152

 
74,521

 
92.8
%
 
45.3
%
New York
3

 
3,853

 
1,109

 
209,522

 
66,950

 
49.6
%
 
25.7
%
Oregon
2

 
795

 
285

 
71,605

 
27,100

 
45.1
%
 
31.8
%
South Carolina
1

 
669

 
649

 
78,085

 
70,570

 
66.4
%
 
28.0
%
Texas
1

 
533

 
—

 
55,275

 
—

 
58.6
%
 
—
%
Washington
1

 
634

 
—

 
82,485

 
—

 
66.8
%
 
—
%
Total Joint-Venture in Lease-up
12

 
9,409

 
3,522

 
784,970

 
301,341

 
55.0
%
 
34.4
%



 


 


 


 


 


 


 Managed Stores


 


 


 


 


 


 


Arizona
1

 
836

 
—

 
89,695

 
—

 
62.9
%
 
—
%
California
5

 
3,920

 
1,608

 
491,191

 
209,030

 
66.1
%
 
58.4
%
Colorado
4

 
2,417

 
1,173

 
273,520

 
134,844

 
64.1
%
 
59.0
%
Connecticut
1

 
360

 
—

 
37,436

 
—

 
71.6
%
 
—
%
Florida
3

 
1,994

 
1,407

 
194,571

 
150,438

 
88.1
%
 
60.3
%
Georgia
3

 
1,922

 
553

 
225,376

 
69,367

 
43.5
%
 
54.4
%
Illinois
8

 
4,919

 
672

 
492,235

 
46,417

 
34.3
%
 
83.6
%
Indiana
2

 
964

 
—

 
111,112

 
—

 
45.3
%
 
—
%
Kentucky
2

 
1,439

 
—

 
138,076

 
—

 
8.0
%
 
—
%
Maryland
3

 
1,726

 
1,318

 
144,230

 
115,650

 
84.8
%
 
75.7
%
Massachusetts
2

 
1,920

 
902

 
153,533

 
70,106

 
48.0
%
 
56.7
%
Minnesota
1

 
626

 
—

 
62,597

 
—

 
93.8
%
 
—
%
Missouri
1

 
608

 
—

 
63,100

 
—

 
41.6
%
 
—
%
Nevada
1

 
1,450

 
1,470

 
197,351

 
196,486

 
88.8
%
 
66.2
%
New Hampshire
1

 
372

 
—

 
35,196

 
—

 
47.6
%
 
—
%
New Jersey
2

 
882

 
—

 
126,396

 
—

 
43.6
%
 
—
%
New York
1

 
534

 
344

 
56,150

 
33,684

 
77.0
%
 
91.0
%
North Carolina
7

 
4,284

 
1,611

 
464,431

 
199,433

 
55.1
%
 
54.2
%
Ohio
2

 
736

 
528

 
87,663

 
64,500

 
60.7
%
 
59.3
%
Oklahoma
1

 
360

 
—

 
68,235

 
—

 
13.6
%
 
—
%
South Carolina
4

 
2,905

 
1,616

 
325,511

 
165,011

 
48.6
%
 
65.6
%
Texas
7

 
4,846

 
570

 
534,569

 
65,409

 
22.8
%
 
2.4
%
Utah
1

 
375

 
—

 
44,149

 
—

 
62.9
%
 
—
%
Virginia
1

 
455

 
455

 
51,299

 
51,289

 
91.0
%
 
93.2
%
Wisconsin
2

 
1,935

 
—

 
226,813

 
—

 
21.0
%
 
—
%
Total Managed in Lease-up
66

 
42,785

 
14,227

 
4,694,435

 
1,571,664

 
50.6
%
 
61.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Lease-up Stores
118

 
80,826

 
38,062

 
8,506,902

 
4,075,017

 
60.4
%
 
62.5
%

(1)
Represents unit count as of December 31, 2016, which may differ from unit count as of December 31, 2015, due to unit conversions or expansions.
(2)
Represents net rentable square feet as of December 31, 2016, which may differ from net rentable square feet as of December 31, 2015, due to unit conversions or expansions.
(3)
In October 2014, a store located in Venice, California was damaged by fire. In 2016, the store was re-opened for operation and is continuing to lease up.
Item 3.     Legal Proceedings
We are involved in various legal proceedings and are 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. In accordance with applicable accounting guidance, management establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. Therefore, any estimate(s) of loss disclosed below represents what management believes to be an estimate of loss only for certain matters meeting these criteria and does not represent our maximum loss exposure. We could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations in any particular period, notwithstanding the fact that we are currently vigorously defending any legal proceedings against us.
We currently have several legal proceedings pending against us that include causes of action alleging wrongful foreclosure, violations of various state specific self-storage statutes, and violations of various consumer fraud acts. As a result of these litigation matters, we have recorded a liability of $5.6 million which is included in other liabilities on the consolidated balance sheets.
Item 4. Mine Safety Disclosures
Not Applicable.
PART II
Item 5.     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock has been traded on the New York Stock Exchange (“NYSE”) under the symbol “EXR” since our IPO on August 17, 2004. Prior to that time there was no public market for our common stock.
The following table presents, for the periods indicated, the high and low sales price for our common stock as reported by the NYSE and the per share dividends declared: 
 
 
 
Range
 
Dividends Declared
Year
Quarter
 
High
 
Low
 
2015
1st
 
$
67.65

 
$
57.11

 
$
0.47

 
2nd
 
70.50

 
63.54

 
0.59

 
3rd
 
77.51

 
65.82

 
0.59

 
4th
 
90.22

 
75.55

 
0.59

 
 
 
 
 
 
 
 
2016
1st
 
93.46

 
78.42

 
0.59

 
2nd
 
94.04

 
84.95

 
0.78

 
3rd
 
94.38

 
76.17

 
0.78

 
4th
 
77.66

 
68.78

 
0.78

On February 21, 2017, the closing price of our common stock as reported by the NYSE was $78.37. At February 21, 2017, we had 355 holders of record of our common stock. Certain shares of the Company are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Holders of shares of common stock are entitled to receive distributions when declared by our board of directors out of any assets legally available for that purpose. As a REIT, we are required to distribute at least 90% of our “REIT taxable

17



income,” which is generally equivalent to our net taxable ordinary income, determined without regard to the deduction for dividends paid to our stockholders annually in order to maintain our REIT qualification for U.S. federal income tax purposes. We have historically made regular quarterly distributions to our stockholders.
Information about our equity compensation plans is incorporated by reference in Item 12 of Part III of this Annual Report on Form 10-K.
Unregistered Sales of Equity Securities

On November 8, 2016, our Operating Partnership issued 486,244 Series D-4 Preferred Units in connection with the acquisition of a store located in Illinois. This store was acquired in exchange for the Series D-4 Preferred Units, valued at $12.2 million.

On November 2, 2016, our Operating Partnership issued 77,575 common OP units ("OP Units") in connection with the acquisition of a store located in Maryland. The store was acquired in exchange for the OP units, valued at $5.8 million, and approximately $9.0 million in cash.
The terms of the common and preferred OP Units are governed by the Operating Partnership’s Fourth Amended and Restated Agreement of Limited Partnership. The OP Units will be redeemable, at the option of the holders following the expiration of a lock-up period commencing on the date of issuance and ending on August 15, 2018, which redemption obligation may be satisfied, at our option, in cash or shares of our common stock.
The OP Units were issued in private placements in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

All other unregistered sales of equity securities during the year ended December 31, 2016 have previously been disclosed in filings with the SEC.
Item 6.     Selected Financial Data
The following table presents selected financial data and should be read in conjunction with the financial statements and notes thereto included in Item 8, “Financial Statements and Supplementary Data” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K (amounts in thousands, except share and per share data).

18



 
For the Year Ended December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
Revenues:
 
 
 
 
 
 
 
 
 
Property rental
$
864,742

 
$
676,138

 
$
559,868

 
$
446,682

 
$
346,874

Tenant reinsurance, management fees and other income
127,133

 
106,132

 
87,287

 
73,931

 
62,522

Total revenues
991,875

 
782,270

 
647,155

 
520,613

 
409,396

Expenses:
 
 
 
 
 
 
 
 
 
Property operations
250,005

 
203,965

 
172,416

 
140,012

 
114,028

Tenant reinsurance
15,555

 
13,033

 
10,427

 
9,022

 
7,869

Acquisition related costs and other
12,111

 
69,401

 
9,826

 
8,618

 
5,351

General and administrative
81,806

 
67,758

 
60,942

 
54,246

 
50,454

Depreciation and amortization
182,560

 
133,457

 
115,076

 
95,232

 
74,453

Total expenses
542,037

 
487,614

 
368,687

 
307,130

 
252,155

Income from operations
449,838

 
294,656

 
278,468

 
213,483

 
157,241

Interest expense
(138,459
)
 
(98,992
)
 
(84,013
)
 
(73,034
)
 
(72,294
)
Interest income
10,998

 
8,311

 
6,457

 
5,599

 
6,666

Loss on extinguishment of debt related to portfolio acquisition, gain (loss) on real estate transactions, earnout from prior acquisitions, sale of other assets and property casualty loss, net
8,465

 
1,501

 
(12,009
)
 
(8,193
)
 
—

Income before equity in earnings of real estate ventures and income tax expense
330,842

 
205,476

 
188,903

 
137,855

 
91,613

Equity in earnings of unconsolidated real estate ventures
12,895

 
12,351

 
10,541

 
11,653

 
10,859

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests
69,199

 
2,857

 
4,022

 
46,032

 
30,630

Income tax expense
(15,847
)
 
(11,148
)
 
(7,570
)
 
(9,984
)
 
(5,413
)
Net income
397,089

 
209,536

 
195,896

 
185,556

 
127,689

Noncontrolling interests in Operating Partnership and other noncontrolling interests
(30,962
)
 
(20,062
)
 
(17,541
)
 
(13,480
)
 
(10,380
)
Net income attributable to common stockholders
$
366,127

 
$
189,474

 
$
178,355

 
$
172,076

 
$
117,309

 
 
 
 
 
 
 
 
 
 
Earnings per common share
 
 
 
 
 
 
 
 
 
Basic
$
2.92

 
$
1.58

 
$
1.54

 
$
1.54

 
$
1.15

Diluted
$
2.91

 
$
1.56

 
$
1.53

 
$
1.53

 
$
1.14

Weighted average number of shares
 
 
 
 
 
 
 
 
 
Basic
125,087,554

 
119,816,743

 
115,713,807

 
111,349,361

 
101,766,385

Diluted
125,948,076

 
126,918,869

 
121,435,267

 
113,105,094

 
103,767,365

Cash dividends paid per common share
$
2.93

 
$
2.24

 
$
1.81

 
$
1.45

 
$
0.85


19



 
As of December 31,
 
2016
 
2015
 
2014
 
2013
 
2012
Balance Sheet Data
 
 
 
 
 
 
 
 
 
Total assets
$
7,091,446

 
$
6,071,407

 
$
4,381,987

 
$
3,977,140

 
$
3,223,477

Total notes payable, notes payable to trusts, exchangeable senior notes and revolving lines of credit, net
$
4,306,223

 
$
3,535,621

 
$
2,349,764

 
$
1,946,647

 
$
1,577,599

Noncontrolling interests
$
351,274

 
$
283,527

 
$
174,558

 
$
173,425

 
$
53,524

Total stockholders' equity
$
2,244,892

 
$
2,089,077

 
$
1,737,425

 
$
1,758,470

 
$
1,491,807

Other Data
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
539,263

 
$
367,329

 
$
337,581

 
$
271,259

 
$
215,879

Net cash used in investing activities
$
(1,032,035
)
 
$
(1,625,664
)
 
$
(564,948
)
 
$
(366,976
)
 
$
(606,938
)
Net cash provided by financing activities
$
460,831

 
$
1,286,471

 
$
148,307

 
$
191,655

 
$
395,360

Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. 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.” Amounts in thousands, except share and per share data.
Overview
We are a fully integrated, self-administered and self-managed real estate investment trust, or REIT, formed to continue the business commenced in 1977 by Extra Space Storage LLC and its subsidiaries to own, operate, manage, acquire, develop and redevelop professionally managed stores.
At December 31, 2016, we owned, had ownership interests in, or managed 1,427 operating stores in 38 states, Washington, D.C. and Puerto Rico. Of these 1,427 operating stores, we owned 836, we held joint venture interests in 180 stores, and our taxable REIT subsidiary, Extra Space Management, Inc., operated an additional 411 stores that are owned by third parties. These operating stores contain approximately 107 million square feet of rentable space in approximately 960,000 units and currently serve a customer base of approximately 850,000 tenants.
Our stores are generally situated in convenient, highly visible locations clustered around large population centers such as Atlanta, Baltimore/Washington, D.C., Boston, Chicago, Dallas, Houston, Las Vegas, Los Angeles, Miami, New York City, Orlando, Philadelphia, Phoenix, St. Petersburg/Tampa and San Francisco/Oakland. These areas all enjoy above average population growth and income levels. The clustering of our assets around these population centers enables us to reduce our operating costs through economies of scale. We consider a store to be in the lease-up stage after it has been issued a certificate of occupancy, but before it has achieved stabilization. We consider a store to be stabilized once it has achieved either an 80% occupancy rate for a full year measured as of January 1 of the current year, or has been open for three years prior to the January 1 of the current year.
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. We believe our systems and processes allow us to more proactively manage revenues.
We derive substantially all of our revenues from rents received from tenants under leases at each of our wholly-owned stores, from management fees on the stores we manage for joint-venture partners and unaffiliated third parties, and from our tenant reinsurance program. Our management fee is generally equal to approximately 6.0% of cash collected from total revenues generated by the managed stores. We also receive an asset management fee of 0.5% of the total asset value from one of our joint ventures.
We operate in competitive markets, often where consumers have multiple stores from which to choose. Competition has impacted, and will continue to impact, our store results. We experience seasonal fluctuations in occupancy levels, with occupancy levels generally higher in the summer months due to increased moving activity. 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

20



tenants to make required rental payments. We believe that we are able to respond quickly and effectively to changes in local, regional and national economic conditions by adjusting rental rates through the combination of our revenue management team and our industry-leading technology systems.

We continue to evaluate a range of new initiatives and opportunities in order to enable us to maximize stockholder value. Our strategies to maximize stockholder value include the following:
 
•
Maximize the performance of our stores through strategic, efficient and proactive management. We pursue revenue-generating and expense-minimizing opportunities in our operations. Our revenue management team seeks to maximize revenue by responding to changing market conditions through our advanced technology system’s ability to provide real-time, interactive rental rate and discount management. Our size allows us greater ability than the majority of our competitors to implement more effective online marketing programs, which we believe will attract more customers to our stores at a lower net cost.
•
Acquire self-storage stores. Our acquisitions team continues to pursue the acquisition of multi-store portfolios and single stores that we believe can provide stockholder value. We have established a reputation as a reliable, ethical buyer, which we believe enhances our ability to negotiate and close acquisitions. In addition, we believe our status as an UPREIT enables flexibility when structuring deals. We continue to review available acquisitions. As interest rates increase, our expectation is that capitalization rates will also increase and that prices will begin to decrease. We remain a disciplined buyer and only execute acquisitions that we believe will strengthen our portfolio and increase stockholder value.
•
Expand our management business. Our management business enables us to generate increased revenues through management fees and expand our geographic footprint. We believe this expanded footprint enables us to reduce our operating costs through economies of scale. In addition, we see our management business as a future acquisition pipeline. We pursue strategic relationships with owners whose stores would enhance our portfolio in the event an opportunity arises to acquire such stores.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those that impact our most critical accounting policies. We base our estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. A summary of significant accounting policies is also provided in
the notes to our consolidated financial statements (see Note 2 to our consolidated financial statements). Actual results may differ from these estimates. We believe the following are our most critical accounting policies:
CONSOLIDATION: Arrangements that are not controlled through voting or similar rights are accounted for as variable interest entities (“VIEs”). An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE.
A VIE is created when (i) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) the entity’s equity holders as a group either: (a) lack the power, through voting or similar rights, to direct the activities of the entity that most significantly impact the entity’s economic performance, (b) are not obligated to absorb expected losses of the entity if they occur, or (c) do not have the right to receive expected residual returns of the entity if they occur. If an entity is deemed to be a VIE, the enterprise that is deemed to have a variable interest, or combination of variable interests, that provides the enterprise with a controlling financial interest in the VIE is considered the primary beneficiary and must consolidate the VIE.
We have concluded that under certain circumstances when we enter into arrangements for the formation of joint ventures, a VIE may be created under condition (i) or (ii)(b) or (ii)(c) of the previous paragraph. For each VIE created, we have performed a qualitative analysis, including considering which party, if any, has the power to direct the activities most significant to the economic performance of each VIE and whether that party has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If we are determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated with our financial statements. As of December 31, 2016, we had no consolidated VIEs. Additionally, our Operating Partnership has notes payable to three trusts that are VIEs under condition (ii)(a) above. Since the Operating Partnership is not the primary beneficiary of the trusts, these VIEs are not consolidated.

21



REAL ESTATE ASSETS: Real estate assets are stated at cost, less accumulated depreciation. Direct and allowable internal costs associated with the development, construction, renovation, and improvement of real estate assets are capitalized. Interest, property taxes, and other costs associated with development incurred during the construction period are capitalized.
Expenditures for maintenance and repairs are charged to expense as incurred. Major replacements and betterments that improve or extend the life of the asset are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between 5 and 39 years.
In connection with our acquisition of operating stores, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their fair values, which are estimated using significant unobservable inputs. The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Intangible assets, which represent the value of existing tenant relationships, are recorded at their fair values based on the avoided cost to replace the current leases. We measure the value of tenant relationships based on the rent lost due to the amount of time required to replace existing customers, which is based on our historical experience with turnover in our facilities. Debt assumed as part of an acquisition is recorded at fair value based on current interest rates compared to contractual rates. Acquisition-related transaction costs are expensed as incurred.
Stores purchased at the time of certificate of occupancy issuance are considered asset acquisitions. As such, the purchase price is allocated to the land and buildings acquired based on their fair values. Any debt assumed as part of the acquisition is recorded at fair value based on current interest rates compared to contractual rates. Acquisition-related transactions costs are capitalized as part of the purchase price.
Intangible lease rights include: (1) purchase price amounts allocated to leases on three stores that cannot be classified as ground or building leases; these rights are amortized to expense over the term of the leases; and (2) intangibles related to ground leases on eight stores where the ground leases were assumed by us at rates that were different than the current market rates for similar leases. The value associated with these assumed leases were recorded as intangibles, which will be amortized over the lease terms.
EVALUATION OF ASSET IMPAIRMENT: Long lived assets held for use are evaluated for impairment when events or circumstances indicate that there may be impairment. We review each store at least annually to determine if any such events or circumstances have occurred or exist. We focus on stores where occupancy and/or rental income have decreased by a significant amount. For these stores, we determine whether the decrease is temporary or permanent and whether the store will likely recover the lost occupancy and/or revenue in the short term. In addition, we review stores in the lease-up stage and compare actual operating results to original projections.
When we determine that an event that may indicate impairment has occurred, we compare the carrying value of the related long-lived assets to the undiscounted future net operating cash flows attributable to the assets. An impairment loss is recorded if the net carrying value of the assets exceeds the undiscounted future net operating cash flows attributable to the assets. The impairment loss recognized equals the excess of net carrying value over the related fair value of the assets.
When real estate assets are identified as held for sale, we discontinue depreciating the assets and estimate the fair value of the assets, net of selling costs. 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, we would recognize a loss on the disposal group classified as held for sale. The operations of assets held for sale or sold during the period are presented as part of normal operations for all periods presented.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE VENTURES: Our investments in real estate joint ventures where we have significant influence but not control, and joint ventures which are VIEs in which we are not the primary beneficiary, are recorded under the equity method of accounting on the accompanying consolidated financial statements.
Under the equity method, our investment in real estate ventures is stated at cost and adjusted for our share of net earnings or losses and reduced by distributions. Equity in earnings of real estate ventures is generally recognized based on our ownership interest in the earnings of each of the unconsolidated real estate ventures. For the purposes of presentation in the statement of cash flows, we follow the “look through” approach for classification of distributions from joint ventures. Under this approach, distributions are reported under operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating dividend or distribution of the proceeds from the joint venture’s sale of assets) in which case it is reported as an investing activity.

22



Our management assesses annually whether there are any indicators that the value of our investments in unconsolidated real estate ventures may be impaired and when events or circumstances indicate that there may be impairment. An investment is impaired if management’s estimate of the fair value of the investment, using significant unobservable inputs, is less than its carrying value. To the extent impairment has occurred and is considered to be other than temporary, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income, outside of earnings and subsequently reclassified to earnings when the hedged transaction affects earnings.
REVENUE AND EXPENSE RECOGNITION: Rental revenues are recognized as earned based upon amounts that are currently due from tenants. Leases are generally on month-to-month terms. Prepaid rents are recognized on a straight-line basis over the term of the leases. Promotional discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees, merchandise sales and truck rentals are recognized in income when earned. Management fee revenues are recognized monthly as services are performed and in accordance with the terms of the related management agreements. Equity in earnings of real estate entities is recognized based on our ownership interest in the earnings of each of the unconsolidated real estate entities. Interest income is recognized as earned.
Property expenses, including utilities, property taxes, repairs and maintenance and other costs to manage the facilities are recognized as incurred. We accrue for property tax expense based upon invoice amounts, estimates and historical trends. If these estimates are incorrect, the timing of expense recognition could be affected.
Tenant reinsurance premiums are recognized as revenue over the period of insurance coverage. We record an unpaid claims liability at the end of each period based on existing unpaid claims and historical claims payment history. The unpaid claims liability represents an estimate of the ultimate cost to settle all unpaid claims as of each period end, including both reported but unpaid claims and claims that may have been incurred but have not been reported. We use a third party claims administrator to adjust all tenant reinsurance claims received. The administrator evaluates each claim to determine the ultimate claim loss and includes an estimate for claims that may have been incurred but not reported. Annually, a third party actuary evaluates the adequacy of the unpaid claims liability. Prior year claim reserves are adjusted as experience develops or new information becomes known. The impact of such adjustments is included in the current period operations. The unpaid claims liability is not discounted to its present value. Each tenant chooses the amount of insurance coverage they want through the tenant reinsurance program. Tenants can purchase policies in amounts of two thousand dollars to ten thousand dollars of insurance coverage in exchange for a monthly fee. Our exposure per claim is limited by the maximum amount of coverage chosen by each tenant. We purchase reinsurance for losses exceeding a set amount on any one event. We do not currently have any amounts recoverable under the reinsurance arrangements.
INCOME TAXES: We have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code. In order to maintain our qualification as a REIT, among other things, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet certain tests regarding the nature of our income and assets. As a REIT, we are not subject to federal income tax with respect to that portion of our income which meets certain criteria and is distributed annually to our stockholders. We plan to continue to operate so that we meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If we were to fail to meet these requirements, we would be subject to federal income tax. We are subject to certain state and local taxes. Provision for such taxes has been included in income tax expense in our consolidated statements of operations.
We have elected to treat one of our corporate subsidiaries, Extra Space Management, Inc., as a taxable REIT subsidiary (“TRS”). In general, our TRS may perform additional services for tenants and generally may engage in any real estate or non-real estate related business. A TRS is subject to corporate federal income tax. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. Interest and penalties relating to uncertain tax positions will be recognized in income tax expense when incurred.

23



RECENT ACCOUNT PRONOUNCEMENTS: For a discussion of recent accounting pronouncements affecting our business, see Item 8, “Financial Statements and Supplementary Data–Recently Issued Accounting Standards.”
RESULTS OF OPERATIONS
Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
Overview
Results for the year ended December 31, 2016 included the operations of 1,016 stores (836 wholly-owned, one in a consolidated joint venture, and 179 in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2015, which included the operations of 999 stores (746 wholly-owned, one in a consolidated joint venture, and 252 in joint ventures accounted for using the equity method).
Revenues
The following table presents information on revenues earned for the years indicated:
 
For the Year Ended December 31,
 
 
 
 
 
2016
 
2015
 
$ Change
 
% Change
Revenues:
 
 
 
 
 
 
 
Property rental
$
864,742

 
$
676,138

 
$
188,604

 
27.9
%
Tenant reinsurance
87,291

 
71,971

 
15,320

 
21.3
%
Management fees and other income
39,842

 
34,161

 
5,681

 
16.6
%
Total revenues
$
991,875

 
$
782,270

 
$
209,605

 
26.8
%

Property Rental—The increase in property rental revenues for the year ended December 31, 2016 was primarily the result of an increase of $144,985 associated with acquisitions completed in 2016 and 2015. We acquired 99 stores during the year ended December 31, 2016 and 171 stores during the year ended December 31, 2015. Property rental revenue also increased by $42,171 during the year ended December 31, 2016 as a result of increases in rental rates to new and existing customers at our stabilized stores. Revenues at our lease-up stores increased by $3,439 for the year ended December 31, 2016 due primarily to increases in occupancy. The achieved rental rate to new tenants on wholly owned properties for the year ended December 31, 2016 increased an average of approximately 7.0% over the prior year. These increases were offset by decreases in property revenue of $1,991 for the year ended December 31, 2016 related to the sales of stores during 2016.
Tenant Reinsurance—The increase in tenant reinsurance revenues was due primarily to the increase in stores operated. We operated 1,427 stores at December 31, 2016, compared to 1,347 stores at December 31, 2015.
Management Fees and Other Income—Our TRS manages stores owned by our joint ventures and third parties. Management fees generally represent 6.0% of cash collected from stores owned by third parties and unconsolidated joint ventures. We also earn an asset management fee from the Storage Portfolio I (“SPI”) joint venture, equal to 0.50% multiplied by the total asset value, provided certain conditions are met. The increase in management fees is due primarily to an increase in the revenues at the stores we managed. At December 31, 2016, we managed 591 stores for third parties and non-consolidated joint ventures, compared to 601 stores at December 31, 2015. The decrease in the number of stores managed is due primarily to our acquisition of 40 stores from our joint ventures during 2016.

24



Expenses
The following table presents information on expenses for the years indicated:
 
For the Year Ended December 31,
 
 
 
 
 
2016
 
2015
 
$ Change
 
% Change
Expenses:
 
 
 
 
 
 
 
Property operations
$
250,005

 
$
203,965

 
$
46,040

 
22.6
 %
Tenant reinsurance
15,555

 
13,033

 
2,522

 
19.4
 %
Acquisition related costs and other
12,111

 
69,401

 
(57,290
)
 
(82.5
)%
General and administrative
81,806

 
67,758

 
14,048

 
20.7
 %
Depreciation and amortization
182,560

 
133,457

 
49,103

 
36.8
 %
Total expenses
$
542,037

 
$
487,614

 
$
54,423

 
11.2
 %
Property Operations—The increase in property operations expense consists primarily of an increase of $45,055 related to acquisitions completed in 2016 and 2015. We acquired 99 operating stores during the year ended December 31, 2016 and 171 stores during the year ended December 31, 2015.
Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. The change is due primarily to the increase in the number of stores we owned and/or managed. At December 31, 2016, we owned and/or managed 1,427 stores compared to 1,347 stores at December 31, 2015.

Acquisition Related Costs and Other—These costs relate primarily to acquisition activities during the periods indicated. The decrease in these expenses for the year ended December 31, 2016 compared to the prior year was due to a decrease in the number of acquisitions. We acquired 99 properties during the year ended December 31, 2016 compared to 171 during the prior year. Included in the acquisitions completed in 2015 was the acquisition of SmartStop Self Storage Inc. ("SmartStop") on October 1, 2015. As part of this acquisition, we recorded an expense of $38,360 related to defeasance costs and prepayment penalties incurred related to the repayment of SmartStop's existing debt as of the acquisition date. We incurred $8,053 of professional fess/closing costs, $6,338 of severance-related costs, $1,327 of other payroll-related costs and $9,043 of other acquisition related costs as a result of the acquisition of SmartStop, for a total of $63,121.

General and Administrative—General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, travel and professional fees. These expenses are recognized as incurred. General and administrative expenses for the year ended December 31, 2016 increased when compared to the same periods in the prior year primarily due to the overall cost associated with the management of additional stores. At December 31, 2016, we owned and/or managed 1,427 stores compared to 1,347 stores at December 31, 2015. Additionally, during 2016, we accrued a $4,000 expense related to the potential settlement of a legal action. We did not observe any material trends in specific payroll, travel or other expenses that contributed significantly to the increase in general and administrative expenses apart from the increase due to the management of additional stores.
Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 99 operating stores during the year ended December 31, 2016, and 171 operating stores during the year ended December 31, 2015.

25



Other Income and Expenses
The following table presents information on other revenues and expenses for the years indicated:
 
For the Year Ended December 31,
 
 
 
 
 
2016
 
2015
 
$ Change
 
% Change
Other income and expenses:
 
 
 
 
 
 
 
Gain on real estate transactions, earnout from prior acquisition and sale of other assets
$
8,465

 
$
1,501

 
$
6,964

 
464.0
 %
Interest expense
(133,479
)
 
(95,682
)
 
(37,797
)
 
39.5
 %
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes
(4,980
)
 
(3,310
)
 
(1,670
)
 
50.5
 %
Interest income
6,148

 
3,461

 
2,687

 
77.6
 %
Interest income on note receivable from Preferred Operating Partnership unit holder
4,850

 
4,850

 
—

 
—

Equity in earnings of unconsolidated real estate ventures
12,895

 
12,351

 
544

 
4.4
 %
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests
69,199

 
2,857

 
66,342

 
2,322.1
 %
Income tax expense
(15,847
)
 
(11,148
)
 
(4,699
)
 
42.2
 %
Total other expense, net
$
(52,749
)
 
$
(85,120
)
 
$
32,371

 
(38.0
)%
 
 
 
 
 
 
 
 

Gain on Real Estate Transactions, Earnout from Prior Acquisition and Sale of Other Assets— During the year ended December 31, 2016, through various transactions, we sold a total of nine stores located in Indiana, Ohio and Texas. We received a total of $22,002 in cash and 85,452 of our OP Units valued at $7,689 in exchange for these stores. The Operating Partnership has canceled the OP Units received. We recognized a total gain of $11,358 related to these dispositions.

During 2014, we acquired a portfolio of five stores. As part of this acquisition, we agreed to make an additional cash payment to the sellers if the acquired stores exceeded a specified amount of net operating income for the years ending December 31, 2015 and 2016. At the acquisition date, we recorded an estimated liability related to this provision. As the operating income of these stores during the earnout period was higher than originally estimated, an additional payment was due to the sellers of $4,284, which was recorded as a loss during 2016.

In 2011, we acquired a single store in Florida. As part of the acquisition, we agreed to make an additional cash payment to the sellers if the acquired store exceeded a specified amount of net rental income for the period of 12 consecutive months ending June 30, 2015. During 2014, we recorded a liability of $2,500 as an estimate of the payment that would become due. The $400 gain recorded during 2015 represents the adjustment needed to true up the existing liability to the amount owed to the sellers as of June 30, 2015.

During 2015, we determined that one of our acquisitions was purchased at below its market value, and therefore recorded a $1,101 gain at the time of the acquisition, which represents the excess of the fair value of the store acquired over the consideration paid.

Interest Expense—The increase in interest expense during the year ended December 31, 2016 was primarily the result of higher debt balances when compared to the prior year. The total face value of our debt, including our lines of credit, was $4,363,697 at December 31, 2016 compared to $3,598,254 at December 31, 2015.

Non-cash Interest Expense Related to Amortization of Discount on Equity Component of Exchangeable Senior Notes—Represents the amortization of the discounts related to the equity components of the exchangeable senior notes issued by our Operating Partnership. Our Operating Partnership has issued and outstanding 2.375% Exchangeable Senior Notes due 2033 (the "2013 Notes") and 3.125% Exchangeable Senior Notes due 2035 (the "2015 Notes.") The 2013 Notes and the 2015 Notes both have an effective interest rate of 4.0% relative to the carrying amount of the liability. The increase for the year ended December 31, 2016 when compared to the same period in the prior year is due to the issuance of $575,000 principal amount of the 2015 Notes in September 2015 and related discount of $22,597.


26



Interest Income—Interest income represents amounts earned on cash and cash equivalents deposited with financial institutions and interest earned on notes receivable. The increase for the year ended December 31, 2016 is related primarily to the increase in the average notes receivable balances outstanding when compared to the prior year. The majority of the increase in interest income related to the $84,331 of notes receivable issued in conjunction with the acquisition of SmartStop in October 2015. These notes have a 7.0% interest rate which increases to 9.0% in February 2017. As of December 31, 2016, the remaining principal balance was $52,201.
Interest Income on Note Receivable from Preferred Operating Partnership Unit Holder—Represents interest on a $100,000 loan to the holder of the Operating Partnership’s Series A Participating Redeemable Preferred Units (the “Series A Units”).

Equity in Earnings of Unconsolidated Real Estate Ventures—Equity in earnings of unconsolidated real estate ventures represents the income earned through our ownership interests in unconsolidated joint ventures. The increase for the year ended December 31, 2016 compared to the same period in the prior year was primarily the result of an increase in our ownership interest from 2.0% to approximately 4.0% in the ESS PRISA LLC ("PRISA") joint venture and from 2.0% to approximately 4.4% in the ESS PRISA II LLC ("PRISA II") joint venture, as well as an increase in revenue at the stores owned by our joint ventures. These increases were offset by an overall decrease in the number of stores owned by our joint ventures, primarily due to our acquisition of 40 of these stores as noted below.

On April 25, 2016, we and affiliates of Prudential Financial, Inc. ("Prudential") entered into the “Second Amendment to Amended and Restated Operating Agreement of ESS PRISA LLC” and the “First Amendment to Amended and Restated Operating Agreement of ESS PRISA II LLC” (the “Amendments”). The Amendments are deemed effective as of April 1, 2016. Under the Amendments, we gave up any future rights to receive distributions from these joint ventures at the higher “excess profit participation” percentage of 17.0% in exchange for a higher equity ownership percentage. Our equity ownership in ESS PRISA LLC increased from 2.0% to 4.0%, and our equity ownership in ESS PRISA II LLC increased from 2.0% to 4.4%.

Equity in Earnings of Unconsolidated Real Estate Ventures—Gain on Sale of Real Estate Assets and Purchase of Joint Venture Partners’ Interests—On November 17, 2016, we acquired 11 stores from our ESS WCOT LLC joint venture ("WCOT") in a step acquisition. We owned 5.0% of WCOT, with the other 95.0% owned by affiliates of Prudential. WCOT created a new subsidiary, Extra Space Storage 132 LLC ("ESS 132"), and transferred 11 stores into ESS 132. WCOT then distributed ESS 132 to Prudential and us on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $68,814 . Immediately after the distribution, we acquired Prudential's 95.0% interest in ESS 132 for $153,304, resulting in 100% ownership of ESS 132 and the related 11 stores. Based on the purchase price of Prudential's share of ESS 132, we determined that the fair value of our investment in ESS 132 immediately prior to the acquisition of Prudential's share was $8,119, and we recorded a gain of $4,651 as a result of re-measuring to fair value our existing equity interest in ESS 132.

On September 16, 2016, we acquired 23 stores from PRISA II in a step acquisition. We owned 4.4% of PRISA II, with the other 95.6% owned by affiliates of Prudential. PRISA II created a new subsidiary, Extra Space Properties 131 LLC ("ESP 131"), and transferred 23 stores into ESP 131. PRISA II then distributed ESP 131 to Prudential and us on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $4,326. Immediately after the distribution, we acquired Prudential's 95.6% interest in ESP 131 for $238,679, resulting in 100% ownership of ESP 131 and the related 23 stores. Based on the purchase price of Prudential's share of ESP 131, we determined that the fair value of our investment in ESP 131 immediately prior to the acquisition of Prudential's share was $10,988, and we recorded a gain of $6,778 as a result of re-measuring to fair value our existing equity interest in ESP 131. Subsequent to these transactions, PRISA II owned 42 stores. We then sold our remaining interest in PRISA II to Prudential for $34,758 in cash. As a result of this sale, we recognized a gain of $30,846.

On February 2, 2016, we acquired six stores from our VRS Self Storage LLC joint venture (“VRS”) in a step acquisition. We owned 45.0% of VRS, with the other 55.0% owned by Prudential. VRS created a new subsidiary, Extra Space Properties 122 LLC (“ESP 122”) and transferred six stores into ESP 122. VRS then distributed ESP 122 to Prudential and us on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $17,261, Immediately after the distribution, we acquired Prudential’s 55.0% interest in ESP 122 for $53,940, resulting in 100% ownership of ESP 122 and the related six stores. Based on the purchase price of Prudential’s share of ESP 122, we determined that the fair value of our investment in ESP 122 immediately prior to the acquisition of Prudential’s share was $44,184, and we recorded a gain of $26,923 as a result of re-measuring to fair value our existing equity interest in ESP 122.

In March 2015, one of our joint ventures sold a store located in New York to a third party and recognized a gain of $60,495. We recognized our 2.0% share of this gain, or $1,228.

27




In March 2015 we acquired a joint venture partner’s 82.4% equity interest in an existing joint venture which had one store. We previously held the remaining 17.6% equity interest in this joint venture. Prior to the acquisition, we accounted for our equity interest in this joint venture as an equity-method investment. We recognized a non-cash gain of $1,629 as a result of re-measuring the fair value of our equity interest in this joint venture held before the acquisition.

Income Tax Expense—Income tax expense is the result of income earned by our TRS which includes income from our management company and reinsurance activities.

Net Income Allocated to Noncontrolling Interests
The following table presents information on net income allocated to noncontrolling interests for the years indicated:
 
For the Year Ended December 31,
 
 
 
 
 
2016
 
2015
 
$ Change
 
% Change
Net income allocated to noncontrolling interests:
 
 
 
 
 
 
 
Net income allocated to Preferred Operating Partnership noncontrolling interests
$
(14,700
)
 
$
(11,718
)
 
$
(2,982
)
 
25.4
%
Net income allocated to Operating Partnership and other noncontrolling interests
(16,262
)
 
(8,344
)
 
(7,918
)
 
94.9
%
Total income allocated to noncontrolling interests:
$
(30,962
)
 
$
(20,062
)
 
$
(10,900
)
 
54.3
%

Net Income Allocated to Preferred Operating Partnership Noncontrolling Interests—Income allocated to the Preferred Operating Partnership noncontrolling interests for the year ended December 31, 2016 represents the fixed distributions paid to the preferred unit holders as follows: the Series A Redeemable Preferred Units (“Series A Units”) receive distributions at an annual rate of 5.0%, plus approximately 0.70% of net income after the allocation of the fixed distributions, the Series B Redeemable Preferred Units (“Series B Units”) receive distributions at an annual rate of 6.0%, the Series C Convertible Redeemable Preferred Units (“Series C Units”) receive, from issuance until the fifth anniversary of issuance, an annual rate of $0.18 plus the then-payable quarterly distribution per OP Unit, and the Series D Redeemable Preferred Units (“Series D Units”) receive distributions at an annual rate of 5.0%.

Net Income Allocated to Operating Partnership and Other Noncontrolling Interests—Income allocated to the Operating Partnership represents approximately 4.2% and 4.2% of net income after the allocation of the fixed distribution paid to the Preferred Operating Partnership unit holders for the years ended December 31, 2016 and 2015, respectively.

Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
Overview
Results for the year ended December 31, 2015, included the operations of 999 stores (747 of which were consolidated and 252 of which were in joint ventures accounted for using the equity method) compared to the results for the year ended December 31, 2014, which included the operations of 828 stores (576 of which were consolidated and 252 of which were in joint ventures accounted for using the equity method).
Revenues
The following table presents information on revenues earned for the years indicated:
 
For the Year Ended
December 31,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Revenues:
 
 
 
 
 
 
 
Property rental
$
676,138

 
$
559,868

 
$
116,270

 
20.8
%
Tenant reinsurance
71,971

 
59,072

 
12,899

 
21.8
%
Management fees and other income
34,161

 
28,215

 
5,946

 
21.1
%
Total revenues
$
782,270

 
$
647,155

 
$
135,115

 
20.9
%

28



Property Rental—The change in property rental revenues consists primarily of an increase of $69,622 associated with acquisitions completed in 2015 and 2014. We acquired 171 operating stores during 2015 and 51 stores during 2014. In addition, revenues increased by $47,560 as a result of increases in occupancy and rental rates to new and existing customers at our stabilized stores. We saw no significant increase in overall customer renewal rates and our average length of stay was approximately 13.7 months. For existing customers we generally seek to increase rental rates approximately 7% to 10% at least annually. Rental rates to new tenants increased by approximately 8.9% over the prior year. Occupancy at our stabilized stores increased to 91.1% at December 31, 2015, as compared to 89.6% at December 31, 2014.
Tenant Reinsurance—The increase in tenant reinsurance revenues was partially due to the increase in overall customer participation to approximately 72.8% at December 31, 2015, compared to approximately 70.7% at December 31, 2014. In addition, we operated 1,347 stores at December 31, 2015, compared to 1,088 stores at December 31, 2014.
Management Fees and Other Income—Our TRS manages stores owned by our joint ventures and third parties. Management fees generally represent 6.0% of cash collected from stores owned by third parties and unconsolidated joint ventures. We also earn an asset management fee from the Storage Portfolio I (“SPI”) joint venture, equal to 0.50% multiplied by the total asset value, provided certain conditions are met. The increase in management fees is due to an increase in the number of properties managed. At December 31, 2015, we managed 348 stores, compared to 260 stores at December 31, 2014.
Expenses
The following table presents information on expenses for the years indicated:
 
For the Year Ended
December 31,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Expenses:
 
 
 
 
 
 
 
Property operations
$
203,965

 
$
172,416

 
$
31,549

 
18.3
%
Tenant reinsurance
13,033

 
10,427

 
2,606

 
25.0
%
Acquisition related costs
69,401

 
9,826

 
59,575

 
606.3
%
General and administrative
67,758

 
60,942

 
6,816

 
11.2
%
Depreciation and amortization
133,457

 
115,076

 
18,381

 
16.0
%
Total expenses
$
487,614

 
$
368,687

 
$
118,927

 
32.3
%
Property Operations—The increase in property operations expense consists primarily of an increase of $26,236 related to acquisitions completed in 2015 and 2014. We acquired 171 operating stores during the year ended December 31, 2015 and 51 stores during the year ended December 31, 2014.
Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. The change is due primarily to the increase in the number of stores we owned and/or managed. At December 31, 2015, we owned and/or managed 1,347 stores compared to 1,088 stores at December 31, 2014. In addition, there was an increase in overall customer participation to approximately 72.8% at December 31, 2015 from approximately 70.7% at December 31, 2014.
Acquisition Related Costs—These costs relate to acquisition activities during the periods indicated. The increase for the year ended December 31, 2015 when compared to the prior year was related primarily to the acquisition of SmartStop on October 1, 2015. As part of this acquisition, we recorded an expense of $38,360 related to defeasance costs and prepayment penalties incurred related to the repayment of SmartStop’s existing debt as of the acquisition date. We incurred $8,053 of professional fees/closing costs, $6,338 of severance-related costs, $1,327 of other payroll-related costs and $9,043 of other acquisition related costs as a result of the acquisition of SmartStop, for a total of $63,121. Additionally, we acquired 49 other properties during the year ended December 31, 2015.
General and Administrative—General and administrative expenses primarily include all expenses not related to our stores, including corporate payroll, travel and professional fees. The expenses are recognized as incurred. General and administrative expense increased over the prior year primarily as a result of the costs related to the management of additional stores. During the year ended December 31, 2015, we acquired 171 stores, 161 of which we did not previously manage. During the year ended December 31, 2014, we acquired 51 stores, 30 of which we did not previously manage. We did not observe any

29



material trends specific to payroll, travel or other expense that contributed significantly to the increase in general and administrative expenses apart from the increase due to the management of additional stores.
Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 171 operating stores during the year ended December 31, 2015, and 51 operating stores during the year ended December 31, 2014.
Other Income and Expenses
The following table presents information on other revenues and expenses for the years indicated:
 
For the Year Ended
December 31,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Other income and expenses:
 
 
 
 
 
 
 
Gain (loss) on real estate transactions, earnout from prior acquisitions and sale of other assets
$
1,501

 
$
(10,285
)
 
$
11,786

 
(114.6
)%
Property casualty loss, net
—

 
(1,724
)
 
1,724

 
(100.0
)%
Interest expense
(95,682
)
 
(81,330
)
 
(14,352
)
 
17.6
 %
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes
(3,310
)
 
(2,683
)
 
(627
)
 
23.4
 %
Interest income
3,461

 
1,607

 
1,854

 
115.4
 %
Interest income on note receivable from Preferred Operating Partnership unit holder
4,850

 
4,850

 
—

 
—
 %
Equity in earnings of unconsolidated real estate ventures
12,351

 
10,541

 
1,810

 
17.2
 %
Equity in earnings of unconsolidated real estate ventures—gain on sale of real estate assets and purchase of joint venture partners’ interests
2,857

 
4,022

 
(1,165
)
 
(29.0
)%
Income tax expense
(11,148
)
 
(7,570
)
 
(3,578
)
 
47.3
 %
Total other expense, net
$
(85,120
)
 
$
(82,572
)
 
$
(2,548
)
 
3.1
 %
Gain (Loss) on Real Estate Transactions, Earnout from Prior Acquisitions and Sale of Other Assets—During 2011, we acquired a store located in Florida. As part of this acquisition, we agreed to make an additional cash payment to the sellers if the acquired store exceeded a specified amount of net rental income for any twelve-month period prior to June 30, 2015. At the acquisition date, $133 was recorded as the estimated amount that would be due, and we believed that it was unlikely that any significant additional payment would be made as a result of this earnout provision. Because the rental growth of the stores trended significantly higher than expected, we recorded additional liability of $2,500. This amount is included in gain (loss) on sale of real estate and earnout from prior acquisitions on our consolidated statements of operations for the year ended December 31, 2014. The $400 gain recorded during the year ended December 31, 2015 represents the adjustment needed to true up the existing liability to the amount owed to the sellers as of June 30, 2015.

During the year ended December 31, 2015, we determined that one of our acquisitions was purchased at below its market value, and we therefore recorded a $1,101 gain, which represents the excess of the fair value of the store acquired over the consideration paid.
During 2012, we acquired a portfolio of ten stores. As part of this acquisition, we agreed to make an additional cash payment to the sellers if the acquired stores exceeded a specified amount of net rental income two years after the acquisition date. At the acquisition date, we believed that it was unlikely that any significant payment would be made as a result of this earnout provision. The rental growth of the stores was significantly higher than expected, resulting in a payment to the sellers of $7,785. This amount is included in gain (loss) on sale of real estate and earnout from prior acquisitions on our consolidated statements of operations for the year ended December 31, 2014.
Property Casualty Loss, Net—In October 2014, a store located in Venice, California, was damaged by a fire. As a result, we recorded a loss, net of insurance recoveries, of $1,724.

30



Interest Expense—Interest expense increased due to the increase in total amount of debt outstanding. This increase was partially offset by a decrease in the average interest rate. At December 31, 2015, our total face value of debt was $3,598,254, compared to a total face value of debt of $2,379,657 at December 31, 2014. The average interest rate was 3.1% as of December 31, 2015, compared to 3.4% as of December 31, 2014.
Non-cash Interest Expense Related to Amortization of Discount on Equity Component of Exchangeable Senior Notes—Represents the amortization of the discount related to the equity component of the exchangeable senior notes issued by our Operating Partnership. In June 2013, our Operating Partnership issued $250,000 of its 2013 Notes. In September 2015, our Operating Partnership issued $575,000 of its 2015 Notes, and repurchased $164,636 principal amount of the 2013 Notes. Both the 2013 Notes and the 2015 Notes have effective interest rates of 4.0%.
Interest Income—Interest income represents amounts earned on cash and cash equivalents deposited with financial institutions and interest earned on notes receivable. The increase relates primarily to the increase in the average balance of notes receivable when compared to the prior year and an increase in our average cash balance. As part of the SmartStop acquisition on October 1, 2015, we issued an $84,331 note receivable that accrues interest at 7.0% annually. We recorded approximately $1,476 of interest income related to this note receivable during the year ended December 31, 2015.
Interest Income on Note Receivable from Preferred Operating Partnership Unit Holder—Represents interest on a $100,000 loan to the holder of the Series A Units.
Equity in Earnings of Unconsolidated Real Estate Ventures—Equity in earnings of unconsolidated real estate ventures represents the income earned through our ownership interests in unconsolidated joint ventures. The increase in equity in earnings for the year ended December 31, 2015 was due primarily to increases in revenue at the stores owned by the joint ventures.
Equity in Earnings of Unconsolidated Real Estate Ventures—Gain on Sale of Real Estate Assets and Purchase of Joint Venture Partners’ Interests— During March 2015, one of our joint ventures sold a store located in New York to a third party and recognized a gain of $60,495. We recognized our 2.0% share of this gain, or $1,228. Additionally, in March 2015 we acquired a joint venture partner’s 82.4% equity interest in an existing joint venture. We previously held the remaining 17.6% equity interest in this joint venture. Prior to the acquisition, we accounted for our equity interest in this joint venture as an equity-method investment. We recognized a non-cash gain of $1,629 during the three months ended March 31, 2015 as a result of re-measuring the fair value of our equity interest in this joint venture held before the acquisition.

In December 2013 and May 2014, as part of a larger acquisition, we acquired our joint venture partners’ 60% to 65% equity interests in six stores located in California. We previously held the remaining 35% to 40% interests in these stores through six separate joint ventures with affiliates of Grupe Properties Co. Inc. (“Grupe”). Prior to the acquisition, we accounted for our interests in these joint ventures as equity-method investments. We recognized a non-cash gain of $3,438 during the year ended December 31, 2014, as a result of re-measuring the fair value of our equity interest in one of these joint ventures held before the acquisition. During the year ended December 31, 2014, we recorded an additional gain of $584 as a result of the final cash distributions received from the other five joint ventures associated with the acquisitions that were completed during 2013.
Income Tax Expense—The increase in income tax expense relates primarily to an increase in income earned by our TRS when compared to the same periods in the prior year. Additionally, during the year ended December 31, 2014, we recorded the initial tax benefit related to a royalty fee that we charge quarterly to our captive insurance subsidiary, which reduced the tax expense for that period.

31



Net Income Allocated to Noncontrolling Interests
The following table presents information on net income allocated to noncontrolling interests for the years indicated:
 
For the Year Ended
December 31,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Net income allocated to noncontrolling interests:
 
 
 
 
 
 
 
Net income allocated to Preferred Operating Partnership noncontrolling interests
$
(11,718
)
 
$
(10,991
)
 
$
(727
)
 
6.6
%
Net income allocated to Operating Partnership and other noncontrolling interests
(8,344
)
 
(6,550
)
 
(1,794
)
 
27.4
%
Total income allocated to noncontrolling interests:
$
(20,062
)

$
(17,541
)
 
$
(2,521
)
 
14.4
%
Net Income Allocated to Preferred Operating Partnership Noncontrolling Interests—In December 2014, as part of the acquisition of a single store, our Operating Partnership issued 548,390 Series D Redeemable Preferred Units (“Series D Units”). The Series D Units have a liquidation value of $25.00 per unit, and receive distributions at an annual rate of 5.0%.
In December 2013 and May 2014, as part of a portfolio acquisition, our Operating Partnership issued 704,016 Series C Convertible Redeemable Preferred Units (“Series C Units”). The Series C Units have a liquidation value of $42.10 per unit. From issuance until the fifth anniversary of issuance, the Series C Units receive distributions at an annual rate of $0.18 plus the then-payable quarterly distribution per OP Unit.
In April 2014, as part of a single store acquisition, our Operating Partnership issued 333,360 Series B Redeemable Preferred Units (“Series B Units”). During August and September 2013, as part of a portfolio acquisition, our Operating Partnership issued 1,342,727 Series B Units. The Series B Units have a liquidation value of $25.00 per unit and receive distributions at an annual rate of 6.0%.
Income allocated to the Preferred Operating Partnership noncontrolling interests for the years ended December 31, 2015 and 2014 represents the fixed distributions paid to the holders of the Series A Units, Series B Units, Series C Units and Series D Units, plus approximately 0.7% of the remaining net income allocated to the holders of the Series A Units.
Net Income Allocated to Operating Partnership and Other Noncontrolling Interests—Income allocated to the Operating Partnership represents approximately 4.2% and 3.5% of net income after the allocation of the fixed distribution paid to the Preferred Operating Partnership unit holders for the years ended December 31, 2015 and 2014, respectively. The percentage of net income allocated to the Operating Partnership noncontrolling interest increased due to OP Units issued in conjunction with acquisitions during 2015.
FUNDS FROM OPERATIONS
FFO provides relevant and meaningful information about our operating performance that is necessary, along with net income and cash flows, for an understanding of our operating results. We believe FFO is a meaningful disclosure as a supplement to net earnings. Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and we believe FFO more accurately reflects the value of our real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) as net income computed in accordance with U.S. generally accepted accounting principles (“GAAP”), excluding gains or losses on sales of operating stores and impairment write-downs of depreciable real estate assets, plus real estate related depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in the consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.
The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

32



The following table presents the calculation of FFO for the periods indicated:
 
 
For the Year Ended December 31,
 
 
2016
 
2015
 
2014
Net income attributable to common stockholders
 
$
366,127

 
$
189,474

 
$
178,355

 
 
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
Real estate depreciation
 
155,358

 
115,924

 
96,819

Amortization of intangibles
 
20,467

 
11,094

 
12,394

(Gain) loss on real estate transactions, earnout from prior acquisition and sale of other assets
 
(8,465
)
 
(1,501
)
 
10,285

Unconsolidated joint venture real estate depreciation and amortization
 
4,505

 
4,233

 
4,395

Unconsolidated joint venture gain on sale of real estate and purchase of partners' interests
 
(69,199
)
 
(2,857
)
 
(4,022
)
Distributions paid on Series A Preferred Operating Partnership units
 
(5,085
)
 
(5,088
)
 
(5,750
)
Income allocated to Operating Partnership noncontrolling interests
 
30,962

 
20,064

 
17,530

 
 
 
 
 
 
 
Funds from operations attributable to common stockholders and unit holders
 
$
494,670

 
$
331,343

 
$
310,006

SAME-STORE RESULTS

Our same-store pool for the periods presented consists of 564 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented. 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. 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. The following table presents operating data for our same-store portfolio.

33



Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
The following table presents a reconciliation of same-store net operating income to income from operations as presented on our consolidated statements of operations for the periods indicated:

 
For the Three Months Ended December 31,
 
Percent
 
For the Year Ended December 31,
 
Percent
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Same-store rental and tenant reinsurance revenues
$
179,003

 
$
170,234

 
5.2%
 
$
708,063

 
$
662,213

 
6.9%
Non same-store rental and tenant reinsurance revenues
72,364

 
45,333

 
59.6%
 
243,970

 
85,896

 
184.0%
Total property rental and tenant reinsurance revenues
251,367

 
215,567

 
16.6%
 
952,033

 
748,109

 
27.3%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store operating and tenant reinsurance expenses
46,169

 
47,142

 
(2.1)%
 
189,973

 
187,939

 
1.1%
Non same-store operating and tenant reinsurance expenses
21,163

 
15,706

 
34.7%
 
75,587

 
29,059

 
160.1%
Total property operating and tenant reinsurance expenses
67,332

 
62,848

 
7.1%
 
265,560

 
216,998

 
22.4%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store net operating income
132,834

 
123,092

 
7.9%
 
518,090

 
474,274

 
9.2%
Non same-store net operating income
51,201

 
29,627

 
72.8%
 
168,383

 
56,837

 
196.3%
Total net operating income
184,035

 
152,719

 
20.5%
 
686,473

 
531,111

 
29.3%
Management fees and other income
9,649

 
10,192

 
 
 
39,842

 
34,161

 
 
Acquisition related costs and other
(2,987
)
 
(63,698
)
 
 
 
(12,111
)
 
(69,401
)
 
 
General and administrative
(18,355
)
 
(18,138
)
 
 
 
(81,806
)
 
(67,758
)
 
 
Depreciation and amortization
(49,158
)
 
(40,766
)
 
 
 
(182,560
)
 
(133,457
)
 
 
Income from operations
$
123,184

 
$
40,309

 
 
 
$
449,838

 
$
294,656

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store square foot occupancy as of quarter end
92.0%
 
92.8%
 
 
 
92.0%
 
92.8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties included in same-store
564
 
564
 
 
 
564
 
564
 
 
The increases in same-store rental and tenant reinsurance revenues for the three months and year ended December 31, 2016, as compared to the same periods ended December 31, 2015, were due primarily to higher rental rates for both new and existing customers. Expenses were lower for the three months ended December 31, 2016 due to decreases year-over-year across most expense categories, primarily due to comparably higher expenses in the three months ended December 31, 2015. The most significant decreases were in repairs and maintenance and utilities. Decreases in these expenses were partially offset by increases in property taxes. For the year ended December 31, 2016, expenses were higher due to increases in property taxes and credit card processing fees. These increases in expenses were partially offset by decreases in utilities and repairs and maintenance expense.

34



Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
The following table presents a reconciliation of same-store net operating income to income from operations as presented on our consolidated statements of operations for the periods indicated:
 
For the Three Months Ended December 31,
 
Percent
 
For the Year Ended December 31,
 
Percent
 
2015
 
2014
 
Change
 
2015
 
2014
 
Change
Same-store rental and tenant reinsurance revenues
$
151,761

 
$
138,471

 
9.6%
 
$
590,979

 
$
540,664

 
9.3%
Non same-store rental and tenant reinsurance revenues
63,806

 
21,665

 
194.5%
 
157,130

 
78,276

 
100.7%
Total property rental and tenant reinsurance revenues
215,567

 
160,136

 
34.6%
 
748,109

 
618,940

 
20.9%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store operating and tenant reinsurance expenses
41,702

 
39,802

 
4.8%
 
166,166

 
161,135

 
3.1%
Non same-store operating and tenant reinsurance expenses
21,146

 
5,838

 
262.2%
 
50,832

 
21,708

 
134.2%
Total property operating and tenant reinsurance expenses
62,848

 
45,640

 
37.7%
 
216,998

 
182,843

 
18.7%
 
 
 
 
 
 
 
 
 
 
 
 
Same-store net operating income
110,059

 
98,669

 
11.5%
 
424,813

 
379,529

 
11.9%
Non same-store net operating income
42,660

 
15,827

 
169.5%
 
106,298

 
56,568

 
87.9%
Total net operating income
152,719

 
114,496

 
33.4%
 
531,111

 
436,097

 
21.8%
Management fees and other income
10,192

 
5,048

 
 
 
34,161

 
28,215

 
 
Acquisition related costs and other
(63,698
)
 
(5,941
)
 
 
 
(69,401
)
 
(9,826
)
 
 
General and administrative
(18,138
)
 
(14,506
)
 
 
 
(67,758
)
 
(60,942
)
 
 
Depreciation and amortization
(40,766
)
 
(29,181
)
 
 
 
(133,457
)
 
(115,076
)
 
 
Income from operations
$
40,309

 
$
69,916

 
 
 
$
294,656

 
$
278,468

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store square foot occupancy as of quarter end
92.9%
 
91.4%
 
 
 
92.9%
 
91.4%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties included in same-store
503
 
503
 
 
 
503
 
503
 
 
The increases in same-store rental and tenant reinsurance revenues for the three months and year ended December 31, 2015, as compared to the same periods ended December 31, 2014, were due primarily to an increase in occupancy, an increase in rental rates to new and existing customers, and reduced customer discounts. Expenses were higher for the year ended December 31, 2015 due to increases in tenant reinsurance expense, credit card merchant fees and property taxes. Increases were offset by decreases in utility expenses and property insurance expense.
CASH FLOWS
Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
Cash provided by operating activities was $539,263 and $367,329 for the years ended December 31, 2016 and 2015, respectively. The change when compared to the prior year was primarily due to a $187,553 increase in net income and an increase in depreciation and amortization expense of $49,103. These increases were offset by an increase in the gain on sale of real estate assets and purchase joint venture partners’ interests of $66,342. This gain was primarily the result of three step acquisitions of stores that were previously owned by our VRS, PRISA II and WCOT joint ventures, along with the gain on the sale of our remaining interest in the PRISA II joint venture to Prudential.


35



Cash used in investing activities was $1,032,035 and $1,625,664, for the years ended December 31, 2016 and 2015, respectively. The decrease was primarily due to a decrease in total cash paid for the acquisition of real estate assets of $464,227. We purchased 99 stores during the year ended December 31, 2016, compared to 171 stores purchased during 2015. There was also an increase in proceeds from sale of real estate assets, investments in real estate ventures and other assets of $60,013, a decrease in cash paid on the purchase/issuance of notes receivable of $57,902 and an increase in cash received from principal payments on notes receivable of $42,785 for the year ended December 31, 2016 when compared to 2015.

Cash provided by financing activities was $460,831 and $1,286,471, for the years ended December 31, 2016 and 2015, respectively. The change related primarily to a decrease in proceeds from notes payable and revolving lines of credit of $221,445, a decrease in net proceeds from the issuance of exchangeable senior notes of $563,500, and a decrease in net proceeds from the sale of common stock of $323,453 for the year ended December 31, 2016 when compared to the prior year. These decreases were partially offset by a decrease in principal payments on notes payable and revolving lines of credit of $191,128 and a decrease in the cash paid for the repurchase of exchangeable senior notes of $205,017.

Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
Cash provided by operating activities was $367,329 and $337,581 for the years ended December 31, 2015 and 2014, respectively. The change when compared to the prior year was primarily due to a $13,640 increase in net income and an increase in depreciation and amortization expense of $18,381. These increases were partially offset by a decrease in the change in accounts payable and accrued liabilities of $4,812.
Cash used in investing activities was $1,625,664 and $564,948 for the years ended December 31, 2015 and 2014, respectively. The change was primarily the result of an increase of $1,200,853 paid for the acquisition of SmartStop in October 2015. There was also an increase of $55,073 in cash used to purchase/issue notes receivable. These increases in cash outflows were partially offset by an increase of $45,080 in cash received as returns of investments in unconsolidated real estate ventures.
Cash provided by financing activities was $1,286,471 and $148,307 for the years ended December 31, 2015 and 2014, respectively. The net increase was due to a number of factors, including an increase of $1,204,138 in the cash proceeds received from the issuance of notes payable and revolving lines of credit, an increase of $446,877 in the cash proceeds received from the sale of common stock, and an increase of $563,500 in the net proceeds from the issuance of exchangeable senior notes. These increases in cash inflows were offset by an increase of $780,442 of cash paid for principal payments on notes payable and revolving lines of credit, an increase of $227,212 in cash paid to repurchase existing exchangeable senior notes, and an increase of $59,211 in cash paid as dividends on our common stock.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2016, we had $43,858 available in cash and cash equivalents. We are required to distribute at least 90% of our net taxable income, excluding net capital gains, to our stockholders on an annual basis to maintain our qualification as a REIT.

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 2016 and 2015, 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.


36



The following table presents information on our lines of credit for the period presented. All of our lines of credit are guaranteed by us.
 
As of December 31, 2016
 
 
 
 
 
 
Revolving Lines of Credit
Amount Drawn
 
Capacity
 
Interest Rate
 
Origination Date
 
Maturity
 
Basis Rate (1)
Credit Line 1 (2)
$
3,000

 
$
100,000

 
2.4
%
 
6/4/2010
 
6/30/2018
 
LIBOR plus 1.7%
Credit Line 2 (3)(4)
362,000

 
500,000

 
2.2
%
 
10/14/2016
 
10/14/2020
 
LIBOR plus 1.4%
 
$
365,000

 
$
600,000

 
 
 
 
 
 
 
 
(1) 30-day USD LIBOR
(2) Secured by mortgages on certain real estate assets. One two-year extension available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of December 31, 2016. Rate is subject to change based on our consolidated leverage ratio.

As of December 31, 2016, we had $4,363,697 face value of debt, resulting in a debt to total enterprise value ratio of 29.6%. As of December 31, 2016, the ratio of total fixed-rate debt and other instruments to total debt was 70.0% (including $2,198,275 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of the total of fixed- and variable-rate debt at December 31, 2016 was 3.0%. Certain of our real estate assets are pledged as collateral for our debt. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at December 31, 2016.

We expect to fund our short-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, including undrawn portions of our unsecured facility. In addition, we are pursuing additional sources of financing based on anticipated funding needs.

Our liquidity needs consist primarily of cash distributions to stockholders, store acquisitions, principal payments under our borrowings and non-recurring capital expenditures. 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. In addition, we evaluate, on an ongoing basis, the merits of strategic acquisitions and other relationships, which may require us to raise additional funds. We do not expect that our operating cash flow or cash balances will be sufficient to fund our liquidity needs and instead expect to fund such needs out of additional borrowings of secured or unsecured indebtedness, joint ventures with third parties, and from the proceeds of public and private offerings of equity and debt. Additional capital may not be available on terms favorable to us or at all. Any additional issuance of equity or equity-linked securities may result in dilution to our stockholders. In addition, any new securities we issue could have rights, preferences and privileges senior to holders of our common stock. We may also use Operating Partnership units as currency to fund acquisitions from self-storage owners who desire tax-deferral in their exiting transactions.
OFF-BALANCE SHEET ARRANGEMENTS
Except as disclosed in the notes to our financial statements, we do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purposes entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our financial statements, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitments or intent to provide funding to any such entities. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
CONTRACTUAL OBLIGATIONS
The following table presents information on future payments due by period as of December 31, 2016:

37



 
Payments due by Period:
 
 
 
Less Than
 
 
 
 
 
After
 
Total
 
1 Year
 
1-3 Years
 
3-5 Years
 
5 Years
Operating leases
$
120,926

 
$
6,123

 
$
12,801

 
$
11,977

 
$
90,025

Notes payable, notes payable to trusts and revolving lines of credit
 
 
 
 
 
 
 
 
 
   Interest
573,411

 
127,630

 
218,184

 
109,191

 
118,406

   Principal
4,363,697

 
311,075

 
936,309

 
2,432,353

 
683,960

Total contractual obligations
$
5,058,034

 
$
444,828

 
$
1,167,294

 
$
2,553,521

 
$
892,391

The operating leases above include minimum future lease payments on leases for 22 of our operating stores as well as leases of our corporate offices. Three ground leases include additional contingent rental payments based on the level of revenue achieved at the store.
As of December 31, 2016, the weighted average interest rate for all fixed rate loans was 3.3%, and the weighted average interest rate on all variable rate loans was 2.3%.
FINANCING STRATEGY
We will continue to employ leverage in our capital structure in amounts reviewed from time to time by our board of directors. 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:
 
•
the interest rate of the proposed financing;
•
the extent to which the financing impacts flexibility in managing our stores;
•
prepayment penalties and restrictions on refinancing;
•
the purchase price of stores acquired with debt financing;
•
long-term objectives with respect to the financing;
•
target investment returns;
•
the ability of particular stores, and our Company as a whole, to generate cash flow sufficient to cover expected debt service payments;
•
overall level of consolidated indebtedness;
•
timing of debt and lease maturities;
•
provisions that require recourse and cross-collateralization;
•
corporate credit ratios including debt service coverage, debt to total capitalization and debt to undepreciated assets; and
•
the overall ratio of fixed and variable rate debt.
Our indebtedness may be recourse, non-recourse, cross-collateralized, cross-defaulted, secured or unsecured. If the indebtedness is non-recourse, the collateral will be limited to the particular stores to which the indebtedness relates. In addition, we may invest in stores subject to existing loans collateralized by mortgages or similar liens on our stores, or 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.
We may from time to time seek to retire or repurchase our outstanding debt, as well as 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. The amounts involved may be material.

38



SEASONALITY
The self-storage business is subject to seasonal fluctuations. A greater portion of revenues and profits are realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.
Item 7a.     Quantitative and Qualitative Disclosures About Market Risk
Market Risk
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Our future income, cash flows and fair values of financial instruments are dependent upon prevailing market interest rates.
Interest Rate Risk
Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.
As of December 31, 2016, we had approximately $4.4 billion in total face value debt, of which approximately $1.3 billion was subject to variable interest rates (excluding debt with interest rate swaps). If LIBOR were to increase or decrease by 100 basis points, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $13.1 million annually.
Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. These analyses do not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

39



Item 8.     Financial Statements and Supplementary Data
EXTRA SPACE STORAGE INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULES
All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto.

40



Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Extra Space Storage Inc.
We have audited the accompanying consolidated balance sheets of Extra Space Storage Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 8. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Extra Space Storage Inc. at December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Extra Space Storage Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Salt Lake City, Utah
February 27, 2017

41



Extra Space Storage Inc.
Consolidated Balance Sheets
(dollars in thousands, except share data)
 
December 31, 2016
 
December 31, 2015
Assets:
 
 
 
Real estate assets, net
$
6,770,447

 
$
5,689,309

Investments in unconsolidated real estate ventures
79,570

 
103,007

Cash and cash equivalents
43,858

 
75,799

Restricted cash
13,884

 
30,738

Receivables from related parties and affiliated real estate joint ventures
16,611

 
2,205

Other assets, net
167,076

 
170,349

Total assets
$
7,091,446

 
$
6,071,407

Liabilities, Noncontrolling Interests and Equity:
 
 
 
Notes payable, net
$
3,213,588

 
$
2,758,567

Exchangeable senior notes, net
610,314

 
623,863

Notes payable to trusts, net
117,321

 
117,191

Revolving lines of credit
365,000

 
36,000

Accounts payable and accrued expenses
101,388

 
82,693

Other liabilities
87,669

 
80,489

Total liabilities
4,495,280

 
3,698,803

Commitments and contingencies

 

Noncontrolling Interests and Equity:
 
 
 
Extra Space Storage Inc. stockholders' equity:
 
 
 
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, 125,881,460 and 124,119,531 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively
1,259

 
1,241

Additional paid-in capital
2,566,120

 
2,431,754

Accumulated other comprehensive income (loss)
16,770

 
(6,352
)
Accumulated deficit
(339,257
)
 
(337,566
)
Total Extra Space Storage Inc. stockholders' equity
2,244,892

 
2,089,077

Noncontrolling interest represented by Preferred Operating Partnership units, net of $120,230 notes receivable
147,920

 
80,531

Noncontrolling interests in Operating Partnership
203,354

 
202,834

Other noncontrolling interests
—

 
162

Total noncontrolling interests and equity
2,596,166

 
2,372,604

Total liabilities, noncontrolling interests and equity
$
7,091,446

 
$
6,071,407

See accompanying notes.

42



Extra Space Storage Inc.
Consolidated Statements of Operations
(dollars in thousands, except share data)
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Revenues:
 
 
 
 
 
Property rental
$
864,742

 
$
676,138

 
$
559,868

Tenant reinsurance
87,291

 
71,971

 
59,072

Management fees and other income
39,842

 
34,161

 
28,215

Total revenues
991,875

 
782,270

 
647,155

Expenses:
 
 
 
 
 
Property operations
250,005

 
203,965

 
172,416

Tenant reinsurance
15,555

 
13,033

 
10,427

Acquisition related costs and other
12,111

 
69,401

 
9,826

General and administrative
81,806

 
67,758

 
60,942

Depreciation and amortization
182,560

 
133,457

 
115,076

Total expenses
542,037

 
487,614

 
368,687

Income from operations
449,838

 
294,656

 
278,468

Gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets
8,465

 
1,501

 
(10,285
)
Property casualty loss, net
—

 
—

 
(1,724
)
Interest expense
(133,479
)
 
(95,682
)
 
(81,330
)
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes
(4,980
)
 
(3,310
)
 
(2,683
)
Interest income
6,148

 
3,461

 
1,607

Interest income on note receivable from Preferred Operating Partnership unit holder
4,850

 
4,850

 
4,850

Income before equity in earnings of unconsolidated real estate ventures and income tax expense
330,842

 
205,476

 
188,903

Equity in earnings of unconsolidated real estate ventures
12,895

 
12,351

 
10,541

Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests
69,199

 
2,857

 
4,022

Income tax expense
(15,847
)
 
(11,148
)
 
(7,570
)
Net income
397,089

 
209,536

 
195,896

Net income allocated to Preferred Operating Partnership noncontrolling interests
(14,700
)
 
(11,718
)
 
(10,991
)
Net income allocated to Operating Partnership and other noncontrolling interests
(16,262
)
 
(8,344
)
 
(6,550
)
Net income attributable to common stockholders
$
366,127

 
$
189,474

 
$
178,355

Earnings per common share
 
 
 
 
 
Basic
$
2.92

 
$
1.58

 
$
1.54

Diluted
$
2.91

 
$
1.56

 
$
1.53

Weighted average number of shares
 
 
 
 
 
Basic
125,087,554

 
119,816,743

 
115,713,807

Diluted
125,948,076

 
126,918,869

 
121,435,267

See accompanying notes.

43



Extra Space Storage Inc.
Consolidated Statements of Comprehensive Income
(amounts in thousands)
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Net income
$
397,089

 
$
209,536

 
$
195,896

Other comprehensive income (loss):
 
 
 
 
 
   Change in fair value of interest rate swaps
24,598

 
(4,929
)
 
(12,061
)
Total comprehensive income
421,687

 
204,607

 
183,835

   Less: comprehensive income attributable to noncontrolling interests
32,438

 
20,001

 
17,120

Comprehensive income attributable to common stockholders
$
389,249

 
$
184,606

 
$
166,715

See accompanying notes

44



Extra Space Storage Inc.
Consolidated Statements of Stockholders' Equity
(amounts in thousands, except share data)
 
 
 
 
 
 
 
Noncontrolling Interests
 
Extra Space Storage Inc. Stockholders’ Equity
 
 
 
Preferred Operating Partnership
 
Operating
Partnership
 
Other
 
 
 
 
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Noncontrolling
Interests and
Equity
 
Series A
 
Series B
 
Series C
 
Series D
 
 
Shares
 
Par Value
 
Balances at December 31, 2013
$
30,202

 
$
33,568

 
$
17,177

 
$
—

 
$
91,453

 
$
1,025

 
115,755,527

 
$
1,157

 
$
1,973,159

 
$
10,156

 
$
(226,002
)
 
$
1,931,895

Issuance of common stock upon the exercise of options
—

 
—

 
—

 
—

 
—

 
—

 
211,747

 
2

 
3,093

 
—

 
—

 
3,095

Restricted stock grants issued
—

 
—

 
—

 
—

 
—

 
—

 
117,370

 
1

 
—

 
—

 
—

 
1

Restricted stock grants cancelled
—

 
—

 
—

 
—

 
—

 
—

 
(23,595
)
 
—

 
—

 
—

 
—

 
—

Compensation expense related to stock-based awards
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
4,984

 
—

 
—

 
4,984

Issuance of Operating Partnership units in conjunction with store acquisitions
—

 
8,334

 
13,783

 
13,710

 
2,982

 
—

 
—

 
—

 
—

 
—

 
—

 
38,809

Redemption of Operating Partnership units for common stock
(10,240
)
 
—

 
—

 
—

 
(398
)
 
—

 
299,190

 
3

 
10,635

 
—

 
—

 
—

Redemption of Operating Partnership units for cash
(4,794
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(4,794
)
Issuance of note receivable to Series C unit holders
—

 
—

 
(20,230
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(20,230
)
Net income
7,036

 
2,387

 
1,551

 
17

 
6,538

 
12

 
—

 
—

 
—

 
—

 
178,355

 
195,896

Other comprehensive income
(74
)
 
—

 
—

 
—

 
(347
)
 
—

 
—

 
—

 
—

 
(11,640
)
 
—

 
(12,061
)
Tax effect from vesting of restricted stock grants and stock option exercises
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,613

 
—

 
—

 
3,613

Distributions to Operating Partnership units held by noncontrolling interests
(7,321
)
 
(2,386
)
 
(1,551
)
 
(17
)
 
(7,806
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(19,081
)
Distributions to other noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(53
)
 
—

 
—

 
—

 
—

 
—

 
(53
)
Dividends paid on common stock at $1.81 per share
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(210,091
)
 
(210,091
)
Balances at December 31, 2014
$
14,809

 
$
41,903

 
$
10,730

 
$
13,710

 
$
92,422

 
$
984

 
116,360,239

 
$
1,163

 
$
1,995,484

 
$
(1,484
)
 
$
(257,738
)
 
$
1,911,983


45



Extra Space Storage Inc.
Consolidated Statements of Stockholders' Equity
(amounts in thousands, except share data)
 
 
 
 
 
 
 
Noncontrolling Interests
 
Extra Space Storage Inc. Stockholders’ Equity
 
 
 
Preferred Operating Partnership
 
Operating
Partnership
 
Other
 
 
 
 
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Noncontrolling
Interests and
Equity
 
Series A
 
Series B
 
Series C
 
Series D
 
 
Shares
 
Par Value
 
Issuance of common stock upon the exercise of options
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
79,974

 
$
1

 
$
1,541

 
$
—

 
$
—

 
$
1,542

Restricted stock grants issued
—

 
—

 
—

 
—

 
—

 
—

 
174,558

 
2

 
—

 
—

 
—

 
2

Restricted stock grants cancelled
—

 
—

 
—

 
—

 
—

 
—

 
(18,090
)
 
—

 
—

 
—

 
—

 
—

Issuance of common stock, net of offering costs
—

 
—

 
—

 
—

 
—

 
—

 
6,735,000

 
67

 
446,810

 
—

 
—

 
446,877

Compensation expense related to stock-based awards
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
6,055

 
—

 
—

 
6,055

Purchase of remaining equity interest in existing consolidated joint venture
—

 
—

 
—

 
—

 
—

 
(822
)
 
—

 
—

 
(446
)
 
—

 
—

 
(1,268
)
Issuance of Operating Partnership units in conjunction with acquisitions
—

 
—

 
—

 
—

 
142,399

 
—

 
—

 
—

 
—

 
—

 
—

 
142,399

Redemption of Operating Partnership units for common stock
—

 
—

 
—

 
—

 
(28,106
)
 
—

 
787,850

 
8

 
28,098

 
—

 
—

 
—

Repurchase of equity portion of 2013 exchangeable senior notes
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(70,112
)
 
—

 
—

 
(70,112
)
Issuance of 2015 exchangeable senior notes - equity component
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
22,597

 
—

 
—

 
22,597

Net income
6,445

 
2,514

 
2,074

 
685

 
8,344

 
—

 
—

 
—

 
—

 
—

 
189,474

 
209,536

Other comprehensive income (loss)
(15
)
 
—

 
—

 
—

 
(46
)
 
—

 
—

 
—

 
—

 
(4,868
)
 
—

 
(4,929
)
Tax effect from vesting of restricted stock grants and stock option exercises
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1,727

 
—

 
—

 
1,727

Distributions to Operating Partnership units held by noncontrolling interests
(7,050
)
 
(2,515
)
 
(2,074
)
 
(685
)
 
(12,179
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(24,503
)
Dividends paid on common stock at $2.24 per share
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(269,302
)
 
(269,302
)
Balances at December 31, 2015
$
14,189

 
$
41,902

 
$
10,730

 
$
13,710

 
$
202,834

 
$
162

 
124,119,531

 
$
1,241

 
$
2,431,754

 
$
(6,352
)
 
$
(337,566
)
 
$
2,372,604


46



Extra Space Storage Inc.
Consolidated Statements of Stockholders' Equity
(amounts in thousands, except share data)
 
 
 
 
 
 
 
Noncontrolling Interests
 
Extra Space Storage Inc. Stockholders’ Equity
 
 
 
Preferred Operating Partnership
 
Operating
Partnership
 
Other
 
 
 
 
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Accumulated
Deficit
 
Total
Noncontrolling
Interests and
Equity
 
Series A
 
Series B
 
Series C
 
Series D
 
 
Shares
 
Par Value
 
Issuance of common stock upon the exercise of options
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
97,855

 
$
—

 
$
1,444

 
$
—

 
$
—

 
$
1,444

Restricted stock grants issued
—

 
—

 
—

 
—

 
—

 
—

 
119,931

 
2

 


 
—

 
—

 
2

Restricted stock grants cancelled
—

 
—

 
—

 
—

 
—

 
—

 
(9,947
)
 
—

 
—

 
—

 
—

 
—

Issuance of common stock, net of offering costs
—

 
—

 
—

 
—

 
—

 
—

 
1,381,300

 
14

 
123,408

 
—

 
—

 
123,422

Compensation expense related to stock-based awards
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
8,045

 
—

 
—

 
8,045

Purchase of remaining equity interest in existing consolidated joint venture
—

 
—

 
—

 
—

 
800

 
(162
)
 
—

 
—

 
(638
)
 
—

 
—

 
—

Issuance of Operating Partnership units in conjunction with acquisitions
—

 
—

 
—

 
—

 
7,247

 
—

 
—

 
—

 
—

 
—

 
—

 
7,247

Redemption of Operating Partnership units for sale of property
—

 
—

 
—

 
—

 
(7,689
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(7,689
)
Redemption of Operating Partnership units for common stock and cash
—

 
—

 
—

 
—

 
(1,083
)
 
—

 
23,850

 
—

 
577

 
—

 
—

 
(506
)
Issuance of Preferred D Units in the Operating Partnership in conjunction with acquisitions
—

 
—

 
—

 
67,193

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
67,193

Repurchase of equity portion of 2013 exchangeable senior notes
—

 
—

 
—

 
—

 
—

 
—

 
148,940

 
2

 
(874
)
 
—

 
—

 
(872
)
Net income
7,645

 
2,514

 
2,570

 
1,971

 
16,262

 
—

 
—

 
—

 
—

 
—

 
366,127

 
397,089

Other comprehensive income loss
201

 
—

 
—

 
—

 
1,275

 
—

 
—

 
—

 
—

 
23,122

 
—

 
24,598

Tax effect from vesting of restricted stock grants and stock option exercises
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,404

 
—

 
—

 
2,404

Distributions to Operating Partnership units held by noncontrolling interests
(7,650
)
 
(2,514
)
 
(2,570
)
 
(1,971
)
 
(16,292
)
 
—

 
—

 
—

 
—

 
—

 
—

 
(30,997
)
Dividends paid on common stock at $2.93 per share
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(367,818
)
 
(367,818
)
Balances at December 31, 2016
$
14,385

 
$
41,902

 
$
10,730

 
$
80,903

 
$
203,354

 
$
—

 
125,881,460

 
$
1,259

 
$
2,566,120

 
$
16,770

 
$
(339,257
)
 
$
2,596,166

See accompanying notes.

47



Extra Space Storage Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
 
Net income
$
397,089

 
$
209,536

 
$
195,896

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
182,560

 
133,457

 
115,076

Amortization of deferred financing costs
12,922

 
7,779

 
6,592

Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes
4,980

 
3,310

 
2,683

Non-cash interest expense related to amortization of premium on notes payable
(872
)
 
(2,409
)
 
(3,079
)
Compensation expense related to stock-based awards
8,045

 
6,055

 
4,984

Gain on sale of real estate assets and purchase of joint venture partners' interests
(69,199
)
 
(2,857
)
 
(3,438
)
Loss (gain) on real estate transactions, earnout from prior acquisition and sale of other assets
(8,465
)
 
(1,501
)
 
2,500

Property casualty loss
—

 
—

 
1,724

Distributions from unconsolidated real estate ventures in excess of earnings
3,534

 
4,531

 
4,510

Changes in operating assets and liabilities:
 
 
 
 
 
Receivables from related parties and affiliated real estate joint ventures
1,367

 
(1,436
)
 
71

Other assets
(2,981
)
 
(1,172
)
 
(1,498
)
Accounts payable and accrued expenses
10,075

 
108

 
4,920

Other liabilities
208

 
11,928

 
6,640

Net cash provided by operating activities
539,263

 
367,329

 
337,581

Cash flows from investing activities:
 
 
 
 
 
Acquisition of SmartStop, net of cash acquired
—

 
(1,200,853
)
 
—

Acquisition of real estate assets
(1,086,523
)
 
(349,897
)
 
(503,538
)
Development and redevelopment of real estate assets
(23,279
)
 
(26,931
)
 
(23,528
)
Proceeds from sale of real estate assets, investments in real estate ventures and other assets
60,813

 
800

 
—

Change in restricted cash
16,854

 
1,282

 
(3,794
)
Investment in unconsolidated real estate ventures
(28,241
)
 
(3,434
)
 
—

Return of investment in unconsolidated real estate ventures
16,953

 
45,080

 
—

Purchase/issuance of notes receivable
(26,429
)
 
(84,331
)
 
(29,258
)
Principal payments received from notes receivable
42,785

 
—

 
—

Purchase of equipment and fixtures
(4,968
)
 
(7,380
)
 
(4,830
)
Net cash used in investing activities
(1,032,035
)
 
(1,625,664
)
 
(564,948
)
Cash flows from financing activities:
 
 
 
 
 
Proceeds from the sale of common stock, net of offering costs
123,424

 
446,877

 
—

Net proceeds from the issuance of 2015 exchangeable senior notes
—

 
563,500

 
—

Repurchase of exchangeable senior notes
(22,195
)
 
(227,212
)
 
—

Proceeds from notes payable and revolving lines of credit
1,900,357

 
2,121,802

 
917,664

Principal payments on notes payable and revolving lines of credit
(1,122,442
)
 
(1,313,570
)
 
(533,128
)
Deferred financing costs
(17,486
)
 
(9,779
)
 
(5,305
)
Net proceeds from exercise of stock options
1,444

 
1,542

 
3,095

Proceeds from termination of interest rate cap
1,650

 
—

 
—

Purchase of interest rate cap
—

 
(2,884
)
 
—

Payment of earnout from prior acquisition
(4,600
)
 
—

 
—

Redemption of Operating Partnership units held by noncontrolling interests
(506
)
 
—

 
(4,794
)
Dividends paid on common stock
(367,818
)
 
(269,302
)
 
(210,091
)
Distributions to noncontrolling interests
(30,997
)
 
(24,503
)
 
(19,134
)
Net cash provided by financing activities
460,831

 
1,286,471

 
148,307

Net increase (decrease) in cash and cash equivalents
(31,941
)
 
28,136

 
(79,060
)
Cash and cash equivalents, beginning of the period
75,799

 
47,663

 
126,723

Cash and cash equivalents, end of the period
$
43,858

 
$
75,799

 
$
47,663

Supplemental schedule of cash flow information
 
 
 
 
 
Interest paid
122,265

 
89,507

 
75,218

Income taxes paid
14,864

 
1,782

 
3,418

Supplemental schedule of noncash investing and financing activities:
 
 
 
 
 
Redemption of Operating Partnership units held by noncontrolling interests for common stock
 
 
 
 
 
Noncontrolling interests in Operating Partnership
$
(577
)
 
$
(28,106
)
 
$
(10,638
)
Common stock and paid-in capital
577

 
28,106

 
10,638

Tax effect from vesting of restricted stock grants and option exercises
 
 
 
 
 
Other assets
$
2,404

 
$
1,727

 
$
3,613

Additional paid-in capital
(2,404
)
 
(1,727
)
 
(3,613
)
Acquisitions of real estate assets
 
 
 
 
 
Real estate assets, net
$
84,163

 
$
158,009

 
$
77,158

Value of Operating Partnership units issued
(74,440
)
 
(142,399
)
 
(38,811
)
Notes payable assumed
(9,723
)
 
—

 
(38,347
)

48



Receivables from related parties and affiliated real estate joint ventures
—

 
(15,610
)
 
—

Accrued construction costs and capital expenditures
 
 
 
 
 
Acquisition of real estate assets
$
8,497

 
$
2,332

 
$
2,799

Development and redevelopment of real estate assets
125

 
—

 
—

Other liabilities
(8,622
)
 
(2,332
)
 
(2,799
)
Distribution of real estate from investments in unconsolidated real estate ventures
 
 
 
 
 
Real estate assets, net
$
25,055

 
$
—

 
$
—

Investments in unconsolidated real estate ventures
(25,055
)
 
—

 
—

Disposition of real estate assets
 
 
 
 
 
Real estate assets, net
$
(7,689
)
 
$
—

 
$
—

Operating Partnership units redeemed
7,689

 
—

 
—

Acquisition of noncontrolling interests
 
 
 
 
 
Operating Partnership units issued
$
(800
)
 
$
—

 
$
—

Other noncontrolling interests
162

 
—

 
—

Additional paid-in capital
638

 
—

 
—

See accompanying notes.

49
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amounts in thousands, except store and share data, unless otherwise stated



1.     DESCRIPTION OF BUSINESS
Extra Space Storage Inc. (the “Company”) is a fully integrated, self-administered and self-managed real estate investment trust (“REIT”), formed as a Maryland Corporation on April 30, 2004, to own, operate, manage, acquire, develop and redevelop professionally managed self-storage properties located throughout the United States. The Company continues the business of Extra Space Storage LLC and its subsidiaries, which had engaged in the self-storage business since 1977. The Company’s interest in its stores is held through its operating partnership, Extra Space Storage LP (the “Operating Partnership”), which was formed on May 5, 2004. The Company’s primary assets are general partner and limited partner interests in the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT. The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). To the extent the Company continues to qualify as a REIT, it will not be subject to tax, with certain limited exceptions, on the taxable income that is distributed to its stockholders.
The Company invests in stores by acquiring wholly-owned stores or by acquiring an equity interest in real estate entities. At December 31, 2016, the Company had direct and indirect equity interests in 1,016 storage facilities. In addition, the Company managed 411 stores for third parties bringing the total number of stores which it owns and/or manages to 1,427. These stores are located in 38 states, Washington, D.C. and Puerto Rico.
The Company operates in three distinct segments: (1) rental operations; (2) tenant reinsurance; and (3) property management, acquisition and development. The rental operations activities include rental operations of stores in which the Company has an ownership interest. No single tenant accounts for more than 5.0% of rental income. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in the Company’s stores. The Company’s property management, acquisition and development activities include managing, acquiring, developing and selling stores.
2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its wholly- or majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to the current year’s presentation. In our Segment Information in Note 19, $2,857 and $4,022 of equity in earnings of unconsolidated real estate ventures-gain on sale of real estate assets and purchase of partners’ interests was reclassified from the rental operations segment to the property management, acquisition and development segment for the years ended December 31, 2015 and 2014, respectively.
Variable Interest Entities
The Company accounts for arrangements that are not controlled through voting or similar rights as variable interest entities (“VIEs”). An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE. A VIE is created when (i) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, or (ii) the entity’s equity holders as a group either: (a) lack the power, through voting or similar rights, to direct the activities of the entity that most significantly impact the entity’s economic performance, (b) are not obligated to absorb expected losses of the entity if they occur, or (c) do not have the right to receive expected residual returns of the entity if they occur. If an entity is deemed to be a VIE, the enterprise that is deemed to have a variable interest, or combination of variable interests, that provides the enterprise with a controlling financial interest in the VIE, is considered the primary beneficiary and must consolidate the VIE.

The Company has concluded that under certain circumstances when the Company enters into arrangements for the formation of joint ventures, a VIE may be created under condition (i), (ii) (b) or (c) of the previous paragraph. For each VIE created, the Company has performed a qualitative analysis, including considering which party, if any, has the power to direct the activities most significant to the economic performance of each VIE and whether that party has the obligation to absorb

50
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If the Company is determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated with the Company’s financial statements. Additionally, the Operating Partnership has notes payable to three trusts that are VIEs under condition (ii)(a) above. Since the Operating Partnership is not the primary beneficiary of the trusts, these VIEs are not consolidated.
The Company’s investments in real estate joint ventures, where the Company has significant influence, but not control, and joint ventures which are VIEs in which the Company is not the primary beneficiary, are recorded under the equity method of accounting on the accompanying consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value Disclosures
Derivative financial instruments
Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. 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 receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves.
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the Financial Accounting Standard Board’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
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 December 31, 2016, 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 are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are 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 December 31, 2016, aggregated by the level in the fair value hierarchy within which those measurements fall.
 
 
 
Fair Value Measurements at Reporting Date Using
Description
December 31, 2016
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Other assets - Cash Flow Hedge Swap Agreements
$
23,844

 
$
—

 
$
23,844

 
$
—

Other liabilities - Cash Flow Hedge Swap Agreements
$
(2,447
)
 
$
—

 
$
(2,447
)
 
$
—


51
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


There were no transfers of assets and liabilities between Level 1 and Level 2 during the year ended December 31, 2016. The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of December 31, 2016 or 2015.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Long-lived assets held for use are evaluated for impairment when events or circumstances indicate there may be impairment. The Company reviews each store at least annually to determine if any such events or circumstances have occurred or exist. The Company focuses on stores where occupancy and/or rental income have decreased by a significant amount. For these stores, the Company determines whether the decrease is temporary or permanent, and whether the store will likely recover the lost occupancy and/or revenue in the short term. In addition, the Company reviews stores in the lease-up stage and compares actual operating results to original projections.
When the Company determines that an event that may indicate impairment has occurred, the Company compares the carrying value of the related long-lived assets to the undiscounted future net operating cash flows attributable to the assets. An impairment loss is recorded if the net carrying value of the assets exceeds the undiscounted future net operating cash flows attributable to the assets. The impairment loss recognized equals the excess of net carrying value over the related fair value of the assets.
When real estate assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the fair value of the assets, net of selling costs. 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 are presented as part of normal operations for all periods presented. As of December 31, 2016, the Company had two parcels of undeveloped land classified as held for sale. The estimated fair value less selling costs of these assets is greater than the carrying value of the assets, and therefore no loss has been recorded.
The Company assesses annually whether there are any indicators that the value of the Company’s investments in unconsolidated real estate ventures may be impaired and when events or circumstances indicate that there may be impairment. An investment is impaired if management’s estimate of the fair value of the investment is less than its carrying value. To the extent impairment has occurred, and is considered to be other than temporary, the loss is measured as the excess of the carrying amount of the investment over the fair value of the investment.
As of December 31, 2016 and 2015, 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, revolving lines of credit and other liabilities reflected in the consolidated balance sheets at December 31, 2016 and 2015, approximate fair value.
The fair values of the Company’s notes receivable from Preferred Operating Partnership unit holders and other fixed rate notes receivable 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 fair values of the Company’s fixed rate notes payable and notes payable to trusts 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 value of the Company’s exchangeable senior notes was estimated using an average market price for similar securities obtained from a third party.

52
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated:
 
December 31, 2016
 
December 31, 2015
 
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
Notes receivable from Preferred Operating Partnership unit holders
$
125,642

 
$
120,230

 
$
128,216

 
$
120,230

Fixed rate notes receivable
$
53,450

 
$
52,201

 
$
86,814

 
$
84,331

Fixed rate notes payable and notes payable to trusts
$
2,404,996

 
$
2,417,558

 
$
1,828,486

 
$
1,806,904

Exchangeable senior notes
$
706,827

 
$
638,170

 
$
770,523

 
$
660,364

Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation. Direct and allowable internal costs associated with the development, construction, renovation, and improvement of real estate assets are capitalized. Interest, property taxes, and other costs associated with development incurred during the construction period are capitalized. The construction period begins when expenditures for the real estate assets have been made and activities that are necessary to prepare the asset for its intended use are in progress. The construction period ends when the asset is substantially complete and ready for its intended use.
Expenditures for maintenance and repairs are charged to expense as incurred. Major replacements and betterments that improve or extend the life of the asset are capitalized and depreciated over their estimated useful lives. Depreciation is computed using the straight-line method over the estimated useful lives of the buildings and improvements, which are generally between five and 39 years.
In connection with the Company’s acquisition of operating stores, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their fair values, which are estimated using significant unobservable inputs. The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Intangible assets, which represent the value of existing tenant relationships, are recorded at their fair values based on the avoided cost to replace the current leases. The Company measures the value of tenant relationships based on the rent lost due to the amount of time required to replace existing customers, which is based on the Company’s historical experience with turnover in its stores. Debt assumed as part of an acquisition is recorded at fair value based on current interest rates compared to contractual rates.     
Stores purchased at the time of certificate of occupancy issuance are considered asset acquisitions. As such, the purchase price is allocated to the land and buildings acquired based on their fair values. Any debt assumed as part of the acquisition is recorded at fair value based on current interest rates compared to contractual rates. Acquisition-related transactions costs are capitalized as part of the purchase price.

Intangible lease rights represent: (1) purchase price amounts allocated to leases on three stores that cannot be classified as ground or building leases; these rights are amortized to expense over the life of the leases and (2) intangibles related to ground leases on eight stores where the leases were assumed by the Company at rates that were lower than the current market rates for similar leases. The values associated with these assumed leases were recorded as intangibles, which will be amortized over the lease terms.
Investments in Unconsolidated Real Estate Ventures
The Company’s investments in real estate joint ventures, where the Company has significant influence, but not control and joint ventures which are VIEs in which the Company is not the primary beneficiary, are recorded under the equity method of accounting in the accompanying consolidated financial statements.
Under the equity method, the Company’s investment in real estate ventures is stated at cost and adjusted for the Company’s share of net earnings or losses and reduced by distributions. Equity in earnings of real estate ventures is generally recognized based on the Company’s ownership interest in the earnings of each of the unconsolidated real estate ventures. For the purposes of presentation in the statement of cash flows, the Company follows the “look through” approach for classification of distributions from joint ventures. Under this approach, distributions are reported under operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating dividend or distribution of the proceeds from the joint venture’s sale of assets), in which case it is reported as an investing activity.

53
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Cash and Cash Equivalents
The Company’s cash is deposited with financial institutions located throughout the United States and at times may exceed federally insured limits. The Company considers all highly liquid debt instruments with a maturity date of three months or less to be cash equivalents.
Restricted Cash
Restricted cash is comprised of letters of credit and escrowed funds deposited with financial institutions located throughout the United States relating to earnest money deposits on potential acquisitions, real estate taxes, insurance and capital expenditures.
Other Assets
Other assets consist of equipment and fixtures, rents receivable by our tenants, investments in trusts, notes receivable, other intangible assets, deferred tax assets, prepaid expenses and the fair value of interest rate swaps. Depreciation of equipment and fixtures is computed on a straight-line basis over 3 to 5 years.
Derivative Instruments and Hedging Activities
The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
Risk Management and Use of Financial Instruments
In the normal course of its ongoing business operations, the Company encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk on its interest-bearing liabilities. Credit risk is the risk of inability or unwillingness of tenants to make contractually required payments. Market risk is the risk of declines in the value of stores due to changes in rental rates, interest rates or other market factors affecting the value of stores held by the Company. The Company has entered into interest rate swap agreements to manage a portion of its interest rate risk.
Exchange of Common Operating Partnership Units
Redemption of common Operating Partnership units for shares of common stock, when redeemed under the original provisions of the Operating Partnership agreement, are accounted for by reclassifying the underlying net book value of the units from noncontrolling interest to the Company’s equity.
Revenue and Expense Recognition
Rental revenues are recognized as earned based upon amounts that are currently due from tenants. Leases are generally on month-to-month terms. Prepaid rents are recognized on a straight-line basis over the term of the leases. Promotional discounts are recognized as a reduction to rental income over the promotional period. Late charges, administrative fees, merchandise sales and truck rentals are recognized as income when earned. Management fee revenues are recognized monthly as services are performed and in accordance with the terms of the related management agreements. Equity in earnings of unconsolidated real

54
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


estate entities is recognized based on the Company's ownership interest in the earnings of each of the unconsolidated real estate entities. Interest income is recognized as earned.
Property expenses, including utilities, property taxes, repairs and maintenance and other costs to manage the facilities are recognized as incurred. The Company accrues for property tax expense based upon invoice amounts, estimates and historical trends. If these estimates are incorrect, the timing of expense recognition could be affected.
Tenant reinsurance premiums are recognized as revenue over the period of insurance coverage. The Company records an unpaid claims liability at the end of each period based on existing unpaid claims and historical claims payment history. The unpaid claims liability represents an estimate of the ultimate cost to settle all unpaid claims as of each period end, including both reported but unpaid claims and claims that may have been incurred but have not been reported. The Company uses a third party claims administrator to adjust all tenant reinsurance claims received. The administrator evaluates each claim to determine the ultimate claim loss and includes an estimate for claims that may have been incurred but not reported. Annually, a third party actuary evaluates the adequacy of the unpaid claims liability. Prior year claim reserves are adjusted as experience develops or new information becomes known. The impact of such adjustments is included in the current period operations. The unpaid claims liability is not discounted to its present value. Each tenant chooses the amount of insurance coverage they want through the tenant reinsurance program. Tenants can purchase policies in amounts of two thousand dollars to ten thousand dollars of insurance coverage in exchange for a monthly fee. As of December 31, 2016, the average insurance coverage for tenants was approximately two thousand eight hundred dollars. The Company’s exposure per claim is limited by the maximum amount of coverage chosen by each tenant. The Company purchases reinsurance for losses exceeding a set amount for any one event. The Company does not currently have any amounts recoverable under the reinsurance arrangements.
Real Estate Sales
In general, sales of real estate and related profits/losses are recognized when all consideration has changed hands and risks and rewards of ownership have been transferred. Certain types of continuing involvement preclude sale treatment and related profit recognition; other forms of continuing involvement allow for sale recognition but require deferral of profit recognition.
Advertising Costs
The Company incurs advertising costs primarily attributable to internet, directory and other advertising. These costs are expensed as incurred. The Company recognized $12,867, $10,528, and $8,843 in advertising expense for the years ended December 31, 2016, 2015 and 2014, respectively, which are included in property operating expenses on the Company’s consolidated statements of operations.
Income Taxes
The Company has elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code. In order to maintain its qualification as a REIT, among other things, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income tax with respect to that portion of its income which meets certain criteria and is distributed annually to stockholders. The Company plans to continue to operate so that it meets the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. If the Company were to fail to meet these requirements, it would be subject to federal income tax. The Company is subject to certain state and local taxes. Provision for such taxes has been included in income tax expense on the Company’s consolidated statements of operations. For the year ended December 31, 2016, 0% (unaudited) of all distributions to stockholders qualified as a return of capital.
The Company has elected to treat its corporate subsidiary, Extra Space Management, Inc. (“ESMI”), as a taxable REIT subsidiary (“TRS”). In general, the Company’s TRS may perform additional services for tenants and may engage in any real estate or non-real estate related business. A TRS is subject to corporate federal income tax. ESM Reinsurance Limited, a wholly-owned subsidiary of ESMI, generates income from insurance premiums that are subject to corporate federal income tax and state insurance premiums tax.
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. At December 31, 2016 and 2015, there were no material unrecognized tax benefits. Interest and penalties relating

55
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


to uncertain tax positions will be recognized in income tax expense when incurred. As of December 31, 2016 and 2015, the Company had no interest or penalties related to uncertain tax provisions.
Stock-Based Compensation
The measurement and recognition of compensation expense for all share-based payment awards to employees and directors are based on estimated fair values. Awards granted are valued at fair value and any compensation element is recognized on a straight line basis over the service periods of each award.
Earnings Per Common Share
Basic earnings per common share is computed using the two-class method by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. All outstanding unvested restricted stock awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common stockholders; accordingly, they are considered participating securities that are included in the two-class method. 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. Potential common shares are securities (such as options, convertible debt, Series A Participating Redeemable Preferred Units (“Series A Units”), Series B Redeemable Preferred Units (“Series B Units”), Series C Convertible Redeemable Preferred Units (“Series C Units”), Series D Redeemable Preferred Units (“Series D 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.
In computing the dilutive effect of convertible securities, net income is adjusted to add back any changes in earnings in the period associated with the convertible security. The numerator also is adjusted for the effects of any other non-discretionary changes in income or loss that would result from the assumed conversion of those potential common shares. In computing diluted earnings per common share, only potential common shares that are dilutive (those that reduce earnings per common share) are included. For the years ended December 31, 2016, 2015 and 2014, options to purchase approximately 88,552, 62,254, and 27,374 shares of common stock, respectively, were excluded from the computation of earnings per share as their effect would have been anti-dilutive.
    
For the purposes of computing the diluted impact of the potential exchange of the Preferred 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 of $83.81 for the year ended December 31, 2016.
The following table presents the number of weighted OP Units and Preferred Operating Partnership units, and the potential common shares, that were excluded from the computation of earnings per share as their effect would have been anti-dilutive:
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
 
Number of Units
 
Equivalent Shares (if converted)
 
Number of Units
 
Equivalent Shares (if converted)
 
Number of Units
 
Equivalent Shares (if converted)
Common OP Units
5,564,631

 
5,564,631

 
—

 
—

 
—

 
—

Series A Units (Variable Only)
875,480

 
875,480

 
—

 
—

 
—

 
—

Series B Units
1,676,087

 
499,966

 
1,676,087

 
579,640

 
1,592,062

 
764,385

Series C Units
704,016

 
353,646

 
704,016

 
410,002

 
605,256

 
489,366

Series D Units
1,853,193

 
552,796

 
548,390

 
189,649

 
13,522

 
6,492

 
10,673,407

 
7,846,519

 
2,928,493

 
1,179,291

 
2,210,840

 
1,260,243


56
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


The Operating Partnership had $63,170 of its 2.375% Exchangeable Senior Notes due 2033 (the “2013 Notes”) issued and outstanding as of December 31, 2016. The 2013 Notes could potentially have a dilutive impact on the Company’s earnings per share calculations. The 2013 Notes are exchangeable by holders into shares of the Company’s common stock under certain circumstances per the terms of the indenture governing the 2013 Notes. The exchange price of the 2013 Notes was $54.09 per share as of December 31, 2016, and could change over time as described in the indenture. The Company has irrevocably agreed to pay only cash for the accreted principal amount of the 2013 Notes relative to its exchange obligations, but retained the right to satisfy the exchange obligation in excess of the accreted principal amount in cash and/or common stock.
The Operating Partnership had $575,000 of its 3.125% Exchangeable Senior Notes due 2035 (the “2015 Notes”) issued and outstanding as of December 31, 2016. The 2015 Notes could potentially have a dilutive impact on the Company’s earnings per share calculations. The 2015 Notes are exchangeable by holders into shares of the Company’s common stock under certain circumstances per the terms of the indenture governing the 2015 Notes. The exchange price of the 2015 Notes was $94.71 per share as of December 31, 2016, and could change over time as described in the indenture. The Company has irrevocably agreed to pay only cash for the accreted principal amount of the 2015 Notes relative to its exchange obligations, but retained the right to satisfy the exchange obligation in excess of the accreted principal amount in cash and/or common stock.
Though the Company has retained that right, Accounting Standards Codification (“ASC”) 260, “Earnings per Share,” requires an assumption that shares would be used to pay the exchange obligation in excess of the accreted principal amount, and requires that those shares be included in the Company’s calculation of weighted average common shares outstanding for the diluted earnings per share computation. For the years ended December 31, 2016, 2015 and 2014, 309,730 shares, 513,040 shares, and 130,883 shares, respectively, related to the 2013 Notes were included in the computation for diluted earnings per share. For the years ended December 31, 2016, 2015, and 2014, no shares related to the 2015 Notes were included in the computation for diluted earnings per share as the exchange price exceeded the per share price of the Company’s common stock during this period.
For the purposes of computing the diluted impact on earnings per share of the potential exchange of Series A Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the positive intent and ability to settle at least $115,000 of the instrument in cash (or net settle a portion of the Series A Units against the related outstanding note receivable), only the amount of the instrument in excess of $115,000 is considered in the calculation of shares contingently issuable for the purposes of computing diluted earnings per share as allowed by ASC 260-10-45-46.

57
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated



The computation of earnings per share is as follows for the periods presented:
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Net income attributable to common stockholders
$
366,127

 
$
189,474

 
$
178,355

Earnings and dividends allocated to participating securities
(792
)
 
(601
)
 
(490
)
Earnings for basic computations
365,335

 
188,873

 
177,865

Earnings and dividends allocated to participating securities
792

 
—

 
—

Income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) and Operating Partnership
—

 
14,790

 
13,575

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

 
(5,088
)
 
(5,586
)
Net income for diluted computations
$
366,127

 
$
198,575

 
$
185,854

Weighted average common shares outstanding:
 
 
 
 
 
Average number of common shares outstanding - basic
125,087,554

 
119,816,743

 
115,713,807

OP Units
—

 
5,451,357

 
4,335,837

Series A Units
—

 
875,480

 
961,747

Unvested restricted stock awards included for treasury stock method
299,585

 
—

 
—

Shares related to exchangeable senior notes and dilutive stock options
560,937

 
775,289

 
423,876

Average number of common shares outstanding - diluted
125,948,076

 
126,918,869

 
121,435,267

Earnings per common share
 
 
 
 
 
Basic
$
2.92

 
$
1.58

 
$
1.54

Diluted
$
2.91

 
$
1.56

 
$
1.53

Recently Issued Accounting Standards
In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers,” which amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. ASU 2014-9 outlines a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. ASU 2014-9 includes all contracts with customers to provide goods and services in the ordinary course of business, except for certain contracts that are specifically excluded from the scope, such as lease contracts and insurance contracts. ASU 2014-9 was originally effective for reporting periods beginning after December 15, 2016. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB approved a one-year deferral of the effective date of the standard. The new standard will now become effective for annual and interim periods beginning after December 15, 2017 with early adoption on the original effective date permitted. The Company has determined that its property rental revenue and tenant reinsurance revenue will not be subject to the guidance in ASU 2014-9, as they qualify as lease contract and insurance contracts, which are excluded from its scope. The Company's management fee revenue will be included in the scope of ASU 2014-9, however, based on the Company's initial assessment, it appears that revenue recognized under ASU 2014-9 will not differ materially from revenue recognized under existing guidance. We continue to assess all potential impacts of ASU 2014-9. The Company anticipates adopting the standard using the modified retrospective transition method as of January 1, 2018.
In April 2015, the FASB issued ASU 2015-3, “Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs related to a recognized debt liability to be presented as a direct deduction from the carrying amount of that debt liability. The new guidance only impacts financial statement presentation. The guidance is effective in the first quarter of 2016 and allows for early adoption. The Company adopted this guidance October 1, 2015. The Company adopted ASU 2015-3 on a retrospective basis.

58
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


In August 2015, the FASB issued ASU 2015-15, “Interest—Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which provides guidance regarding the classification of debt issuance costs associated with lines of credit. Specifically, deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement is allowed. The Company adopted this guidance effective October 1, 2015. The Company continued to present the debt issuance costs and related accumulated amortization relating to its lines of credit as assets.
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which modifies the accounting for leases, intending to increase transparency and comparability of organizations by requiring balance sheet presentation of leased assets and increased financial statement disclosure of leasing arrangements. ASU 2016-02 will require entities to recognize a liability for their lease obligations and a corresponding asset representing the right to use the underlying asset over the lease term. Lease obligations are to be measured at the present value and accounted for using the effective interest method. The accounting for the leased asset will differ slightly depending on whether the agreement is deemed to be a financing or operating lease. For finance leases, the leased asset is depreciated on a straight-line basis and recorded separately from the interest expense in the statements of operations, resulting in higher expense in the earlier part of the lease term. For operating leases, the depreciation and interest expense components are combined, recognized evenly over the term of the lease, and presented as a reduction to operating income. ASU 2016-02 requires that assets and liabilities be presented or disclosed separately, and requires additional disclosure of certain qualitative and quantitative information related to these lease agreements. ASU 2016-02 is effective for annual periods beginning after December 15, 2018. The Company is currently assessing the impact of the adoption on ASU 2016-02 on the Company's consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," which provides guidance on whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Specifically, when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. Additionally, ASU 2017-01 also provides other guidance providing a more robust framework to use in determining whether a set of assets and activities is a business. This guidance is effective for annual periods beginning after December 15, 2017. Early application of ASU 2017-01 is permitted for transactions for which the acquisition or disposition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued. The Company plans to apply the guidance in ASU 2017-01 to new acquisitions beginning on January 1, 2017. The adoption of this guidance will result in a decrease in acquisition related costs, as the Company's acquisition of operating stores will likely be considered asset acquisitions rather than business combinations under ASU 2017-01.
3.     REAL ESTATE ASSETS
The components of real estate assets are summarized as follows:
 
December 31, 2016
 
December 31, 2015
Land - operating
$
1,664,659

 
$
1,384,009

Land - development
26,982

 
17,313

Buildings, improvements and other intangibles
5,833,836

 
4,886,397

Intangible assets - tenant relationships
111,528

 
95,891

Intangible lease rights
12,443

 
8,877

 
7,649,448

 
6,392,487

Less: accumulated depreciation and amortization
(900,861
)
 
(728,087
)
Net operating real estate assets
6,748,587

 
5,664,400

Real estate under development/redevelopment
21,860

 
24,909

Net real estate assets
$
6,770,447

 
$
5,689,309

Real estate assets held for sale included in net real estate assets
$
1,970

 
$
10,774


As of December 31, 2016, the Company had two parcels of undeveloped land classified as held for sale. The estimated fair value less selling costs of each of these assets is greater than the carrying value of the assets, and therefore no loss has been

59
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


recorded. These assets held for sale are included in the property management, acquisition and development segment of the Company’s segment information. The Company expects this land to be sold by the end of 2017.
The Company amortizes to expense intangible assets—tenant relationships on a straight-line basis over the average period that a tenant is expected to utilize the facility (currently estimated at 18 months). The Company amortizes to expense the intangible lease rights over the terms of the related leases. Amortization related to the tenant relationships and lease rights was $21,133, $11,695, and $12,996 for the years ended December 31, 2016, 2015 and 2014, respectively. The remaining balance of the unamortized lease rights will be amortized over the next 2 years to 45 years.
4.     PROPERTY ACQUISITIONS AND DISPOSITIONS

The following table shows the Company’s acquisitions of operating stores for the years ended December 31, 2016 and 2015. The table excludes purchases of raw land or improvements made to existing assets.
 
 
 
 
 
Consideration Paid
 
Fair Value
Property Location
Number of Stores
 
Date of Acquisition
 
Total
 
Cash Paid
 
Loan Assumed
Notes issued to/from Seller
Net Liabilities/(Assets) Assumed
Value of OP Units Issued
Number of OP Units Issued
 
Real estate assets
Arizona
1
 
12/21/2016
 
$
9,513

 
$
9,500

 
$
—

$
—

$
13

$
—

—

 
$
9,513

Washington
1
 
11/22/2016
 
12,743

 
12,726

 
—

—

17

—

—

 
12,743

Hawaii
2
 
11/18/2016
 
15,394

 
15,356

 
—

—

38

—

—

 
15,394

Georgia
1
 
11/17/2016
 
7,998

 
8,009

 
—

—

(11
)
—

—

 
7,998

Various states (1)
11
 
11/17/2016
 
152,953

 
153,017

 
—

—

(64
)
—

—

 
161,072

California
1
 
11/17/2016
 
17,892

 
17,860

 
—

—

32

—

—

 
17,892

North Carolina
1
 
11/14/2016
 
13,242

 
13,241

 
—

—

1

—

—

 
13,242

Illinois
1
 
11/8/2016
 
12,304

 
9

 
—

—

139

12,156

486,244

 
12,304

Maryland
1
 
11/2/2016
 
14,807

 
9,040

 
—

—

(75
)
5,842

77,575,000

 
14,807

Texas
1
 
10/25/2016
 
6,743

 
6,685

 
—

—

58

—

—

 
6,743

Minnesota
1
 
10/12/2016
 
17,744

 
17,729

 
—

—

15

—

—

 
17,744

Texas
3
 
10/6/2016
 
22,302

 
22,131

 
—

—

171

—

—

 
22,302

Utah
1
 
10/4/2016
 
8,429

 
3,750

 
—

—

4,679

—

—

 
8,429

California
1
 
10/4/2016
 
8,500

 
8,516

 
—

—

(16
)
—

—

 
8,500

California
1
 
9/21/2016
 
13,800

 
13,782

 
—

—

18

—

—

 
13,800

Various states(2)
23
 
9/16/2016
 
237,542

 
237,800

 
—

—

(258
)
—

—

 
248,530

California
1
 
8/31/2016
 
3,990

 
3,998

 
—

—

(8
)
—

—

 
3,990

Texas
1
 
8/12/2016
 
9,993

 
9,915

 
—

—

78

—

—

 
9,993

Hawaii
1
 
7/14/2016
 
30,955

 
30,850

 
—

—

105

—

—

 
30,955

Massachusetts
1
 
6/30/2016
 
13,807

 
13,751

 
—

—

56

—

—

 
13,807

Georgia
1
 
6/30/2016
 
7,900

 
6,696

 
—

—

4

1,200

13,764

 
7,900

Illinois
4
 
6/10/2016
 
55,851

 
—

 
—

—

814

55,037

2,201,467

 
55,851

Texas
4
 
6/2/2016
 
37,478

 
37,246

 
—

—

232

—

—

 
37,478

South Carolina
1
 
5/10/2016
 
8,249

 
8,230

 
—

—

19

—

—

 
8,249

Washington, DC
1
 
5/5/2016
 
32,968

 
23,163

 
9,723

—

82

—

—

 
32,968

Indiana
5
 
4/22/2016
 
26,983

 
26,849

 
—

—

134

—

—

 
26,983

Colorado
1
 
4/19/2016
 
7,904

 
7,869

 
—

—

35

—

—

 
7,904

Arizona
1
 
4/18/2016
 
8,154

 
8,029

 
—

—

125

—

—

 
8,154

Texas
1
 
4/15/2016
 
10,978

 
10,922

 
—

—

56

—

—

 
10,978

Arizona
1
 
4/5/2016
 
5,000

 
4,999

 
—

—

1

—

—

 
5,000

Hawaii
1
 
4/5/2016
 
28,992

 
28,935

 
—

—

57

—

—

 
28,992

New Mexico
1
 
3/29/2016
 
10,958

 
10,928

 
—

—

30

—

—

 
10,958

New Mexico
1
 
3/29/2016
 
17,940

 
17,905

 
—

—

35

—

—

 
17,940

Georgia
3
 
3/29/2016
 
25,087

 
25,069

 
—

—

18

—

—

 
25,087


60
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


 
 
 
 
 
Consideration Paid
 
Fair Value
Property Location
Number of Stores
 
Date of Acquisition
 
Total
 
Cash Paid
 
Loan Assumed
Notes issued to/from Seller
Net Liabilities/(Assets) Assumed
Value of OP Units Issued
Number of OP Units Issued
 
Real estate assets
Texas
1
 
3/21/2016
 
9,994

 
9,969

 
—

—

25

—

—

 
9,994

Illinois
1
 
2/25/2016
 
16,721

 
16,738

 
—

—

(17
)
—

—

 
16,721

Massachusetts
1
 
2/16/2016
 
16,169

 
16,174

 
—

—

(5
)
—

—

 
16,169

Various states (3)
6
 
2/2/2016
 
53,898

 
53,940

 
—

—

(42
)
—

—

 
98,082

Texas
3
 
1/14/2016
 
22,625

 
22,523

 
—

—

102

—

—

 
22,625

Florida
1
 
1/12/2016
 
9,001

 
8,980

 
—

—

21

—

—

 
9,001

Texas
3
 
1/7/2016
 
27,537

 
27,435

 
—

—

102

—

—

 
27,537

New Mexico
2
 
1/7/2016
 
15,607

 
15,495

 
—

—

112

—

—

 
15,607

2016 Totals
99
 
 
 
$
1,086,645

 
$
995,759

 
$
9,723

$
—

$
6,928

$
74,235

2,779,050

 
$
1,149,936

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
California
1
 
12/11/2015
 
$
9,708

 
$
9,712

 
$
—

$
—

$
(4
)
$
—

$
—

 
$
9,708

North Carolina
1
 
12/8/2015
 
5,301

 
5,327

 
—

—

(26
)
—

—

 
5,301

Oregon
1
 
11/24/2015
 
9,992

 
9,994

 
—

—

(2
)
—

—

 
9,992

Florida
3
 
11/19/2015
 
20,003

 
19,951

 
—

—

52

—

—

 
20,003

Texas
1
 
11/16/2015
 
14,396

 
7,115

 
—

—

60

7,221

91,434

 
14,396

Texas
1
 
10/23/2015
 
8,700

 
8,678

 
—

—

22

—

—

 
8,700

New Jersey
1
 
10/7/2015
 
7,240

 
7,204

 
—

—

36

—

—

 
7,240

Various (4)
122
 
10/1/2015
 
1,176,893

 
1,218,173

 
—

—

(69,936
)
28,656

376,848

 
1,176,898

Maryland
1
 
9/10/2015
 
6,091

 
6,109

 
—

—

(18
)
—

—

 
6,091

North Carolina
1
 
6/19/2015
 
6,976

 
6,915

 
—

—

61

—

—

 
6,976

Florida
1
 
6/18/2015
 
17,547

 
12,567

 
—

—

207

4,773

71,054

 
17,547

Florida (5)
1
 
6/17/2015
 
4,923

 
359

 
—

4,601

(37
)
—

—

 
6,023

Illinois
1
 
6/8/2015
 
10,049

 
9,973

 
—

—

76

—

—

 
10,049

Massachusetts
1
 
5/13/2015
 
12,500

 
12,503

 
—

—

(3
)
—

—

 
12,500

Georgia
1
 
5/7/2015
 
6,496

 
6,456

 
—

—

40

—

—

 
6,496

North Carolina
1
 
5/5/2015
 
10,994

 
10,963

 
—

—

31

—

—

 
10,994

Georgia
1
 
4/24/2015
 
6,498

 
6,449

 
—

—

49

—

—

 
6,498

Arizona, Texas
22
 
4/15/2015
 
177,673

 
75,102

 
—

—

822

101,749

1,504,277

 
177,673

Texas
1
 
4/14/2015
 
8,640

 
8,570

 
—

—

70

—

—

 
8,640

California (6)
1
 
3/30/2015
 
12,334

 
1,700

 
—

11,009

(375
)
—

—

 
12,699

South Carolina
2
 
3/30/2015
 
13,136

 
13,114

 
—

—

22

—

—

 
13,136

Virginia
1
 
3/17/2015
 
4,996

 
4,988

 
—

—

8

—

—

 
4,996

Texas
1
 
2/24/2015
 
13,554

 
13,503

 
—

—

51

—

—

 
13,554

Texas
3
 
1/13/2015
 
41,869

 
41,771

 
—

—

98

—

—

 
41,869

2015 Totals
171
 
 
 
$
1,606,509

 
$
1,517,196

 
$
—

$
15,610

$
(68,696
)
$
142,399

2,043,613

 
$
1,607,979

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

61
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


(1)
On November 17, 2016, the Company acquired 11 stores from its ESS WCOT LLC joint venture ("WCOT") in a step acquisition. These stores are located in California, Georgia, Maryland, New Mexico, Tennessee and Virginia. The Company owns 5.0% of WCOT, with the other 95.0% owned by affiliates of Prudential Global Investment Management ("Prudential"). WCOT created a new subsidiary, Extra Space Properties 132 LLC ("ESP 132") and transferred 11 stores into ESP 132. WCOT then distributed ESP 132 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $68,814. Immediately after the distribution, the Company acquired Prudential's 95.0% interest in ESP 132 for $153,304, resulting in 100% ownership of ESP 132 and the related 11 stores. Based on the purchase price of Prudential's share of ESP 132, the Company determined that the fair value of its investment in ESP 132 immediately prior to the acquisition of Prudential's share was $8,119, and the Company recorded a gain of $4,651 as a result of remeasuring to fair value its existing equity interest in ESP 132. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations. The Company recorded fixed assets related to this acquisition of $161,072, which includes total cash paid, the investment in ESP 132, and the step acquisition gain, less net assets acquired.
(2)
On September 16, 2016, the Company acquired 23 stores from its ESS PRISA II LLC joint venture ("PRISA II") in a step acquisition. These stores are located in Arizona, California, Connecticut, Florida, Indiana, Kentucky, Massachusetts, Maryland, Michigan, New Jersey, New Mexico, Ohio, Tennessee and Virginia. The Company owned 4.4% of PRISA II, with the other 95.6% owned by affiliates of Prudential. PRISA II created a new subsidiary, Extra Space Properties 131 LLC ("ESP 131"), and transferred 23 stores into ESP 131. PRISA II then distributed ESP 131 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $4,326. Immediately after the distribution, the Company acquired Prudential's 95.6% interest in ESP 131 for $238,679, resulting in 100% ownership of ESP 131 and the related 23 stores. Based on the purchase price of Prudential's share of ESP 131, the Company determined that the fair value of its investment in ESP 131 immediately prior to the acquisition of Prudential's share was $10,988, and the Company recorded a gain of $6,778 as a result of re-measuring to fair value its existing equity interest in ESP 131. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations. The Company recorded fixed assets related to this acquisition of $248,530, which includes total cash paid, the investment in ESP 131, and the step acquisition gain, less net assets acquired. Subsequent to these transactions, PRISA II owned 42 stores. The Company sold its 4.4% interest in PRISA II to Prudential immediately following these transactions, as disclosed in Note 5.
(3)
On February 2, 2016, the Company acquired six stores from its VRS Self Storage LLC joint venture (“VRS”) in a step acquisition. These stores are located in Florida, Maryland, Nevada, New York, and Tennessee. The Company owns 45.0% of VRS, with the other 55.0% owned by affiliates of Prudential. VRS created a new subsidiary, Extra Space Properties 122 LLC (“ESP 122”) and transferred six stores into ESP 122. VRS then distributed ESP 122 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $17,261. Immediately after the distribution, the Company acquired Prudential’s 55.0% interest in ESP 122 for $53,940, resulting in 100% ownership of ESP 122 and the related six stores. Based on the purchase price of Prudential’s share of ESP 122, the Company determined that the fair value of its investment in ESP 122 immediately prior to the acquisition of Prudential’s share was $44,184, and the Company recorded a gain of $26,923 as a result of re-measuring to fair value its existing equity interest in ESP 122. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners’ interests on the Company’s consolidated statements of operations. The Company recorded fixed assets related to this acquisition of $98,082, which includes total cash paid, the investment in ESP 122, and the step acquisition gain, less net assets acquired.
(4)
This represents the acquisition of SmartStop Self Storage, Inc. (“SmartStop”). See below for more detailed information about this acquisition.
(5)
The Company determined the consideration paid for this store was below its market value, and recognized a $1,100 gain, representing the difference between the fair value of the store and the consideration paid.
(6)
This represents the acquisition of a joint venture partners’ interest in Extra Space of Sacramento One LLC (“Sacramento One”), an existing joint venture, for $1,700 in cash. The result of the acquisition is that the Company owns 100% of Sacramento One, which owned one store located in California. Prior to the acquisition date, the Company accounted for its interest in Sacramento One as an equity-method investment, and the Company also held mortgage notes receivable from Sacramento One totaling $11,009, including related interest. The total acquisition date fair value of the Company’s previous equity interest was approximately $365 and is included in consideration transfered. The Company recognized a non-cash gain of $1,629 as a result of remeasuring the fair value of its equity

62
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


interest held prior to the acquisition. The store is consolidated subsequent to the acquisition as the Company owns 100% of the store.

Acquisition of SmartStop
On October 1, 2015, the Company completed the acquisition of SmartStop, a public non-traded REIT (the “Transaction”), pursuant to an Agreement and Plan of Merger, dated June 15, 2015 (the “Merger Agreement”). The Company completed the Transaction as part of its strategy to acquire stores and portfolios of stores that can increase stockholder value. Under the terms of the Merger Agreement, SmartStop shareholders received $13.75 per share in cash, which represented a total purchase price of approximately $1,391,272.
In connection with the Transaction, it was agreed that certain assets would be excluded from the Company’s acquisition of SmartStop (the “Excluded Assets”). The Company had determined that the Excluded Assets were not complementary to the Company’s business or otherwise not of primary interest to the Company. These Excluded Assets were instead sold by SmartStop to Strategic 1031, LLC, a Delaware limited liability company (“Strategic 1031”), prior to the Transaction. The Excluded Assets included five SmartStop stores located in Canada, one parcel of land located in California that is under development, and SmartStop’s non-traded REIT platform. Strategic 1031 is owned by and controlled by SmartStop’s former Chief Executive Officer, President and Chairman of the Board of Directors.
The following table reconciles the purchase price to cash paid by the Company and total consideration transferred to acquire SmartStop:
Total purchase price
$
1,391,272

Less: amount paid for Excluded Assets by Strategic 1031
(90,360
)
Total purchase price attributable to the Company
$
1,300,912

Total cash paid by the Company
$
1,272,256

Fair value of OP Units issued to certain SmartStop unit holders
28,656

 
1,300,912

Less: Cash paid for transaction costs
8,053

Less: Cash paid for defeasance and prepayment fees
38,360

Less: Severance and share-based compensation to SmartStop employees
7,665

Total consideration transferred
$
1,246,834

As part of this acquisition, the Company recorded an expense of $38,360 related to defeasance costs and prepayment penalties incurred related to the repayment of SmartStop’s existing debt as of the acquisition date. The Company incurred $8,053 of professional fees/closing costs, $6,338 of severance-related costs, and $1,327 of other payroll-related costs for a total of $54,078 that was paid at closing. Another $9,043 of other acquisition related costs were incurred that were not paid in connection with the closing for a total of $63,121.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The Company’s allocation of consideration transferred for SmartStop is as follows:
Land
$
179,700

Buildings
978,368

Intangibles
18,830

Investments in unconsolidated real estate ventures
60,981

Other assets
34,500

Total assets acquired
1,272,379

Accounts payable and accrued liabilities assumed
17,064

Other liabilities assumed
8,481

Total net assets acquired
$
1,246,834

The Company agreed to loan Strategic 1031 $84,331 to finance the purchase of the Excluded Assets. The loans are secured by an interest in the Excluded Assets and accrue interest at 7.0% per annum until February 1, 2017, when the interest

63
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


rate increases to 9.0%. The loans are due May 30, 2018. As of December 31, 2016, the remaining principal balance was $52,201. These loans receivable are included in Other assets on the Company’s consolidated balance sheets.
Pro Forma Information
During the year ended December 31, 2016, the Company acquired 99 operating stores. The following pro forma financial information includes 66 of the 99 operating stores acquired. 33 stores were excluded as it was impractical to obtain the historical information from the previous owners and in total they represent and immaterial amount of total revenues. The following pro forma financial information is based on the combined historical financial statements of the Company and 66 of the stores acquired, and presents the Company’s results as if the acquisitions had occurred as of January 1, 2015 (unaudited): 
 
For the Year Ended December 31,
 
2016
 
2015
 
Pro Forma
 
Pro Forma
Total revenues
$
1,025,639

 
$
831,730

Net income attributable to common stockholders
$
381,883

 
$
212,313


The following table summarizes the revenues and earnings related to the 99 stores acquired during 2016 since their acquisition dates, which are included in the Company’s consolidated statements of operations for the year ended December 31, 2016:
 
Year Ended
December 31, 2016
Total revenues
$
44,712

Net income attributable to common stockholders
$
12,560

Store Disposals

On July 26, 2016, the Company completed the sale of an operating store located in Indiana that had been classified as held for sale for $4,447 in cash. The Company recognized no gain or loss related to this disposition.

On April 20, 2016, the Company completed the sale of seven operating stores located in Ohio and Indiana that had been classified as held for sale for $17,555 in cash. The Company recognized a gain of $11,265 related to this disposition, which is included in gain (loss) on real estate transactions, earnout from prior acquisitions, and sale of other assets on the Company's consolidated statements of operations.

On April 1, 2016, the Company disposed of a single store in Texas in exchange for 85,452 of the Company's OP Units valued at $7,689. The Operating Partnership canceled the OP Units received in this disposition. The Company recognized a gain of $93 related to this disposition, which is included in gain (loss) on real estate transactions, earnout from prior acquisitions, and sale of other assets on the Company's consolidated statements of operations.

Losses on Earnouts from Prior Acquisitions
On December 2014, the Company acquired a portfolio of five stores located in New Jersey and Virginia. As part of this acquisition, the Company agreed to make an additional cash payment to the sellers if the acquired stores exceeded a specified amount of net operating income for the years ending December 31, 2015 and 2016. At the acquisition date, the Company recorded an estimated liability related to this earnout provision. The operating income of these stores during the earnout period has been higher than expected, resulting in an increase in the estimate of the amount due to the sellers of $4,284, which was recorded as a loss and included in gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets on the Company's consolidated statements of operations for the year ended December 31, 2016.
During 2011, the Company acquired a store located in Florida. As part of this acquisition, the Company agreed to make an additional cash payment to the sellers if the acquired store exceeded a specified amount of net rental income for any twelve-month period prior to June 30, 2015. At the acquisition date, $133 was recorded as the estimated amount that would be due, and

64
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


the Company believed that it was unlikely that any significant additional payment would be made as a result of this earnout provision. Because the rental growth of the stores was trending significantly higher than expected, the Company estimated that an additional earnout payment of $2,500 would be due to the seller as of December 31, 2014. This amount is included in gain (loss) on real estate transactions, earnout from prior acquisitions and sale of other assets on the Company’s consolidated statements of operations for the year ended December 31, 2014. During the year ended December 31, 2015, the Company recorded a gain of $400 to adjust the existing liability to the actual amount owed to the sellers as of June 30, 2015. This gain is included in gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets on the Company’s consolidated statements of operations for the year ended December 31, 2015.
During 2012, the Company acquired a portfolio of ten stores located in New Jersey and New York. As part of this acquisition, the Company agreed to make an additional cash payment to the sellers if the acquired stores exceeded a specified amount of net rental income two years after the acquisition date. At the acquisition date, the Company believed that it was unlikely that any significant payment would be made as a result of this earnout provision. The rental growth of the stores was significantly higher than expected, resulting in a payment to the sellers of $7,785. This amount is included in gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets on the Company’s consolidated statements of operations for the year ended December 31, 2014.
During 2011, the Company acquired a store located in Florida. As part of this acquisition, the Company agreed to make an additional cash payment to the sellers if the acquired store exceeded a specified amount of net rental income for any twelve-month period prior to June 30, 2015. At the acquisition date, $133 was recorded as the estimated amount that would be due, and the Company believed that it was unlikely that any significant additional payment would be made as a result of this earnout provision. Because the rental growth of the stores was trending significantly higher than expected, the Company estimated that an additional earnout payment of $2,500 would be due to the seller as of December 31, 2014. This amount is included in gain (loss) on real estate transactions, earnout from prior acquisitions and sale of other assets on the Company’s consolidated statements of operations for the year ended December 31, 2014. During the year ended December 31, 2015, the Company recorded a gain of $400 to adjust the existing liability to the actual amount owed to the sellers as of June 30, 2015. This gain is included in gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets on the Company’s consolidated statements of operations for the year ended December 31, 2015.
5.     INVESTMENTS IN UNCONSOLIDATED REAL ESTATE VENTURES
Investments in unconsolidated real estate ventures consist of the following:
 
Equity
Ownership %
 
Excess Profit
Participation %
 
December 31,
 
2016
 
2015
VRS Self Storage LLC ("VRS")
45%
 
54%
 
$
20,433

 
$
39,091

PR EXR Self Storage, LLC ("PREXR")
25%
 
40%
 
12,430

 
—

Storage Portfolio I LLC ("SP I")
25%
 
25-40%
 
11,782

 
11,813

PRISA Self Storage LLC ("PRISA")
4%
 
4%
 
10,152

 
10,309

Extra Space West Two LLC ("ESW II")
5%
 
40%
 
4,048

 
4,122

Clarendon Storage Associates Limited Partnership ("Clarendon")
50%
 
50%
 
3,111

 
3,131

Extra Space of Santa Monica LLC ("ESSM")
48%
 
48%
 
1,202

 
1,200

WCOT Self Storage LLC ("WCOT")
5%
 
20%
 
160

 
3,783

PRISA II Self Storage LLC ("PRISA II")
—%
 
—%
 
—

 
8,323

Extra Space West One LLC ("ESW")
5%
 
40%
 
(546
)
 
(405
)
Extra Space Northern Properties Six LLC ("ESNPS")
10%
 
35%
 
(905
)
 
(470
)
Other minority owned properties
10-50%
 
19-50%
 
17,703

 
6,148

 
 
 
 
 
79,570

 
87,045

Investments in Strategic Storage Growth Trust "SSGT"
 
 
 
 
—

 
15,962

Total
 
 
 
 
$
79,570

 
$
103,007


65
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


In these joint ventures, the Company and the joint venture partner generally receive a preferred return on their invested capital. To the extent that cash/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/profits than its equity interest.
In accordance with ASC 810, the Company reviews all of its joint venture relationships quarterly to ensure that there are no entities that require consolidation. As of December 31, 2016, there were no previously unconsolidated entities that were required to be consolidated as a result of this review.
The Company has entered into several new real estate ventures. The Company accounts for its investment in the following ventures under the equity method of accounting. Information about these real estate ventures is summarized as follows:
Joint venture
Date of initial contribution
 
Initial Investment
 
Equity Ownership %
 
Number of operating stores owned
BH Ridgelake LLC
12/21/2016
 
$
1,301

 
20.0%
 
1
ESS-GS Portland & Broadway LLC
10/19/2016
 
1,250

 
25.0%
 
1
ESS-GS Vancouver-139th LLC
9/14/2016
 
806

 
25.0%
 
1
ESS-H Elmont Associates LLC
8/16/2016
 
4,712

 
50.0%
 
1
ESS-GS Hillsboro-73rd LLC
7/8/2016
 
376

 
25.0%
 
1
BH Storage Columbia LLC
5/20/2016
 
1,034

 
20.0%
 
1
PR EXR Self-Storage, LLC
4/8/2016
 
12,114

 
25.0%
 
1
ESS-H Baychester Investments LLC
3/31/2016
 
4,794

 
44.4%
 
1
ESS-H Bloomfield Investment LLC
12/30/2015
 
2,885

 
50.0%
 
1

On September 16, 2016, subsequent to its acquisition of 23 properties as outlined in Note 4, the Company sold its 4.42% interest in PRISA II to Prudential for $34,758 in cash. The carrying value of the Company's investment prior to the acquisition was $3,912, and the Company recorded a gain on the sale of $30,846. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations.

On April 25, 2016, the Company and Prudential entered into the “Second Amendment to Amended and Restated Operating Agreement of ESS PRISA LLC” and the “First Amendment to Amended and Restated Operating Agreement of ESS PRISA II LLC” (the “Amendments”). The Amendments are deemed effective as of April 1, 2016. Under the Amendments, the Company gave up any future rights to receive distributions from these joint ventures at the higher “excess profit participation” percentage of 17.0% in exchange for a higher equity ownership percentage. The Company’s equity ownership in ESS PRISA LLC increased from 2.0% to 4.0%, and the Company’s equity ownership in ESS PRISA II LLC increased from 2.0% to 4.4%. The Company continues to account for its investment in PRISA under the equity method of accounting. The Company subsequently sold its interest in PRISA II as noted above.
In December 2013 and May 2014, the Company acquired twelve stores located in California from entities associated with Grupe Properties Co. Inc. (“Grupe.”) As part of the Grupe acquisition, the Company acquired its joint venture partners’ 60% to 65% equity interests in six stores. The Company previously held the remaining 35% to 40% interests in these stores through six separate joint ventures with Grupe. Prior to the acquisition, the Company accounted for its interests in these joint ventures as equity-method investments. The Company recognized a non-cash gain of $3,438 during the year ended December 31, 2014 as a result of re-measuring the fair value of its equity interest in one of these joint ventures held before the acquisition. During the year ended December 31, 2014, the Company recorded a gain of $584 as a result of the final cash distributions received from the other five joint ventures associated with the acquisitions that were completed during 2013.

66
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Equity in earnings of unconsolidated real estate ventures consists of the following:
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Equity in earnings of VRS
$
2,919

 
$
4,041

 
$
3,510

Equity in earnings of PREXR
(172
)
 
—

 
—

Equity in earnings of SP I
2,380

 
1,951

 
1,541

Equity in earnings of PRISA
1,912

 
1,013

 
929

Equity in earnings of ESW II
174

 
145

 
102

Equity in earnings of Clarendon
620

 
581

 
551

Equity in earnings of ESSM
596

 
493

 
424

Equity in earnings of WCOT
614

 
569

 
498

Equity in earnings of PRISA II
1,016

 
793

 
764

Equity in earnings of ESW
2,269

 
1,875

 
1,571

Equity in earnings of ESNPS
823

 
633

 
513

Equity in earnings of other minority owned properties
(256
)
 
257

 
138

 
$
12,895

 
$
12,351

 
$
10,541

Equity in earnings of ESW II, SP I and VRS includes the amortization of the Company’s excess purchase price of $26,806 of these equity investments over its original basis. The excess basis is amortized over 40 years.

Information (unaudited) related to the real estate ventures’ debt at December 31, 2016, is presented below:
 
Loan Amount
 
Current Interest Rate
 
Debt Maturity
VRS - Swapped to fixed
$
52,100

 
3.19
%
 
June 2020
PREXR
—

 
—
%
 
Unleveraged
SP I - Fixed
86,285

 
4.66
%
 
April 2018
PRISA
—

 
—
%
 
Unleveraged
ESW II - Swapped to fixed
18,072

 
3.57
%
 
February 2019
Clarendon - Swapped to fixed
7,596

 
5.93
%
 
September 2018
ESSM - Variable
13,374

 
2.52
%
 
May 2021
WCOT - Swapped to fixed
87,500

 
3.34
%
 
August 2019
ESW - Variable
17,150

 
2.02
%
 
August 2020
ESNPS - Variable
35,500

 
2.12
%
 
July 2025
Other minority owned properties
67,087

 
Various

 
Various

67
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Combined, condensed unaudited financial information of VRS, PREXR, SP I, PRISA, ESW II, PRISA II, WCOT, ESW and ESNPS as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014, follows: 
 
December 31,
 
2016
 
2015
Balance Sheets:
 
 
 
Assets:
 
 
 
Net real estate assets
$
906,637

 
$
1,389,974

Other
34,116

 
33,703

 
$
940,753

 
$
1,423,677

Liabilities and members' equity:
 
 
 
Notes payable
$
296,607

 
$
299,730

Other liabilities
19,878

 
25,715

Members' equity
624,268

 
1,098,232

 
$
940,753

 
$
1,423,677

 
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Statements of Income:
 
 
 
 
 
Rents and other income
$
269,858

 
$
286,857

 
$
273,231

Expenses
(143,805
)
 
(155,851
)
 
(153,973
)
Gain on sale of real estate
—

 
60,495

 
—

Net income
$
126,053

 
$
191,501

 
$
119,258

In March 2015, PRISA II sold a single store located in New York and recorded a gain of $60,495.
The Company had no consolidated VIEs for the years ended December 31, 2016 or 2015.
6.     NOTES PAYABLE AND REVOLVING LINES OF CREDIT
The components of notes payable are summarized as follows:
Notes Payable
December 31, 2016
 
December 31, 2015
 
Fixed Rate
 
Variable Rate
 
Basis Rate
 
Maturity Dates
Secured fixed rate notes payable (1)
$
2,297,968

 
$
1,613,490

 
2.8 - 6.1%
 
 
 
 
 
March 2017 - September 2026
Secured variable rate notes payable (1)
642,970

 
1,094,985

 
 
 
2.4 - 2.8%
 
Libor plus 1.6 - 2.0%
 
January 2017 - October 2023
Unsecured fixed rate notes payable
—

 
73,825

 
3.1%
 
 
 
 
 
March 2020
Unsecured variable rate notes payable
300,000

 
—

 
 
 
2.1%
 
Libor plus 1.4%
 
October 2021 - October 2023
Total
3,240,938

 
2,782,300

 
 
 
 
 
 
 
 
Plus: Premium on notes payable
—

 
872

 
 
 
 
 
 
 
 
Less: unamortized debt issuance costs
(27,350
)
 
(24,605
)
 
 
 
 
 
 
 
 
Total
$
3,213,588

 
$
2,758,567

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


68
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


On October 14, 2016, the Company entered into a credit agreement (the “Credit Agreement”) which provides for aggregate borrowings of up to $1.15 billion, consisting of a senior unsecured four-year revolving credit facility of $500 million (the “Revolving Credit Facility”), a senior unsecured five-year term loan of up to $430 million (the “Five-Year Term Loan Facility”) and a senior unsecured seven-year term loan of up to $220 million (the “Seven-Year Term Loan Facility” and, together with the Revolving Credit Facility and the Five-Year Term Loan Facility, the “Credit Facility”). The Company may request an increase in the amount of the commitments under the Credit Facility up to an aggregate of $1.5 billion, and extend the term of the Revolving Credit Facility for up to two additional periods of six months each, after satisfying certain conditions. The latest date by which capacity may be drawn on The Five-Year Term Loan Facility and Seven-Year Term Loan Facility are October 13, 2017 and April 4, 2017, respectively. Costs incurred in connection with the Credit Facility were approximately $8,000. These costs are being amortized as an adjustment to interest expense over the terms of each loan.

Amounts outstanding under the Credit Facility bear interest at floating rates, at the Company’s option, equal to either (i) LIBOR plus the applicable Eurodollar rate margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or (d) the Eurodollar rate plus 1.00%. The applicable Eurodollar rate margin will range from 1.35% to 2.50% per annum and the applicable base rate margin will range from 0.35% to 1.50% per annum, in each case depending on the Company’s Consolidated Leverage Ratio, as defined in the Credit Agreement, and the type of loan. If the Operating Partnership obtains a specified investment grade rating from two or more specified credit rating agencies, and elects to use the alternative rates based on the Company’s debt rating, the applicable Eurodollar rate margin will range from 0.85% to 2.45% per annum and the applicable base rate margin will range from 0.00% to 1.45% per annum, in each case depending on the rating achieved and the type of loan.

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

 As of December 31, 2016, the Company was in compliance with all of its financial covenants.

The following table summarizes the scheduled maturities of notes payable at December 31, 2016:
 
 
2017
$
311,075

2018
356,018

2019
514,121

2020
831,289

2021
664,064

Thereafter
564,371

 
$
3,240,938

Real estate assets are pledged as collateral for the secured loans. Of the Company’s $3,240,938 principal amount in notes payable outstanding at December 31, 2016, $2,660,814 were recourse due to guarantees or other security provisions. The Company is subject to certain restrictive covenants relating to the outstanding notes payable. The Company was in compliance with all financial covenants at December 31, 2016.


69
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


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 December 31, 2016
 
 
 
 
 
 
Revolving Lines of Credit
Amount Drawn
 
Capacity
 
Interest Rate
 
Origination Date
 
Maturity
 
Basis Rate (1)
Credit Line 1 (2)
$
3,000

 
$
100,000

 
2.4%
 
6/4/2010
 
6/30/2018
 
LIBOR plus 1.7%
Credit Line 2 (3)(4)
362,000

 
500,000

 
2.2%
 
10/14/2016
 
10/14/2020
 
LIBOR plus 1.4%
 
$
365,000

 
$
600,000

 
 
 
 
 
 
 
 
(1) 30-day USD LIBOR
(2) Secured by mortgages on certain real estate assets. One two-year extension available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of December 31, 2016. Rate is subject to change based on our consolidated leverage ratio.


7.     DERIVATIVES
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“OCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. A portion of these changes is excluded from accumulated other comprehensive income as it is allocated to noncontrolling interests. During the years ended December 31, 2016, 2015 and 2014, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. During 2017, the Company estimates that an additional $9,244 will be reclassified as an increase to interest expense.
The following table summarizes the terms of the Company’s 31 derivative financial instruments, which have a total combined notional amount of $2,109,486 as of December 31, 2016:
 
Hedge Product
  
Range of Notional
Amounts
  
Strike
  
Effective Dates
  
Maturity Dates
Swap Agreements
  
 $4,873 - $267,431
  
0.84% - 3.84%
  
10/3/2011 - 10/3/2016
  
9/20/2018 - 2/1/2024


70
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


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 consolidated balance sheets:
 
Asset (Liability) Derivatives
 
December 31, 2016
 
December 31, 2015
Derivatives designated as hedging instruments:
Fair Value
Other assets
$
23,844

 
$
4,996

Other liabilities
$
(2,447
)
 
$
(6,991
)
Effect of Derivative Instruments
The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the periods presented. No tax effect has been presented as the derivative instruments are held by the Company:
 
 
 
Gain (loss) recognized in OCI For the Year Ended December 31,
 
Location of amounts reclassified from OCI into income
 
Gain (loss) reclassified from OCI For the Year Ended December 31,
Type
 
2016
 
2015
 
2016
 
2015
 
2014
Swap Agreements
 
$
6,388

 
$
(17,669
)
 
Interest expense
 
$
(18,800
)
 
$
(12,487
)
 
$
(8,780
)
Credit-Risk-Related Contingent Features
The Company has agreements with some of its derivative counterparties that contain provisions pursuant to which, the Company could be declared in default of its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender.
The Company also has an agreement with some of its derivative counterparties that incorporates the loan covenant provisions of the Company’s indebtedness with a lender affiliate of the derivative counterparty. 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 December 31, 2016, 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 $2,836. As of December 31, 2016, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of December 31, 2016, it could have been required to cash settle its obligations under these agreements at their termination value of $2,836.
8.     NOTES PAYABLE TO TRUSTS
During July 2005, ESS Statutory Trust III (the “Trust III”), a newly formed Delaware statutory trust and a wholly-owned, unconsolidated subsidiary of the Operating Partnership, issued an aggregate of $40,000 of preferred securities which mature on July 31, 2035. In addition, the Trust III issued 1,238 of Trust common securities to the Operating Partnership for a purchase price of $1,238. On July 27, 2005, the proceeds from the sale of the preferred and common securities of $41,238 were loaned in the form of a note to the Operating Partnership (“Note 3”). Note 3 had a fixed rate of 6.91% through July 31, 2010, and then was payable at a variable rate equal to the three month LIBOR plus 2.4% per annum. Effective July 11, 2011, the Trust III entered into an interest rate swap that fixes the interest rate to be paid at 5.0% per annum and matures July 11, 2018. The interest on Note 3, payable quarterly, will be used by the Trust III to pay dividends on the trust preferred securities. The trust preferred securities became redeemable by the Trust III with no prepayment premium on July 27, 2010.
During May 2005, ESS Statutory Trust II (the “Trust II”), a newly formed Delaware statutory trust and a wholly-owned, unconsolidated subsidiary of the Operating Partnership of the Company, issued an aggregate of $41,000 of preferred securities which mature on June 30, 2035. In addition, the Trust II issued 1,269 of Trust common securities to the Operating Partnership for a purchase price of $1,269. On May 24, 2005, the proceeds from the sale of the preferred and common securities of $42,269

71
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


were loaned in the form of a note to the Operating Partnership (“Note 2”). Note 2 had a fixed rate of 6.7% through June 30, 2010, and then was payable at a variable rate equal to the three month LIBOR plus 2.4% per annum. Effective July 11, 2011, the Trust II entered into an interest rate swap that fixes the interest rate to be paid at 5.0% per annum and matures July 11, 2018. The interest on Note 2, payable quarterly, will be used by the Trust II to pay dividends on the trust preferred securities. The trust preferred securities became redeemable by the Trust II with no prepayment premium on June 30, 2010.
During April 2005, ESS Statutory Trust I (the “Trust”), a newly formed Delaware statutory trust and a wholly-owned, unconsolidated subsidiary of the Operating Partnership of the Company issued an aggregate of $35,000 of trust preferred securities which mature on June 30, 2035. In addition, the Trust issued 1,083 of Trust common securities to the Operating Partnership for a purchase price of $1,083. On April 8, 2005, the proceeds from the sale of the trust preferred and common securities of $36,083 were loaned in the form of a note to the Operating Partnership (the “Note”). The Note has a variable rate equal to the three month LIBOR plus 2.3% per annum. Effective June 30, 2010, the Trust entered into an interest rate swap that fixes the interest rate to be paid at 5.1% per annum and matures on June 30, 2018. The interest on the Note, payable quarterly, will be used by the Trust to pay dividends on the trust preferred securities. The trust preferred securities are redeemable by the Trust with no prepayment premium.
Trust, Trust II and Trust III (together, the “Trusts”) are VIEs because the holders of the equity investment at risk (the trust preferred securities) do not have the power to direct the activities of the entities that most significantly affect the entities’ economic performance because of their lack of voting or similar rights. Because the Operating Partnership’s investment in the Trusts’ common securities was financed directly by the Trusts as a result of its loan of the proceeds to the Operating Partnership, that investment is not considered to be an equity investment at risk. The Operating Partnership’s investment in the Trusts is not a variable interest because equity interests are variable interests only to the extent that the investment is considered to be at risk, and therefore the Operating Partnership cannot be the primary beneficiary of the Trusts. Since the Company is not the primary beneficiary of the Trusts, they have not been consolidated. A debt obligation has been recorded in the form of notes as discussed above for the proceeds, which are owed to the Trusts by the Company. The Company has also recorded its investment in the Trusts’ common securities as other assets.
The Company has not provided financing or other support during the periods presented to the Trusts that it was not previously contractually obligated to provide. The Company’s maximum exposure to loss as a result of its involvement with the Trusts is equal to the total amount of the notes discussed above less the amounts of the Company’s investments in the Trusts’ common securities. The net amount is the notes payable that the Trusts owe to third parties for their investments in the Trusts’ preferred securities.
The notes payable to trusts are presented net of unamortized deferred financing costs of $2,269 and $2,399 as of December 31, 2016 and 2015, respectively.

Following is a tabular comparison of the liabilities the Company has recorded as a result of its involvements with the Trusts to the maximum exposure to loss the Company is subject to related to the Trusts as of December 31, 2016:
 
Notes payable
to Trusts
 
Investment
Balance
 
Maximum
exposure to loss
 
Difference
Trust
$
36,083

 
$
1,083

 
$
35,000

 
$
—

Trust II
42,269

 
1,269

 
41,000

 
—

Trust III
41,238

 
1,238

 
40,000

 
—

 
119,590

 
3,590

 
116,000

 
—

Unamortized debt issuance costs
(2,269
)
 

 

 

 
$
117,321

 
$
3,590

 
$
116,000

 
$
—


72
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


9.     EXCHANGEABLE SENIOR NOTES
In September 2015, the Operating Partnership issued $575,000 of its 3.125% Exchangeable Senior Notes due 2035. Costs incurred to issue the 2015 Notes were approximately $11,992, consisting primarily of a 2.0% underwriting fee. These costs are being amortized as an adjustment to interest expense over five years, which represents the estimated term based on the first available redemption date, and are included in other assets in the consolidated balance sheets. The 2015 Notes are general unsecured senior obligations of the Operating Partnership and are fully guaranteed by the Company. Interest is payable on April 1 and October 1 of each year beginning April 1, 2016, until the maturity date of October 1, 2035. The Notes bear interest at 3.125% per annum and contain an exchange settlement feature, which provides that the 2015 Notes may, under certain circumstances, be exchangeable for cash (for the principal amount of the 2015 Notes) and, with respect to any excess exchange value, for cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s option. The exchange rate of the 2015 Notes as of December 31, 2016 was approximately 10.56 shares of the Company’s common stock per $1,000 principal amount of the 2015 Notes.
The Operating Partnership may redeem the 2015 Notes at any time to preserve the Company’s status as a REIT. In addition, on or after October 5, 2020, the Operating Partnership may redeem the 2015 Notes for cash, in whole or in part, at 100% of the principal amount plus accrued and unpaid interest, upon at least 30 days but not more than 60 days prior written notice to the holders of the 2015 Notes. The holders of the 2015 Notes have the right to require the Operating Partnership to repurchase the 2015 Notes for cash, in whole or in part, on October 1 of the years 2020, 2025 and 2030, (unless the Operating Partnership has called the 2015 Notes for redemption), and upon the occurrence of certain designated events, in each case for a repurchase price equal to 100% of the principal amount of the 2015 Notes plus accrued and unpaid interest. Certain events are considered “Events of Default,” as defined in the indenture governing the 2015 Notes, which may result in the accelerated maturity of the 2015 Notes.
On June 21, 2013, the Operating Partnership issued $250,000 of its 2.375% Exchangeable Senior Notes due 2033 at a 1.5% discount, or $3,750. Costs incurred to issue the 2013 Notes were approximately $1,672. These costs are being amortized as an adjustment to interest expense over five years, which represents the estimated term based on the first available redemption date, and are included in other assets in the consolidated balance sheets. The 2013 Notes are general unsecured senior obligations of the Operating Partnership and are fully guaranteed by the Company. Interest is payable on January 1 and July 1 of each year beginning January 1, 2014, until the maturity date of July 1, 2033. The 2013 Notes bear interest at 2.375% per annum and contain an exchange settlement feature, which provides that the 2013 Notes may, under certain circumstances, be exchangeable for cash (for the principal amount of the 2013 Notes) and, with respect to any excess exchange value, for cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s option. The exchange rate of the 2013 Notes as of December 31, 2016 was approximately 18.49 shares of the Company’s common stock per $1,000 principal amount of the 2013 Notes.

Additionally, the 2013 Notes and the 2015 Notes can be exchanged during any calendar quarter, if the last reported sale price of the common stock of the Company is greater than or equal to 130% of the exchange price for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter. The price of the Company’s common stock exceeded 130% of the exchange price for the required time period for the 2013 Notes during the quarter ended December 31, 2016. Therefore, holders of the 2013 Notes may elect to exchange such notes during the quarter ending March 31, 2017. The price of the Company’s common stock did not exceed 130% of the exchange price for the required time period for the 2015 Notes during the quarter ended December 31, 2016.
The Operating Partnership may redeem the 2013 Notes at any time to preserve the Company’s status as a REIT. In addition, on or after July 5, 2018, the Operating Partnership may redeem the 2013 Notes for cash, in whole or in part, at 100% of the principal amount plus accrued and unpaid interest, upon at least 30 days but not more than 60 days prior written notice to the holders of the 2013 Notes. The holders of the 2013 Notes have the right to require the Operating Partnership to repurchase the 2013 Notes for cash, in whole or in part, on July 1 of the years 2018, 2023 and 2028, and upon the occurrence of certain designated events, in each case for a repurchase price equal to 100% of the principal amount of the 2013 Notes plus accrued and unpaid interest. Certain events are considered “Events of Default,” as defined in the indenture governing the 2013 Notes, which may result in the accelerated maturity of the 2013 Notes.
GAAP requires entities with convertible debt instruments that may be settled entirely or partially in cash upon conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s economic interest cost. The Company therefore accounts for the liability and equity components of the 2013 Notes and 2015 Notes separately. The equity components are included in paid-in capital in stockholders’ equity in the consolidated balance sheets, and

73
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


the value of the equity components are treated as original issue discount for purposes of accounting for the debt components. The discounts are being amortized as interest expense over the remaining period of the debt through its first redemption date, July 1, 2018 for the 2013 Notes and October 1, 2020 for the 2015 Notes. The effective interest rate on the liability components of both the 2013 Notes and the 2015 Notes is 4.0%, which approximates the market rate of interest of similar debt without exchange features (i.e. nonconvertible debt) at the time of issuance.
Information about the carrying amount of the equity component, the principal amount of the liability component, its unamortized discount and its net carrying amount were as follows for the periods indicated:
 
December 31, 2016
 
December 31, 2015
Carrying amount of equity component - 2013 Notes
$
—

 
$
—

Carrying amount of equity component - 2015 Notes
22,597

 
22,597

Carrying amount of equity components
$
22,597

 
$
22,597

Principal amount of liability component - 2013 Notes
$
63,170

 
$
85,364

Principal amount of liability component - 2015 Notes
575,000

 
575,000

Unamortized discount - equity component - 2013 Notes
(1,187
)
 
(2,605
)
Unamortized discount - equity component - 2015 Notes
(17,355
)
 
(21,565
)
Unamortized cash discount - 2013 Notes
(281
)
 
(633
)
Unamortized debt issuance costs
(9,033
)
 
(11,698
)
Net carrying amount of liability components
$
610,314

 
$
623,863


The amount of interest cost recognized relating to the contractual interest rate and the amortization of the discount on the liability component for the 2013 Notes and 2015 Notes was as follows for the periods indicated:
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Contractual interest
$
19,483

 
$
9,939

 
$
5,936

Amortization of discount
4,980

 
3,310

 
2,683

Total interest expense recognized
$
24,463

 
$
13,249

 
$
8,619

Repurchase of 2013 Notes
During April 2016, the Company repurchased a total principal amount of $2,555 of the 2013 Notes. The Company paid cash for the principal amount and issued a total of 18,031 shares of common stock valued at $1,686 for the exchange value in excess of the principal amount.
During February 2016, the Company repurchased a total principal amount of $19,639 of the 2013 Notes. The Company paid cash for the principal amount, and issued a total of 130,909 shares of common stock valued at $11,380 for the exchange value in excess of the principal amount.
As part of the 2015 Notes offering, the Company repurchased $164,636 of the 2013 Notes for $227,212 on September 15, 2015. The Company allocated the value of the consideration paid to repurchase the 2013 Notes (1) to the extinguishment of the liability component and (2) to the reacquisition of the equity component. The amount allocated to the extinguishment of the liability component is equal to the fair value of that component immediately prior to extinguishment. The difference between the consideration attributed to the extinguishment of the liability component and the sum of (a) the net carrying amount of the repurchased liability component, and (b) the related unamortized debt issuance costs, is recognized as a gain on debt extinguishment. The remaining settlement consideration is allocated to the reacquisition of the equity component of the repurchased 2013 Notes and recognized as a reduction of stockholders’ equity.

74
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Information about the repurchases is as follows:
 
February 2016
 
April 2016
 
September 2015
Principal amount repurchased
$
19,639

 
$
2,555

 
$
164,636

Amount allocated to:
 
 
 
 
 
  Extinguishment of liability component
$
18,887

 
$
2,476

 
$
157,100

  Reacquisition of equity component
12,132

 
1,766

 
70,112

Total consideration paid for repurchase
$
31,019

 
$
4,242

 
$
227,212

Exchangeable senior notes repurchased
$
19,639

 
$
2,555

 
$
164,636

Extinguishment of liability component
(18,887
)
 
(2,476
)
 
(157,100
)
Discount on exchangeable senior notes
(716
)
 
(72
)
 
(6,931
)
Related debt issuance costs
(36
)
 
(7
)
 
(605
)
Gain/(loss) on repurchase
$
—

 
$
—

 
$
—

10.         OTHER LIABILITIES
The components of other liabilities are summarized as follows:
 
December 31, 2016
 
December 31, 2015
Deferred rental income
$
43,923

 
$
35,904

Fair value of interest rate swaps
2,447

 
6,991

Income taxes payable
1,695

 
2,223

Deferred tax liability
9,838

 
10,728

Earnout provisions on acquisitions
5,184

 
5,510

Unpaid claims liability
10,134

 
11,313

Other miscellaneous liabilities
14,448

 
7,820

 
$
87,669

 
$
80,489

Included in the unpaid claims liability are claims related to the Company’s tenant reinsurance program. For the years ended December 31, 2016, 2015 and 2014, the number of claims made were 4,055, 3,959 and 2,942, respectively. The following table presents information on the portion of the Company’s unpaid claims liability that relates to tenant insurance for the periods indicated:
 
For the Year Ended December 31,
Tenant Reinsurance Claims:
2016
 
2015
 
2014
Unpaid claims liability at beginning of year
$
3,908

 
$
3,121

 
$
2,112

Claims and claim adjustment expense for claims incurred in the current year
7,250

 
6,421

 
5,126

Claims and claim adjustment expense (benefit) for claims incurred in the prior years
87

 
—

 
(345
)
Payments for current year claims
(5,423
)
 
(4,283
)
 
(2,954
)
Payments for prior year claims
(1,926
)
 
(1,351
)
 
(818
)
Unpaid claims liability at the end of the year
$
3,896

 
$
3,908

 
$
3,121

11.     RELATED PARTY AND AFFILIATED REAL ESTATE JOINT VENTURE TRANSACTIONS
The Company provides management services to certain joint ventures, third parties and other related party stores. Management agreements provide generally for management fees of 6.0% of cash collected from total revenues for the management of operations at the stores. In addition, the Company receives an asset management fee equal to 0.5% multiplied by the total asset value of the stores owned by the SPI joint venture, provided certain requirements are met.

75
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Management fee revenues for related party and affiliated real estate joint ventures and other income are summarized as follows:
 
 
 
 
For the Year Ended December 31,
Entity
 
Type
 
2016
 
2015
 
2014
VRS
 
Affiliated real estate joint ventures
 
$
1,053

 
$
1,398

 
$
1,326

PREXR
 
Affiliated real estate joint ventures
 
20

 
—

 
—

SP I
 
Affiliated real estate joint ventures
 
2,160

 
2,075

 
1,999

PRISA
 
Affiliated real estate joint ventures
 
6,117

 
5,809

 
5,466

ESW II
 
Affiliated real estate joint ventures
 
482

 
452

 
410

ESSM
 
Affiliated real estate joint ventures
 
162

 
152

 
132

WCOT
 
Affiliated real estate joint ventures
 
1,819

 
1,799

 
1,680

PRISA II
 
Affiliated real estate joint ventures
 
3,469

 
4,703

 
4,635

ESW
 
Affiliated real estate joint ventures
 
555

 
515

 
480

ESNPS
 
Affiliated real estate joint ventures
 
620

 
584

 
550

HSRE-ESP IA, LLC ("HSRE")
 
Affiliated real estate joint ventures
 
—

 
—

 
1,201

Other
 
Franchisees, third parties and other
 
23,385

 
16,674

 
10,336

 
 
 
 
$
39,842

 
$
34,161

 
$
28,215


Receivables from related parties and affiliated real estate joint ventures balances are summarized as follows:
 
 
December 31, 2016
 
December 31, 2015
Mortgage notes receivable
 
$
15,860

 
$
—

Other receivables from stores
 
751

 
2,205

 
 
$
16,611

 
$
2,205

Mortgage notes receivable consist of short-term mortgage notes to joint ventures and one three-year revolving line of credit to a joint venture. These short-term mortgage notes have a maturity of less than a year and the Company believes they are fully collectible. Other receivables from stores consist of amounts due for management fees, asset management fees and expenses paid on behalf of the stores that the Company manages. The Company believes that all of these related party and affiliated real estate joint venture receivables are fully collectible. The Company does not have any payables to related parties at December 31, 2016, or 2015.
The Company has entered into an annual aircraft dry lease and service and management agreement with SpenAero, L.C. (“SpenAero”), an affiliate of Spencer F. Kirk, who was the Company's Chief Executive Officer through December 31, 2016 and continues to serve as a member of the Company's Board of Directors. Under the terms of the agreement, the Company pays a defined hourly rate for use of the aircraft. During the years ended December 31, 2016, 2015 and 2014, the Company paid SpenAero $1,180, $1,163 and $1,059, respectively. The services that the Company receives from SpenAero are similar in nature and comparable in price to those that are provided to other outside third parties.
12.     STOCKHOLDERS’ EQUITY
The Company’s charter provides that it can issue up to 500,000,000 shares of common stock, $0.01 par value per share and 50,000,000 shares of preferred stock, $0.01 par value per share. As of December 31, 2016, 125,881,460 shares of common stock were issued and outstanding, and no shares of preferred stock were issued or outstanding.

All holders of the Company's common stock are entitled to receive dividends and to one vote on all matters submitted to a vote of stockholders. The transfer agent and registrar for the Company’s common stock is American Stock Transfer & Trust Company.

On August 28, 2015, the Company filed a $400,000 “at the market” equity program with the Securities and Exchange Commission, and entered into separate equity distribution agreements with five sales agents. On May 6, 2016, the Company

76
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


filed its current $400,000 "at the market" equity program with the Securities and Exchange Commission using a new shelf registration statement on Form S-3, and entered into separate equity distribution agreements with five sales agents. Under the terms of the current equity distribution agreements, the Company may from time to time offer and sell shares of common stock, up to the aggregate offering price of $400,000, through its sales agents. The current equity distribution agreements, dated May 6, 2016, replaced and superseded the previous equity distribution agreements, dated August 28, 2015.

During July 2016, the Company sold 550,000 shares of common stock under the current “at the market” equity program at an average sales price of $92.04 per share, resulting in net proceeds of $50,062. At December 31, 2016, the Company had $349,375 available for issuance under the existing equity distribution agreements.

From January 1, 2016, through May 6, 2016, the Company sold 831,300 shares of common stock under the previous “at the market” equity program at an average sales price of $89.66 per share, resulting in net proceeds of $73,360.

During September 2015, the Company sold 410,000 shares of common stock under the previous “at the market” equity program at an average sales price of $75.17 per share, resulting in net proceeds of $30,266.

On June 22, 2015, the Company issued and sold 6,325,000 shares of its common stock in a public offering at a price of $68.15 per share. The Company received gross proceeds of $431,049. The underwriting discount and transaction costs were $14,438, resulting in net proceeds of $416,611.
13.     NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS
Classification of Noncontrolling Interests
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. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity.
The Company has evaluated the terms of the Operating Partnership’s preferred units and classifies the noncontrolling interest represented by such preferred units as stockholders’ equity in the accompanying consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling amount as permanent equity in the consolidated balance sheets. 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, or (2) its redemption value as of the end of the period in which the determination is made.
Series A Participating Redeemable Preferred Units
On June 15, 2007, the Operating Partnership entered into a Contribution Agreement with various limited partnerships affiliated with AAAAA Rent-A-Space to acquire ten stores in exchange for 989,980 Series A Units. The stores are located in California and Hawaii.
The partnership agreement of the Operating Partnership (as amended, the “Partnership Agreement”) provides for the designation and issuance of the Series A Units. The Series A Units have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation.
Under the Partnership Agreement, Series A Units in the amount of $115,000 bear a fixed priority return of 5.0% and have a fixed liquidation value of $115,000. The remaining balance participates in distributions with, and has a liquidation value equal to, that of the common OP Units. The Series A Units became redeemable at the option of the holder on September 1, 2008, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock.
On June 25, 2007, the Operating Partnership loaned the holders of the Series A Units $100,000. The note receivable bears interest at 4.85%. During 2013, a loan amendment was signed extending the maturity date to September 1, 2020. The loan is secured by the borrower’s Series A Units. The holders of the Series A Units could redeem up to 114,500 Series A Units prior to the maturity date of the loan. If any redemption in excess of 114,500 Series A Units occurs prior to the maturity date, the holder

77
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


of the Series A Units is required to repay the loan as of the date of that redemption. On October 3, 2014, the holders of the Series A Units redeemed 114,500 Series A Units for $4,794 in cash and 280,331 shares of common stock. No additional redemption of Series A Units can be made without repayment of the loan. The Series A Units are shown on the balance sheet net of the $100,000 loan because the borrower under the loan receivable is also the holder of the Series A Units.
Series B Redeemable Preferred Units
On April 3, 2014, the Operating Partnership completed the purchase of a store located in Georgia. This store was acquired in exchange for $15,158 of cash and 333,360 Series B Units valued at $8,334.
On August 29, 2013, the Operating Partnership completed the purchase of 19 out of 20 stores affiliated with All Aboard Mini Storage, all of which are located in California. On September 26, 2013, the Operating Partnership completed the purchase of the remaining facility. These stores were acquired in exchange for $100,876 in cash (including $98,960 of debt assumed and immediately defeased at closing), 1,342,727 Series B Units valued at $33,568, and 1,448,108 common OP Units valued at $62,341.
The Partnership Agreement provides for the designation and issuance of the Series B Units. The Series B Units rank junior to the Series A Units, on parity with the Series C Units and Series D Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation.
The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $41,903. Holders of the Series B Units receive distributions at an annual rate of 6.0%. These distributions are cumulative. The Series B Units are redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligations may be satisfied at the Company’s option in cash or shares of its common stock.
Series C Convertible Redeemable Preferred Units
On November 19, 2013, the Operating Partnership entered into Contribution Agreements with various entities affiliated with Grupe, under which the Company agreed to acquire twelve stores, all of which are located in California. The Company completed the purchase of these stores between December 2013 and May 2014. The Company previously held a 35% interest in five of these stores and a 40% interest in one store all through six separate joint ventures with Grupe. These stores were acquired in exchange for a total of approximately $45,722 of cash, the assumption of $37,532 in existing debt, and the issuance of 704,016 Series C Units valued at $30,960.
The Partnership Agreement provides for the designation and issuance of the Series C Units. The Series C Units rank 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.
The Series C Units have a liquidation value of $42.10 per unit for a fixed liquidation value of $29,639. From issuance to the fifth anniversary of issuance, each Series C Unit holder will receive quarterly distributions equal to the quarterly distribution for common OP Unit plus $0.18. Beginning on the fifth anniversary of issuance, each Series C Unit holder will receive a fixed quarterly distribution equal to the aggregate quarterly distribution payable in respect of such Series C Unit during the four quarters immediately preceding the fifth anniversary of issuance divided by four. These distributions are cumulative. The Series C Units will become redeemable at the option of the holder one year from the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock. The Series C Units will also become convertible into common OP Units at the option of the holder one year from the date of issuance, at a rate of 0.9145 common OP Units per Series C Unit converted. This conversion option expires upon the fifth anniversary of the date of issuance.
In December 2014, the Operating Partnership loaned holders of the Series C Units $20,230. The notes receivable, which are collateralized by the Series C Units, bear interest at 5.0% and mature on December 15, 2024. The Series C Units are shown on the balance sheet net of the $20,230 loan because the borrower under the loan receivable is also the holder of the Series C Units.
Series D Redeemable Preferred Units

78
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


On November 8, 2016, the Operating Partnership completed the acquisition of a store located in Illinois. This store was acquired in exchange for 486,244 Series D-4 Preferred Units ("D-4 Units") valued at $12,156.
On May 21, 2016, the Operating Partnership completed the acquisition of four stores located in Illinois. These stores were acquired in exchange for 2,201,467 Series D-3 Preferred Units ("D-3 Units") valued at $55,037.
In December 2014, the Operating Partnership completed the acquisition of a store located in Florida. This store was acquired in exchange for $5,621 in cash and 548,390 Series D-1 Preferred Units ("D-1 Units," and together with the D-4 Units and D-3 Units, "Series D Units") valued at $13,710.
The Partnership Agreement provides for the designation and issuance of the Series D Units. The Series D Units rank junior to the Series A Units, on parity with the Series B Units and Series C Units, and senior to all other partnership interest of the Operating Partnership with respect to distributions and liquidation.

The Series D Units have a liquidation value of $25.00 per unit, for a fixed liquidation value of $80,903. Holders of the Series D Units receive distributions at an annual rate between 3.5% and 5.0%. These distributions are cumulative. The Series D Units will become redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock. In addition, the D-3 Units are exchangeable for common OP Units until the tenth anniversary of the date of issuance. The D-1 Units and D-4 Units are not exchangeable for common OP Units.
14.     NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP
The Company’s interest in its stores is held through the Operating Partnership. ESS Holding Business Trust I, a wholly-owned subsidiary of the Company, is the sole general partner of the Operating Partnership. ESS Business Trust II, also a wholly-owned subsidiary of the Company, is a limited partner of the Operating Partnership. Between its general partner and limited partner interests, the Company held a 91.2% majority ownership interest therein as of December 31, 2016. The remaining ownership interests in the Operating Partnership (including Preferred Operating Partnership units) of 8.8% are held by certain former owners of assets acquired by the Operating Partnership.
The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. In conjunction with the formation of the Company and as a result of subsequent acquisitions, certain persons and entities contributing interests in stores to the Operating Partnership received limited partnership units in the form of OP Units. Limited partners who received OP Units in the formation transactions or in exchange for contributions for interests in stores have the right to require the Operating Partnership to redeem part or all of their OP Units for 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. Alternatively, the Company may, at its sole discretion, elect to acquire those OP Units in exchange for shares of its common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Operating Partnership agreement. The ten-day average closing stock price at December 31, 2016, was $74.87 and there were 5,608,038 OP Units outstanding.
Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on December 31, 2016 and the Company elected to pay the OP Unit holders cash, the Company would have paid $419,874 in cash consideration to redeem the units.
During the years ended December 31, 2016, 2015, and 2014, a total of 23,850 OP Units, 787,850 OP Units, and 18,859 OP Units, respectively, were redeemed in exchange for the Company’s common stock.
During November 2016, 6,760 OP Units were redeemed for $506 in cash.
On November 2, 2016, the Company purchased one store located in Maryland. As part of the consideration for this acquisition, 77,575 OP units were issued with a total value of $5,842.
On June 30, 2016, the Company purchased one store located in Georgia. As part of the consideration for this acquisition, 13,764 OP Units were issued with a total value of $1,200.
On May 31, 2016, the Company purchased 50% undivided interest in vacant land in California. As part of the consideration for this acquisition, 2,230 OP Units were issued with a total value of $205.

79
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


On November 13, 2015, the Company purchased one store located in Texas. As part of the consideration for this acquisition, 91,434 OP Units were issued with a total value of $7,221.
On October 1, 2015, the Company acquired SmartStop. As part of the consideration for this acquisition, 376,848 OP Units were issued with a total value of $28,656.
On June 18, 2015, the Company purchased one store located in Florida. As part of the consideration for this acquisition, 71,054 OP Units were issued with a total value of $4,773.
On April 15, 2015, the Company purchased 22 stores located in Arizona and Texas. As part of the consideration for this acquisition, 1,504,277 OP Units were issued with a total value of $101,749.
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. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity.
The Company has evaluated the terms of the common OP Units and classifies the noncontrolling interest represented by the common OP Units as stockholders’ equity in the accompanying consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling amount as permanent equity in the consolidated balance sheets. 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, or (2) its redemption value as of the end of the period in which the determination is made.
15.     OTHER NONCONTROLLING INTERESTS
Other noncontrolling interests represent the ownership interest of a third party in one consolidated joint venture as of December 31, 2016. This joint venture owns an operating store in Texas. The voting interest of the third-party owner is 20.0%. Other noncontrolling interests are included in the stockholders’ equity section of the Company’s consolidated balance sheets. The income or losses attributable to this third-party owner based on its ownership percentage are reflected in net income allocated to Operating Partnership and other noncontrolling interests in the consolidated statements of operations.
On August 1, 2016, the Company purchased its joint venture partner's remaining 3.3% interest in an existing joint venture in exchange for 8,889 OP Units, valued at $800. This joint venture owned one store located in California, and as a result of this purchase, this store became wholly-owned by the Company. Prior to this acquisition, the partner's interest was reported in other noncontrolling interests. Since the Company retained its controlling interest in the joint venture, this transaction was accounted for as an equity transaction. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase, and the difference between the price paid by the Company and the carrying value of the noncontrolling interest was recorded as an adjustment to equity attributable to the Company.
On June 11, 2015, the Company purchased its joint venture partner’s remaining 1% interest in the HSRE joint venture for $1,267. The joint venture owned 19 properties in California, Florida, Nevada, Ohio, Pennsylvania, Tennessee, Texas and Virginia, and as a result of this purchase, these properties became wholly-owned by the Company. Prior to this acquisition, the partner’s interest was reported in other noncontrolling interests. Since the Company retained its controlling interest in the subsidiary, this transaction was accounted for as an equity transaction. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase, and the difference between the price paid by the Company and the carrying value of the noncontrolling interest was recorded as an adjustment to equity attributable to the Company.

16.     STOCK-BASED COMPENSATION
As of December 31, 2016, 1,934,735 shares were available for issuance under the Company’s 2015 Incentive Award Plan (the “Plan”).

80
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Option grants are issued with an exercise price equal to the closing price of stock on the date of grant. Unless otherwise determined by the Compensation, Nominating and Governance Committee (“CNG Committee”) at the time of grant, options shall vest ratably over a four-year period beginning on the date of grant. Each option will be exercisable once it has vested. Options are exercisable at such times and subject to such terms as determined by the CNG Committee, but under no circumstances may be exercised if such exercise would cause a violation of the ownership limit in the Company’s charter. Options expire 10 years from the date of grant.
Also as defined under the terms of the Plan, restricted stock grants may be awarded. The stock grants are subject to a vesting period over which the restrictions are released and the stock certificates are given to the grantee. During the performance or vesting period, the grantee is not permitted to sell, transfer, pledge, encumber or assign shares of restricted stock granted under the Plan; however, the grantee has the ability to vote the shares and receive nonforfeitable dividends paid on shares. Unless otherwise determined by the CNG Committee at the time of grant, the forfeiture and transfer restrictions on the shares lapse over a four-year period beginning on the date of grant.
Option Grants
A summary of stock option activity is as follows:
Options
Number of Shares
 
Weighted Average Exercise Price
 
Weighted Average Remaining Contractual Life (Years)
 
Aggregate Intrinsic Value as of December 31, 2016
Outstanding at December 31, 2013
754,624

 
$
15.01

 
 
 
 
Granted
31,000

 
47.50

 
 
 
 
Exercised
(211,747
)
 
14.85

 
 
 
 
Forfeited
(5,150
)
 
28.28

 
 
 
 
Outstanding at December 31, 2014
568,727

 
$
16.62

 
 
 
 
Granted
89,575

 
69.93

 
 
 
 
Exercised
(79,974
)
 
18.79

 
 
 
 
Forfeited
(5,699
)
 
39.83

 
 
 
 
Outstanding at December 31, 2015
572,629

 
$
24.42

 
 
 
 
Granted
35,800

 
85.99

 
 
 
 
Exercised
(97,855
)
 
14.75

 
 
 
 
Forfeited
—

 
—

 
 
 
 
Outstanding at December 31, 2016
510,574

 
$
30.60

 
4.78
 
$
24,129

Vested and Expected to Vest
494,881

 
$
29.20

 
4.65
 
$
24,038

Ending Exercisable
384,810

 
$
17.82

 
3.62
 
$
22,865


The aggregate intrinsic value in the table above represents the total value (the difference between the Company’s closing stock price on the last trading day of 2016 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2016. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock.
The weighted average fair value of stock options granted in 2016, 2015 and 2014, was $20.30, $16.89 and $12.03, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

81
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Expected volatility
37.0
%
 
38.0
%
 
40.0
%
Dividend yield
3.6
%
 
3.6
%
 
3.8
%
Risk-free interest rate
1.3
%
 
1.5
%
 
1.5
%
Average expected term (years)
5

 
5

 
5

The Black-Scholes model incorporates assumptions to value stock-based awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the estimated life of the option. The Company uses actual historical data to calculate the expected price volatility, dividend yield and average expected term. The forfeiture rate, which is estimated at a weighted-average of 5.0% of unvested options outstanding as of December 31, 2016, is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimates.
A summary of stock options outstanding and exercisable as of December 31, 2016, is as follows:
 
 
Options Outstanding
 
Options Exercisable
Exercise Price
 
Shares
 
Weighted Average Remaining Contractual Life
 
Weighted Average Exercise Price
 
Shares
 
Weighted Average Exercise Price
$6.22 - $6.22
 
157,750

 
2.13
 
$
6.22

 
157,750

 
$
6.22

$11.59 - $11.59
 
28,080

 
3.13
 
11.59

 
28,080

 
11.59

$12.21 - $12.21
 
77,400

 
3.18
 
12.21

 
77,400

 
12.21

$19.6 - $28.11
 
59,660

 
4.78
 
24.23

 
59,660

 
24.23

$28.79 - $38.4
 
37,659

 
6.05
 
37.44

 
27,197

 
37.08

$47.5 - $47.5
 
24,650

 
7.14
 
47.50

 
12,328

 
47.50

$65.36 - $65.36
 
20,395

 
8.15
 
65.36

 
5,100

 
65.36

$65.45 - $65.45
 
19,180

 
8.14
 
65.45

 
4,795

 
65.45

$73.52 - $73.52
 
50,000

 
8.59
 
73.52

 
12,500

 
73.52

$85.99 - $85.99
 
35,800

 
9.15
 
85.99

 
—

 
—

$6.22 - $85.99
 
510,574

 
4.78
 
$
30.60

 
384,810

 
$
17.82

The Company recorded compensation expense relating to outstanding options of $729, $510 and $456 in general and administrative expense for the years ended December 31, 2016, 2015 and 2014, respectively. Total cash received for the years ended December 31, 2016, 2015 and 2014, related to option exercises was $1,444, $1,542 and $3,095, respectively. At December 31, 2016, there was $1,442 of total unrecognized compensation expense related to non-vested stock options under the Plan. That cost is expected to be recognized over a weighted-average period of 2.30 years. The valuation model applied in this calculation utilizes subjective assumptions that could potentially change over time, including the expected forfeiture rate. Therefore, the amount of unrecognized compensation expense at December 31, 2016, noted above does not necessarily represent the expense that will ultimately be realized by the Company in the statement of operations.

Common Stock Granted to Employees and Directors
The Company recorded $7,316, $5,545 and $4,528 of expense in general and administrative expense in its statement of operations related to outstanding shares of common stock granted to employees and directors for the years ended December 31, 2016, 2015 and 2014, respectively. The forfeiture rate, which is estimated at a weighted-average of 10.1% of unvested awards outstanding as of December 31, 2016, is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimates. At December 31, 2016 there was $14,141 of total unrecognized compensation expense related to non-vested restricted stock awards under the Plan. That cost is expected to be recognized over a weighted-average period of 2.37 years.
The fair value of common stock awards is determined based on the closing trading price of the Company’s common stock on the grant date.

82
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


A summary of the Company’s employee and director share grant activity is as follows:
Restricted Stock Grants
Shares
 
Weighted-Average Grant-Date Fair Value
Unreleased at December 31, 2013
395,360

 
$
26.96

Granted
117,370

 
49.25

Released
(197,386
)
 
23.07

Cancelled
(23,595
)
 
37.19

Unreleased at December 31, 2014
291,749

 
$
37.73

Granted
174,558

 
69.18

Released
(129,808
)
 
34.86

Cancelled
(18,090
)
 
44.54

Unreleased at December 31, 2015
318,409

 
$
55.75

Granted
119,931

 
87.61

Released
(128,808
)
 
50.05

Cancelled
(9,947
)
 
67.36

Unreleased at December 31, 2016
299,585

 
$
70.57

17.     EMPLOYEE BENEFIT PLAN
The Company has a retirement savings plan under Section 401(k) of the Internal Revenue Code under which eligible employees can contribute up to 60% of their annual salary, subject to a statutory prescribed annual limit. For the years ended December 31, 2016, 2015 and 2014, the Company made matching contributions to the plan of $1,944, $1,680 and $1,529, respectively, based on 100% of the first 3% and up to 50% of the next 2% of an employee’s compensation.
18.     INCOME TAXES
As a REIT, the Company is generally not subject to federal income tax with respect to that portion of its income which is distributed annually to its stockholders. However, the Company has elected to treat one of its corporate subsidiaries, Extra Space Management, Inc., as a taxable REIT subsidiary. In general, the Company’s TRS may perform additional services for tenants and generally may engage in any real estate or non-real estate related business. A TRS is subject to corporate federal income tax. The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes.” Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. The Company has elected to use the Tax-Law-Ordering approach to determine when excess tax benefits will be realized.

The income tax provision for the years ended December 31, 2016, 2015 and 2014, is comprised of the following components:
 
For the Year Ended December 31, 2016
 
Federal      
 
State      
 
Total      
Current expense
$
14,627

 
$
2,368

 
$
16,995

Tax credits/true-up
(312
)
 
—

 
(312
)
Change in deferred benefit
(369
)
 
(467
)
 
(836
)
Total tax expense
$
13,946

 
$
1,901

 
$
15,847

 

83
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


 
For the Year Ended December 31, 2015
 
Federal      
 
State      
 
Total      
Current expense
$
3,736

 
$
1,640

 
$
5,376

Tax credits/true-up
274

 
—

 
274

Change in deferred benefit
7,016

 
(1,518
)
 
5,498

Total tax expense
$
11,026

 
$
122

 
$
11,148

 
 
For the Year Ended December 31, 2014
 
Federal      
 
State      
 
Total      
Current expense
$
6,020

 
$
1,374

 
$
7,394

Tax credits/true-up
(2,176
)
 
—

 
(2,176
)
Change in deferred benefit
803

 
1,549

 
2,352

Total tax expense
$
4,647

 
$
2,923

 
$
7,570

A reconciliation of the statutory income tax provisions to the effective income tax provisions for the periods indicated is as follows:
 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Expected tax at statutory rate
$
144,708

 
35.0
 %
 
$
77,151

 
35.0
 %
 
$
71,215

 
35.0
 %
Non-taxable REIT income
(131,112
)
 
(31.7
)%
 
(67,084
)
 
(30.4
)%
 
(64,402
)
 
(31.7
)%
State and local tax expense - net of federal benefit
2,399

 
0.6
 %
 
1,249

 
0.6
 %
 
1,109

 
0.6
 %
Change in valuation allowance
(845
)
 
(0.2
)%
 
(624
)
 
(0.3
)%
 
1,663

 
0.8
 %
Tax credits/true-up
(312
)
 
(0.1
)%
 
274

 
0.1
 %
 
(2,176
)
 
(1.1
)%
Miscellaneous
1,009

 
0.2
 %
 
182

 
0.1
 %
 
161

 
0.1
 %
Total provision
$
15,847

 
3.8
 %
 
$
11,148

 
5.1
 %
 
$
7,570

 
3.7
 %


84
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


The major sources of temporary differences stated at their deferred tax effects are as follows:
 
December 31, 2016
 
December 31, 2015
Deferred tax liabilities:
 
 
 
Fixed assets
$
(16,488
)
 
$
(17,360
)
Other
(201
)
 
(221
)
State deferred taxes
(1,242
)
 
(1,523
)
Total deferred tax liabilities
(17,931
)
 
(19,104
)
 
 
 
 
Deferred tax assets:
 
 
 
Captive insurance subsidiary
413

 
429

Accrued liabilities
2,741

 
2,633

Stock compensation
1,713

 
1,346

Solar credit
—

 
2,167

Other
1,548

 
309

SmartStop TRS
365

 
1,085

State deferred taxes
6,078

 
6,016

Total deferred tax assets
12,858

 
13,985

 
 
 
 
Valuation allowance
(4,765
)
 
(5,609
)
 
 
 
 
Net deferred income tax liabilities
$
(9,838
)
 
$
(10,728
)
The state income tax net operating losses expire between 2017 and 2034. The valuation allowance is associated with the state income tax net operating losses. The tax years 2012 through 2015 remain open related to the state returns, and 2013 through 2015 for the federal returns.
19.     SEGMENT INFORMATION
The Company operates in three distinct segments: (1) rental operations; (2) tenant reinsurance; and (3) property management, acquisition and development. Management fees collected for wholly-owned stores are eliminated in consolidation. Financial information for the Company’s business segments is set forth below:
 
December 31, 2016
 
December 31, 2015
Balance Sheet
 
 
 
Investment in unconsolidated real estate ventures
 
 
 
Rental operations
$
79,570

 
$
103,007

Total assets
 
 
 
Rental operations
$
6,731,292

 
$
5,674,030

Tenant reinsurance
44,524

 
37,696

Property management, acquisition and development
315,630

 
359,681

 
$
7,091,446

 
$
6,071,407









85
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


 
For the Year Ended December 31,
 
2016
 
2015
 
2014
Statement of Operations
 
 
 
 
 
Total revenues
 
 
 
 
 
Rental operations
$
864,742

 
$
676,138

 
$
559,868

Tenant reinsurance
87,291

 
71,971

 
59,072

Property management, acquisition and development
39,842

 
34,161

 
28,215

 
991,875

 
782,270

 
647,155

Operating expenses, including depreciation and amortization
 
 
 
 
 
Rental operations
423,575

 
328,380

 
279,497

Tenant reinsurance
15,555

 
13,033

 
10,427

Property management, acquisition and development
102,907

 
146,201

 
78,763

 
542,037

 
487,614

 
368,687

Income (loss) from operations
 
 
 
 
 
Rental operations
441,167

 
347,758

 
280,371

Tenant reinsurance
71,736

 
58,938

 
48,645

Property management, acquisition and development
(63,065
)
 
(112,040
)
 
(50,548
)
 
449,838

 
294,656

 
278,468

Gain (loss) on real estate transactions, earnout from prior acquisition and sale of other assets
 
 
 
 
 
Property management, acquisition and development
8,465

 
1,501

 
(10,285
)
 
 
 
 
 
 
Property casualty loss, net
 
 
 
 
 
Rental operations
—

 
—

 
(1,724
)
 
 
 
 
 
 
Interest expense
 
 
 
 
 
Rental operations
(129,907
)
 
(93,711
)
 
(80,160
)
Property management, acquisition and development
(3,572
)
 
(1,971
)
 
(1,170
)
 
(133,479
)
 
(95,682
)
 
(81,330
)
Non-cash interest expense related to the amortization of discount on equity component of exchangeable senior notes
 
 
 
 
 
Property management, acquisition and development
(4,980
)
 
(3,310
)
 
(2,683
)
 
 
 
 
 
 
Interest income
 
 
 
 
 
Property management, acquisition and development
6,148

 
3,461

 
1,607

 
 
 
 
 
 
Interest income on note receivable from Preferred Operating Partnership unit holder
 
 
 
 
 
Property management, acquisition and development
4,850

 
4,850

 
4,850

 
 
 
 
 
 
Equity in earnings of unconsolidated real estate ventures
 
 
 
 
 
Rental operations
12,895

 
12,351

 
10,541

 
 
 
 
 
 
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of partners' interests
 
 
 
 
 
Property management, acquisition and development
69,199

 
2,857

 
4,022

 
 
 
 
 
 
Income tax (expense) benefit
 
 
 
 
 
Rental operations
(2,320
)
 
(1,729
)
 
(1,157
)

86
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


Tenant reinsurance
(12,610
)
 
(9,780
)
 
(8,662
)
Property management, acquisition and development
(917
)
 
361

 
2,249

 
(15,847
)
 
(11,148
)
 
(7,570
)
Net income (loss)
 
 
 
 
 
Rental operations
321,835

 
264,669

 
207,871

Tenant reinsurance
59,138

 
49,173

 
40,000

Property management, acquisition and development
16,116

 
(104,306
)
 
(51,975
)
 
$
397,089

 
$
209,536

 
$
195,896

Depreciation and amortization expense
 
 
 
 
 
Rental operations
$
173,570

 
$
124,415

 
$
107,081

Property management, acquisition and development
8,990

 
9,042

 
7,995

 
$
182,560

 
$
133,457

 
$
115,076

Statement of Cash Flows
 
 
 
 
 
Acquisition of real estate assets
 
 
 
 
 
Property management, acquisition and development
$
(1,086,523
)
 
$
(1,550,750
)
 
$
(503,538
)
Development and redevelopment of real estate assets
 
 
 
 
 
Property management, acquisition and development
$
(23,279
)
 
$
(26,931
)
 
$
(23,528
)
 
 
 
 
 
 
20.     COMMITMENTS AND CONTINGENCIES
The Company has operating leases on its corporate offices and owns 22 stores that are subject to leases. At December 31, 2016, future minimum rental payments under these non-cancelable operating leases were as follows (unaudited):
Less than 1 year
$
6,123

Year 2
6,677

Year 3
6,124

Year 4
6,080

Year 5
5,897

Thereafter
90,025

 
$
120,926

The monthly rental amounts for three of the ground leases include contingent rental payments based on the level of revenue achieved at the stores. The Company recorded expense of $4,578, $3,858 and $3,406 related to these ground leases in the years ended December 31, 2016, 2015 and 2014, respectively.
The Company is involved in various legal proceedings and is 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. In accordance with applicable accounting guidance, management establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. Therefore, any estimate(s) of loss disclosed below represents what management believes to be an estimate of loss only for certain matters meeting these criteria and does not represent the Company's maximum loss exposure. The Company could in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period, notwithstanding the fact that the Company is currently vigorously defending any legal proceedings against it.
The Company currently has several legal proceedings pending against it that include causes of action alleging wrongful foreclosure, violations of various state specific self-storage statutes, and violations of various consumer fraud acts. As a result of these litigation matters, the Company has a liability of $5,600 as of December 31, 2016, which is included in other liabilities on the consolidated balance sheets.

87
EXTRA SPACE STORAGE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts in thousands, except store and share data, unless otherwise stated


As of December 31, 2016, the Company was under contract to acquire four operating stores and 12 stores to be acquired upon the completion of construction. The total purchase price of all stores with commitments was $183,581. Of these stores, seven are scheduled to close in 2017. The remaining stores will close upon completion of construction, expected to occur on various dates in 2018 and 2019. Additionally, the Company is under contract to acquire 16 stores with joint venture partners, for a net investment of $74,708. Eight of these stores are scheduled to close in 2017 while the remaining eight stores are expected to close in 2018.
Although there can be no assurance, the Company is not aware of any material environmental liability, for which it believes it will be ultimately responsible, that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to its properties could result in future material environmental liabilities.
21.     SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)
 
 
For the Three Months Ended
 
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
Revenues
$
229,403

 
$
244,273

 
$
257,183

 
$
261,016

Cost of operations
135,775

 
133,971

 
134,459

 
137,832

Revenues less cost of operations
$
93,628

 
$
110,302

 
$
122,724

 
$
123,184

Net income
$
89,407

 
$
90,040

 
$
127,226

 
$
90,416

Net income attributable to common stockholders
$
82,592

 
$
83,044

 
$
118,088

 
$
82,403

Earnings per common share—basic
$
0.66

 
$
0.66

 
$
0.94

 
$
0.65

Earnings per common share—diluted
$
0.66

 
$
0.66

 
$
0.93

 
$
0.65

 
For the Three Months Ended
 
March 31, 2015
 
June 30, 2015
 
September 30, 2015
 
December 31, 2015
Revenues
$
173,154

 
$
185,860

 
$
197,497

 
$
225,759

Cost of operations
97,718

 
104,253

 
100,193

 
185,450

Revenues less cost of operations
$
75,436

 
$
81,607

 
$
97,304

 
$
40,309

Net income
$
58,636

 
$
60,956

 
$
78,200

 
$
11,744

Net income attributable to common stockholders
$
53,742

 
$
55,339

 
$
71,718

 
$
8,675

Earnings per common share—basic
$
0.46

 
$
0.47

 
$
0.58

 
$
0.07

Earnings per common share—diluted
$
0.46

 
$
0.47

 
$
0.58

 
$
0.07

22.     SUBSEQUENT EVENTS
Subsequent to year end the Company has purchased two stores for a total of $25,500. These stores are located in Georgia and Illinois.
On February 1, 2017, the Company received a cash payment of $33,071 related to its loans receivable from Strategic 1031 leaving a remaining principal balance of $20,608.

88



Extra Space Storage Inc.
Schedule III
Real Estate and Accumulated Depreciation
(Dollars in thousands)
Date acquired
or development
completed
Store Name
 
State
 
Debt
 
Land
initial cost
 
Building and
improvements
initial cost
 
Adjustments
and costs subsequent
to acquisition
 
Notes
 
Gross carrying amount at December 31, 2016
 
Accumulated
depreciation
Land      
 
Building and improvements    
 
Total      
8/23/2010
Auburn / Dean Rd
 
AL
 
$4,512
 
$324
 
$1,895
 
$163
 
 
 
$325
 
$2,057
 
$2,382
 
$408
8/23/2010
Auburn / Opelika Rd
 
AL
 
1,751
 
92
 
138
 
203
 
 
 
92
 
341
 
433
 
125
7/2/2012
Birmingham / Grace Baker Rd
 
AL
 
4,424
 
790
 
9,369
 
160
 
 
 
790
 
9,529
 
10,319
 
1,108
3/20/2014
Birmingham / Lorna Rd
 
AL
 
7,211
 
2,381
 
11,224
 
108
 
 
 
2,381
 
11,332
 
13,713
 
820
10/1/2015
Daphne
 
AL
 
—
 
970
 
4,182
 
249
 
 
 
970
 
4,431
 
5,401
 
148
8/31/2007
Hoover
 
AL
 
3,973
 
1,313
 
2,858
 
744
 
 
 
1,313
 
3,602
 
4,915
 
1,275
10/1/2015
Montgomery / Carmichael Rd
 
AL
 
4,898
 
540
 
9,048
 
233
 
 
 
540
 
9,281
 
9,821
 
304
10/1/2015
Montgomery / Monticello Dr
 
AL
 
—
 
1,280
 
4,056
 
637
 
 
 
1,280
 
4,693
 
5,973
 
154
12/21/2016
Chandler / Arizona Ave
 
AZ
 
—
 
1,964
 
7,432
 
—
 
 
 
1,964
 
7,432
 
9,396
 
16
10/1/2015
Chandler / W Chandler Blvd
 
AZ
 
—
 
950
 
3,707
 
272
 
 
 
950
 
3,979
 
4,929
 
133
7/25/2013
Chandler / W Elliot Rd
 
AZ
 
4,081
 
547
 
4,213
 
230
 
 
 
547
 
4,443
 
4,990
 
443
4/15/2015
Glendale
 
AZ
 
—
 
608
 
8,461
 
249
 
 
 
608
 
8,710
 
9,318
 
400
10/1/2015
Mesa / E Guadalupe Rd
 
AZ
 
—
 
1,350
 
6,290
 
307
 
 
 
1,350
 
6,597
 
7,947
 
224
12/27/2012
Mesa / E Southern Ave
 
AZ
 
5,435
 
2,973
 
5,545
 
353
 
 
 
2,973
 
5,898
 
8,871
 
657
4/5/2016
Mesa / Greenfield Road
 
AZ
 
—
 
360
 
4,655
 
30
 
 
 
360
 
4,685
 
5,045
 
90
8/18/2004
Mesa / Madero Ave
 
AZ
 
—
 
849
 
2,547
 
347
 
 
 
849
 
2,894
 
3,743
 
977
7/2/2012
Mesa / N. Alma School Rd
 
AZ
 
—
 
1,129
 
4,402
 
264
 
 
 
1,129
 
4,666
 
5,795
 
548
7/25/2013
Mesa / Southern Ave
 
AZ
 
4,049
 
1,453
 
2,897
 
170
 
 
 
1,453
 
3,067
 
4,520
 
301
4/1/2006
Peoria / 75th Ave
 
AZ
 
4,337
 
652
 
4,105
 
173
 
 
 
652
 
4,278
 
4,930
 
1,228
1/31/2011
Peoria / W Beardsley Rd
 
AZ
 
—
 
1,060
 
4,731
 
48
 
 
 
1,060
 
4,779
 
5,839
 
751
1/2/2007
Phoenix / E Greenway Pkwy
 
AZ
 
—
 
669
 
4,135
 
507
 
 
 
668
 
4,643
 
5,311
 
1,283
7/1/2005
Phoenix / East Bell Rd
 
AZ
 
8,019
 
1,441
 
7,982
 
1,057
 
 
 
1,441
 
9,039
 
10,480
 
2,850
10/1/2015
Phoenix / Missouri Ave
 
AZ
 
—
 
470
 
1,702
 
582
 
 
 
470
 
2,284
 
2,754
 
82
11/30/2012
Phoenix / N 32nd St
 
AZ
 
6,984
 
2,257
 
7,820
 
364
 
 
 
2,257
 
8,184
 
10,441
 
892
6/30/2006
Phoenix / N Cave Creek Rd
 
AZ
 
2,814
 
552
 
3,530
 
288
 
 
 
551
 
3,819
 
4,370
 
1,147
10/1/2015
Phoenix / Washington
 
AZ
 
3,105
 
1,200
 
3,767
 
438
 
 
 
1,200
 
4,205
 
5,405
 
146
9/16/2016
Phoenix / West Peoria
 
AZ
 
—
 
1,545
 
7,135
 
—
 
 
 
1,545
 
7,135
 
8,680
 
61
10/1/2015
Tempe / S Priest Dr
 
AZ
 
—
 
850
 
3,283
 
175
 
 
 
850
 
3,458
 
4,308
 
115
10/1/2015
Tempe / W Broadway Rd
 
AZ
 
2,711
 
1,040
 
3,562
 
333
 
 
 
1,040
 
3,895
 
4,935
 
144
11/30/2012
Tucson / N Oracle Rd
 
AZ
 
—
 
1,090
 
7,845
 
134
 
 
 
1,090
 
7,979
 
9,069
 
868
4/18/2016
Tucson / N Tucson Blvd
 
AZ
 
—
 
786
 
7,233
 
235
 
 
 
786
 
7,468
 
8,254
 
143
6/25/2007
Alameda
 
CA
 
—
 
2,919
 
12,984
 
2,133
 
 
 
2,919
 
15,117
 
18,036
 
4,613
8/29/2013
Alhambra
 
CA
 
—
 
10,109
 
6,065
 
402
 
 
 
10,109
 
6,467
 
16,576
 
606
4/25/2014
Anaheim / Old Canal Rd
 
CA
 
10,062
 
2,765
 
12,680
 
189
 
 
 
2,765
 
12,869
 
15,634
 
922
8/29/2013
Anaheim / S Adams St
 
CA
 
6,966
 
3,593
 
3,330
 
262
 
 
 
3,593
 
3,592
 
7,185
 
358
8/29/2013
Anaheim / S State College Blvd
 
CA
 
6,365
 
2,519
 
2,886
 
223
 
 
 
2,519
 
3,109
 
5,628
 
312
7/1/2008
Antelope
 
CA
 
—
 
1,525
 
8,345
 
(251)
 
 (a)
 
1,185
 
8,434
 
9,619
 
1,822
10/19/2011
Bellflower
 
CA
 
2,025
 
640
 
1,350
 
104
 
 
 
639
 
1,455
 
2,094
 
211
5/15/2007
Belmont
 
CA
 
—
 
3,500
 
7,280
 
131
 
 
 
3,500
 
7,411
 
10,911
 
1,800
6/25/2007
Berkeley
 
CA
 
20,351
 
1,716
 
19,602
 
2,107
 
 
 
1,715
 
21,710
 
23,425
 
5,762
11/17/2016
Bermuda Dunes
 
CA
 
—
 
2,593
 
15,049
 
—
 
 
 
2,593
 
15,049
 
17,642
 
64
10/19/2011
Bloomington / Bloomington Ave
 
CA
 
2,692
 
934
 
1,937
 
171
 
 
 
934
 
2,108
 
3,042
 
381
10/19/2011
Bloomington / Linden Ave
 
CA
 
—
 
647
 
1,303
 
202
 
 
 
647
 
1,505
 
2,152
 
266
8/29/2013
Burbank / Thornton Ave
 
CA
 
—
 
4,061
 
5,318
 
299
 
 
 
4,061
 
5,617
 
9,678
 
538
8/10/2000
Burbank / W Verdugo Ave
 
CA
 
18,864
 
3,199
 
5,082
 
2,111
 
 
 
3,617
 
6,775
 
10,392
 
2,891
4/8/2011
Burlingame
 
CA
 
5,230
 
2,211
 
5,829
 
151
 
 
 
2,211
 
5,980
 
8,191
 
921
3/14/2011
Carson
 
CA
 
—
 
—
 
9,709
 
116
 
 
 
—
 
9,825
 
9,825
 
1,474
6/25/2007
Castro Valley
 
CA
 
—
 
—
 
6,346
 
500
 
 
 
—
 
6,846
 
6,846
 
1,684
10/19/2011
Cerritos
 
CA
 
25,224
 
8,728
 
15,895
 
2,737
 
 
 
8,728
 
18,632
 
27,360
 
2,589
11/1/2013
Chatsworth
 
CA
 
11,974
 
9,922
 
7,599
 
559
 
 
 
9,922
 
8,158
 
18,080
 
1,558
6/1/2004
Claremont / South Mills Ave
 
CA
 
2,949
 
1,472
 
2,012
 
284
 
 
 
1,472
 
2,296
 
3,768
 
835
10/19/2011
Claremont / W Arrow Hwy
 
CA
 
3,325
 
1,375
 
1,434
 
233
 
 
 
1,375
 
1,667
 
3,042
 
264
6/25/2007
Colma
 
CA
 
23,134
 
3,947
 
22,002
 
2,781
 
 
 
3,947
 
24,783
 
28,730
 
6,742
9/1/2008
Compton
 
CA
 
—
 
1,426
 
7,582
 
188
 
 
 
1,426
 
7,770
 
9,196
 
1,645
8/29/2013
Concord
 
CA
 
5,089
 
3,082
 
2,822
 
328
 
 
 
3,082
 
3,150
 
6,232
 
299
9/21/2009
El Cajon
 
CA
 
—
 
1,100
 
6,380
 
128
 
 
 
1,100
 
6,508
 
7,608
 
1,232
6/25/2007
El Sobrante
 
CA
 
—
 
1,209
 
4,018
 
1,598
 
 
 
1,209
 
5,616
 
6,825
 
1,782
12/2/2013
Elk Grove / Power Inn Rd
 
CA
 
5,657
 
894
 
6,949
 
119
 
 
 
894
 
7,068
 
7,962
 
562
12/2/2013
Elk Grove / Stockton Blvd
 
CA
 
6,541
 
640
 
8,640
 
76
 
 
 
640
 
8,716
 
9,356
 
687
5/1/2010
Emeryville
 
CA
 
—
 
3,024
 
11,321
 
337
 
 
 
3,024
 
11,658
 
14,682
 
1,980
12/2/2013
Fair Oaks
 
CA
 
4,141
 
644
 
11,287
 
150
 
 
 
644
 
11,437
 
12,081
 
892
11/17/2016
Fallbrook
 
CA
 
—
 
1,638
 
7,361
 
—
 
 
 
1,638
 
7,361
 
8,999
 
31
10/19/2011
Fontana / Baseline Ave
 
CA
 
4,700
 
778
 
4,723
 
134
 
 
 
777
 
4,858
 
5,635
 
710
10/19/2011
Fontana / Foothill Blvd 1
 
CA
 
—
 
768
 
4,208
 
236
 
 
 
768
 
4,444
 
5,212
 
652
10/19/2011
Fontana / Foothill Blvd 2
 
CA
 
—
 
684
 
3,951
 
275
 
 
 
684
 
4,226
 
4,910
 
614
9/15/2002
Fontana / Valley Blvd 1
 
CA
 
2,997
 
961
 
3,846
 
475
 
 
 
1,000
 
4,282
 
5,282
 
1,635
10/15/2003
Fontana / Valley Blvd 2
 
CA
 
5,372
 
1,246
 
3,356
 
553
 
 
 
1,300
 
3,855
 
5,155
 
1,363
6/1/2004
Gardena
 
CA
 
—
 
3,710
 
6,271
 
2,314
 
 
 
4,110
 
8,185
 
12,295
 
2,654
10/1/2015
Gilroy
 
CA
 
8,222
 
1,140
 
14,265
 
295
 
 
 
1,140
 
14,560
 
15,700
 
489
6/1/2004
Glendale / San Fernando Rd 1
 
CA
 
—
 
—
 
6,084
 
253
 
 
 
—
 
6,337
 
6,337
 
2,152
9/21/2016
Glendale / San Fernando Rd 2
 
CA
 
—
 
4,416
 
9,672
 
36
 
 
 
4,416
 
9,708
 
14,124
 
83
7/2/2012
Hawaiian Gardens
 
CA
 
9,994
 
2,964
 
12,478
 
276
 
 
 
2,964
 
12,754
 
15,718
 
1,559
10/1/2015
Hawthorne / La Cienega Blvd
 
CA
 
12,075
 
2,500
 
18,562
 
289
 
 
 
2,500
 
18,851
 
21,351
 
611
6/1/2004
Hawthorne / Rosselle Ave
 
CA
 
3,681
 
1,532
 
3,871
 
327
 
 
 
1,532
 
4,198
 
5,730
 
1,458
6/26/2007
Hayward
 
CA
 
8,191
 
3,149
 
8,006
 
3,471
 
 
 
3,148
 
11,478
 
14,626
 
3,462
8/31/2016
Hemet / Acacia Ave
 
CA
 
—
 
301
 
3,609
 
16
 
 
 
301
 
3,625
 
3,926
 
39
7/1/2005
Hemet / S Sanderson
 
CA
 
3,085
 
1,146
 
6,369
 
408
 
 
 
1,146
 
6,777
 
7,923
 
2,130
10/19/2011
Hesperia
 
CA
 
—
 
156
 
430
 
188
 
 
 
156
 
618
 
774
 
147
7/2/2012
Hollywood
 
CA
 
—
 
4,555
 
10,590
 
162
 
 
 
4,555
 
10,752
 
15,307
 
1,253
8/10/2000
Inglewood
 
CA
 
5,482
 
1,379
 
3,343
 
975
 
 
 
1,530
 
4,167
 
5,697
 
1,922
10/19/2011
Irvine
 
CA
 
9,034
 
3,821
 
3,999
 
182
 
 
 
3,821
 
4,181
 
8,002
 
595
5/28/2014
La Quinta
 
CA
 
10,938
 
4,706
 
12,604
 
152
 
 
 
4,706
 
12,756
 
17,462
 
890
10/1/2015
Ladera Ranch
 
CA
 
—
 
6,440
 
24,500
 
8,705
 
 
 
6,440
 
33,205
 
39,645
 
850
10/19/2011
Lake Elsinore / Central Ave
 
CA
 
—
 
587
 
4,219
 
229
 
 
 
587
 
4,448
 
5,035
 
647
10/19/2011
Lake Elsinore / Collier Ave
 
CA
 
—
 
294
 
2,105
 
263
 
 
 
294
 
2,368
 
2,662
 
334
10/1/2015
Lake Forest
 
CA
 
18,122
 
15,093
 
18,895
 
273
 
 
 
15,090
 
19,171
 
34,261
 
621
10/17/2009
Lancaster / 23rd St W
 
CA
 
—
 
1,425
 
5,855
 
107
 
 
 
1,425
 
5,962
 
7,387
 
1,108
7/28/2006
Lancaster / West Ave J/8
 
CA
 
4,466
 
1,347
 
5,827
 
324
 
 
 
1,348
 
6,150
 
7,498
 
1,771
6/1/2004
Livermore
 
CA
 
—
 
1,134
 
4,615
 
357
 
 
 
1,134
 
4,972
 
6,106
 
1,686
10/19/2011
Long Beach / E Artesia Blvd
 
CA
 
—
 
1,772
 
2,539
 
430
 
 
 
1,772
 
2,969
 
4,741
 
431
10/1/2015
Long Beach / E Wardlow Rd
 
CA
 
13,274
 
6,340
 
17,050
 
331
 
 
 
6,340
 
17,381
 
23,721
 
563
11/1/2013
Long Beach / W Wardlow Rd
 
CA
 
6,861
 
5,859
 
4,992
 
54
 
 
 
5,859
 
5,046
 
10,905
 
1,054
11/17/2016
Los Alamitos
 
CA
 
—
 
10,107
 
15,874
 
66
 
 
 
10,107
 
15,940
 
26,047
 
68
3/23/2000
Los Angeles / Casitas Ave
 
CA
 
—
 
1,431
 
2,976
 
829
 
 
 
1,611
 
3,625
 
5,236
 
1,566
7/2/2012
Los Angeles / Fountain Ave
 
CA
 
—
 
3,099
 
4,889
 
122
 
 
 
3,099
 
5,011
 
8,110
 
601
12/31/2007
Los Angeles / La Cienega
 
CA
 
9,678
 
3,991
 
9,774
 
146
 
 
 
3,992
 
9,919
 
13,911
 
2,314
9/1/2008
Los Angeles / S Central Ave
 
CA
 
8,038
 
2,200
 
8,108
 
243
 
 
 
2,200
 
8,351
 
10,551
 
1,772
12/2/2013
Los Angeles / S Western Ave
 
CA
 
1,434
 
287
 
2,011
 
388
 
 
 
287
 
2,399
 
2,686
 
251
4/25/2014
Los Angeles / Slauson Ave
 
CA
 
—
 
2,400
 
8,605
 
340
 
 
 
2,401
 
8,944
 
11,345
 
655
7/17/2012
Los Gatos
 
CA
 
—
 
2,550
 
8,257
 
74
 
 
 
2,550
 
8,331
 
10,881
 
1,054
1/1/2004
Manteca
 
CA
 
4,725
 
848
 
2,543
 
210
 
 
 
848
 
2,753
 
3,601
 
968
11/1/2013
Marina Del Rey
 
CA
 
34,478
 
19,928
 
18,742
 
250
 
 
 
19,928
 
18,992
 
38,920
 
3,128
8/29/2013
Menlo Park
 
CA
 
9,371
 
7,675
 
1,812
 
275
 
 
 
7,675
 
2,087
 
9,762
 
216
6/1/2007
Modesto / Crows Landing
 
CA
 
3,203
 
909
 
3,043
 
397
 
 
 
909
 
3,440
 
4,349
 
944
8/29/2013
Modesto / Sylvan Ave
 
CA
 
4,192
 
1,647
 
4,215
 
211
 
 
 
1,647
 
4,426
 
6,073
 
408
7/2/2012
Moreno Valley
 
CA
 
2,011
 
482
 
3,484
 
188
 
 
 
482
 
3,672
 
4,154
 
423
10/1/2015
Morgan Hill
 
CA
 
7,354
 
1,760
 
11,772
 
247
 
 
 
1,760
 
12,019
 
13,779
 
397
11/1/2013
North Highlands
 
CA
 
3,274
 
799
 
2,801
 
135
 
 
 
799
 
2,936
 
3,735
 
568
8/29/2013
North Hollywood / Coldwater Canyon
 
CA
 
—
 
4,501
 
4,465
 
376
 
 
 
4,501
 
4,841
 
9,342
 
471
5/1/2006
North Hollywood / Van Owen
 
CA
 
6,444
 
3,125
 
9,257
 
327
 
 
 
3,125
 
9,584
 
12,709
 
2,622
8/29/2013
Northridge
 
CA
 
6,514
 
3,641
 
2,872
 
308
 
 
 
3,641
 
3,180
 
6,821
 
327
8/29/2013
Oakland / 29th Ave
 
CA
 
9,880
 
6,359
 
5,753
 
385
 
 
 
6,359
 
6,138
 
12,497
 
567
4/24/2000
Oakland / Fallon St
 
CA
 
—
 
—
 
3,777
 
1,167
 
 
 
—
 
4,944
 
4,944
 
2,207
12/2/2013
Oakland / San Leandro St
 
CA
 
7,719
 
1,668
 
7,652
 
338
 
 
 
1,668
 
7,990
 
9,658
 
658
7/1/2005
Oceanside / Oceanside Blvd 1
 
CA
 
—
 
3,241
 
11,361
 
909
 
 
 
3,241
 
12,270
 
15,511
 
3,921
12/9/2014
Oceanside / Oceanside Blvd 2
 
CA
 
5,890
 
4,508
 
4,599
 
52
 
 
 
4,508
 
4,651
 
9,159
 
251
11/30/2012
Orange
 
CA
 
11,856
 
4,847
 
12,341
 
343
 
 
 
4,847
 
12,684
 
17,531
 
1,411
12/2/2013
Oxnard
 
CA
 
8,452
 
5,421
 
6,761
 
342
 
 
 
5,421
 
7,103
 
12,524
 
598
8/1/2009
Pacoima
 
CA
 
2,120
 
3,050
 
7,597
 
218
 
 
 
3,050
 
7,815
 
10,865
 
1,471
1/1/2005
Palmdale
 
CA
 
4,453
 
1,225
 
5,379
 
2,405
 
 
 
1,225
 
7,784
 
9,009
 
2,367
10/19/2011
Paramount
 
CA
 
4,440
 
1,404
 
2,549
 
254
 
 
 
1,404
 
2,803
 
4,207
 
419
8/31/2000
Pico Rivera / Beverly Blvd
 
CA
 
—
 
1,150
 
3,450
 
233
 
 
 
1,150
 
3,683
 
4,833
 
1,486
9/16/2016
Pico Rivera / East Slauson Ave
 
CA
 
—
 
—
 
11,750
 
66
 
 
 
—
 
11,816
 
11,816
 
101
3/4/2014
Pico Rivera / San Gabriel River Pkwy
 
CA
 
4,376
 
2,150
 
4,734
 
47
 
 
 
2,150
 
4,781
 
6,931
 
349
10/19/2011
Placentia
 
CA
 
11,245
 
4,798
 
5,483
 
346
 
 
 
4,798
 
5,829
 
10,627
 
831
5/24/2007
Pleasanton
 
CA
 
7,067
 
1,208
 
4,283
 
640
 
 
 
1,208
 
4,923
 
6,131
 
1,401
6/1/2004
Richmond / Lakeside Dr
 
CA
 
4,716
 
953
 
4,635
 
1,497
 
 
 
953
 
6,132
 
7,085
 
1,913
9/26/2013
Richmond / Meeker Ave
 
CA
 
—
 
3,139
 
7,437
 
227
 
 
 
3,139
 
7,664
 
10,803
 
690
8/18/2004
Riverside
 
CA
 
4,674
 
1,075
 
4,042
 
796
 
 
 
1,075
 
4,838
 
5,913
 
1,643
12/2/2013
Rocklin
 
CA
 
6,297
 
1,745
 
8,005
 
88
 
 
 
1,745
 
8,093
 
9,838
 
639
11/4/2013
Rohnert Park
 
CA
 
6,289
 
990
 
8,094
 
186
 
 
 
990
 
8,280
 
9,270
 
676
7/1/2005
Sacramento / Auburn Blvd
 
CA
 
4,446
 
852
 
4,720
 
1,011
 
 
 
852
 
5,731
 
6,583
 
1,795
3/31/2015
Sacramento / B Street
 
CA
 
7,611
 
1,025
 
11,479
 
459
 
 
 
1,025
 
11,938
 
12,963
 
571
10/1/2010
Sacramento / Franklin Blvd
 
CA
 
3,390
 
1,738
 
5,522
 
306
 
 
 
1,844
 
5,722
 
7,566
 
923
12/31/2007
Sacramento / Stockton Blvd
 
CA
 
2,784
 
952
 
6,936
 
481
 
 
 
1,075
 
7,294
 
8,369
 
1,194
6/1/2006
San Bernardino / Sterling Ave.
 
CA
 
—
 
750
 
5,135
 
212
 
 
 
750
 
5,347
 
6,097
 
1,414
6/1/2004
San Bernardino / W Club Center Dr
 
CA
 
—
 
1,213
 
3,061
 
141
 
 
 
1,173
 
3,242
 
4,415
 
1,121
8/29/2013
San Diego / Cedar St
 
CA
 
13,188
 
5,919
 
6,729
 
450
 
 
 
5,919
 
7,179
 
13,098
 
673
12/11/2015
San Diego / Del Sol Blvd
 
CA
 
—
 
2,679
 
7,029
 
171
 
 
 
2,679
 
7,200
 
9,879
 
197
10/19/2011
San Dimas
 
CA
 
—
 
1,867
 
6,354
 
276
 
 
 
1,867
 
6,630
 
8,497
 
948
8/29/2013
San Francisco / Egbert Ave
 
CA
 
10,355
 
5,098
 
4,054
 
334
 
 
 
5,098
 
4,388
 
9,486
 
413
6/14/2007
San Francisco / Folsom
 
CA
 
17,828
 
8,457
 
9,928
 
1,859
 
 
 
8,457
 
11,787
 
20,244
 
3,502
10/1/2015
San Francisco / Otis Street
 
CA
 
—
 
5,460
 
18,741
 
340
 
 
 
5,460
 
19,081
 
24,541
 
620
7/26/2012
San Jose / Charter Park Dr
 
CA
 
4,652
 
2,428
 
2,323
 
288
 
 
 
2,428
 
2,611
 
5,039
 
366
9/1/2009
San Jose / N 10th St
 
CA
 
10,784
 
5,340
 
6,821
 
303
 
 
 
5,340
 
7,124
 
12,464
 
1,345
8/1/2007
San Leandro / Doolittle Dr
 
CA
 
14,686
 
4,601
 
9,777
 
3,479
 
 
 
4,601
 
13,256
 
17,857
 
3,811
10/1/2010
San Leandro / Washington Ave
 
CA
 
—
 
3,343
 
6,630
 
10
 
 (f)
 
3,291
 
6,692
 
9,983
 
1,103
10/1/2015
San Lorenzo
 
CA
 
—
 
—
 
8,784
 
292
 
 
 
—
 
9,076
 
9,076
 
298
8/29/2013
San Ramon
 
CA
 
—
 
4,819
 
5,819
 
290
 
 
 
4,819
 
6,109
 
10,928
 
558
8/29/2013
Santa Ana
 
CA
 
4,075
 
3,485
 
2,382
 
236
 
 
 
3,485
 
2,618
 
6,103
 
272
7/30/2009
Santa Clara
 
CA
 
7,746
 
4,750
 
8,218
 
46
 
 
 
4,750
 
8,264
 
13,014
 
1,558
7/2/2012
Santa Cruz
 
CA
 
—
 
1,588
 
11,160
 
142
 
 
 
1,588
 
11,302
 
12,890
 
1,318
10/4/2007
Santa Fe Springs
 
CA
 
7,249
 
3,617
 
7,022
 
382
 
 
 
3,617
 
7,404
 
11,021
 
1,921
10/19/2011
Santa Maria / Farnel Rd
 
CA
 
2,872
 
1,556
 
2,740
 
504
 
 
 
1,556
 
3,244
 
4,800
 
515
10/19/2011
Santa Maria / Skyway Dr
 
CA
 
6,241
 
1,310
 
3,526
 
109
 
 
 
1,309
 
3,636
 
4,945
 
514
11/17/2016
Santa Rosa
 
CA
 
—
 
9,526
 
15,282
 
—
 
 
 
9,526
 
15,282
 
24,808
 
65
11/17/2016
Santee
 
CA
 
—
 
7,058
 
12,121
 
—
 
 
 
7,058
 
12,121
 
19,179
 
52
11/17/2016
Scotts Valley
 
CA
 
—
 
5,006
 
5,806
 
—
 
 
 
5,006
 
5,806
 
10,812
 
25
8/31/2004
Sherman Oaks
 
CA
 
25,176
 
4,051
 
12,152
 
630
 
 
 
4,051
 
12,782
 
16,833
 
4,130
8/29/2013
Stanton
 
CA
 
6,791
 
5,022
 
2,267
 
226
 
 
 
5,022
 
2,493
 
7,515
 
271
5/19/2002
Stockton / Jamestown
 
CA
 
2,290
 
649
 
3,272
 
269
 
 
 
649
 
3,541
 
4,190
 
1,374
12/2/2013
Stockton / Pacific Ave
 
CA
 
5,360
 
3,619
 
2,443
 
86
 
 
 
3,619
 
2,529
 
6,148
 
211
4/25/2014
Sunland
 
CA
 
—
 
1,688
 
6,381
 
110
 
 
 
1,688
 
6,491
 
8,179
 
465
8/29/2013
Sunnyvale
 
CA
 
—
 
10,732
 
5,004
 
260
 
 
 
10,732
 
5,264
 
15,996
 
492
5/2/2008
Sylmar
 
CA
 
6,111
 
3,058
 
4,671
 
288
 
 
 
3,058
 
4,959
 
8,017
 
1,253
2/28/2013
Thousand Oaks
 
CA
 
—
 
4,500
 
8,834
 
(965)
 
 (d)
 
3,500
 
8,869
 
12,369
 
354
7/15/2003
Tracy / E 11th St 1
 
CA
 
5,115
 
778
 
2,638
 
828
 
 
 
911
 
3,333
 
4,244
 
1,192
4/1/2004
Tracy / E 11th St 2
 
CA
 
3,053
 
946
 
1,937
 
311
 
 
 
946
 
2,248
 
3,194
 
897
6/25/2007
Vallejo / Sonoma Blvd
 
CA
 
2,758
 
1,177
 
2,157
 
1,083
 
 
 
1,177
 
3,240
 
4,417
 
1,202
10/1/2015
Vallejo / Tennessee St
 
CA
 
8,695
 
2,640
 
13,870
 
352
 
 
 
2,640
 
14,222
 
16,862
 
469
8/29/2013
Van Nuys
 
CA
 
—
 
7,939
 
2,576
 
387
 
 
 
7,939
 
2,963
 
10,902
 
316
8/31/2004
Venice
 
CA
 
—
 
2,803
 
8,410
 
2
 
 (b)
 
2,803
 
8,412
 
11,215
 
1,479
8/29/2013
Ventura
 
CA
 
—
 
3,453
 
2,837
 
259
 
 
 
3,453
 
3,096
 
6,549
 
315
10/19/2011
Victorville
 
CA
 
—
 
151
 
751
 
165
 
 
 
151
 
916
 
1,067
 
168
7/1/2005
Watsonville
 
CA
 
4,365
 
1,699
 
3,056
 
373
 
 
 
1,699
 
3,429
 
5,128
 
1,107
9/1/2009
West Sacramento
 
CA
 
—
 
2,400
 
7,425
 
151
 
 
 
2,400
 
7,576
 
9,976
 
1,441
6/19/2002
Whittier
 
CA
 
3,184
 
—
 
2,985
 
217
 
 
 
—
 
3,202
 
3,202
 
1,233
8/29/2013
Wilmington
 
CA
 
—
 
6,792
 
10,726
 
398
 
 
 
6,792
 
11,124
 
17,916
 
930
9/15/2000
Arvada
 
CO
 
1,697
 
286
 
1,521
 
706
 
 
 
286
 
2,227
 
2,513
 
1,179
5/25/2011
Castle Rock / Industrial Way 1
 
CO
 
—
 
407
 
3,077
 
295
 
 
 
407
 
3,372
 
3,779
 
534
7/23/2015
Castle Rock / Industrial Way 2
 
CO
 
—
 
531
 
—
 
—
 
 
 
531
 
—
 
531
 
—
4/19/2016
Colorado Springs / Arlington Dr
 
CO
 
—
 
2,140
 
5,660
 
385
 
 
 
2,140
 
6,045
 
8,185
 
122
6/10/2011
Colorado Springs / Austin Bluffs Pkwy
 
CO
 
—
 
296
 
4,199
 
349
 
 
 
296
 
4,548
 
4,844
 
739
8/31/2007
Colorado Springs / Dublin Blvd
 
CO
 
3,582
 
781
 
3,400
 
450
 
 
 
781
 
3,850
 
4,631
 
1,019
11/25/2008
Colorado Springs / S 8th St
 
CO
 
5,935
 
1,525
 
4,310
 
641
 
 
 
1,525
 
4,951
 
6,476
 
1,114
10/24/2014
Colorado Springs / Stetson Hills Blvd
 
CO
 
3,919
 
2,077
 
4,087
 
369
 
 
 
2,077
 
4,456
 
6,533
 
281
9/15/2000
Denver / E 40th Ave
 
CO
 
2,402
 
602
 
2,052
 
1,733
 
 
 
745
 
3,642
 
4,387
 
1,524
7/1/2005
Denver / W 96th Ave
 
CO
 
3,417
 
368
 
1,574
 
528
 
 
 
368
 
2,102
 
2,470
 
689
7/18/2012
Fort Carson
 
CO
 
—
 
—
 
6,945
 
125
 
 
 
—
 
7,070
 
7,070
 
835
9/1/2006
Parker
 
CO
 
6,919
 
800
 
4,549
 
853
 
 
 
800
 
5,402
 
6,202
 
1,701
9/15/2000
Thornton
 
CO
 
2,631
 
212
 
2,044
 
1,169
 
 
 
248
 
3,177
 
3,425
 
1,522
9/15/2000
Westminster
 
CO
 
1,985
 
291
 
1,586
 
1,343
 
 
 
299
 
2,921
 
3,220
 
1,485
3/17/2014
Bridgeport
 
CT
 
—
 
1,072
 
14,028
 
142
 
 
 
1,072
 
14,170
 
15,242
 
1,027
7/2/2012
Brookfield
 
CT
 
4,919
 
991
 
7,891
 
134
 
 
 
991
 
8,025
 
9,016
 
960
1/15/2004
Groton
 
CT
 
5,112
 
1,277
 
3,992
 
463
 
 
 
1,276
 
4,456
 
5,732
 
1,684
12/31/2007
Middletown
 
CT
 
2,653
 
932
 
2,810
 
225
 
 
 
932
 
3,035
 
3,967
 
752
11/4/2013
Newington
 
CT
 
2,282
 
1,363
 
2,978
 
682
 
 
 
1,363
 
3,660
 
5,023
 
335
9/16/2016
Wethersfield / Olesen Rd
 
CT
 
—
 
2,502
 
7,588
 
81
 
 
 
2,502
 
7,669
 
10,171
 
66
8/16/2002
Wethersfield / Silas Deane Hwy
 
CT
 
6,533
 
709
 
4,205
 
231
 
 
 
709
 
4,436
 
5,145
 
1,701
5/5/2016
Washington
 
DC
 
9,559
 
14,394
 
18,172
 
216
 
 
 
14,394
 
18,388
 
32,782
 
319


89



Date acquired
or development
completed
Store Name
 
State
 
Debt
 
Land
initial cost
 
Building and
improvements
initial cost
 
Adjustments
and costs subsequent
to acquisition
 
Notes
 
Gross carrying amount at December 31, 2016
 
Accumulated
depreciation
Land      
 
Building and
improvements    
 
Total      
11/19/2015
Apopka / Park Ave
 
FL
 
2,742
 
613
 
5,228
 
277
 
 
 
613
 
5,505
 
6,118
 
170
11/19/2015
Apopka / Semoran Blvd
 
FL
 
2,742
 
888
 
5,737
 
439
 
 
 
888
 
6,176
 
7,064
 
190
5/2/2012
Auburndale
 
FL
 
1,218
 
470
 
1,076
 
155
 
 
 
470
 
1,231
 
1,701
 
182
7/15/2009
Bonita Springs
 
FL
 
—
 
2,198
 
8,215
 
129
 
 
 
2,198
 
8,344
 
10,542
 
1,577
12/23/2014
Bradenton
 
FL
 
3,728
 
1,333
 
3,677
 
565
 
 
 
1,333
 
4,242
 
5,575
 
274
11/30/2012
Brandon
 
FL
 
4,595
 
1,327
 
5,656
 
190
 
 
 
1,327
 
5,846
 
7,173
 
658
6/19/2008
Coral Springs
 
FL
 
5,923
 
3,638
 
6,590
 
462
 
 
 
3,638
 
7,052
 
10,690
 
1,664
10/1/2015
Davie
 
FL
 
7,993
 
4,890
 
11,679
 
474
 
 
 
4,890
 
12,153
 
17,043
 
421
1/6/2006
Deland
 
FL
 
3,087
 
1,318
 
3,971
 
369
 
 
 
1,318
 
4,340
 
5,658
 
1,312
11/30/2012
Fort Lauderdale / Commercial Blvd
 
FL
 
5,078
 
1,576
 
5,397
 
363
 
 
 
1,576
 
5,760
 
7,336
 
655
8/26/2004
Fort Lauderdale / NW 31st Ave
 
FL
 
7,246
 
1,587
 
4,205
 
501
 
 
 
1,587
 
4,706
 
6,293
 
1,601
5/4/2011
Fort Lauderdale / S State Rd 7
 
FL
 
—
 
2,750
 
7,002
 
564
 
 
 
2,750
 
7,566
 
10,316
 
1,163
8/26/2004
Fort Myers / Cypress Lake Dr
 
FL
 
5,902
 
1,691
 
4,711
 
572
 
 
 
1,691
 
5,283
 
6,974
 
1,733
7/1/2005
Fort Myers / San Carlos Blvd
 
FL
 
4,756
 
1,985
 
4,983
 
663
 
 
 
1,985
 
5,646
 
7,631
 
1,846
3/8/2005
Greenacres
 
FL
 
2,765
 
1,463
 
3,244
 
182
 
 
 
1,463
 
3,426
 
4,889
 
1,125
10/1/2015
Gulf Breeze / Gulf Breeze Pkwy
 
FL
 
2,900
 
620
 
2,886
 
247
 
 
 
620
 
3,133
 
3,753
 
107
10/1/2015
Gulf Breeze / McClure Dr
 
FL
 
6,256
 
660
 
12,590
 
277
 
 
 
660
 
12,867
 
13,527
 
416
1/1/2010
Hialeah / E 65th Street
 
FL
 
5,643
 
1,750
 
7,150
 
157
 
 
 
1,750
 
7,307
 
9,057
 
1,328
8/1/2008
Hialeah / Okeechobee Rd
 
FL
 
—
 
2,800
 
7,588
 
135
 
 
 
2,800
 
7,723
 
10,523
 
1,701
9/1/2010
Hialeah / W 84th St
 
FL
 
5,643
 
1,678
 
6,807
 
98
 
 
 
1,678
 
6,905
 
8,583
 
1,132
11/20/2007
Hollywood
 
FL
 
12,328
 
3,214
 
8,689
 
376
 
 
 
3,214
 
9,065
 
12,279
 
2,275
1/12/2016
Jacksonville / Girvin Rd
 
FL
 
—
 
841
 
8,102
 
159
 
 
 
841
 
8,261
 
9,102
 
215
10/1/2015
Jacksonville / Monument Rd
 
FL
 
5,609
 
490
 
10,708
 
385
 
 
 
490
 
11,093
 
11,583
 
378
10/1/2015
Jacksonville / Timuquana Rd
 
FL
 
4,600
 
1,000
 
3,744
 
304
 
 
 
1,000
 
4,048
 
5,048
 
146
12/28/2012
Kenneth City
 
FL
 
4,000
 
805
 
3,345
 
86
 
 
 
805
 
3,431
 
4,236
 
369
5/2/2012
Lakeland / Harden Blvd
 
FL
 
3,687
 
593
 
4,701
 
224
 
 
 
593
 
4,925
 
5,518
 
670
5/2/2012
Lakeland / South Florida Ave
 
FL
 
5,297
 
871
 
6,905
 
272
 
 
 
871
 
7,177
 
8,048
 
908
9/3/2014
Lakeland / US Hwy 98
 
FL
 
—
 
529
 
3,604
 
134
 
 
 
529
 
3,738
 
4,267
 
243
12/27/2012
Land O Lakes
 
FL
 
6,207
 
798
 
4,490
 
10
 
 
 
799
 
4,499
 
5,298
 
509
8/26/2004
Madeira Beach
 
FL
 
5,661
 
1,686
 
5,163
 
316
 
 
 
1,686
 
5,479
 
7,165
 
1,826
8/10/2000
Margate
 
FL
 
3,136
 
430
 
3,139
 
1,498
 
 
 
469
 
4,598
 
5,067
 
1,740
7/2/2012
Miami / Coral Way
 
FL
 
7,777
 
3,257
 
9,713
 
195
 
 
 
3,257
 
9,908
 
13,165
 
1,179
10/25/2011
Miami / Hammocks Blvd
 
FL
 
6,114
 
521
 
5,198
 
133
 
 
 
521
 
5,331
 
5,852
 
785
8/10/2000
Miami / NW 12th St
 
FL
 
7,475
 
1,325
 
4,395
 
2,172
 
 
 
1,419
 
6,473
 
7,892
 
2,420
7/2/2012
Miami / NW 2nd Ave
 
FL
 
8,742
 
1,979
 
6,513
 
201
 
 
 
1,979
 
6,714
 
8,693
 
825
9/16/2016
Miami / NW 79th Ave
 
FL
 
—
 
4,872
 
9,846
 
8
 
 
 
4,872
 
9,854
 
14,726
 
84
2/4/2011
Miami / SW 147th Ave
 
FL
 
—
 
2,375
 
5,543
 
117
 
 
 
2,374
 
5,661
 
8,035
 
818
5/31/2007
Miami / SW 186th St
 
FL
 
4,181
 
1,238
 
7,597
 
506
 
 
 
1,238
 
8,103
 
9,341
 
2,131
11/8/2013
Miami / SW 68th Ave
 
FL
 
9,678
 
3,305
 
11,997
 
68
 
 
 
3,305
 
12,065
 
15,370
 
974
8/10/2000
Miami / SW 72nd Street
 
FL
 
—
 
5,315
 
4,305
 
2,117
 
 
 
5,859
 
5,878
 
11,737
 
2,276
11/30/2009
Miami Gardens / 183rd Street
 
FL
 
6,564
 
4,798
 
9,475
 
149
 
 
 
4,798
 
9,624
 
14,422
 
1,777
2/2/2016
Miami Gardens / 2nd Ave
 
FL
 
2,633
 
1,052
 
2,716
 
32
 
 
 
1,052
 
2,748
 
3,800
 
65
6/18/2015
Naples / Goodlette Road
 
FL
 
13,148
 
—
 
17,220
 
169
 
 
 
—
 
17,389
 
17,389
 
674
11/1/2013
Naples / Old US 41
 
FL
 
6,098
 
1,990
 
4,887
 
644
 
 
 
1,990
 
5,531
 
7,521
 
835
11/8/2013
Naranja
 
FL
 
8,231
 
603
 
11,223
 
109
 
 
 
603
 
11,332
 
11,935
 
920
8/10/2000
North Lauderdale
 
FL
 
3,931
 
428
 
3,516
 
1,947
 
 
 
459
 
5,432
 
5,891
 
2,141
6/1/2004
North Miami
 
FL
 
8,231
 
1,256
 
6,535
 
659
 
 
 
1,256
 
7,194
 
8,450
 
2,562
10/1/2015
Oakland Park
 
FL
 
9,862
 
2,030
 
19,241
 
407
 
 
 
2,030
 
19,648
 
21,678
 
658
3/8/2005
Ocoee
 
FL
 
3,000
 
872
 
3,642
 
529
 
 
 
872
 
4,171
 
5,043
 
1,337
11/19/2015
Orlando / Hoffner Ave
 
FL
 
2,793
 
512
 
6,697
 
328
 
 
 
512
 
7,025
 
7,537
 
214
3/8/2005
Orlando / Hunters Creek
 
FL
 
9,563
 
2,233
 
9,223
 
679
 
 
 
2,233
 
9,902
 
12,135
 
3,159
8/26/2004
Orlando / LB McLeod Rd
 
FL
 
8,284
 
1,216
 
5,008
 
528
 
 
 
1,216
 
5,536
 
6,752
 
1,903
6/17/2015
Orlando / Lee Rd
 
FL
 
3,979
 
535
 
5,364
 
21
 
 
 
535
 
5,385
 
5,920
 
203
3/8/2005
Orlando / Metrowest
 
FL
 
5,600
 
1,474
 
6,101
 
323
 
 
 
1,474
 
6,424
 
7,898
 
2,077
7/15/2010
Orlando / Orange Blossom Trail
 
FL
 
2,632
 
625
 
2,133
 
109
 
 
 
625
 
2,242
 
2,867
 
415
3/8/2005
Orlando / Waterford Lakes
 
FL
 
6,293
 
1,166
 
4,816
 
1,341
 
 
 
1,166
 
6,157
 
7,323
 
1,911
11/7/2013
Palm Springs
 
FL
 
5,544
 
2,108
 
8,028
 
2,355
 
 
 
2,108
 
10,383
 
12,491
 
709
5/31/2013
Plantation
 
FL
 
—
 
3,850
 
—
 
(1,504)
 
 (d)
 
2,346
 
—
 
2,346
 
—
8/26/2004
Port Charlotte
 
FL
 
—
 
1,389
 
4,632
 
318
 
 
 
1,389
 
4,950
 
6,339
 
1,639
8/26/2004
Riverview
 
FL
 
4,503
 
654
 
2,953
 
328
 
 
 
654
 
3,281
 
3,935
 
1,129
11/30/2012
Sarasota / Clark Rd
 
FL
 
—
 
4,666
 
9,016
 
523
 
 
 
4,666
 
9,539
 
14,205
 
1,061
12/23/2014
Sarasota / Washington Blvd
 
FL
 
3,883
 
1,192
 
2,919
 
63
 
 
 
1,192
 
2,982
 
4,174
 
162
12/3/2012
Seminole
 
FL
 
3,918
 
1,133
 
3,017
 
326
 
 
 
1,133
 
3,343
 
4,476
 
374
12/23/2014
South Pasadena
 
FL
 
10,078
 
8,890
 
10,106
 
132
 
 
 
8,890
 
10,238
 
19,128
 
548
4/15/2014
Stuart / Gran Park Way
 
FL
 
6,791
 
1,640
 
8,358
 
163
 
 
 
1,640
 
8,521
 
10,161
 
627
10/1/2015
Stuart / Kanner Hwy
 
FL
 
—
 
1,250
 
5,007
 
324
 
 
 
1,250
 
5,331
 
6,581
 
199
10/1/2015
Stuart / NW Federal Hwy 1
 
FL
 
—
 
760
 
3,125
 
277
 
 
 
760
 
3,402
 
4,162
 
131
10/1/2015
Tallahassee
 
FL
 
—
 
1,460
 
21,471
 
259
 
 
 
1,460
 
21,730
 
23,190
 
692
11/1/2013
Tamiami
 
FL
 
5,016
 
5,042
 
7,164
 
384
 
 
 
5,042
 
7,548
 
12,590
 
1,248
11/22/2006
Tampa / Cypress St
 
FL
 
3,445
 
883
 
3,533
 
191
 
 
 
881
 
3,726
 
4,607
 
1,033
3/27/2007
Tampa / W Cleveland St
 
FL
 
5,511
 
1,425
 
4,766
 
489
 
 
 
1,425
 
5,255
 
6,680
 
1,464
12/23/2014
Tampa / W Hillsborough Ave
 
FL
 
2,319
 
1,086
 
2,937
 
402
 
 
 
1,086
 
3,339
 
4,425
 
194
8/26/2004
Valrico
 
FL
 
4,235
 
1,197
 
4,411
 
307
 
 
 
1,197
 
4,718
 
5,915
 
1,617
1/13/2006
Venice
 
FL
 
—
 
1,969
 
5,903
 
332
 
 
 
1,970
 
6,234
 
8,204
 
1,927
8/10/2000
West Palm Beach / Forest Hill Bl
 
FL
 
3,467
 
1,164
 
2,511
 
1,056
 
 
 
1,246
 
3,485
 
4,731
 
1,443
8/10/2000
West Palm Beach / N Military Trail 1
 
FL
 
4,345
 
1,312
 
2,511
 
1,906
 
 
 
1,416
 
4,313
 
5,729
 
1,548
11/1/2013
West Palm Beach / N Military Trail 2
 
FL
 
3,659
 
1,595
 
2,833
 
111
 
 
 
1,595
 
2,944
 
4,539
 
528
12/1/2011
West Palm Beach / S Military Trail
 
FL
 
3,280
 
1,729
 
4,058
 
129
 
 
 
1,730
 
4,186
 
5,916
 
585
7/1/2005
West Palm Beach / Southern Blvd
 
FL
 
5,346
 
1,752
 
4,909
 
514
 
 
 
1,752
 
5,423
 
7,175
 
1,851
10/1/2015
Weston
 
FL
 
7,039
 
1,680
 
11,342
 
355
 
 
 
1,680
 
11,697
 
13,377
 
391
11/17/2016
Acworth
 
GA
 
—
 
2,805
 
4,519
 
—
 
 
 
2,805
 
4,519
 
7,324
 
19
8/26/2004
Alpharetta / Holcomb Bridge Rd
 
GA
 
—
 
1,973
 
1,587
 
329
 
 
 
1,973
 
1,916
 
3,889
 
694
10/1/2015
Alpharetta / Jones Bridge Rd
 
GA
 
5,827
 
1,420
 
8,902
 
278
 
 
 
1,420
 
9,180
 
10,600
 
295
8/8/2006
Alpharetta / North Main St
 
GA
 
5,429
 
1,893
 
3,161
 
232
 
 
 
1,894
 
3,392
 
5,286
 
984
8/6/2014
Atlanta / Chattahoochee Ave
 
GA
 
—
 
1,132
 
10,080
 
118
 
 
 
1,132
 
10,198
 
11,330
 
640
8/26/2004
Atlanta / Cheshire Bridge Rd NE
 
GA
 
12,613
 
3,737
 
8,333
 
760
 
 
 
3,738
 
9,092
 
12,830
 
3,033
10/22/2014
Atlanta / Edgewood Ave SE
 
GA
 
7,544
 
588
 
10,295
 
251
 
 
 
588
 
10,546
 
11,134
 
593
4/3/2014
Atlanta / Mt Vernon Hwy
 
GA
 
—
 
2,961
 
19,819
 
173
 
 
 
2,961
 
19,992
 
22,953
 
1,400
8/26/2004
Atlanta / Roswell Rd
 
GA
 
—
 
1,665
 
2,028
 
473
 
 
 
1,665
 
2,501
 
4,166
 
844
2/28/2005
Atlanta / Virginia Ave
 
GA
 
6,315
 
3,319
 
8,325
 
780
 
 
 
3,319
 
9,105
 
12,424
 
2,973
11/4/2013
Augusta
 
GA
 
1,982
 
710
 
2,299
 
88
 
 
 
710
 
2,387
 
3,097
 
200
10/1/2015
Austell
 
GA
 
3,361
 
540
 
6,550
 
257
 
 
 
540
 
6,807
 
7,347
 
226
10/1/2015
Buford / Buford Dr
 
GA
 
—
 
500
 
5,484
 
321
 
 
 
500
 
5,805
 
6,305
 
192
3/29/2016
Buford / Gravel Springs Rd
 
GA
 
—
 
895
 
7,625
 
180
 
 
 
895
 
7,805
 
8,700
 
169
5/7/2015
Dacula / Auburn Rd
 
GA
 
4,378
 
2,087
 
4,295
 
141
 
 
 
2,077
 
4,446
 
6,523
 
176
1/17/2006
Dacula / Braselton Hwy
 
GA
 
4,965
 
1,993
 
3,001
 
228
 
 
 
1,993
 
3,229
 
5,222
 
964
6/17/2010
Douglasville
 
GA
 
—
 
1,209
 
719
 
597
 
 
 
1,209
 
1,316
 
2,525
 
315
10/1/2015
Duluth / Berkeley Lake Rd
 
GA
 
4,055
 
1,350
 
5,718
 
336
 
 
 
1,350
 
6,054
 
7,404
 
192
10/1/2015
Duluth / Breckinridge Blvd
 
GA
 
3,864
 
1,160
 
6,336
 
271
 
 
 
1,160
 
6,607
 
7,767
 
212
10/1/2015
Duluth / Peachtree Industrial Blvd
 
GA
 
4,216
 
440
 
7,516
 
260
 
 
 
440
 
7,776
 
8,216
 
253
11/30/2012
Eastpoint
 
GA
 
5,566
 
1,718
 
6,388
 
200
 
 
 
1,718
 
6,588
 
8,306
 
726
10/1/2015
Ellenwood
 
GA
 
2,679
 
260
 
3,992
 
398
 
 
 
260
 
4,390
 
4,650
 
140
6/14/2007
Johns Creek
 
GA
 
3,298
 
1,454
 
4,151
 
187
 
 
 
1,454
 
4,338
 
5,792
 
1,127
10/1/2015
Jonesboro
 
GA
 
—
 
540
 
6,174
 
312
 
 
 
540
 
6,486
 
7,026
 
220
6/17/2010
Kennesaw / Cobb Parkway NW
 
GA
 
—
 
673
 
1,151
 
206
 
 
 
673
 
1,357
 
2,030
 
293
10/1/2015
Kennesaw / George Busbee Pkwy
 
GA
 
4,730
 
500
 
9,126
 
202
 
 
 
500
 
9,328
 
9,828
 
304
11/4/2013
Lawrenceville / Hurricane Shoals Rd
 
GA
 
3,265
 
2,117
 
2,784
 
371
 
 
 
2,117
 
3,155
 
5,272
 
296
10/1/2015
Lawrenceville / Lawrenceville Hwy 1
 
GA
 
—
 
730
 
3,058
 
542
 
 
 
730
 
3,600
 
4,330
 
116
10/1/2015
Lawrenceville / Lawrenceville Hwy 2
 
GA
 
3,073
 
1,510
 
4,674
 
263
 
 
 
1,510
 
4,937
 
6,447
 
162
10/1/2015
Lawrenceville / Old Norcross Rd
 
GA
 
—
 
870
 
3,705
 
375
 
 
 
870
 
4,080
 
4,950
 
131
11/12/2009
Lithonia
 
GA
 
—
 
1,958
 
3,645
 
904
 
 
 
1,958
 
4,549
 
6,507
 
739
3/29/2016
Loganville
 
GA
 
—
 
814
 
5,494
 
422
 
 
 
814
 
5,916
 
6,730
 
130
10/1/2015
Marietta / Austell Rd SW
 
GA
 
—
 
1,070
 
3,560
 
483
 
 
 
1,070
 
4,043
 
5,113
 
131
6/17/2010
Marietta / Cobb Parkway N
 
GA
 
—
 
887
 
2,617
 
355
 
 
 
887
 
2,972
 
3,859
 
596
10/1/2015
Marietta / Powers Ferry Rd
 
GA
 
5,442
 
430
 
9,242
 
249
 
 
 
430
 
9,491
 
9,921
 
307
10/1/2015
Marietta / West Oak Pkwy
 
GA
 
4,370
 
500
 
6,395
 
192
 
 
 
500
 
6,587
 
7,087
 
217
10/1/2015
Peachtree City
 
GA
 
—
 
1,080
 
8,628
 
438
 
 
 
1,080
 
9,066
 
10,146
 
289
4/24/2015
Powder Springs
 
GA
 
4,503
 
370
 
6,014
 
66
 
 
 
370
 
6,080
 
6,450
 
237
6/30/2016
Roswell
 
GA
 
—
 
1,043
 
6,981
 
—
 
 
 
1,043
 
6,981
 
8,024
 
119
10/1/2015
Sandy Springs
 
GA
 
7,000
 
1,740
 
11,439
 
337
 
 
 
1,740
 
11,776
 
13,516
 
382
10/1/2015
Savannah / King George Blvd 1
 
GA
 
2,963
 
390
 
4,889
 
301
 
 
 
390
 
5,190
 
5,580
 
170
10/1/2015
Savannah / King George Blvd 2
 
GA
 
—
 
390
 
3,370
 
270
 
 
 
390
 
3,640
 
4,030
 
122
10/1/2015
Sharpsburg
 
GA
 
4,899
 
360
 
8,455
 
255
 
 
 
360
 
8,710
 
9,070
 
282
10/1/2015
Smyrna / Cobb Parkway SE
 
GA
 
4,580
 
1,360
 
7,002
 
353
 
 
 
1,360
 
7,355
 
8,715
 
242
11/17/2016
Smyrna / Oakdale Rd
 
GA
 
—
 
588
 
7,362
 
—
 
 
 
588
 
7,362
 
7,950
 
31
8/26/2004
Snellville
 
GA
 
—
 
2,691
 
4,026
 
381
 
 
 
2,691
 
4,407
 
7,098
 
1,516
3/29/2016
Stockbridge
 
GA
 
—
 
2,899
 
7,098
 
457
 
 
 
2,899
 
7,555
 
10,454
 
165
8/26/2004
Stone Mountain / Annistown Rd
 
GA
 
2,738
 
1,817
 
4,382
 
338
 
 
 
1,817
 
4,720
 
6,537
 
1,604
7/1/2005
Stone Mountain / S Hairston Rd
 
GA
 
2,533
 
925
 
3,505
 
458
 
 
 
925
 
3,963
 
4,888
 
1,286
6/14/2007
Sugar Hill / Nelson Brogdon Blvd 1
 
GA
 
—
 
1,371
 
2,547
 
252
 
 
 
1,371
 
2,799
 
4,170
 
771
6/14/2007
Sugar Hill / Nelson Brogdon Blvd 2
 
GA
 
—
 
1,368
 
2,540
 
413
 
 
 
1,367
 
2,954
 
4,321
 
786
10/15/2013
Tucker
 
GA
 
5,713
 
1,773
 
10,456
 
87
 
 
 
1,773
 
10,543
 
12,316
 
875
10/1/2015
Wilmington Island
 
GA
 
5,631
 
760
 
9,423
 
341
 
 
 
760
 
9,764
 
10,524
 
318
11/18/2016
Hilo
 
HI
 
—
 
2,859
 
5,429
 
7
 
 
 
2,859
 
5,436
 
8,295
 
23
4/5/2016
Honolulu / Ahua Street
 
HI
 
—
 
2,325
 
26,376
 
390
 
 
 
2,325
 
26,766
 
29,091
 
463
5/3/2013
Honolulu / Kalakaua Ave
 
HI
 
17,140
 
4,674
 
18,350
 
313
 
 
 
4,674
 
18,663
 
23,337
 
1,758
7/14/2016
Honolulu / Kalanianaole Hwy
 
HI
 
—
 
—
 
29,211
 
115
 
 
 
—
 
29,326
 
29,326
 
378
6/25/2007
Kahului
 
HI
 
—
 
3,984
 
15,044
 
1,226
 
 
 
3,984
 
16,270
 
20,254
 
4,180
6/25/2007
Kapolei / Farrington Hwy 1
 
HI
 
9,084
 
—
 
24,701
 
798
 
 
 
—
 
25,499
 
25,499
 
6,370
12/6/2013
Kapolei / Farrington Hwy 2
 
HI
 
7,029
 
—
 
7,776
 
116
 
 
 
—
 
7,892
 
7,892
 
620
11/18/2016
Lihue
 
HI
 
—
 
2,504
 
4,357
 
2
 
 
 
2,504
 
4,359
 
6,863
 
19
5/3/2013
Wahiawa
 
HI
 
3,504
 
1,317
 
2,626
 
345
 
 
 
1,317
 
2,971
 
4,288
 
287
11/4/2013
Bedford Park
 
IL
 
2,469
 
922
 
3,289
 
363
 
 
 
922
 
3,652
 
4,574
 
329
6/8/2015
Berwyn
 
IL
 
—
 
965
 
9,085
 
148
 
 
 
965
 
9,233
 
10,198
 
379
11/4/2013
Chicago / 60th St
 
IL
 
4,842
 
1,363
 
5,850
 
173
 
 
 
1,363
 
6,023
 
7,386
 
502
11/4/2013
Chicago / 87th St
 
IL
 
5,765
 
2,881
 
6,324
 
116
 
 
 
2,881
 
6,440
 
9,321
 
523
10/1/2015
Chicago / 95th St
 
IL
 
—
 
750
 
7,828
 
414
 
 
 
750
 
8,242
 
8,992
 
283
2/13/2013
Chicago / Montrose
 
IL
 
8,093
 
1,318
 
9,485
 
213
 
 
 
1,318
 
9,698
 
11,016
 
977
11/4/2013
Chicago / Pulaski Rd
 
IL
 
3,488
 
1,143
 
6,138
 
529
 
 
 
1,143
 
6,667
 
7,810
 
537
7/1/2005
Chicago / South Wabash
 
IL
 
11,436
 
621
 
3,428
 
2,245
 
 
 
621
 
5,673
 
6,294
 
1,846
11/10/2004
Chicago / Stony Island
 
IL
 
—
 
1,925
 
—
 
—
 
 
 
1,925
 
—
 
1,925
 
—
7/1/2005
Chicago / West Addison
 
IL
 
5,324
 
449
 
2,471
 
810
 
 
 
449
 
3,281
 
3,730
 
1,241
2/25/2016
Chicago / West Devon Ave
 
IL
 
—
 
1,327
 
15,535
 
2
 
 
 
1,327
 
15,537
 
16,864
 
362
7/1/2005
Chicago / West Harrison 1
 
IL
 
4,477
 
472
 
2,582
 
2,823
 
 
 
472
 
5,405
 
5,877
 
1,440
6/10/2016
Chicago / West Harrison 2
 
IL
 
—
 
4,502
 
21,672
 
52
 
 
 
4,502
 
21,724
 
26,226
 
325
10/1/2015
Chicago / Western Ave
 
IL
 
—
 
670
 
4,718
 
342
 
 
 
670
 
5,060
 
5,730
 
176
10/1/2015
Cicero / Ogden Ave
 
IL
 
—
 
1,590
 
9,371
 
397
 
 
 
1,590
 
9,768
 
11,358
 
328
10/1/2015
Cicero / Roosevelt Rd
 
IL
 
—
 
910
 
3,224
 
354
 
 
 
910
 
3,578
 
4,488
 
126
6/10/2016
Country Club Hills
 
IL
 
—
 
195
 
8,650
 
85
 
 
 
195
 
8,735
 
8,930
 
130
7/15/2003
Crest Hill
 
IL
 
2,301
 
847
 
2,946
 
1,040
 
 
 
968
 
3,865
 
4,833
 
1,307
11/8/2016
Des Plaines
 
IL
 
—
 
1,645
 
10,630
 
7
 
 
 
1,645
 
10,637
 
12,282
 
45
10/1/2007
Gurnee
 
IL
 
—
 
1,374
 
8,296
 
135
 
 
 
1,374
 
8,431
 
9,805
 
2,028
6/10/2016
Harwood Heights
 
IL
 
—
 
1,724
 
14,543
 
125
 
 
 
1,724
 
14,668
 
16,392
 
219
12/1/2011
Highland Park
 
IL
 
12,678
 
5,798
 
6,016
 
269
 
 
 
5,798
 
6,285
 
12,083
 
844
11/4/2013
Lincolnshire
 
IL
 
3,585
 
1,438
 
5,128
 
102
 
 
 
1,438
 
5,230
 
6,668
 
422
12/1/2008
Naperville / Ogden Avenue
 
IL
 
—
 
2,800
 
7,355
 
(710)
 
 (d)
 
1,950
 
7,495
 
9,445
 
1,588
12/1/2011
Naperville / State Route 59
 
IL
 
4,633
 
1,860
 
5,793
 
136
 
 
 
1,860
 
5,929
 
7,789
 
801
5/3/2008
North Aurora
 
IL
 
2,711
 
600
 
5,833
 
176
 
 
 
600
 
6,009
 
6,609
 
1,377
6/10/2016
Round Lake Beach
 
IL
 
—
 
796
 
2,977
 
150
 
 
 
796
 
3,127
 
3,923
 
46
7/2/2012
Skokie
 
IL
 
—
 
1,119
 
7,502
 
3,250
 
 
 
1,119
 
10,752
 
11,871
 
937
10/15/2002
South Holland
 
IL
 
2,301
 
839
 
2,879
 
386
 
 
 
865
 
3,239
 
4,104
 
1,248
8/1/2008
Tinley Park
 
IL
 
—
 
1,823
 
4,794
 
1,010
 
 
 
1,548
 
6,079
 
7,627
 
1,148
10/10/2008
Carmel
 
IN
 
4,860
 
1,169
 
4,393
 
313
 
 
 
1,169
 
4,706
 
5,875
 
1,119
9/16/2016
Greenwood
 
IN
 
—
 
457
 
2,954
 
9
 
 
 
457
 
2,963
 
3,420
 
26
9/16/2016
Indianapolis / Crawfordsville Rd
 
IN
 
—
 
287
 
3,251
 
21
 
 
 
287
 
3,272
 
3,559
 
29
10/10/2008
Indianapolis / Dandy Trail/Windham Lake Dr
 
IN
 
5,460
 
850
 
4,545
 
714
 
 
 
850
 
5,259
 
6,109
 
1,269
8/31/2007
Indianapolis / E 65th St
 
IN
 
—
 
588
 
3,457
 
530
 
 
 
588
 
3,987
 
4,575
 
1,089
11/30/2012
Indianapolis / E 86th St
 
IN
 
—
 
646
 
1,294
 
195
 
 
 
646
 
1,489
 
2,135
 
195
9/16/2016
Indianapolis / E Stop 11 Rd
 
IN
 
—
 
1,923
 
5,925
 
2
 
 
 
1,923
 
5,927
 
7,850
 
51
4/22/2016
Indianapolis / Emerson Ave
 
IN
 
—
 
876
 
4,778
 
236
 
 
 
876
 
5,014
 
5,890
 
97
9/16/2016
Indianapolis / Fulton Dr
 
IN
 
—
 
663
 
4,434
 
10
 
 
 
663
 
4,444
 
5,107
 
38
4/22/2016
Indianapolis / Georgetown Road
 
IN
 
—
 
1,326
 
6,164
 
327
 
 
 
1,326
 
6,491
 
7,817
 
125
10/10/2008
Indianapolis / Southport Rd/Kildeer Dr
 
IN
 
—
 
426
 
2,903
 
418
 
 
 
426
 
3,321
 
3,747
 
853
4/22/2016
Indianapolis / Washington Street
 
IN
 
—
 
172
 
3,066
 
213
 
 
 
172
 
3,279
 
3,451
 
62
4/22/2016
Indianapolis/ Lafayette Road
 
IN
 
—
 
903
 
3,658
 
305
 
 
 
903
 
3,963
 
4,866
 
74
4/22/2016
Indianapolis/ Rockville Road
 
IN
 
—
 
1,531
 
4,076
 
247
 
 
 
1,531
 
4,323
 
5,854
 
82
10/10/2008
Mishawaka
 
IN
 
5,201
 
630
 
3,349
 
347
 
 
 
630
 
3,696
 
4,326
 
910
4/13/2006
Wichita
 
KS
 
—
 
366
 
1,897
 
466
 
 
 
366
 
2,363
 
2,729
 
834
6/27/2011
Covington
 
KY
 
1,909
 
839
 
2,543
 
169
 
 
 
839
 
2,712
 
3,551
 
448
10/1/2015
Crescent Springs
 
KY
 
—
 
120
 
5,313
 
289
 
 
 
120
 
5,602
 
5,722
 
187
10/1/2015
Erlanger
 
KY
 
3,799
 
220
 
7,132
 
258
 
 
 
220
 
7,390
 
7,610
 
244
10/1/2015
Florence / Centennial Circle
 
KY
 
—
 
240
 
8,234
 
666
 
 
 
240
 
8,900
 
9,140
 
305
10/1/2015
Florence / Steilen Dr
 
KY
 
6,326
 
540
 
13,616
 
674
 
 
 
540
 
14,290
 
14,830
 
473
7/1/2005
Louisville / Bardstown Rd
 
KY
 
3,586
 
586
 
3,244
 
583
 
 
 
586
 
3,827
 
4,413
 
1,250
9/16/2016
Louisville / Preston Hwy
 
KY
 
—
 
2,970
 
8,237
 
24
 
 
 
2,970
 
8,261
 
11,231
 
71
7/1/2005
Louisville / Warwick Ave
 
KY
 
6,745
 
1,217
 
4,611
 
393
 
 
 
1,217
 
5,004
 
6,221
 
1,557
12/1/2005
Louisville / Wattbourne Ln
 
KY
 
4,510
 
892
 
2,677
 
539
 
 
 
892
 
3,216
 
4,108
 
927
10/1/2015
Walton
 
KY
 
—
 
290
 
6,245
 
330
 
 
 
290
 
6,575
 
6,865
 
216
8/26/2004
Metairie
 
LA
 
3,699
 
2,056
 
4,216
 
331
 
 
 
2,056
 
4,547
 
6,603
 
1,497
8/26/2004
New Orleans
 
LA
 
5,230
 
4,058
 
4,325
 
850
 
 
 
4,059
 
5,174
 
9,233
 
1,814

90



Date acquired
or development
completed
Store Name
 
State
 
Debt
 
Land
initial cost
 
Building and
improvements
initial cost
 
Adjustments
and costs subsequent
to acquisition
 
Notes
 
Gross carrying amount at December 31, 2016
 
Accumulated
depreciation
Land      
 
Building and improvements   
 
Total      
6/1/2003
Ashland
 
MA
 
5,455
 
474
 
3,324
 
384
 
 
 
474
 
3,708
 
4,182
 
1,566
5/1/2004
Auburn
 
MA
 
—
 
918
 
3,728
 
540
 
 
 
919
 
4,267
 
5,186
 
1,805
11/4/2013
Billerica
 
MA
 
7,897
 
3,023
 
6,697
 
238
 
 
 
3,023
 
6,935
 
9,958
 
582
5/1/2004
Brockton / Centre St / Rte 123
 
MA
 
—
 
647
 
2,762
 
347
 
 
 
647
 
3,109
 
3,756
 
1,234
11/4/2013
Brockton / Oak St
 
MA
 
4,929
 
829
 
6,195
 
486
 
 
 
829
 
6,681
 
7,510
 
589
11/9/2012
Danvers
 
MA
 
7,662
 
3,115
 
5,736
 
195
 
 
 
3,115
 
5,931
 
9,046
 
656
2/6/2004
Dedham / Allied Dr
 
MA
 
—
 
2,443
 
7,328
 
1,587
 
 
 
2,443
 
8,915
 
11,358
 
3,242
3/4/2002
Dedham / Milton St
 
MA
 
5,737
 
2,127
 
3,041
 
984
 
 
 
2,127
 
4,025
 
6,152
 
1,687
5/13/2015
Dedham / Providence Highway
 
MA
 
—
 
1,625
 
10,875
 
114
 
 
 
1,625
 
10,989
 
12,614
 
420
2/6/2004
East Somerville
 
MA
 
—
 
—
 
—
 
173
 
 
 
—
 
173
 
173
 
130
7/1/2005
Everett
 
MA
 
—
 
692
 
2,129
 
1,120
 
 
 
692
 
3,249
 
3,941
 
1,196
5/1/2004
Foxboro
 
MA
 
—
 
759
 
4,158
 
505
 
 
 
759
 
4,663
 
5,422
 
2,174
7/2/2012
Framingham
 
MA
 
—
 
—
 
—
 
56
 
 
 
—
 
56
 
56
 
19
5/1/2004
Hudson
 
MA
 
3,247
 
806
 
3,122
 
671
 
 
 
806
 
3,793
 
4,599
 
1,719
12/31/2007
Jamaica Plain
 
MA
 
9,015
 
3,285
 
11,275
 
766
 
 
 
3,285
 
12,041
 
15,326
 
2,873
10/18/2002
Kingston
 
MA
 
5,173
 
555
 
2,491
 
209
 
 
 
555
 
2,700
 
3,255
 
1,158
6/22/2001
Lynn
 
MA
 
—
 
1,703
 
3,237
 
450
 
 
 
1,703
 
3,687
 
5,390
 
1,608
3/31/2004
Marshfield
 
MA
 
—
 
1,039
 
4,155
 
273
 
 
 
1,026
 
4,441
 
5,467
 
1,545
11/14/2002
Milton
 
MA
 
—
 
2,838
 
3,979
 
6,893
 
 
 
2,838
 
10,872
 
13,710
 
3,089
11/4/2013
North Andover
 
MA
 
3,628
 
773
 
4,120
 
146
 
 
 
773
 
4,266
 
5,039
 
359
10/15/1999
North Oxford
 
MA
 
3,704
 
482
 
1,762
 
671
 
 
 
527
 
2,388
 
2,915
 
1,067
2/28/2001
Northborough
 
MA
 
4,433
 
280
 
2,715
 
704
 
 
 
280
 
3,419
 
3,699
 
1,552
8/15/1999
Norwood
 
MA
 
7,116
 
2,160
 
2,336
 
1,841
 
 
 
2,221
 
4,116
 
6,337
 
1,705
7/1/2005
Plainville
 
MA
 
4,832
 
2,223
 
4,430
 
485
 
 
 
2,223
 
4,915
 
7,138
 
1,856
2/16/2016
Quincy / Liberty St
 
MA
 
—
 
1,567
 
14,595
 
41
 
 
 
1,567
 
14,636
 
16,203
 
344
6/30/2016
Quincy / Old Colony Ave
 
MA
 
—
 
1,238
 
12,362
 
338
 
 
 
1,238
 
12,700
 
13,938
 
165
2/6/2004
Quincy / Weston Ave
 
MA
 
6,910
 
1,359
 
4,078
 
541
 
 
 
1,360
 
4,618
 
5,978
 
1,582
5/15/2000
Raynham
 
MA
 
—
 
588
 
2,270
 
929
 
 
 
670
 
3,117
 
3,787
 
1,297
12/1/2011
Revere
 
MA
 
4,675
 
2,275
 
6,935
 
361
 
 
 
2,275
 
7,296
 
9,571
 
984
6/1/2003
Saugus
 
MA
 
9,015
 
1,725
 
5,514
 
611
 
 
 
1,725
 
6,125
 
7,850
 
2,396
6/15/2001
Somerville
 
MA
 
11,406
 
1,728
 
6,570
 
948
 
 
 
1,731
 
7,515
 
9,246
 
2,987
7/1/2005
Stoneham
 
MA
 
5,729
 
944
 
5,241
 
326
 
 
 
944
 
5,567
 
6,511
 
1,716
5/1/2004
Stoughton / Washington St 1
 
MA
 
—
 
1,754
 
2,769
 
365
 
 
 
1,755
 
3,133
 
4,888
 
1,405
9/16/2016
Stoughton / Washington St 2
 
MA
 
—
 
2,189
 
7,047
 
61
 
 
 
2,189
 
7,108
 
9,297
 
62
7/2/2012
Tyngsboro
 
MA
 
3,341
 
1,843
 
5,004
 
94
 
 
 
1,843
 
5,098
 
6,941
 
602
2/6/2004
Waltham
 
MA
 
—
 
3,770
 
11,310
 
1,121
 
 
 
3,770
 
12,431
 
16,201
 
4,344
9/14/2000
Weymouth
 
MA
 
—
 
2,806
 
3,129
 
232
 
 
 
2,806
 
3,361
 
6,167
 
1,518
2/6/2004
Woburn
 
MA
 
—
 
—
 
—
 
285
 
 
 
—
 
285
 
285
 
168
12/1/2006
Worcester / Ararat St
 
MA
 
3,889
 
1,350
 
4,433
 
398
 
 
 
1,350
 
4,831
 
6,181
 
1,269
5/1/2004
Worcester / Millbury St
 
MA
 
4,290
 
896
 
4,377
 
3,249
 
 
 
896
 
7,626
 
8,522
 
3,001
8/31/2007
Annapolis / Renard Ct / Annex
 
MD
 
8,957
 
1,375
 
8,896
 
425
 
 
 
1,376
 
9,320
 
10,696
 
2,409
4/17/2007
Annapolis / Trout Rd
 
MD
 
—
 
5,248
 
7,247
 
381
 
 
 
5,247
 
7,629
 
12,876
 
1,966
7/1/2005
Arnold
 
MD
 
9,640
 
2,558
 
9,446
 
691
 
 
 
2,558
 
10,137
 
12,695
 
3,133
5/31/2012
Baltimore / Eastern Ave 1
 
MD
 
4,327
 
1,185
 
5,051
 
177
 
 
 
1,185
 
5,228
 
6,413
 
649
2/13/2013
Baltimore / Eastern Ave 2
 
MD
 
7,085
 
1,266
 
10,789
 
155
 
 
 
1,266
 
10,944
 
12,210
 
1,116
11/1/2008
Baltimore / Moravia Rd
 
MD
 
4,297
 
800
 
5,955
 
160
 
 
 
800
 
6,115
 
6,915
 
1,339
6/1/2010
Baltimore / N Howard St
 
MD
 
—
 
1,900
 
5,277
 
156
 
 
 
1,900
 
5,433
 
7,333
 
962
7/1/2005
Bethesda
 
MD
 
25,193
 
3,671
 
18,331
 
1,422
 
 
 
3,671
 
19,753
 
23,424
 
6,751
11/17/2016
Burtonsville
 
MD
 
—
 
10,136
 
11,756
 
—
 
 
 
10,136
 
11,756
 
21,892
 
50
10/20/2010
Capitol Heights
 
MD
 
7,932
 
1,461
 
9,866
 
259
 
 
 
1,461
 
10,125
 
11,586
 
1,711
3/7/2012
Cockeysville
 
MD
 
3,629
 
465
 
5,600
 
312
 
 
 
465
 
5,912
 
6,377
 
805
7/1/2005
Columbia
 
MD
 
10,990
 
1,736
 
9,632
 
386
 
 
 
1,736
 
10,018
 
11,754
 
3,090
12/2/2005
Edgewood / Pulaski Hwy 1
 
MD
 
—
 
1,000
 
—
 
(575)
 
 (d)
 
425
 
—
 
425
 
—
9/10/2015
Edgewood / Pulaski Hwy 2
 
MD
 
—
 
794
 
5,178
 
253
 
 
 
794
 
5,431
 
6,225
 
200
11/2/2016
Forestville
 
MD
 
—
 
3,590
 
11,003
 
70
 
 
 
3,590
 
11,073
 
14,663
 
48
1/11/2007
Ft. Washington
 
MD
 
—
 
4,920
 
9,174
 
327
 
 
 
4,920
 
9,501
 
14,421
 
2,508
7/2/2012
Gambrills
 
MD
 
4,672
 
1,905
 
7,104
 
207
 
 
 
1,905
 
7,311
 
9,216
 
851
9/16/2016
Germantown
 
MD
 
—
 
7,114
 
11,316
 
—
 
 
 
7,114
 
11,316
 
18,430
 
97
7/8/2011
Glen Burnie
 
MD
 
6,331
 
1,303
 
4,218
 
361
 
 
 
1,303
 
4,579
 
5,882
 
782
6/10/2013
Hanover
 
MD
 
—
 
2,160
 
11,340
 
88
 
 
 
2,160
 
11,428
 
13,588
 
1,048
2/6/2004
Lanham
 
MD
 
11,373
 
3,346
 
10,079
 
1,595
 
 
 
2,618
 
12,402
 
15,020
 
4,171
12/27/2007
Laurel
 
MD
 
5,868
 
3,000
 
5,930
 
215
 
 
 
3,000
 
6,145
 
9,145
 
1,498
12/27/2012
Lexington Park
 
MD
 
—
 
4,314
 
8,412
 
194
 
 
 
4,314
 
8,606
 
12,920
 
923
9/17/2008
Pasadena / Fort Smallwood Rd
 
MD
 
5,926
 
1,869
 
3,056
 
772
 
 
 
1,869
 
3,828
 
5,697
 
1,095
3/24/2011
Pasadena / Mountain Rd
 
MD
 
—
 
3,500
 
7,407
 
169
 
 
 
3,500
 
7,576
 
11,076
 
1,120
8/1/2011
Randallstown
 
MD
 
4,465
 
764
 
6,331
 
344
 
 
 
764
 
6,675
 
7,439
 
1,008
9/1/2006
Rockville
 
MD
 
11,950
 
4,596
 
11,328
 
564
 
 
 
4,596
 
11,892
 
16,488
 
3,216
7/1/2005
Towson / East Joppa Rd 1
 
MD
 
10,861
 
861
 
4,742
 
269
 
 
 
861
 
5,011
 
5,872
 
1,609
7/2/2012
Towson / East Joppa Rd 2
 
MD
 
5,909
 
1,094
 
9,598
 
175
 
 
 
1,094
 
9,773
 
10,867
 
1,151
2/2/2016
Wheaton
 
MD
 
—
 
12,738
 
12,894
 
397
 
 
 
12,738
 
13,291
 
26,029
 
310
7/2/2012
Belleville
 
MI
 
—
 
954
 
4,984
 
315
 
 
 
954
 
5,299
 
6,253
 
613
7/1/2005
Grandville
 
MI
 
—
 
726
 
1,298
 
472
 
 
 
726
 
1,770
 
2,496
 
711
7/1/2005
Mt Clemens
 
MI
 
2,824
 
798
 
1,796
 
563
 
 
 
798
 
2,359
 
3,157
 
827
9/16/2016
Southgate
 
MI
 
—
 
960
 
7,247
 
33
 
 
 
960
 
7,280
 
8,240
 
63
10/12/2016
Plymouth
 
MN
 
—
 
1,528
 
16,030
 
5
 
 
 
1,528
 
16,035
 
17,563
 
103
8/31/2007
Florissant
 
MO
 
3,207
 
1,241
 
4,648
 
356
 
 
 
1,241
 
5,004
 
6,245
 
1,392
7/1/2005
Grandview
 
MO
 
3,081
 
612
 
1,770
 
594
 
 
 
612
 
2,364
 
2,976
 
854
6/1/2000
St Louis / Forest Park
 
MO
 
2,395
 
156
 
1,313
 
691
 
 
 
113
 
2,047
 
2,160
 
967
8/31/2007
St Louis / Gravois Rd
 
MO
 
2,615
 
676
 
3,551
 
357
 
 
 
676
 
3,908
 
4,584
 
1,107
6/1/2000
St Louis / Halls Ferry Rd
 
MO
 
2,422
 
631
 
2,159
 
791
 
 
 
690
 
2,891
 
3,581
 
1,267
8/31/2007
St Louis / Old Tesson Rd
 
MO
 
6,173
 
1,444
 
4,162
 
483
 
 
 
1,444
 
4,645
 
6,089
 
1,274
10/1/2015
Biloxi
 
MS
 
—
 
770
 
3,947
 
349
 
 
 
770
 
4,296
 
5,066
 
134
10/1/2015
Canton
 
MS
 
—
 
1,240
 
7,767
 
465
 
 
 
1,240
 
8,232
 
9,472
 
268
10/1/2015
Ridgeland
 
MS
 
—
 
410
 
9,135
 
426
 
 
 
410
 
9,561
 
9,971
 
307
10/15/2013
Cary
 
NC
 
4,139
 
3,614
 
1,788
 
20
 
 
 
3,614
 
1,808
 
5,422
 
149
5/5/2015
Charlotte / Monroe Rd
 
NC
 
4,637
 
4,050
 
6,867
 
181
 
 
 
4,050
 
7,048
 
11,098
 
282
12/8/2015
Charlotte / S Tryon St
 
NC
 
—
 
1,372
 
3,931
 
29
 
 
 
1,372
 
3,960
 
5,332
 
109
11/14/2016
Charlotte / South Blvd
 
NC
 
—
 
2,790
 
10,364
 
2
 
 
 
2,790
 
10,366
 
13,156
 
44
6/19/2015
Charlotte / Wendover Rd
 
NC
 
—
 
1,408
 
5,461
 
220
 
 
 
1,408
 
5,681
 
7,089
 
227
10/1/2015
Concord
 
NC
 
—
 
770
 
4,873
 
633
 
 
 
770
 
5,506
 
6,276
 
186
12/11/2014
Greensboro / High Point Rd
 
NC
 
3,637
 
1,069
 
4,199
 
134
 
 
 
1,069
 
4,333
 
5,402
 
234
12/11/2014
Greensboro / Lawndale Drive
 
NC
 
6,412
 
3,725
 
7,036
 
208
 
 
 
3,723
 
7,246
 
10,969
 
391
12/11/2014
Hickory / 10th Ave
 
NC
 
3,252
 
875
 
5,418
 
107
 
 
 
875
 
5,525
 
6,400
 
298
10/1/2015
Hickory / 18th Street
 
NC
 
—
 
400
 
5,844
 
320
 
 
 
400
 
6,164
 
6,564
 
202
10/1/2015
Morganton
 
NC
 
—
 
600
 
5,724
 
291
 
 
 
600
 
6,015
 
6,615
 
193
6/18/2014
Raleigh
 
NC
 
—
 
2,940
 
4,265
 
107
 
 
 
2,940
 
4,372
 
7,312
 
295
12/11/2014
Winston/Salem / Peters Creek Pkwy
 
NC
 
2,941
 
1,548
 
3,495
 
136
 
 
 
1,548
 
3,631
 
5,179
 
200
12/11/2014
Winston/Salem / University Pkwy
 
NC
 
4,207
 
1,131
 
5,084
 
129
 
 
 
1,131
 
5,213
 
6,344
 
278
4/15/1999
Merrimack
 
NH
 
3,747
 
754
 
3,299
 
615
 
 
 
817
 
3,851
 
4,668
 
1,520
7/1/2005
Nashua
 
NH
 
—
 
—
 
755
 
136
 
 
 
—
 
891
 
891
 
405
1/1/2005
Avenel
 
NJ
 
—
 
1,518
 
8,037
 
593
 
 
 
1,518
 
8,630
 
10,148
 
2,780
12/28/2004
Bayville
 
NJ
 
3,545
 
1,193
 
5,312
 
641
 
 
 
1,193
 
5,953
 
7,146
 
1,943
9/1/2008
Bellmawr
 
NJ
 
3,296
 
3,600
 
4,765
 
421
 
 
 
3,675
 
5,111
 
8,786
 
1,060
7/18/2012
Berkeley Heights
 
NJ
 
6,792
 
1,598
 
7,553
 
210
 
 
 
1,598
 
7,763
 
9,361
 
921
12/18/2014
Burlington
 
NJ
 
3,793
 
477
 
6,534
 
248
 
 
 
477
 
6,782
 
7,259
 
366
10/7/2015
Cherry Hill / Church Rd
 
NJ
 
—
 
1,057
 
6,037
 
313
 
 
 
1,057
 
6,350
 
7,407
 
206
11/30/2012
Cherry Hill / Marlton Pike
 
NJ
 
—
 
2,323
 
1,549
 
318
 
 
 
2,323
 
1,867
 
4,190
 
245
9/16/2016
Cherry Hill / Old Cuthbert Rd
 
NJ
 
—
 
1,295
 
4,125
 
8
 
 
 
1,295
 
4,133
 
5,428
 
35
12/18/2014
Cherry Hill / Rockhill Rd
 
NJ
 
1,960
 
536
 
3,407
 
58
 
 
 
536
 
3,465
 
4,001
 
190
11/30/2012
Cranbury
 
NJ
 
6,910
 
3,543
 
5,095
 
1,196
 
 
 
3,543
 
6,291
 
9,834
 
693
12/18/2014
Denville
 
NJ
 
8,802
 
584
 
14,398
 
120
 
 
 
584
 
14,518
 
15,102
 
767
12/31/2001
Edison
 
NJ
 
8,591
 
2,519
 
8,547
 
1,788
 
 
 
2,518
 
10,336
 
12,854
 
3,867
12/31/2001
Egg Harbor Township
 
NJ
 
3,868
 
1,724
 
5,001
 
1,631
 
 
 
1,724
 
6,632
 
8,356
 
2,482
3/15/2007
Ewing
 
NJ
 
—
 
1,552
 
4,720
 
(42)
 
 (c, d)
 
1,562
 
4,668
 
6,230
 
1,274
7/18/2012
Fairfield
 
NJ
 
5,919
 
—
 
9,402
 
167
 
 
 
—
 
9,569
 
9,569
 
1,119
11/30/2012
Fort Lee / Bergen Blvd
 
NJ
 
12,227
 
4,402
 
9,831
 
347
 
 
 
4,402
 
10,178
 
14,580
 
1,124
10/1/2015
Fort Lee / Main St
 
NJ
 
—
 
2,280
 
27,409
 
357
 
 
 
2,280
 
27,766
 
30,046
 
899
3/15/2001
Glen Rock
 
NJ
 
—
 
1,109
 
2,401
 
576
 
 
 
1,222
 
2,864
 
4,086
 
1,130
12/18/2014
Hackensack / Railroad Ave
 
NJ
 
7,476
 
2,053
 
9,882
 
99
 
 
 
2,053
 
9,981
 
12,034
 
532
7/1/2005
Hackensack / South River St
 
NJ
 
—
 
2,283
 
11,234
 
919
 
 
 
2,283
 
12,153
 
14,436
 
3,994
8/23/2012
Hackettstown
 
NJ
 
5,799
 
2,144
 
6,660
 
176
 
 
 
2,144
 
6,836
 
8,980
 
814
7/2/2012
Harrison
 
NJ
 
3,465
 
300
 
6,003
 
261
 
 
 
300
 
6,264
 
6,564
 
754
12/31/2001
Hazlet
 
NJ
 
7,454
 
1,362
 
10,262
 
1,796
 
 
 
1,362
 
12,058
 
13,420
 
4,484
9/16/2016
Ho Ho Kus
 
NJ
 
—
 
13,054
 
31,770
 
39
 
 
 
13,054
 
31,809
 
44,863
 
274
7/2/2002
Hoboken
 
NJ
 
17,029
 
2,687
 
6,092
 
340
 
 
 
2,687
 
6,432
 
9,119
 
2,489
12/31/2001
Howell
 
NJ
 
—
 
2,440
 
3,407
 
1,198
 
 
 
2,440
 
4,605
 
7,045
 
1,683
12/31/2001
Iselin
 
NJ
 
4,628
 
505
 
4,524
 
603
 
 
 
505
 
5,127
 
5,632
 
2,203
10/1/2015
Jersey City
 
NJ
 
—
 
8,050
 
16,342
 
484
 
 
 
8,050
 
16,826
 
24,876
 
551
11/30/2012
Lawnside
 
NJ
 
4,930
 
1,249
 
5,613
 
403
 
 
 
1,249
 
6,016
 
7,265
 
675
2/6/2004
Lawrenceville
 
NJ
 
5,096
 
3,402
 
10,230
 
822
 
 
 
3,402
 
11,052
 
14,454
 
3,766
7/1/2005
Linden
 
NJ
 
3,612
 
1,517
 
8,384
 
323
 
 
 
1,517
 
8,707
 
10,224
 
2,679
12/22/2004
Lumberton
 
NJ
 
3,875
 
831
 
4,060
 
338
 
 
 
831
 
4,398
 
5,229
 
1,526
3/15/2001
Lyndhurst
 
NJ
 
—
 
2,679
 
4,644
 
1,063
 
 
 
2,928
 
5,458
 
8,386
 
2,107
8/23/2012
Mahwah
 
NJ
 
10,784
 
1,890
 
13,112
 
325
 
 
 
1,890
 
13,437
 
15,327
 
1,609
12/16/2011
Maple Shade
 
NJ
 
3,920
 
1,093
 
5,492
 
208
 
 
 
1,093
 
5,700
 
6,793
 
803
12/7/2001
Metuchen
 
NJ
 
5,314
 
1,153
 
4,462
 
373
 
 
 
1,153
 
4,835
 
5,988
 
1,933
8/28/2012
Montville
 
NJ
 
8,583
 
1,511
 
11,749
 
164
 
 
 
1,511
 
11,913
 
13,424
 
1,378
2/6/2004
Morrisville
 
NJ
 
—
 
2,487
 
7,494
 
2,450
 
 
 
1,688
 
10,743
 
12,431
 
3,219
7/2/2012
Mt Laurel
 
NJ
 
2,939
 
329
 
5,217
 
236
 
 
 
329
 
5,453
 
5,782
 
671
11/2/2006
Neptune
 
NJ
 
7,130
 
4,204
 
8,906
 
471
 
 
 
4,204
 
9,377
 
13,581
 
2,570
7/18/2012
Newark
 
NJ
 
7,229
 
806
 
8,340
 
167
 
 
 
806
 
8,507
 
9,313
 
1,007
7/1/2005
North Bergen / 83rd St
 
NJ
 
10,744
 
2,299
 
12,728
 
567
 
 
 
2,299
 
13,295
 
15,594
 
4,145
10/6/2011
North Bergen / Kennedy Blvd
 
NJ
 
—
 
861
 
17,127
 
432
 
 
 
861
 
17,559
 
18,420
 
2,377
7/25/2003
North Bergen / River Rd
 
NJ
 
8,684
 
2,100
 
6,606
 
417
 
 
 
2,100
 
7,023
 
9,123
 
2,571
7/18/2012
North Brunswick
 
NJ
 
6,044
 
2,789
 
4,404
 
207
 
 
 
2,789
 
4,611
 
7,400
 
572
12/31/2001
Old Bridge
 
NJ
 
5,445
 
2,758
 
6,450
 
2,051
 
 
 
2,758
 
8,501
 
11,259
 
3,149
5/1/2004
Parlin / Cheesequake Rd
 
NJ
 
—
 
—
 
5,273
 
496
 
 
 
—
 
5,769
 
5,769
 
2,585
7/1/2005
Parlin / Route 9 North
 
NJ
 
—
 
2,517
 
4,516
 
605
 
 
 
2,517
 
5,121
 
7,638
 
1,881
7/18/2012
Parsippany
 
NJ
 
6,235
 
2,353
 
7,798
 
142
 
 
 
2,354
 
7,939
 
10,293
 
960
6/2/2011
Pennsauken
 
NJ
 
3,622
 
1,644
 
3,115
 
409
 
 
 
1,644
 
3,524
 
5,168
 
617
10/1/2015
Riverdale
 
NJ
 
7,217
 
2,000
 
14,541
 
217
 
 
 
2,000
 
14,758
 
16,758
 
476
12/9/2009
South Brunswick
 
NJ
 
2,846
 
1,700
 
5,835
 
215
 
 
 
1,700
 
6,050
 
7,750
 
1,118
7/1/2005
Toms River / Route 37 East 1
 
NJ
 
4,762
 
1,790
 
9,935
 
486
 
 
 
1,790
 
10,421
 
12,211
 
3,340
10/1/2015
Toms River / Route 37 East 2
 
NJ
 
—
 
1,800
 
10,765
 
323
 
 
 
1,800
 
11,088
 
12,888
 
362
10/1/2015
Toms River / Route 9
 
NJ
 
—
 
980
 
4,717
 
299
 
 
 
980
 
5,016
 
5,996
 
169
10/1/2015
Trenton
 
NJ
 
—
 
2,180
 
8,007
 
219
 
 
 
2,180
 
8,226
 
10,406
 
269
12/28/2004
Union / Green Ln
 
NJ
 
6,021
 
1,754
 
6,237
 
432
 
 
 
1,754
 
6,669
 
8,423
 
2,247
11/30/2012
Union / Route 22 West
 
NJ
 
6,678
 
1,133
 
7,239
 
221
 
 
 
1,133
 
7,460
 
8,593
 
818
11/30/2012
Watchung
 
NJ
 
6,584
 
1,843
 
4,499
 
262
 
 
 
1,843
 
4,761
 
6,604
 
556
11/30/2012
Albuquerque / Airport Dr NW
 
NM
 
—
 
755
 
1,797
 
84
 
 
 
755
 
1,881
 
2,636
 
219
8/31/2007
Albuquerque / Calle Cuervo NW
 
NM
 
4,364
 
1,298
 
4,628
 
753
 
 
 
1,298
 
5,381
 
6,679
 
1,458
1/7/2016
Albuquerque / Eagle Ranch Rd
 
NM
 
—
 
1,346
 
5,558
 
156
 
 
 
1,346
 
5,714
 
7,060
 
157
9/16/2016
Albuquerque / Ellison Rd NW
 
NM
 
—
 
1,182
 
5,813
 
39
 
 
 
1,182
 
5,852
 
7,034
 
51
9/16/2016
Albuquerque / Eubank SE
 
NM
 
—
 
1,446
 
7,647
 
71
 
 
 
1,446
 
7,718
 
9,164
 
67
9/16/2016
Albuquerque / Legion Rd NE
 
NM
 
—
 
—
 
4,861
 
—
 
 
 
—
 
4,861
 
4,861
 
42
11/17/2016
Albuquerque / Lomas Blvd NE
 
NM
 
—
 
544
 
3,081
 
—
 
 
 
544
 
3,081
 
3,625
 
13
9/16/2016
Albuquerque / Montgomery Blvd NE 1
 
NM
 
—
 
1,601
 
5,013
 
1
 
 
 
1,601
 
5,014
 
6,615
 
43
3/29/2016
Albuquerque / Montgomery Blvd NE 2
 
NM
 
—
 
2,842
 
7,965
 
153
 
 
 
2,842
 
8,118
 
10,960
 
176
1/7/2016
Rio Rancho / Golf Course Rd
 
NM
 
—
 
1,667
 
6,836
 
247
 
 
 
1,667
 
7,083
 
8,750
 
188
3/29/2016
Santa Fe / Pacheco St
 
NM
 
—
 
9,079
 
8,620
 
289
 
 
 
9,079
 
8,909
 
17,988
 
194
7/2/2012
Santa Fe / West San Mateo Rd
 
NM
 
6,263
 
3,066
 
7,366
 
558
 
 
 
3,066
 
7,924
 
10,990
 
949
10/1/2015
Henderson / Racetrack Rd
 
NV
 
4,705
 
1,470
 
6,348
 
343
 
 
 
1,470
 
6,691
 
8,161
 
221
11/30/2012
Henderson / Stephanie Pl
 
NV
 
—
 
2,934
 
8,897
 
293
 
 
 
2,934
 
9,190
 
12,124
 
1,026
10/1/2015
Las Vegas / Bonanza Rd
 
NV
 
4,011
 
820
 
6,716
 
209
 
 
 
820
 
6,925
 
7,745
 
228
10/1/2015
Las Vegas / Durango Dr
 
NV
 
—
 
1,140
 
4,384
 
319
 
 
 
1,140
 
4,703
 
5,843
 
157
6/22/2011
Las Vegas / Jones Blvd
 
NV
 
2,373
 
1,441
 
1,810
 
176
 
 
 
1,441
 
1,986
 
3,427
 
340
10/1/2015
Las Vegas / Las Vegas Blvd
 
NV
 
—
 
2,830
 
6,834
 
369
 
 
 
2,830
 
7,203
 
10,033
 
238
2/22/2000
Las Vegas / N Lamont St
 
NV
 
—
 
251
 
717
 
553
 
 
 
278
 
1,243
 
1,521
 
653
11/1/2013
Las Vegas / North Lamb Blvd
 
NV
 
2,601
 
279
 
3,900
 
199
 
 
 
279
 
4,099
 
4,378
 
764
10/1/2015
Las Vegas / Pecos Rd
 
NV
 
—
 
1,420
 
5,900
 
411
 
 
 
1,420
 
6,311
 
7,731
 
209
10/1/2015
Las Vegas / Rancho Dr
 
NV
 
—
 
590
 
5,899
 
159
 
 
 
590
 
6,058
 
6,648
 
198
10/1/2015
Las Vegas / W Charleston Blvd
 
NV
 
—
 
550
 
1,319
 
109
 
 
 
550
 
1,428
 
1,978
 
50
2/2/2016
Las Vegas / W Oakey Blvd
 
NV
 
3,776
 
645
 
4,568
 
—
 
 
 
645
 
4,568
 
5,213
 
107
11/30/2012
Las Vegas / W Sahara Ave
 
NV
 
4,226
 
773
 
6,006
 
313
 
 
 
773
 
6,319
 
7,092
 
699
11/30/2012
Las Vegas / W Tropicana Ave
 
NV
 
4,110
 
400
 
4,936
 
109
 
 
 
400
 
5,045
 
5,445
 
568
10/1/2015
North Las Vegas
 
NV
 
—
 
1,260
 
4,589
 
184
 
 
 
1,260
 
4,773
 
6,033
 
157
10/1/2015
Ballston Spa
 
NY
 
—
 
890
 
9,941
 
59
 
 
 
890
 
10,000
 
10,890
 
321
12/19/2007
Bohemia
 
NY
 
—
 
1,456
 
1,398
 
408
 
 
 
1,456
 
1,806
 
3,262
 
495
12/1/2011
Bronx / Edson Av
 
NY
 
16,840
 
3,450
 
21,210
 
453
 
 
 
3,450
 
21,663
 
25,113
 
2,918
8/26/2004
Bronx / Fordham Rd
 
NY
 
—
 
3,995
 
11,870
 
3,140
 
 
 
3,995
 
15,010
 
19,005
 
4,324
10/2/2008
Brooklyn / 3rd Ave
 
NY
 
18,550
 
12,993
 
10,405
 
405
 
 
 
12,993
 
10,810
 
23,803
 
2,422
7/2/2012
Brooklyn / 64th St
 
NY
 
20,805
 
16,188
 
23,309
 
471
 
 
 
16,257
 
23,711
 
39,968
 
2,780
5/21/2010
Brooklyn / Atlantic Ave
 
NY
 
7,598
 
2,802
 
6,536
 
351
 
 
 
2,802
 
6,887
 
9,689
 
1,269
12/11/2014
Brooklyn / Avenue M
 
NY
 
—
 
12,085
 
7,665
 
—
 
 
 
12,085
 
7,665
 
19,750
 
—
10/2/2008
Centereach
 
NY
 
4,014
 
2,226
 
1,657
 
236
 
 
 
2,226
 
1,893
 
4,119
 
496
8/10/2012
Central Valley
 
NY
 
—
 
2,800
 
12,173
 
596
 
 
 
2,800
 
12,769
 
15,569
 
1,564
11/23/2010
Freeport
 
NY
 
—
 
5,676
 
3,784
 
908
 
 
 
5,676
 
4,692
 
10,368
 
1,063
7/2/2012
Hauppauge
 
NY
 
5,383
 
1,238
 
7,095
 
364
 
 
 
1,238
 
7,459
 
8,697
 
905
7/2/2012
Hicksville
 
NY
 
8,477
 
2,581
 
10,677
 
132
 
 
 
2,581
 
10,809
 
13,390
 
1,252
7/2/2012
Kingston
 
NY
 
4,703
 
837
 
6,199
 
182
 
 
 
837
 
6,381
 
7,218
 
766
2/2/2016
Long Island City
 
NY
 
—
 
32,361
 
24,017
 
40
 
 
 
32,362
 
24,056
 
56,418
 
566
11/26/2002
Mt Vernon / N Mac Questen Pkwy
 
NY
 
7,726
 
1,926
 
7,622
 
1,075
 
 
 
1,926
 
8,697
 
10,623
 
3,199
7/1/2005
Mt Vernon / Northwest St
 
NY
 
—
 
1,585
 
6,025
 
2,850
 
 
 
1,585
 
8,875
 
10,460
 
3,065
2/7/2002
Nanuet
 
NY
 
9,581
 
2,072
 
4,644
 
1,779
 
 
 
2,738
 
5,757
 
8,495
 
2,261
7/1/2005
New Paltz
 
NY
 
4,215
 
2,059
 
3,715
 
700
 
 
 
2,059
 
4,415
 
6,474
 
1,499
7/1/2005
New York
 
NY
 
17,825
 
3,060
 
16,978
 
795
 
 
 
3,060
 
17,773
 
20,833
 
5,579
12/4/2000
Plainview
 
NY
 
7,367
 
4,287
 
3,710
 
751
 
 
 
4,287
 
4,461
 
8,748
 
2,037
7/18/2012
Poughkeepsie
 
NY
 
5,799
 
1,038
 
7,862
 
281
 
 
 
1,038
 
8,143
 
9,181
 
959
7/2/2012
Ridge
 
NY
 
5,940
 
1,762
 
6,934
 
243
 
 
 
1,762
 
7,177
 
8,939
 
822

91



Date acquired
or development
completed
Store Name
 
State
 
Debt
 
Land
initial cost
 
Building and
improvements
initial cost
 
Adjustments and
costs subsequent
to acquisition
 
Notes
 
Gross carrying amount at December 31, 2016
 
Accumulated
depreciation
Land      
 
Building and improvements    
 
Total      
6/27/2011
Cincinnati / Glencrossing Way
 
OH
 
—
 
1,217
 
1,941
 
270
 
 
 
1,217
 
2,211
 
3,428
 
355
6/27/2011
Cincinnati / Glendale/Milford Rd
 
OH
 
4,458
 
1,815
 
5,733
 
278
 
 
 
1,815
 
6,011
 
7,826
 
989
6/27/2011
Cincinnati / Hamilton Ave
 
OH
 
—
 
2,941
 
2,177
 
300
 
 
 
2,941
 
2,477
 
5,418
 
470
6/27/2011
Cincinnati / Wooster Pk
 
OH
 
5,275
 
1,445
 
3,755
 
301
 
 
 
1,445
 
4,056
 
5,501
 
693
9/16/2016
Columbus / E Main St
 
OH
 
—
 
652
 
2,147
 
23
 
 
 
652
 
2,170
 
2,822
 
19
7/1/2005
Columbus / Innis Rd
 
OH
 
4,655
 
483
 
2,654
 
993
 
 
 
483
 
3,647
 
4,130
 
1,309
11/1/2013
Columbus / Kenny Rd
 
OH
 
4,718
 
1,227
 
5,057
 
275
 
 
 
1,227
 
5,332
 
6,559
 
942
11/4/2013
Fairfield
 
OH
 
3,717
 
904
 
3,856
 
331
 
 
 
904
 
4,187
 
5,091
 
382
6/27/2011
Hamilton
 
OH
 
—
 
673
 
2,910
 
164
 
 
 
673
 
3,074
 
3,747
 
481
11/30/2012
Hilliard
 
OH
 
2,033
 
1,613
 
2,369
 
269
 
 
 
1,613
 
2,638
 
4,251
 
350
7/1/2005
Kent
 
OH
 
2,301
 
220
 
1,206
 
281
 
 
 
220
 
1,487
 
1,707
 
591
6/27/2011
Lebanon
 
OH
 
3,983
 
1,657
 
1,566
 
346
 
 
 
1,657
 
1,912
 
3,569
 
357
11/30/2012
Mentor / Heisley Rd
 
OH
 
1,233
 
658
 
1,267
 
358
 
 
 
658
 
1,625
 
2,283
 
228
7/2/2012
Mentor / Mentor Ave
 
OH
 
—
 
409
 
1,609
 
195
 
 
 
409
 
1,804
 
2,213
 
252
6/27/2011
Middletown
 
OH
 
—
 
534
 
1,047
 
131
 
 
 
533
 
1,179
 
1,712
 
213
11/1/2013
Whitehall
 
OH
 
1,958
 
726
 
1,965
 
131
 
 
 
726
 
2,096
 
2,822
 
366
7/2/2012
Willoughby
 
OH
 
—
 
155
 
1,811
 
118
 
 
 
155
 
1,929
 
2,084
 
232
7/1/2005
Aloha / NW 185th Ave
 
OR
 
5,922
 
1,221
 
6,262
 
317
 
 
 
1,221
 
6,579
 
7,800
 
2,125
7/2/2012
Aloha / SW 229th Ave
 
OR
 
4,486
 
2,014
 
5,786
 
183
 
 
 
2,014
 
5,969
 
7,983
 
712
11/24/2015
Hillsboro
 
OR
 
—
 
732
 
9,158
 
167
 
 
 
732
 
9,325
 
10,057
 
277
9/15/2009
King City
 
OR
 
2,894
 
2,520
 
6,845
 
83
 
 
 
2,520
 
6,928
 
9,448
 
1,263
12/28/2004
Bensalem / Bristol Pike
 
PA
 
3,117
 
1,131
 
4,525
 
505
 
 
 
1,131
 
5,030
 
6,161
 
1,648
3/30/2006
Bensalem / Knights Rd.
 
PA
 
—
 
750
 
3,015
 
252
 
 
 
750
 
3,267
 
4,017
 
990
10/1/2015
Collegeville
 
PA
 
—
 
490
 
6,947
 
258
 
 
 
490
 
7,205
 
7,695
 
241
11/15/1999
Doylestown
 
PA
 
—
 
220
 
3,442
 
1,168
 
 
 
521
 
4,309
 
4,830
 
1,728
5/1/2004
Kennedy Township
 
PA
 
2,498
 
736
 
3,173
 
329
 
 
 
736
 
3,502
 
4,238
 
1,533
2/6/2004
Philadelphia / Roosevelt Bl
 
PA
 
5,386
 
1,965
 
5,925
 
1,596
 
 
 
1,965
 
7,521
 
9,486
 
2,605
11/1/2013
Philadelphia / Wayne Ave
 
PA
 
—
 
596
 
10,368
 
75
 
 
 
596
 
10,443
 
11,039
 
1,438
8/3/2000
Pittsburgh / E Entry Dr
 
PA
 
2,498
 
991
 
1,990
 
946
 
 
 
1,082
 
2,845
 
3,927
 
1,257
10/1/2015
Pittsburgh / Landings Dr
 
PA
 
—
 
400
 
3,936
 
412
 
 
 
400
 
4,348
 
4,748
 
145
5/1/2004
Pittsburgh / Penn Ave
 
PA
 
3,684
 
889
 
4,117
 
689
 
 
 
889
 
4,806
 
5,695
 
2,156
10/1/2015
Skippack
 
PA
 
—
 
720
 
4,552
 
245
 
 
 
720
 
4,797
 
5,517
 
162
10/1/2015
West Mifflin
 
PA
 
—
 
840
 
8,931
 
400
 
 
 
840
 
9,331
 
10,171
 
302
1/1/2011
Willow Grove
 
PA
 
4,995
 
1,297
 
4,027
 
370
 
 
 
1,297
 
4,397
 
5,694
 
761
7/1/2005
Johnston / Hartford Ave
 
RI
 
6,226
 
2,658
 
4,799
 
669
 
 
 
2,658
 
5,468
 
8,126
 
1,857
12/1/2011
Johnston / Plainfield
 
RI
 
1,771
 
533
 
2,127
 
241
 
 
 
533
 
2,368
 
2,901
 
315
10/1/2015
Bluffton
 
SC
 
—
 
1,010
 
8,673
 
181
 
 
 
1,010
 
8,854
 
9,864
 
288
10/1/2015
Charleston / Ashley River Rd
 
SC
 
—
 
500
 
5,390
 
326
 
 
 
500
 
5,716
 
6,216
 
196
8/26/2004
Charleston / Glenn McConnell Pkwy
 
SC
 
3,359
 
1,279
 
4,171
 
386
 
 
 
1,279
 
4,557
 
5,836
 
1,509
10/1/2015
Charleston / Maybank Hwy
 
SC
 
5,631
 
600
 
9,364
 
432
 
 
 
600
 
9,796
 
10,396
 
321
10/1/2015
Charleston / Savannah Hwy
 
SC
 
—
 
370
 
3,794
 
250
 
 
 
370
 
4,044
 
4,414
 
129
3/30/2015
Columbia / Clemson Rd
 
SC
 
—
 
1,483
 
5,415
 
77
 
 
 
1,483
 
5,492
 
6,975
 
254
7/19/2012
Columbia / Decker Blvd
 
SC
 
3,482
 
1,784
 
2,745
 
304
 
 
 
1,784
 
3,049
 
4,833
 
352
8/26/2004
Columbia / Harban Ct
 
SC
 
2,692
 
838
 
3,312
 
371
 
 
 
839
 
3,682
 
4,521
 
1,260
10/1/2015
Columbia / Percival Rd
 
SC
 
—
 
480
 
2,115
 
264
 
 
 
480
 
2,379
 
2,859
 
82
8/26/2004
Goose Creek
 
SC
 
—
 
1,683
 
4,372
 
1,102
 
 
 
1,683
 
5,474
 
7,157
 
1,758
10/1/2015
Greenville / Laurens Rd
 
SC
 
—
 
620
 
8,467
 
330
 
 
 
620
 
8,797
 
9,417
 
281
5/10/2016
Greenville / Woodruff Rd
 
SC
 
—
 
1,258
 
6,912
 
108
 
 
 
1,258
 
7,020
 
8,278
 
121
10/1/2015
Lexington / Northpoint Dr
 
SC
 
—
 
780
 
5,732
 
303
 
 
 
780
 
6,035
 
6,815
 
204
10/1/2015
Lexington / St Peters Church Rd
 
SC
 
—
 
750
 
1,481
 
96
 
 
 
750
 
1,577
 
2,327
 
51
10/1/2015
Mt Pleasant / Bowman Rd
 
SC
 
—
 
1,740
 
3,094
 
238
 
 
 
1,740
 
3,332
 
5,072
 
111
10/1/2015
Mt Pleasant / Hwy 17 N
 
SC
 
4,729
 
4,600
 
2,342
 
287
 
 
 
4,600
 
2,629
 
7,229
 
100
10/1/2015
Mt Pleasant / Stockade Ln
 
SC
 
14,472
 
11,680
 
19,626
 
488
 
 
 
11,680
 
20,114
 
31,794
 
646
10/1/2015
Myrtle Beach
 
SC
 
—
 
510
 
3,921
 
260
 
 
 
510
 
4,181
 
4,691
 
137
3/30/2015
North Charleston / Dorchester Road
 
SC
 
3,213
 
280
 
5,814
 
82
 
 
 
280
 
5,896
 
6,176
 
273
10/1/2015
North Charleston / Rivers Ave
 
SC
 
6,176
 
1,250
 
8,753
 
682
 
 
 
1,250
 
9,435
 
10,685
 
307
8/26/2004
Summerville
 
SC
 
—
 
450
 
4,454
 
267
 
 
 
450
 
4,721
 
5,171
 
1,580
12/11/2014
Taylors
 
SC
 
5,323
 
1,433
 
6,071
 
183
 
 
 
1,433
 
6,254
 
7,687
 
335
9/16/2016
Antioch
 
TN
 
—
 
2,056
 
3,921
 
17
 
 
 
2,056
 
3,938
 
5,994
 
35
7/2/2012
Bartlett
 
TN
 
—
 
632
 
3,798
 
147
 
 
 
632
 
3,945
 
4,577
 
470
4/15/2011
Cordova / Houston Levee Rd
 
TN
 
1,977
 
652
 
1,791
 
131
 
 
 
652
 
1,922
 
2,574
 
331
7/1/2005
Cordova / N Germantown Pkwy 1
 
TN
 
3,306
 
852
 
2,720
 
521
 
 
 
852
 
3,241
 
4,093
 
1,084
11/1/2013
Cordova / N Germantown Pkwy 2
 
TN
 
6,794
 
8,187
 
4,628
 
227
 
 
 
8,187
 
4,855
 
13,042
 
1,223
1/5/2007
Cordova / Patriot Cove
 
TN
 
—
 
894
 
2,680
 
235
 
 
 
894
 
2,915
 
3,809
 
797
11/30/2012
Franklin
 
TN
 
—
 
3,357
 
8,984
 
278
 
 
 
3,357
 
9,262
 
12,619
 
1,039
10/1/2015
Knoxville / Ebenezer Rd
 
TN
 
7,392
 
470
 
13,299
 
211
 
 
 
470
 
13,510
 
13,980
 
436
10/1/2015
Knoxville / Lovell Rd
 
TN
 
5,202
 
1,360
 
8,475
 
209
 
 
 
1,360
 
8,684
 
10,044
 
279
10/1/2015
Lenoir City
 
TN
 
5,550
 
850
 
10,738
 
453
 
 
 
850
 
11,191
 
12,041
 
363
7/2/2012
Memphis / Covington Way
 
TN
 
—
 
274
 
2,623
 
88
 
 
 
274
 
2,711
 
2,985
 
323
2/2/2016
Memphis / Gateway Dr
 
TN
 
—
 
305
 
3,345
 
40
 
 
 
305
 
3,385
 
3,690
 
82
10/1/2015
Memphis / Hollywood St
 
TN
 
—
 
570
 
8,893
 
315
 
 
 
570
 
9,208
 
9,778
 
294
11/17/2016
Memphis / Kirby Pkwy
 
TN
 
—
 
907
 
2,873
 
1
 
 
 
907
 
2,874
 
3,781
 
12
2/2/2016
Memphis / Madison Ave
 
TN
 
—
 
193
 
2,070
 
1
 
 
 
193
 
2,071
 
2,264
 
48
11/30/2012
Memphis / Mt Moriah
 
TN
 
2,533
 
1,617
 
2,875
 
478
 
 
 
1,617
 
3,353
 
4,970
 
358
11/1/2013
Memphis / Mt Moriah Terrace
 
TN
 
7,925
 
1,313
 
2,928
 
296
 
 
 
1,313
 
3,224
 
4,537
 
530
7/2/2012
Memphis / Raleigh/LaGrange
 
TN
 
—
 
110
 
1,280
 
86
 
 
 
110
 
1,366
 
1,476
 
170
11/1/2013
Memphis / Riverdale Bend
 
TN
 
4,236
 
803
 
4,635
 
236
 
 
 
803
 
4,871
 
5,674
 
728
11/30/2012
Memphis / Summer Ave 1
 
TN
 
3,313
 
1,040
 
3,867
 
423
 
 
 
1,040
 
4,290
 
5,330
 
473
9/16/2016
Memphis / Summer Ave 2
 
TN
 
—
 
578
 
2,548
 
10
 
 
 
578
 
2,558
 
3,136
 
22
11/17/2016
Memphis / Winchester Rd
 
TN
 
—
 
1,301
 
4,722
 
4
 
 
 
1,301
 
4,726
 
6,027
 
20
4/13/2006
Nashville
 
TN
 
8,263
 
390
 
2,598
 
1,279
 
 
 
390
 
3,877
 
4,267
 
1,341
11/22/2006
Allen
 
TX
 
4,312
 
901
 
5,553
 
309
 
 
 
901
 
5,862
 
6,763
 
1,626
8/26/2004
Arlington / E Pioneer Pkwy
 
TX
 
3,181
 
534
 
2,525
 
619
 
 
 
534
 
3,144
 
3,678
 
1,165
10/1/2015
Arlington / Randol Mill Rd
 
TX
 
—
 
630
 
5,214
 
365
 
 
 
630
 
5,579
 
6,209
 
187
4/15/2015
Arlington / US 287 Frontage Rd
 
TX
 
2,633
 
567
 
5,340
 
353
 
 
 
567
 
5,693
 
6,260
 
272
4/15/2015
Arlington / Watson Rd
 
TX
 
2,647
 
698
 
3,862
 
258
 
 
 
698
 
4,120
 
4,818
 
209
1/13/2015
Austin / 1st Street
 
TX
 
4,139
 
807
 
7,689
 
170
 
 
 
807
 
7,859
 
8,666
 
406
1/13/2015
Austin / Brodie Lane
 
TX
 
5,717
 
1,155
 
8,552
 
187
 
 
 
1,155
 
8,739
 
9,894
 
461
8/26/2004
Austin / Burnet Rd
 
TX
 
8,759
 
870
 
4,455
 
532
 
 
 
870
 
4,987
 
5,857
 
1,686
1/13/2015
Austin / Capital of Texas Hwy
 
TX
 
10,175
 
10,117
 
13,248
 
163
 
 
 
10,117
 
13,411
 
23,528
 
693
11/1/2013
Austin / McNeil Dr
 
TX
 
4,846
 
3,411
 
4,502
 
83
 
 
 
3,411
 
4,585
 
7,996
 
740
8/8/2014
Austin / North Lamar Blvd
 
TX
 
4,949
 
1,047
 
9,969
 
186
 
 
 
1,047
 
10,155
 
11,202
 
638
1/14/2016
Austin / Slaughter Creek Dr
 
TX
 
—
 
2,039
 
8,006
 
443
 
 
 
2,039
 
8,449
 
10,488
 
214
4/14/2015
Baytown
 
TX
 
6,486
 
619
 
7,861
 
90
 
 
 
619
 
7,951
 
8,570
 
311
1/14/2016
Belton
 
TX
 
—
 
801
 
2,550
 
444
 
 
 
801
 
2,994
 
3,795
 
83
1/14/2016
Cedar Park
 
TX
 
—
 
655
 
8,191
 
119
 
 
 
655
 
8,310
 
8,965
 
215
4/15/2015
Coppell / Belt Line Rd
 
TX
 
4,295
 
724
 
5,743
 
206
 
 
 
724
 
5,949
 
6,673
 
271
10/1/2015
Coppell / Denton Tap Rd
 
TX
 
—
 
2,270
 
9,333
 
158
 
 
 
2,270
 
9,491
 
11,761
 
307
4/15/2015
Dallas / Clark Rd
 
TX
 
4,910
 
1,837
 
8,426
 
395
 
 
 
1,837
 
8,821
 
10,658
 
407
8/26/2004
Dallas / E Northwest Hwy
 
TX
 
15,213
 
4,432
 
6,181
 
1,371
 
 
 
4,432
 
7,552
 
11,984
 
2,514
4/13/2006
Dallas / Garland Rd
 
TX
 
4,475
 
337
 
2,216
 
642
 
 
 
337
 
2,858
 
3,195
 
1,056
4/15/2015
Dallas / Haskell Ave
 
TX
 
—
 
275
 
11,183
 
278
 
 
 
275
 
11,461
 
11,736
 
516
5/4/2006
Dallas / Inwood Rd
 
TX
 
13,330
 
1,980
 
12,501
 
565
 
 
 
1,979
 
13,067
 
15,046
 
3,721
4/15/2015
Dallas / Lyndon B Johnson Freeway
 
TX
 
4,546
 
1,729
 
7,876
 
437
 
 
 
1,729
 
8,313
 
10,042
 
384
11/1/2013
Dallas / N Central Expressway
 
TX
 
16,794
 
13,392
 
15,019
 
778
 
 
 
13,392
 
15,797
 
29,189
 
1,351
7/2/2012
Dallas / Preston Rd 1
 
TX
 
5,113
 
921
 
7,656
 
140
 
 
 
921
 
7,796
 
8,717
 
939
8/10/2012
Dallas / Preston Rd 2
 
TX
 
4,278
 
2,542
 
3,274
 
283
 
 
 
2,542
 
3,557
 
6,099
 
485
4/15/2015
Dallas / Shiloh Rd
 
TX
 
3,243
 
781
 
7,104
 
317
 
 
 
781
 
7,421
 
8,202
 
342
10/1/2015
Dallas / W Northwest Hwy
 
TX
 
—
 
1,320
 
6,547
 
460
 
 
 
1,320
 
7,007
 
8,327
 
233
4/15/2015
Dallas / Walton Walker Blvd
 
TX
 
2,904
 
547
 
5,970
 
301
 
 
 
547
 
6,271
 
6,818
 
290
4/15/2015
DeSoto
 
TX
 
5,322
 
821
 
8,298
 
234
 
 
 
821
 
8,532
 
9,353
 
387
4/15/2015
Duncanville / E Hwy 67
 
TX
 
3,991
 
1,328
 
4,997
 
251
 
 
 
1,328
 
5,248
 
6,576
 
245
4/15/2015
Duncanville / E Wheatland Rd
 
TX
 
3,650
 
793
 
7,062
 
233
 
 
 
793
 
7,295
 
8,088
 
341
10/1/2015
El Paso / Desert Blvd
 
TX
 
—
 
890
 
3,207
 
288
 
 
 
890
 
3,495
 
4,385
 
109
10/1/2015
El Paso / Dyer St
 
TX
 
—
 
1,510
 
5,034
 
433
 
 
 
1,510
 
5,467
 
6,977
 
179
10/1/2015
El Paso / Joe Battle Blvd 1
 
TX
 
—
 
1,010
 
5,238
 
251
 
 
 
1,010
 
5,489
 
6,499
 
181
10/1/2015
El Paso / Joe Battle Blvd 2
 
TX
 
—
 
850
 
2,775
 
262
 
 
 
850
 
3,037
 
3,887
 
102
10/1/2015
El Paso / Woodrow Bean Dr
 
TX
 
—
 
420
 
1,752
 
176
 
 
 
420
 
1,928
 
2,348
 
65
5/8/2013
Euless / Mid/Cities Blvd
 
TX
 
4,240
 
1,374
 
5,636
 
137
 
 
 
1,374
 
5,773
 
7,147
 
571
4/1/2011
Euless / W Euless Blvd
 
TX
 
2,810
 
671
 
3,213
 
2,036
 
 
 
671
 
5,249
 
5,920
 
811
12/9/2013
Fort Worth / Mandy Lane
 
TX
 
2,060
 
2,033
 
2,495
 
154
 
 
 
2,033
 
2,649
 
4,682
 
239
10/25/2016
Fort Worth / Mansfield Hwy
 
TX
 
—
 
772
 
5,880
 
63
 
 
 
772
 
5,943
 
6,715
 
38
8/26/2004
Fort Worth / W Rosedale St
 
TX
 
4,000
 
631
 
5,794
 
425
 
 
 
630
 
6,220
 
6,850
 
2,093
11/4/2013
Fort Worth / White Settlement Rd
 
TX
 
3,585
 
3,158
 
2,512
 
89
 
 
 
3,158
 
2,601
 
5,759
 
229
11/4/2013
Garland / Beltline Rd
 
TX
 
3,267
 
1,424
 
2,209
 
217
 
 
 
1,424
 
2,426
 
3,850
 
226
4/15/2015
Garland / Texas 66
 
TX
 
4,598
 
991
 
6,999
 
200
 
 
 
991
 
7,199
 
8,190
 
335
1/7/2016
Georgetown / Dawn Dr
 
TX
 
—
 
1,055
 
5,843
 
482
 
 
 
1,055
 
6,325
 
7,380
 
161
8/26/2004
Grand Prairie / N Hwy 360 1
 
TX
 
2,370
 
551
 
2,330
 
609
 
 
 
551
 
2,939
 
3,490
 
996
8/10/2012
Grand Prairie / N Hwy 360 2
 
TX
 
3,048
 
2,327
 
1,551
 
189
 
 
 
2,327
 
1,740
 
4,067
 
242
3/21/2016
Houston / Eldridge Pwy
 
TX
 
—
 
3,428
 
6,423
 
252
 
 
 
3,428
 
6,675
 
10,103
 
143
10/6/2016
Houston / Fuqua St
 
TX
 
—
 
931
 
5,864
 
94
 
 
 
931
 
5,958
 
6,889
 
39
2/5/2014
Houston / Katy Fwy 1
 
TX
 
—
 
1,767
 
12,368
 
55
 
 
 
1,767
 
12,423
 
14,190
 
921
11/13/2015
Houston / Katy Fwy 2
 
TX
 
—
 
6,643
 
7,551
 
603
 
 
 
6,643
 
8,154
 
14,797
 
248
12/14/2010
Houston / Ryewater Dr
 
TX
 
—
 
402
 
1,870
 
240
 
 
 
402
 
2,110
 
2,512
 
402
10/1/2015
Houston / Senate Ave
 
TX
 
—
 
1,510
 
5,235
 
342
 
 
 
1,510
 
5,577
 
7,087
 
180
11/1/2013
Houston / South Main
 
TX
 
4,196
 
2,017
 
4,181
 
304
 
 
 
2,017
 
4,485
 
6,502
 
772
4/13/2006
Houston / Southwest Freeway
 
TX
 
8,555
 
2,596
 
8,735
 
419
 
 
 
2,596
 
9,154
 
11,750
 
2,650
2/29/2012
Houston / Space Center Blvd
 
TX
 
5,470
 
1,036
 
8,133
 
288
 
 
 
1,036
 
8,421
 
9,457
 
1,079
4/15/2015
Irving / N State Hwy 161
 
TX
 
—
 
951
 
5,842
 
265
 
 
 
951
 
6,107
 
7,058
 
276
4/15/2015
Irving / Story Rd
 
TX
 
—
 
585
 
5,445
 
262
 
 
 
585
 
5,707
 
6,292
 
260
10/1/2015
Kemah
 
TX
 
12,305
 
2,720
 
26,547
 
434
 
 
 
2,720
 
26,981
 
29,701
 
871
1/7/2016
Killeen / Fort Hood St
 
TX
 
—
 
1,683
 
6,447
 
353
 
 
 
1,683
 
6,800
 
8,483
 
172
11/4/2013
Killeen / Jasper Rd
 
TX
 
2,601
 
1,207
 
1,688
 
456
 
 
 
1,207
 
2,144
 
3,351
 
216
12/14/2010
La Porte
 
TX
 
—
 
1,608
 
2,351
 
353
 
 
 
1,608
 
2,704
 
4,312
 
544
8/12/2016
Lewisville / Interstate 35 E
 
TX
 
—
 
1,804
 
8,056
 
25
 
 
 
1,804
 
8,081
 
9,885
 
86
4/15/2015
Lewisville / State Hwy 121
 
TX
 
4,929
 
2,665
 
6,399
 
272
 
 
 
2,665
 
6,671
 
9,336
 
305
1/7/2016
Manor / Harris Branch Pkwy
 
TX
 
—
 
2,501
 
9,582
 
403
 
 
 
2,501
 
9,985
 
12,486
 
258
4/15/2015
Mansfield
 
TX
 
4,243
 
925
 
7,411
 
225
 
 
 
925
 
7,636
 
8,561
 
356
4/15/2015
Mesquite
 
TX
 
5,536
 
1,910
 
6,580
 
401
 
 
 
1,910
 
6,981
 
8,891
 
309
6/2/2016
Midland / 2504 N Loop 250 W
 
TX
 
—
 
1,469
 
5,666
 
281
 
 
 
1,469
 
5,947
 
7,416
 
84
10/1/2015
Midland / Andrews Hwy
 
TX
 
—
 
1,430
 
8,353
 
501
 
 
 
1,430
 
8,854
 
10,284
 
290
6/2/2016
Midland / Caldera Blvd
 
TX
 
—
 
2,263
 
7,451
 
192
 
 
 
2,263
 
7,643
 
9,906
 
112
10/1/2015
Midland / Loop 250 N
 
TX
 
—
 
1,320
 
10,291
 
323
 
 
 
1,320
 
10,614
 
11,934
 
345
6/2/2016
Odessa / Grandview Ave
 
TX
 
—
 
2,084
 
7,844
 
178
 
 
 
2,084
 
8,022
 
10,106
 
110
6/2/2016
Odessa / Kermit Hwy
 
TX
 
—
 
2,228
 
7,855
 
163
 
 
 
2,228
 
8,018
 
10,246
 
113
10/1/2015
Pearland
 
TX
 
5,738
 
3,400
 
7,812
 
213
 
 
 
3,400
 
8,025
 
11,425
 
260
4/15/2015
Plano / 14th Street
 
TX
 
5,354
 
1,681
 
7,606
 
231
 
 
 
1,681
 
7,837
 
9,518
 
358
4/15/2015
Plano / K Ave 1
 
TX
 
5,445
 
1,631
 
8,498
 
507
 
 
 
1,631
 
9,005
 
10,636
 
425
4/15/2015
Plano / K Ave 2
 
TX
 
4,041
 
1,298
 
5,293
 
175
 
 
 
1,298
 
5,468
 
6,766
 
248
11/22/2006
Plano / Plano Parkway
 
TX
 
5,080
 
1,010
 
6,203
 
564
 
 
 
1,010
 
6,767
 
7,777
 
1,885
11/22/2006
Plano / Spring Creek
 
TX
 
4,413
 
614
 
3,775
 
379
 
 
 
613
 
4,155
 
4,768
 
1,180
11/1/2013
Plano / Wagner Way
 
TX
 
5,890
 
2,753
 
4,353
 
151
 
 
 
2,753
 
4,504
 
7,257
 
824
10/6/2016
Rosenberg
 
TX
 
—
 
1,308
 
5,687
 
28
 
 
 
1,308
 
5,715
 
7,023
 
36
8/10/2006
Rowlett
 
TX
 
2,046
 
1,002
 
2,601
 
1,490
 
 
 
1,003
 
4,090
 
5,093
 
915
8/26/2004
San Antonio / Culebra Rd
 
TX
 
2,152
 
1,269
 
1,816
 
739
 
 
 
1,270
 
2,554
 
3,824
 
1,032
12/14/2007
San Antonio / DeZavala Rd
 
TX
 
6,063
 
2,471
 
3,556
 
1,439
 
 (e)
 
2,471
 
4,995
 
7,466
 
896
10/6/2016
San Antonio / Loop 1604 W
 
TX
 
—
 
1,549
 
6,604
 
30
 
 
 
1,549
 
6,634
 
8,183
 
42
10/23/2015
San Antonio / San Pedro Ave
 
TX
 
—
 
1,140
 
7,560
 
225
 
 
 
1,140
 
7,785
 
8,925
 
246
8/26/2004
San Antonio / Westchase Dr
 
TX
 
2,420
 
253
 
1,496
 
280
 
 
 
253
 
1,776
 
2,029
 
637
10/1/2015
Seabrook
 
TX
 
—
 
1,910
 
8,564
 
246
 
 
 
1,910
 
8,810
 
10,720
 
291
4/13/2006
South Houston
 
TX
 
2,791
 
478
 
4,069
 
857
 
 
 
478
 
4,926
 
5,404
 
1,620
7/2/2012
Spring / I/45 North
 
TX
 
3,544
 
506
 
5,096
 
493
 
 
 
506
 
5,589
 
6,095
 
685
8/2/2011
Spring / Treaschwig Rd
 
TX
 
1,873
 
978
 
1,347
 
249
 
 
 
979
 
1,595
 
2,574
 
271
2/24/2015
The Woodlands
 
TX
 
7,744
 
1,511
 
11,861
 
221
 
 
 
1,511
 
12,082
 
13,593
 
603
4/8/2015
Trenton
 
TX
 
—
 
300
 
2,375
 
3,696
 
 
 
300
 
6,071
 
6,371
 
129
10/1/2015
Weatherford
 
TX
 
—
 
630
 
5,932
 
485
 
 
 
630
 
6,417
 
7,047
 
228
4/15/2016
West Spicewood
 
TX
 
—
 
2,722
 
8,122
 
76
 
 
 
2,722
 
8,198
 
10,920
 
158

92



Date
acquired
or
development
completed
Store Name
 
State
 
Debt
 
Land
initial cost
 
Building and
improvements
initial cost
 
Adjustments and
costs subsequent
to acquisition
 
Notes
 
Gross carrying amount at December 31, 2016
 
Accumulated
depreciation
Land      
 
Building and improvements    
 
Total      
10/20/2010
East Millcreek
 
UT
 
2,934
 
986
 
3,455
 
2,658
 
 
 
986
 
6,113
 
7,099
 
639
11/23/2010
Murray / Cottonwood St
 
UT
 
3,611
 
571
 
986
 
2,340
 
 
 
571
 
3,326
 
3,897
 
576
10/4/2016
Murray / Van Winkle Expressway
 
UT
 
—
 
—
 
8,511
 
3
 
 
 
—
 
8,514
 
8,514
 
84
4/1/2011
Orem
 
UT
 
1,918
 
841
 
2,335
 
308
 
 
 
841
 
2,643
 
3,484
 
434
6/1/2004
Salt Lake City
 
UT
 
3,293
 
642
 
2,607
 
459
 
 
 
642
 
3,066
 
3,708
 
1,086
7/1/2005
Sandy / South 700 East 1
 
UT
 
5,051
 
1,349
 
4,372
 
795
 
 
 
1,349
 
5,167
 
6,516
 
1,620
9/28/2012
Sandy / South 700 East 2
 
UT
 
8,688
 
2,063
 
5,202
 
1,539
 
 
 
2,063
 
6,741
 
8,804
 
681
11/23/2010
West Jordan
 
UT
 
2,041
 
735
 
2,146
 
484
 
 
 
735
 
2,630
 
3,365
 
503
7/1/2005
West Valley City
 
UT
 
2,574
 
461
 
1,722
 
193
 
 
 
461
 
1,915
 
2,376
 
658
7/2/2012
Alexandria / N Henry St
 
VA
 
15,659
 
5,029
 
18,943
 
1,641
 
 
 
5,029
 
20,584
 
25,613
 
2,198
6/6/2007
Alexandria / S Dove St
 
VA
 
—
 
1,620
 
13,103
 
1,870
 
 
 
1,620
 
14,973
 
16,593
 
3,766
10/20/2010
Arlington
 
VA
 
—
 
—
 
4,802
 
937
 
 
 
—
 
5,739
 
5,739
 
2,643
11/1/2013
Burke
 
VA
 
11,779
 
11,534
 
7,347
 
75
 
 
 
11,534
 
7,422
 
18,956
 
1,503
10/1/2015
Chantilly
 
VA
 
6,261
 
1,100
 
10,606
 
450
 
 
 
1,100
 
11,056
 
12,156
 
359
1/7/2014
Chesapeake / Bruce Rd
 
VA
 
5,906
 
1,074
 
9,464
 
141
 
 
 
1,074
 
9,605
 
10,679
 
751
1/7/2014
Chesapeake / Military Hwy
 
VA
 
2,468
 
332
 
4,106
 
172
 
 
 
332
 
4,278
 
4,610
 
341
1/7/2014
Chesapeake / Poplar Hill Rd
 
VA
 
5,826
 
540
 
9,977
 
146
 
 
 
541
 
10,122
 
10,663
 
782
1/7/2014
Chesapeake / Woodlake Dr
 
VA
 
8,512
 
4,014
 
14,872
 
133
 
 
 
4,014
 
15,005
 
19,019
 
1,154
5/26/2011
Dumfries
 
VA
 
12,001
 
932
 
9,349
 
184
 
 
 
932
 
9,533
 
10,465
 
1,468
11/30/2012
Falls Church / Hollywood Rd
 
VA
 
8,574
 
5,703
 
13,307
 
337
 
 
 
5,703
 
13,644
 
19,347
 
1,523
7/1/2005
Falls Church / Seminary Rd
 
VA
 
9,097
 
1,259
 
6,975
 
706
 
 
 
1,259
 
7,681
 
8,940
 
2,398
11/30/2012
Fredericksburg / Jefferson Davis Hwy
 
VA
 
2,963
 
1,438
 
2,459
 
189
 
 
 
1,438
 
2,648
 
4,086
 
325
7/2/2012
Fredericksburg / Plank Rd 1
 
VA
 
4,115
 
2,128
 
5,398
 
122
 
 
 
2,128
 
5,520
 
7,648
 
655
10/1/2015
Fredericksburg / Plank Rd 2
 
VA
 
—
 
3,170
 
6,717
 
156
 
 
 
3,170
 
6,873
 
10,043
 
224
12/18/2014
Glen Allen
 
VA
 
4,921
 
609
 
8,220
 
116
 
 
 
609
 
8,336
 
8,945
 
439
10/1/2015
Hampton / Big Bethel Rd
 
VA
 
4,075
 
550
 
6,697
 
222
 
 
 
550
 
6,919
 
7,469
 
232
10/1/2015
Hampton / LaSalle Ave
 
VA
 
—
 
610
 
8,883
 
170
 
 
 
610
 
9,053
 
9,663
 
302
1/7/2014
Hampton / Pembroke Ave
 
VA
 
7,703
 
7,849
 
7,040
 
164
 
 
 
7,849
 
7,204
 
15,053
 
565
9/16/2016
Herndon / Spring St
 
VA
 
—
 
7,435
 
12,713
 
50
 
 
 
7,435
 
12,763
 
20,198
 
109
10/1/2015
Manassas
 
VA
 
—
 
750
 
6,242
 
337
 
 
 
750
 
6,579
 
7,329
 
216
1/7/2014
Newport News / Denbigh Blvd
 
VA
 
5,495
 
4,619
 
5,870
 
184
 
 
 
4,619
 
6,054
 
10,673
 
480
1/7/2014
Newport News / J Clyde Morris Blvd
 
VA
 
5,266
 
4,838
 
6,124
 
177
 
 
 
4,838
 
6,301
 
11,139
 
503
1/7/2014
Newport News / Tyler Ave
 
VA
 
4,435
 
2,740
 
4,955
 
158
 
 
 
2,740
 
5,113
 
7,853
 
421
1/7/2014
Norfolk / Granby St
 
VA
 
4,723
 
1,785
 
8,543
 
120
 
 
 
1,785
 
8,663
 
10,448
 
675
1/7/2014
Norfolk / Naval Base Rd
 
VA
 
4,214
 
4,078
 
5,975
 
155
 
 
 
4,078
 
6,130
 
10,208
 
497
3/17/2015
Portsmouth
 
VA
 
2,633
 
118
 
4,797
 
287
 
 
 
118
 
5,084
 
5,202
 
260
11/17/2016
Reston
 
VA
 
—
 
13,957
 
12,526
 
—
 
 
 
13,957
 
12,526
 
26,483
 
54
1/7/2014
Richmond / Hull St
 
VA
 
6,363
 
2,016
 
9,425
 
136
 
 
 
2,016
 
9,561
 
11,577
 
745
1/7/2014
Richmond / Laburnum Ave
 
VA
 
8,216
 
5,945
 
7,613
 
197
 
 
 
5,945
 
7,810
 
13,755
 
625
1/7/2014
Richmond / Midlothian Turnpike
 
VA
 
4,851
 
2,735
 
5,699
 
160
 
 
 
2,735
 
5,859
 
8,594
 
467
1/7/2014
Richmond / Old Staples Mill Rd
 
VA
 
6,702
 
5,905
 
6,869
 
148
 
 
 
5,905
 
7,017
 
12,922
 
563
8/26/2004
Richmond / W Broad St 1
 
VA
 
4,371
 
2,305
 
5,467
 
435
 
 
 
2,305
 
5,902
 
8,207
 
1,937
9/16/2016
Richmond / W Broad St 2
 
VA
 
—
 
5,810
 
13,177
 
58
 
 
 
5,810
 
13,235
 
19,045
 
115
10/1/2015
Sandston
 
VA
 
6,511
 
570
 
10,525
 
229
 
 
 
570
 
10,754
 
11,324
 
357
9/20/2012
Stafford / Jefferson Davis Hwy
 
VA
 
4,691
 
1,172
 
5,562
 
161
 
 
 
1,172
 
5,723
 
6,895
 
673
1/23/2009
Stafford / SUSA Dr
 
VA
 
4,233
 
2,076
 
5,175
 
156
 
 
 
2,076
 
5,331
 
7,407
 
1,120
1/7/2014
Virginia Beach / General Booth Blvd
 
VA
 
7,119
 
1,142
 
11,721
 
152
 
 
 
1,142
 
11,873
 
13,015
 
919
1/7/2014
Virginia Beach / Kempsville Rd
 
VA
 
7,363
 
3,934
 
11,413
 
116
 
 
 
3,934
 
11,529
 
15,463
 
890
1/7/2014
Virginia Beach / Village Dr
 
VA
 
9,398
 
331
 
13,175
 
163
 
 
 
331
 
13,338
 
13,669
 
1,038
11/22/2016
Kent
 
WA
 
—
 
1,937
 
10,640
 
15
 
 
 
1,937
 
10,655
 
12,592
 
45
2/15/2006
Lakewood / 80th St
 
WA
 
5,501
 
1,389
 
4,780
 
322
 
 
 
1,390
 
5,101
 
6,491
 
1,549
2/15/2006
Lakewood / Pacific Hwy
 
WA
 
5,501
 
1,917
 
5,256
 
265
 
 
 
1,918
 
5,520
 
7,438
 
1,622
4/30/2014
Puyallup
 
WA
 
—
 
437
 
3,808
 
101
 
 
 
437
 
3,909
 
4,346
 
278
7/1/2005
Seattle
 
WA
 
7,040
 
2,727
 
7,241
 
491
 
 
 
2,727
 
7,732
 
10,459
 
2,364
2/15/2006
Tacoma
 
WA
 
3,279
 
1,031
 
3,103
 
157
 
 
 
1,031
 
3,260
 
4,291
 
988
7/2/2012
Vancouver
 
WA
 
2,970
 
709
 
4,280
 
184
 
 
 
709
 
4,464
 
5,173
 
534
Various
Other corporate assets
 
 
 
—
 
—
 
2,202
 
79,378
 
 
 
—
 
81,580
 
81,580
 
20,941
Various
Construction in progress
 
 
 
—
 
—
 
—
 
21,860
 
 
 
—
 
21,860
 
21,860
 
—
Various
Undeveloped land
 
 
 
—
 
9,368
 
—
 
—
 
 
 
9,368
 
—
 
9,368
 
—
Various
Intangible tenant relationships and lease rights
 
 
 
—
 
—
 
93,695
 
30,276
 
 
 
—
 
123,971
 
123,971
 
101,120
 
 
 
 
 
$2,960,387
 
$1,693,124
 
$5,487,194
 
$490,990
 
—
 
$1,691,641
 
$5,979,667
 
$7,671,308
 
$900,861
____________________
(a)
Adjustment relates to partial disposition of land
(b)
Adjustment relates to property casualty loss
(c)
Adjustment relates to asset transfers between land, building and/or equipment
(d)
Adjustment relates to impairment charge
(e)
Adjustment relates to a purchase price adjustment
(f)
Adjustment relates to the acquisition of a joint venture partner’s interest

93




Activity in real estate facilities during the years ended December 31, 2016, 2015 and 2014 is as follows:
 
2016
 
2015
 
2014
Operating facilities
 
 
 
 
 
Balance at beginning of year
$
6,392,487

 
$
4,722,162

 
$
4,126,648

Acquisitions
1,159,304

 
1,609,608

 
557,158

Improvements
92,480

 
46,696

 
32,861

Transfers from construction in progress
26,400

 
19,971

 
12,308

Dispositions and other
(21,223
)
 
(5,950
)
 
(6,813
)
Balance at end of year
$
7,649,448


$
6,392,487


$
4,722,162

Accumulated depreciation:
 
 
 
 
 
Balance at beginning of year
$
728,087

 
$
604,336

 
$
496,754

Depreciation expense
174,906

 
123,751

 
109,531

Dispositions and other
(2,132
)
 
—

 
(1,949
)
Balance at end of year
$
900,861


$
728,087


$
604,336

Real estate under development/redevelopment:
 
 
 
 
 
Balance at beginning of year
$
24,909

 
$
17,870

 
$
6,650

Current development
23,404

 
27,010

 
23,528

Transfers to operating facilities
(26,400
)
 
(19,971
)
 
(12,308
)
Dispositions and other
(53
)
 
—

 
—

Balance at end of year
$
21,860


$
24,909


$
17,870

Net real estate assets
$
6,770,447

 
$
5,689,309

 
$
4,135,696

The aggregate cost of real estate for U.S. federal income tax purposes is $6,513,574.

94



Item 9.     Changes in an Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.     Controls and Procedures
 
(i)
Disclosure Controls and Procedures
We maintain disclosure controls and procedures to ensure that information required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) of the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
We have a disclosure committee that is responsible for considering the materiality of information and determining the disclosure obligations of the Company on a timely basis. The disclosure committee meets quarterly and reports directly to our Chief Executive Officer and Chief Financial Officer.
We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
 
(ii)
Internal Control over Financial Reporting

(a)
Management’s Report on Internal Control over Financial Reporting
    
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2016. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our independent registered public accounting firm, Ernst & Young LLP, has issued the following attestation report over our internal control over financial reporting.

(b)
Attestation Report of the Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Extra Space Storage Inc.
We have audited Extra Space Storage Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Extra Space Storage Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

95



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Extra Space Storage Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Extra Space Storage Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2016 of Extra Space Storage Inc. and our report dated February 27, 2017 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Salt Lake City, Utah
February 27, 2017

(c)
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during our most recent quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.     Other Information
None.

96



PART III
 
Item 10.     Directors, Executive Officers and Corporate Governance
Information required by this item is incorporated by reference to the information set forth under the captions “Executive Officers,” and “Information About the Board of Directors and its Committees” in our definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2016.
We have adopted a Code of Business Conduct and Ethics in compliance with rules of the SEC that applies to all of our personnel, including our board of directors, Chief Executive Officer, Chief Financial Officer and principal accounting officer. The Code of Business Conduct and Ethics is available free of charge on the “Investor Relations—Corporate Governance” section of our web site at www.extraspace.com. We intend to satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of this Code of Business Conduct and Ethics by posting such information on our web site at the address and location specified above.
The board of directors has adopted Corporate Governance Guidelines and charters for our Audit Committee and Compensation, Nominating and Governance Committee, each of which is posted on our website at the address and location specified above. Investors may obtain a free copy of the Code of Business Conduct and Ethics, the Corporate Governance Guidelines and the committee charters by contacting the Investor Relations Department at 2795 East Cottonwood Parkway, Suite 400, Salt Lake City, Utah 84121, Attn: Jeff Norman or by telephoning (801) 365-4600.
Item 11.     Executive Compensation
Information with respect to executive compensation is incorporated by reference to the information set forth under the caption “Executive Compensation” in our definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2016.
Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information with respect to security ownership of certain beneficial owners and management and related stockholder matters is incorporated by reference to the information set forth under the captions “Executive Compensation” and “Security Ownership of Directors and Officers” in our definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2016.
Item 13.     Certain Relationships and Related Transactions, and Director Independence
Information with respect to certain relationships and related transactions is incorporated by reference to the information set forth under the captions “Information about the Board of Directors and its Committees” and “Certain Relationships and Related Transactions” in our Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2016.
Item 14.     Principal Accounting Fees and Services
Information with respect to principal accounting fees and services is incorporated by reference to the information set forth under the caption “Ratification of Appointment of Independent Registered Public Accounting Firm” in our Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after December 31, 2016.

97



PART IV
 
Item 15.     Exhibits and Financial Statement Schedules
 
(a)
Documents filed as part of this report:
(1) and (2). All Financial Statements and Financial Statement Schedules filed as part of this Annual Report on 10-K are included in Item 8—“Financial Statements and Supplementary Data” of this Annual Report on 10-K and reference is made thereto.
(3) The following documents are filed or incorporated by references as exhibits to this report:
Exhibit
Number
  
Description
2.1
  
Purchase and Sale Agreement, dated May 5, 2005 by and among Security Capital Self Storage Incorporated, as seller and Extra Space Storage LLC, PRISA Self Storage LLC, PRISA II Self Storage LLC, PRISA III Self Storage LLC, VRS Self Storage LLC, WCOT Self Storage LLC and Extra Space Storage LP, as purchaser parties and The Prudential Insurance Company of America (incorporated by reference to Exhibit 2.1 of Form 8-K filed on May 11, 2005).
2.2
  
Agreement and Plan of Merger, dated as of June 15, 2015, among Extra Space Storage Inc., Extra Space Storage LP, Edgewater REIT Acquisition (MD) LLC, Edgewater Partnership Acquisition (DE) LLC, SmartStop Self Storage, Inc. and SmartStop Self Storage Operating Partnership, L.P. (incorporated by reference to Exhibit 2.1 of Form 8-K filed on June 15, 2015).
2.3
  
Amendment No. 1 to Agreement and Plan of Merger, dated as of July 16, 2015, among Extra Space Storage Inc., Extra Space Storage LP, Edgewater REIT Acquisition (MD) LLC, Edgewater Partnership Acquisition (DE) LLC, SmartStop Self Storage, Inc. and SmartStop Self Storage Operating Partnership, L.P. (incorporated by reference to Exhibit 2.1 of Form 8-K filed on July 16, 2015).
3.1
  
Amended and Restated Articles of Incorporation of Extra Space Storage Inc.(1)
3.2
  
Articles of Amendment of Extra Space Storage Inc., dated September 28, 2007 (incorporated by reference to Exhibit 3.1 of Form 8-K filed on October 3, 2007).
3.3
  
Articles of Amendment of Extra Space Storage Inc., dated August 29, 2013 (incorporated by reference to Exhibit 3.1 of Form 8-K filed on August 29, 2013).
3.4
  
Amended and Restated Bylaws of Extra Space Storage Inc.(incorporated by reference to Exhibit 3.1 of Form 8-K filed on May 26, 2009)
3.5
  
Amendment No. 1 to Amended and Restated Bylaws of Extra Space Storage Inc. (incorporated by reference to Exhibit 3.1 of Form 8-K filed December 23, 2014).
3.6
  
Fourth Amended and Restated Agreement of Limited Partnership of Extra Space Storage LP (incorporated by reference to Exhibit 10.1 of Form 8-K filed on December 6, 2013).
3.7
  
Declaration of Trust of ESS Holdings Business Trust II.(1)
4.1
  
Junior Subordinated Indenture dated as of July 27, 2005, between Extra Space Storage LP and JPMorgan Chase Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 of Form 8-K filed on August 2, 2005).
4.2
  
Amended and Restated Trust Agreement, dated as of July 27, 2005, among Extra Space Storage LP, as depositor and JPMorgan Chase Bank, National Association, as property trustee, Chase Bank USA, National Association, as Delaware trustee, the Administrative Trustees named therein and the holders of undivided beneficial interest in the assets of ESS Statutory Trust III (incorporated by reference to Exhibit 4.2 of Form 8-K filed on August 2, 2005).
4.3
  
Junior Subordinated Note (incorporated by reference to Exhibit 4.3 of Form 10-K filed on February 26, 2010)
4.4
  
Trust Preferred Security Certificates (incorporated by reference to Exhibit 4.4 of Form 10-K filed on February 26, 2010)
4.6
  
Indenture, dated June 21, 2013, among Extra Space Storage LP, Extra Space Storage Inc. and Wells Fargo Bank, National Association, as trustee, including the form of 2.375% Exchangeable Senior Notes due 2033 and form of guarantee (incorporated by reference to Exhibit 4.1 of Form 8-K filed on June 21, 2013).
4.7
  
Indenture, dated September 21, 2015, among Extra Space Storage LP, as issuer, Extra Space Storage Inc., as guarantor, and Wells Fargo Bank, National Association, as trustee, including the form of 3.125% Exchangeable Senior Notes due 2035 and the form of guarantee (incorporated by reference to Exhibit 4.1 of Form 8-K filed on September 21, 2015).
10.1
  
Registration Rights Agreement, by and among Extra Space Storage Inc. and the parties listed on Schedule I thereto.(1)

98



Exhibit
Number
  
Description
10.2
  
Joint Venture Agreement, dated June 1, 2004, by and between Extra Space Storage LLC and Prudential Financial, Inc.(1)
10.3
  
Registration Rights Agreement, dated June 20, 2005, among Extra Space Storage Inc. and the investors named therein (incorporated by reference to Exhibit 10.1 of Form 8-K filed on June 24, 2005).
10.4
  
Purchase Agreement, dated as of July 27, 2005, among Extra Space Storage LP, ESS Statutory Trust III and the Purchaser named therein (incorporated by reference to Exhibit 10.1 of Form 8-K filed on August 2, 2005).
10.5
  
Registration Rights Agreement, dated March 27, 2007, among Extra Space Storage LP, Extra Space Storage Inc., Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 10.1 of Form 8-K filed on March 28, 2007).
10.6
  
Promissory Note, dated June 25, 2007, among Extra Space Storage LP, H. James Knuppe and Barbara Knuppe (incorporated by reference to Exhibit 10.2 of Form 8-K filed on June 26, 2007).
10.7
  
Pledge Agreement, dated June 25, 2007, among Extra Space Storage LP, H. James Knuppe and Barbara Knuppe (incorporated by reference to Exhibit 10.3 of Form 8-K filed on June 26, 2007).
10.8
  
Registration Rights Agreement among Extra Space Storage LP, H. James Knuppe and Barbara Knuppe. (incorporated by reference to Exhibit 10.26 of Form 10-K filed on February 26, 2010)
10.9
  
Membership Interest Purchase Agreement, dated as of April 13, 2012, between Extra Space Properties Sixty Three LLC and PRISA III Co-Investment LLC (incorporated by reference to Exhibit 10.1 of Form 8-K filed on April 16, 2012).
10.10
  
Extra Space Storage Inc. Executive Change in Control Plan (incorporated by reference to Exhibit 10.1 of Form 8-K filed on August 31, 2011).
10.11
  
Registration Rights Agreement, dated June 21, 2013, among Extra Space Storage LP, Extra Space Storage Inc., Citigroup Global Markets Inc. and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 10.1 of Form 8-K filed on June 21, 2013).
10.12
  
Letter Agreement, dated as of November 22, 2013, amending the Contribution Agreement, dated June 15, 2007, among Extra Space Storage LP and various limited partnerships affiliated with AAAAA Rent-A-Space, and the Promissory Note, dated June 25, 2007, among Extra Space Storage LP, H. James Knuppe and Barbara Knuppe (incorporated by reference to Exhibit 10.1 of Form 10-Q filed on May 8, 2014).
10.13*
  
2015 Incentive Award Plan (incorporated by reference to the Definitive Proxy Statement on Schedule 14A filed on April 14, 2015)
10.14
  
Registration Rights Agreement, dated September 21, 2015, among Extra Space Storage LP, Extra Space Storage Inc., Citigroup Global Markets Inc. and Wells Fargo Securities, LLC, as representatives of the initial purchasers (incorporated by reference to Exhibit 10.1 of Form 8-K filed on September 21, 2015).
10.15
  
Credit Agreement, dated as of October 14, 2016, by and among Extra Space Storage Inc., Extra Space Storage LP, U.S. Bank National Association, as administrative agent, certain other financial institutions acting as syndication agents, documentation agents, senior management agents and lead arrangers and book runners, and certain lenders party thereto (incorporated by reference to Exhibit 10.1 of Form 8-K
10.16*
 
2004 Long-Term Compensation Incentive Plan as amended and restated effective March 25, 2008 (incorporated by reference to the Definitive Proxy Statement on Schedule 14A filed on April 14, 2008)
10.17*
 
Form of 2004 Long Term Incentive Compensation Plan Option Award Agreement for Employees with employment agreements. (incorporated by reference to Exhibit 10.11 of Form 10-K filed on February 26, 2010)
10.18*
 
Form of 2004 Long Term Incentive Compensation Plan Option Award Agreement for employees without employment agreements. (incorporated by reference to Exhibit 10.12 of Form 10-K filed on February 26, 2010)
10.19*
 
Form of 2004 Non-Employee Directors Share Plan Option Award Agreement for Directors. (incorporated by reference to Exhibit 10.13 of Form 10-K filed on February 26, 2010)
10.20*
 
2004 Long Term Incentive Compensation Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 of Form 10-Q filed on November 7, 2007).
10.21*
 
First Amendment to Extra Space Storage Inc. 2004 Non-Employee Directors’ Share Plan (incorporated by reference to Exhibit 10.4 of Form 10-Q filed on November 7, 2007).
10.22*
  
Extra Space Storage Non-Employee Directors’ Share Plan (incorporated by reference to Exhibit 10.22 of Form 10-K/A filed on March 22, 2007).
21.1
  
Subsidiaries of the Company(2)
23.1
  
Consent of Ernst & Young LLP(2)
31.1
  
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(2)
31.2
  
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(2)

99



Exhibit
Number
  
Description
32.1
  
Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(2)
101
  
The following financial information from Registrant’s Annual Report on Form 10-K for the period ended December 31, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2014 and 2013; (ii) Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012; (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2014, 2013 and 2012; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (vi) Notes to Consolidated Financial Statements(2).

*     Management compensatory plan or arrangement
(1)Incorporated by reference to Registration Statement on Form S-11 (File No. 333-115436 dated August 11, 2004).
(2)Filed herewith.
(3)See Item 15(a)(2) above.


100



SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
EXTRA SPACE STORAGE INC.
Date: February 27, 2017
 
By:
 
/S/ JOSEPH D. MARGOLIS
 
 
 
 
Joseph D. Margolis
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: February 27, 2017
 
By:
 
/S/ JOSEPH D. MARGOLIS
 
 
 
 
Joseph D. Margolis
Chief Executive Officer
(Principal Executive Officer)
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ P. SCOTT STUBBS
 
 
 
 
P. Scott Stubbs
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ GRACE KUNDE
 
 
 
 
Grace Kunde
Senior Vice President, Accounting and Finance
(Principal Accounting Officer)
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ KENNETH M. WOOLLEY
 
 
 
 
Kenneth M. Woolley
Executive Chairman
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ KARL HAAS
 
 
 
 
Karl Haas
Director
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ SPENCER F. KIRK
 
 
 
 
Spencer F. Kirk
Director
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ DENNIS LETHAM
 
 
 
 
Dennis Letham
Director
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ DIANE OLMSTEAD
 
 
 
 
Diane Olmstead
Director
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ ROGER B. PORTER
 
 
 
 
Roger B. Porter
Director
 
 
 
 
 
Date: February 27, 2017
 
By:
 
/S/ K. FRED SKOUSEN
 
 
 
 
K. Fred Skousen
Director


101