10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ 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 300

Salt Lake City, Utah 84121

(Address of principal executive offices)

Registrant’s telephone number, including area code: (801) 365-4600

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	EXR	New York Stock Exchange

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

1

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of November 1, 2022, was 133,921,528.

2

EXTRA SPACE STORAGE INC.

TABLE OF CONTENTS

 

STATEMENT ON FORWARD-LOOKING INFORMATION	4
PART I. FINANCIAL INFORMATION	6
ITEM 1. FINANCIAL STATEMENTS (unaudited)	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 4. CONTROLS AND PROCEDURES	43
PART II. OTHER INFORMATION	44
ITEM 1. LEGAL PROCEEDINGS	44
ITEM 1A. RISK FACTORS	44
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	44
ITEM 4. MINE SAFETY DISCLOSURES	44
ITEM 5. OTHER INFORMATION	44
ITEM 6. EXHIBITS	45
SIGNATURES	46

3

STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information presented 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 II. Item 1A. Risk Factors” below and in “Part I. Item 1A. Risk Factors” included in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to:

•adverse changes in general economic conditions, the real estate industry and the markets in which we operate;

•failure to close pending acquisitions and developments 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;

•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;

•impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases, including reduced demand for self-storage space and ancillary products and services such as tenant reinsurance, and potential decreases in occupancy and rental rates and staffing levels, which could adversely affect our results;

•our reliance on information technologies, which are vulnerable to, among other things, attack from computer viruses and malware, hacking, cyberattacks and other unauthorized access or misuse, any of which could adversely affect our business and results;

•increased interest rates;

•reductions in asset valuations and related impairment charges;

•our lack of sole decision-making authority with respect to our joint venture investments;

•our ability to recover losses under our insurance policies;

•the effect of recent or future changes to U.S. tax laws;

•the failure to maintain our REIT status for U.S. federal income tax purposes; and

•economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.

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.

4

We disclaim any duty or obligation to update or revise any forward-looking statements set forth in this report to reflect new information, future events or otherwise.

5

PART I.     FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Extra Space Storage Inc.

Condensed Consolidated Balance Sheets

(amounts in thousands, except share data)

 

	September 30, 2022		December 31, 2021
	(unaudited)
Assets:
Real estate assets, net	$	9,877,080	$	8,834,649
Real estate assets - operating lease right-of-use assets	226,984		227,949
Investments in unconsolidated real estate entities	568,691		457,326
Investments in debt securities and notes receivable	658,663		719,187
Cash and cash equivalents	86,991		71,126
Restricted cash	7,363		5,068
Other assets, net	414,873		159,172
Total assets	$	11,840,645	$	10,474,477
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net	$	1,296,830	$	1,320,755
Unsecured term loans, net	2,339,419		1,741,926
Unsecured senior notes, net	2,757,285		2,360,066
Revolving lines of credit	600,000		535,000
Operating lease liabilities	233,832		233,356
Cash distributions in unconsolidated real estate ventures	66,141		63,582
Accounts payable and accrued expenses	191,183		142,285
Other liabilities	286,657		291,531
Total liabilities	7,771,347		6,688,501
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, 133,918,037 and 133,922,305 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	1,339		1,339
Additional paid-in capital	3,339,961		3,285,948
Accumulated other comprehensive income (loss)	48,521		(42,546)
Accumulated deficit	(139,250)		(128,245)
Total Extra Space Storage Inc. stockholders' equity	3,250,571		3,116,496
Noncontrolling interest represented by Preferred Operating Partnership units, net	261,494		259,110
Noncontrolling interests in Operating Partnership, net and other noncontrolling interests	557,233		410,370
Total noncontrolling interests and equity	4,069,298		3,785,976
Total liabilities, noncontrolling interests and equity	$	11,840,645	$	10,474,477

See accompanying notes to unaudited condensed consolidated financial statements.

6

Extra Space Storage Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except share data)

(unaudited)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Property rental	$	428,787	$	351,355	$	1,216,639	$	976,448
Tenant reinsurance	47,869		44,258		138,093		126,211
Management fees and other income	22,246		16,879		62,720		47,320
Total revenues	498,902		412,492		1,417,452		1,149,979
Expenses:
Property operations	114,577		92,794		322,371		274,316
Tenant reinsurance	10,770		7,509		25,349		21,405
Transaction related costs	—		—		1,465		—
General and administrative	32,275		24,395		93,288		74,276
Depreciation and amortization	71,423		61,516		208,396		179,685
Total expenses	229,045		186,214		650,869		549,682
Gain on real estate transactions	—		—		14,249		63,883
Income from operations	269,857		226,278		780,832		664,180
Interest expense	(56,245)		(39,670)		(146,249)		(120,605)
Interest income	18,125		11,729		52,174		36,871
Income before equity in earnings and dividend income from unconsolidated real estate ventures and income tax expense	231,737		198,337		686,757		580,446
Equity in earnings and dividend income from unconsolidated real estate entities	11,149		8,255		30,436		23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		6,251
Income tax expense	(6,760)		(6,772)		(15,516)		(16,330)
Net income	236,126		199,820		701,677		593,900
Net income allocated to Preferred Operating Partnership noncontrolling interests	(4,454)		(3,529)		(13,278)		(10,647)
Net income allocated to Operating Partnership and other noncontrolling interests	(10,953)		(8,015)		(31,971)		(24,031)
Net income attributable to common stockholders	$	220,719	$	188,276	$	656,428	$	559,222
Earnings per common share
Basic	$	1.65	$	1.41	$	4.89	$	4.19
Diluted	$	1.65	$	1.40	$	4.89	$	4.19
Weighted average number of shares
Basic	133,913,652		133,809,750		134,094,490		133,197,903
Diluted	141,504,215		140,425,269		141,567,845		139,854,881
Cash dividends paid per common share	$	1.50	$	1.25	$	4.50	$	3.25

See accompanying notes to unaudited condensed consolidated financial statements.

7

Extra Space Storage Inc.

Condensed Consolidated Statements of Comprehensive Income

(amounts in thousands)

(unaudited)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	236,126	$	199,820	$	701,677	$	593,900
Other comprehensive income:
Change in fair value of interest rate swaps	24,222		8,055		95,984		36,685
Total comprehensive income	260,348		207,875		797,661		630,585
Less: comprehensive income attributable to noncontrolling interests	16,663		11,924		50,166		36,425
Comprehensive income attributable to common stockholders	$	243,685	$	195,951	$	747,495	$	594,160

See accompanying notes to unaudited condensed consolidated financial statements.

8

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

(amounts in thousands, except share data)

(unaudited)

	Noncontrolling Interest							Extra Space Storage Inc. Stockholders' Equity
		Preferred Operating Partnership		Operating Partnership		Other		Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Noncontrolling Interests and Equity
Balances at December 31, 2020		$	172,052	$	215,892	$	401	131,357,961	$	1,314	$	3,000,458	$	(99,093)	$	(354,900)	$	2,936,124
Issuance of common stock upon the exercise of options		—		—		—		56,722	—		4,254		—		—		4,254
Issuance of common stock in connection with share based compensation		—		—		—		89,793	—		3,652		—		—		3,652
Restricted stock grants cancelled		—		—		—		(2,499)	—		—		—		—		—
Issuance of common stock, net of offering costs		—		—		—		2,185,685	22		273,698		—		—		273,720
Redemption of Operating Partnership units for stock		—		(193)		—		5,000	—		193		—		—		—
Noncontrolling interest in consolidated joint venture		—		—		(50)		—	—		—		—		—		(50)
Net income (loss)		3,680		8,828		(5)		—	—		—		—		202,998		215,501
Other comprehensive income		144		956		—		—	—		—		21,913		—		23,013
Distributions to Operating Partnership units held by noncontrolling interests		(3,224)		(5,801)		—		—	—		—		—		—		(9,025)
Dividends paid on common stock at $1.00 per share		—		—		—		—	—		—		—		(132,540)		(132,540)
Balances at March 31, 2021		$	172,652	$	219,682	$	346	133,692,662	$	1,336	$	3,282,255	$	(77,180)	$	(284,442)	$	3,314,649
Issuance of common stock in connection with share based compensation		—		—		—		44,990	—		4,983		—		—		4,983
Restricted stock grants cancelled		—		—		—		(4,972)	—		—		—		—		—
Offering costs associated with previous stock issuance		—		—		—		—	—		(211)		—		—		(211)
Redemption of Operating Partnership units for stock		—		(2,185)		—		58,429	1		2,184		—		—		—
Redemption of Operating Partnership units for cash		—		(113)		—		—	—		(359)		—		—		(472)
Repayment of receivable with Operating Partnership units pledged as collateral		—		411		—		—	—		—		—		—		411
Noncontrolling interest in consolidated joint venture		—		—		150		—	—		—		—		—		150
Net income		3,438		7,190		3		—	—		—		—		167,948		178,579
Other comprehensive income		35		232		—		—	—		—		5,350		—		5,617
Distributions to Operating Partnership units held by noncontrolling interests		(3,223)		(5,751)		—		—	—		—		—		—		(8,974)
Dividends paid on common stock at $1.00 per share		—		—		—		—	—		—		—		(133,777)		(133,777)
Balances at June 30, 2021		$	172,902	$	219,466	$	499	133,791,109	$	1,337	$	3,288,852	$	(71,830)	$	(250,271)	$	3,360,955

9

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

(amounts in thousands, except share data)

(unaudited)

	Noncontrolling Interest							Extra Space Storage Inc. Stockholders' Equity
		Preferred Operating Partnership		Operating Partnership		Other		Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Noncontrolling Interests and Equity
Issuance of common stock upon the exercise of options		$	—	$	—	$	—	5,600	$	—	$	318	$	—	$	—	$	318
Issuance of common stock in connection with share based compensation		—		—		—		10,913	—		4,012		—		—		4,012
Restricted stock grants cancelled		—		—		—		(4,582)	—		—		—		—		—
Offering costs associated with previous stock issuance		—		—		—		—	—		(151)		—		—		(151)
Redemption of Operating Partnership units for stock		—		(34)		—		858	—		34		—		—		—
Redemption of Preferred B Units in the Operating Partnership for stock		(2,834)		—		—		15,265	1		2,833		—		—		—
Purchase of remaining equity interest in existing consolidated joint venture		—		—		—		—	—		(12,050)		—		—		(12,050)
Noncontrolling interest in consolidated joint venture		—		—		(225)		—	—		—		—		—		(225)
Net income		3,529		8,015		—		—	—		—		—		188,276		199,820
Other comprehensive income		50		330		—		—	—		—		7,675		—		8,055
Distributions to Operating Partnership units held by noncontrolling interests		(3,399)		(7,186)		—		—	—		—		—		—		(10,585)
Dividends paid on common stock at $1.25 per share		—		—		—		—	—		—		—		(167,274)		(167,274)
Balances at September 30, 2021		$	170,248	$	220,591	$	274	133,819,163	$	1,338	$	3,283,848	$	(64,155)	$	(229,269)	$	3,382,875
Balances at December 31, 2021		$	259,110	$	410,053	$	317	133,922,305	$	1,339	$	3,285,948	$	(42,546)	$	(128,245)	$	3,785,976
Issuance of common stock in connection with share based compensation		—		—		—		142,784	—		4,542		—		—		4,542
Restricted stock grants cancelled		—		—		—		(779)	—		—		—		—		—
Redemption of Operating Partnership units for cash		—		(829)		—		—	—		(1,843)		—		—		(2,672)
Redemption of Preferred B Units in the Operating Partnership for cash		(3,375)		—		—		—	—		—		—		—		(3,375)
Issuance of common stock in conjunction with acquisitions		—		—		—		186,766	4		40,961		—		—		40,965
Net income		4,333		9,805				—	—		—		—		203,579		217,717
Other comprehensive income		313		2,333		—		—	—		—		49,003		—		51,649
Distributions to Operating Partnership units held by noncontrolling interests		(4,330)		(9,781)		—		—	—		—		—		—		(14,111)
Dividends paid on common stock at $1.50 per share		—		—		—		—	—		—		—		(202,527)		(202,527)
Balances at March 31, 2022		$	256,051	$	411,581	$	317	134,251,076	$	1,343	$	3,329,608	$	6,457	$	(127,193)	$	3,878,164

10

Extra Space Storage Inc.

Condensed Consolidated Statement of Noncontrolling Interests and Equity

(amounts in thousands, except share data)

(unaudited)

	Noncontrolling Interest							Extra Space Storage Inc. Stockholders' Equity
		Preferred Operating Partnership		Operating Partnership		Other		Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Noncontrolling Interests and Equity
Issuance of common stock in connection with share based compensation		—		—		—		38,016	—		5,245		—		—		5,245
Restricted stock grants cancelled		—		—		—		(7,122)	—		—		—		—		—
Redemption of Operating Partnership units for cash		—		(296)		—		—	—		(536)		—		—		(832)
Redemption of Preferred B Units in the Operating Partnership for cash		(1,125)		—		—		—	—		—		—		—		(1,125)
Issuance of Operating Partnership units in conjunction with business combinations		—		16,000		—		—	—		—		—		—		16,000
Issuance of Preferred D units in the Operating Partnership in conjunction with business combinations		6,000		—		—		—	—		—		—		—		6,000
Repurchase of common stock, net of offering costs		—		—		—		(381,786)	(4)		—		—		(63,004)		(63,008)
Net income		4,491		11,213		—		—	—		—		—		232,130		247,834
Other comprehensive income		120		895		—		—	—		—		19,098		—		20,113
Distributions to Operating Partnership units held by noncontrolling interests		(4,306)		(9,821)		—		—	—		—		—		—		(14,127)
Dividends paid on common stock at $1.50 per share		—		—		—		—	—		—		—		(201,024)		(201,024)
Balances at June 30, 2022		$	261,231	$	429,572	$	317	133,900,184	$	1,339	$	3,334,317	$	25,555	$	(159,091)	$	3,893,240
Issuance of common stock in connection with share based compensation		—		—		—		19,654	—		5,644		—		—		5,644
Restricted stock grants cancelled		—		—		—		(1,801)	—		—		—		—		—
Issuance of Operating Partnership units in conjunction with acquisitions		—		125,000		—		—	—		—		—		—		125,000
Noncontrolling interest in consolidated joint venture		—		—		338		—	—		—		—		—		338
Net income		4,454		10,953		—		—	—		—		—		220,719		236,126
Other comprehensive income		145		1,111		—		—	—		—		22,966		—		24,222
Distributions to Operating Partnership units held by noncontrolling interests		(4,336)		(10,058)		—		—	—		—		—		—		(14,394)
Dividends paid on common stock at $1.50 per share		—		—		—		—	—		—		—		(200,878)		(200,878)
Balances at September 30, 2022		$	261,494	$	556,578	$	655	133,918,037	$	1,339	$	3,339,961	$	48,521	$	(139,250)	$	4,069,298

See accompanying notes to unaudited condensed consolidated financial statements.

11

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	For the Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	701,677	$	593,900
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	208,396		179,685
Amortization of deferred financing costs	6,352		6,656
Non-cash lease expense	1,441		1,396
Compensation expense related to stock-based awards	15,431		12,647
Accrual of interest income added to principal of debt securities and notes receivable	(28,514)		(25,871)
Gain on real estate transactions	(14,249)		(63,883)
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		(6,251)
Distributions from unconsolidated real estate ventures in excess of earnings	9,380		4,640
Changes in operating assets and liabilities:
Other assets	(4,207)		(10,612)
Accounts payable and accrued expenses	48,898		33,907
Other liabilities	3,416		3,054
Net cash provided by operating activities	948,021		729,268
Cash flows from investing activities:
Acquisition of real estate assets	(1,124,777)		(589,382)
Cash paid for business combination	(157,301)		—
Development and redevelopment of real estate assets	(31,652)		(42,719)
Proceeds from sale of real estate assets and investments in real estate ventures	39,367		196,241
Investment in unconsolidated real estate entities	(102,670)		(20,834)
Return of investment in unconsolidated real estate ventures	342		31,534
Issuance and purchase of notes receivable	(314,542)		(143,270)
Principal payments received from notes receivable	264,774		36,874
Proceeds from sale of notes receivable	203,695		116,822
Purchase of equipment and fixtures	(19,490)		(3,058)
Net cash used in investing activities	(1,242,254)		(417,792)
Cash flows from financing activities:
Proceeds from the sale of common stock, net of offering costs	—		273,358
Proceeds from notes payable and revolving lines of credit	3,983,865		3,323,000
Principal payments on notes payable and revolving lines of credit	(3,341,881)		(4,526,549)
Proceeds from issuance of public bonds, net	396,100		1,040,349
Deferred financing costs	(7,618)		(10,698)
Net proceeds from exercise of stock options	—		4,572
Repurchase of common stock	(63,008)		—
Redemption of Operating Partnership units held by noncontrolling interests	(3,504)		(472)
Redemption of Preferred B Units for cash	(4,500)		—
Proceeds from principal payments on note receivable collateralized by OP Units	—		411
Dividends paid on common stock	(604,429)		(433,591)
Distributions to noncontrolling interests	(42,632)		(28,584)
Net cash provided by (used in) financing activities	312,393		(358,204)
Net increase (decrease) in cash, cash equivalents, and restricted cash	18,160		(46,728)
Cash, cash equivalents, and restricted cash, beginning of the period	76,194		128,009
Cash, cash equivalents, and restricted cash, end of the period	$	94,354	$	81,281

12

Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in thousands)

(unaudited)

	For the Nine Months Ended September 30,
	2022		2021
Supplemental schedule of cash flow information
Interest paid	$	137,683	$	116,937
Income taxes paid	14,489		21,365
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	$	—	$	(2,412)
Common stock and paid-in capital	—		2,412
Acquisition and establishment of operating lease right of use assets and lease liabilities
Real estate assets - operating lease right-of-use assets	$	1,689	$	2,911
Operating lease liabilities	(1,689)		(2,911)
Acquisitions of real estate assets
Real estate assets, net	$	173,873	$	3,021
Value of equity issued	(165,965)		—
Investment in unconsolidated real estate ventures	(1,085)		(2,673)
Finance lease liability	(6,823)		(348)
Accrued construction costs and capital expenditures
Acquisition of real estate assets	$	—	$	756
Accounts payable and accrued expenses	—		(756)
Redemption of Preferred Operating Partnership units for common stock
Preferred Operating Partnership units	$	—	$	(2,834)
Additional paid-in capital	—		$	2,834
Issuance of OP and Preferred OP units in conjunction with business combinations
Preferred OP Units issued	$	(6,000)	$	—
OP Units Issued	(16,000)		—
Establishment of finance lease assets and lease liabilities
Real estate assets, net	$	—	$	41,438
Other liabilities	—		$	(41,438)
Investment in unconsolidated real estate ventures received on sale of stores to joint venture
Investment in unconsolidated real estate ventures	$	—	$	33,878
Real estate assets	—		(33,878)

See accompanying notes to unaudited condensed consolidated financial statements.

13

EXTRA SPACE STORAGE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

1.    ORGANIZATION

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 self-storage properties ("stores") located throughout the United States. The Company was formed to continue 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 invests in stores by acquiring wholly-owned stores or by acquiring an equity interest in real estate entities. At September 30, 2022, the Company had direct and indirect equity interests in 1,441 stores. In addition, the Company managed 886 stores for third parties, bringing the total number of stores which it owns and/or manages to 2,327. These stores are located in 41 states and Washington, D.C. The Company also offers tenant reinsurance at its owned and managed stores that insures the value of goods in the storage units.

2.    BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission.

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The Company also elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes are made to applicable debt and derivative contracts. Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope", which refines the scope of Topic 848 and clarifies some of its guidance. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company has begun transitioning debt over to Secured Overnight Financing Rate ("SOFR") as part of the reference rate reform.

14

EXTRA SPACE STORAGE INC.

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

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

3.    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 FASB’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 the Company and its counterparties. However, as of September 30, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	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	$	—	$	54,977	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of September 30, 2022 or December 31, 2021.

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.

15

EXTRA SPACE STORAGE INC.

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

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

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 an impairment loss on the assets held for sale. The operations of assets held for sale or sold during the period is presented as part of normal operations for all periods presented. As of September 30, 2022, the Company had no operating stores classified as held for sale which are included in real estate assets, net.

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 annually 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.

In connection with the Company’s acquisition of stores, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their relative 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. Any 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 capitalized as part of the purchase price. For acquisitions that meet the definition of a business, the Company estimates the fair value of the identifiable assets and liabilities of the acquired entity on the acquisition date. We measure goodwill as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. Acquisition-related expenses arising from the transaction are expensed as incurred. The Company includes the results of operations of the businesses that it acquires beginning on the acquisition date.

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, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021 approximate fair value. Restricted cash is comprised of funds deposited with financial institutions located throughout the United States primarily relating to earnest money deposits on potential acquisitions.

The fair values of the Company’s notes receivable from Preferred and Common Operating Partnership unit holders and other fixed rate notes receivable were based on the discounted estimated future cash flows 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 were estimated using the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality.

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

	September 30, 2022				December 31, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	95,276	$	101,900	$	101,824	$	101,900
Fixed rate notes receivable	$	3,839	$	3,867	$	105,954	$	104,251
Fixed rate debt	$	3,899,556	$	4,367,099	$	4,643,072	$	4,506,435

16

EXTRA SPACE STORAGE INC.

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

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

4.     REAL ESTATE ASSETS

The components of real estate assets are summarized as follows:

	September 30, 2022		December 31, 2021
Land	$	2,327,366	$	2,151,319
Buildings, improvements and other intangibles	9,256,894		8,227,094
Right of use asset - finance lease	136,259		117,718
Intangible assets - tenant relationships	147,460		134,577
Intangible lease rights	16,543		12,443
	11,884,522		10,643,151
Less: accumulated depreciation and amortization	(2,061,814)		(1,867,750)
Net operating real estate assets	9,822,708		8,775,401
Real estate under development/redevelopment	54,372		59,248
Real estate assets, net	$	9,877,080	$	8,834,649
Real estate assets held for sale included in real estate assets, net	$	—	$	8,436

5.     OTHER ASSETS

The components of other assets are summarized as follows:

	September 30, 2022		December 31, 2021
Equipment and fixtures, net	$	42,713	$	29,060
Deferred line of credit financing costs, net	6,173		7,408
Prepaid expenses and deposits	60,866		39,384
Receivables, net	79,333		83,050
Goodwill	170,811		—
Fair value of interest rate swaps	54,977		270
	$	414,873	$	159,172

We evaluate goodwill for impairment annually in the fourth quarter and whenever events, circumstances, and other related factors indicate that fair value of the related reporting unit may be less than the carrying value. If we determine that the fair value of the reporting unit exceeds the aggregate carrying amount, no impairment charge is recorded. Otherwise, we record an impairment charge to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value.

17

EXTRA SPACE STORAGE INC.

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

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

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

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 (i.e. those that reduce earnings per common share) are included.

For the purposes of computing the diluted impact of the potential exchange of the Preferred Operating Partnership units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the intent and ability to settle the redemption in shares, the Company divided the total value of the Preferred Operating Partnership units by the average share price for the period presented. The average share price for the three months ended September 30, 2022 and 2021 was $189.11 and $176.78, respectively.

The following table presents the number of 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 Three Months Ended September 30,		For the Nine Months Ended September 30,
	2022	2021	2022	2021
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	177,506	225,972	181,408	271,132
Series D Units	1,118,056	663,888	1,089,389	784,139
	1,295,562	889,860	1,270,797	1,055,271

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 $101,700 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 $101,700 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. Accordingly, the number of shares included in the computation for diluted earnings per share related to the Series A Units is equal to the number of Series A Units outstanding, with no additional shares included related to the fixed $101,700 amount.

18

EXTRA SPACE STORAGE INC.

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

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

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to common stockholders	$	220,719	$	188,276	$	656,428	$	559,222
Earnings and dividends allocated to participating securities	(313)		(260)		(914)		(800)
Earnings for basic computations	220,406		188,016		655,514		558,422
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,954		9,810		37,932		29,395
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	(572)		(572)		(1,716)		(1,716)
Net income for diluted computations	$	232,788	$	197,254	$	691,730	$	586,101
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	133,913,652		133,809,750		134,094,490		133,197,903
OP Units	6,709,854		5,733,936		6,592,606		5,767,132
Series A Units	875,480		875,480		875,480		875,480
Shares related to dilutive stock options	5,229		6,103		5,269		14,366
Average number of common shares outstanding - diluted	141,504,215		140,425,269		141,567,845		139,854,881
Earnings per common share
Basic	$	1.65	$	1.41	$	4.89	$	4.19
Diluted	$	1.65	$	1.40	$	4.89	$	4.19

7.    ACQUISITIONS AND DISPOSITIONS

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three and nine months ended September 30, 2022 and 2021. The table excludes purchases of raw land and improvements made to existing assets. All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

												Total
Quarter	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q3 2022	118	$	639,071	$	—	$	338	$	(2,291)	$	125,000	$	762,118
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	147	$	1,045,914	$	6,823	$	1,085	$	(1,206)	$	165,965	$	1,218,581
Q3 2021	12	$	185,497	$	348	$	—	$	747	$	—	$	186,592
Q2 2021	15	190,729		—		2,673		381		—		193,783
Q1 2021	9	148,940		—		—		2,944		—		151,884
Total 2021	36	$	525,166	$	348	$	2,673	$	4,072	$	—	$	532,259

19

EXTRA SPACE STORAGE INC.

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

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

On September 15, 2022 the Company completed the acquisition of multiple entities doing business as Storage Express for a purchase price of $590.0 million. A portion of the consideration paid was in the form of the issuance of 619,294 OP units (a total value of $125.0 million) and the remainder in cash. The portfolio included 106 operating stores and eight parcels of land for future development, all located in Illinois, Indiana, Kentucky and Ohio. This acquisition did not meet the definition of a business under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" and was therefore considered an asset acquisition.

Subsequent to September 30, 2022 the Company purchased six operating stores for a total purchase price of $147 million.

Other Investments

On June 1, 2022 the Company completed the acquisition of Bargold Storage Systems, LLC ("Bargold") for a purchase price of approximately $179.3 million. Bargold leases space in apartment buildings, primarily in New York City and its boroughs, builds out the space as storage units, and subleases the units to tenants. As of June 1, 2022, Bargold had approximately 17,000 storage units with an approximate occupancy of 97%. This acquisition is considered a business combination under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

The following table summarizes the total consideration transferred to acquire Bargold:

Total cash paid by the company	$	157,302
Fair value of Series D Units issued	16,000
Fair value of OP Units issued	6,000
Total consideration transferred	$	179,302

As part of this acquisition, we recorded an expense of $1,465 related to transaction costs.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	$	179,302

The following table summarizes the revenues and earnings related to Bargold since the acquisition date of June 1, 2022, which are included in the Company's consolidated statement of operations for the nine months ended September 30, 2022:

Total revenues	$	5,389
Net income from operations	$	1,773

Pro Forma Information

20

EXTRA SPACE STORAGE INC.

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

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

As noted above, during the nine months ended September 30, 2022, the Company acquired Bargold. The following pro forma financial information is based on the combined historical financial statements of the Company and Bargold, however, only includes revenue and presents the Company's results as if the acquisition had occurred on January 1, 2021. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.

	For the Nine Months Ended September 30, 2022		For the Year Ended December 31, 2021
	Pro Forma		Pro Forma
Total revenues	$	1,424,098	$	1,592,021

Dispositions

The Company disposed of two previously held for sale stores during the nine months ended September 30, 2022 , for approximately $38.7 million, resulting in a gain of $14.2 million.

8.    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

Investments in unconsolidated real estate entities and cash distributions in unconsolidated real estate ventures represent the Company's interest in preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") and the Company's noncontrolling interest in real estate joint ventures that own stores. The Company accounts for its investment in SmartStop preferred stock, which does not have a readily determinable fair value, at the transaction price less impairment, if any. The Company accounts for its investments in joint ventures using the equity method of accounting. The Company initially records these investments at cost and subsequently adjusts for cash contributions, distributions and net equity in income or loss, which is allocated in accordance with the provisions of the applicable partnership or joint venture agreement.

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

The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets. The net equity of certain joint ventures is less than zero because distributions have exceeded the Company's investment in and share of income from these joint ventures. This is generally the result of financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.

21

EXTRA SPACE STORAGE INC.

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

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

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

	Number of Stores	Equity Ownership %	Excess Profit % (1)	September 30,		December 31,
				2022		2021
PRISA Self Storage LLC	85	4%	4%	$	8,606	$	8,792
Storage Portfolio II JV LLC	36	10%	30%	(6,863)		(6,116)
Storage Portfolio IV JV LLC	32	10%	30%	49,584		40,174
Storage Portfolio I LLC	24	34%	49%	(40,957)		(40,168)
PR II EXR JV LLC	23	25%	25%	110,553		70,403
ESS-CA TIVS JV LP	16	55%	60%	31,222		32,288
VRS Self Storage, LLC	16	45%	54%	(15,055)		(14,269)
ACPF-EXR JV LLC	12	10%	30%	19,227		—
ESS-NYFL JV LP	11	16%	24%	11,409		11,796
Extra Space Northern Properties Six LLC	10	10%	35%	(3,266)		(3,029)
Alan Jathoo JV LLC	9	10%	10%	7,460		7,621
ESS Bristol Investments LLC	8	10%	30%	2,122		2,628
ESS - BGO Atlanta GA JV LLC	6	20%	35%	25,713		—
PR EXR Self Storage, LLC	5	25%	40%	58,703		59,393
Storage Portfolio III JV LLC	5	10%	30%	5,484		5,596
Storage Portfolio V JV LLC	5	10%	30%	8,557		—
Other unconsolidated real estate ventures	12	20-50%	20-50%	30,051		18,635
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Net Investments in and Cash distributions in unconsolidated real estate entities	315			$	502,550	$	393,744

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

(2) The Company invested in shares of convertible preferred stock of SmartStop. The dividend rate for the preferred shares is 6.25% per annum, subject to increase after five years. The preferred shares are generally not redeemable for five years, except in the case of a change of control or initial listing of SmartStop. Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's condensed consolidated statements of operations.

During the nine months ended September 30, 2022, the Company contributed a total of $102,670 of cash to its joint ventures, for its pro-rata portion of the purchase price of 29 operating stores.

9.    INVESTMENTS IN DEBT SECURITIES AND NOTES RECEIVABLE

Investments in debt securities and notes receivable consists of the Company's investment in mandatorily redeemable preferred stock of Jernigan Capital, Inc. ("JCAP") in connection with JCAP's acquisition by affiliates of NexPoint Advisors, L.P. ("NexPoint Investment") and receivables due to the Company under its bridge loan program. Information about these

22

EXTRA SPACE STORAGE INC.

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

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

balances is as follows:

	September 30, 2022		December 31, 2021
Debt securities - NexPoint Series A Preferred Stock	$	200,000	$	200,000
Debt securities - NexPoint Series B Preferred Stock	100,000		100,000
Notes Receivable - Bridge Loans	298,108		279,042
Notes Receivable - Senior Mezzanine Loan, net	—		102,079
Dividends Receivable	60,555		38,066
	$	658,663	$	719,187

In November 2020, the Company invested $300,000 in the preferred stock of JCAP in connection with the acquisition of JCAP by affiliates of NexPoint Advisors, L.P. This investment consists of 200,000 Series A Preferred Shares valued at a total of $200,000, and 100,000 Series B Preferred Shares valued at a total of $100,000. The JCAP preferred stock is mandatorily redeemable after five years, with two one-year extension options. NexPoint may redeem the Preferred Shares at any time, subject to certain prepayment penalties. The Company accounts for the JCAP preferred stock as a held to maturity debt security at amortized cost. The Series A Preferred Shares and the Series B Preferred Shares have initial dividend rates of 10.0% and 12.0%, respectively. If the investment is not retired after five years, the preferred dividends increase annually.

In July 2020, the Company purchased a senior mezzanine note receivable with a principal amount of $103,000. This note receivable bore interest at 5.5%, matured in December 2023 and was collateralized through an equity interest in which it or its subsidiaries wholly own 62 storage facilities. The Company paid cash of $101,142 for the loan receivable and accounted for the discount at amortized cost. The discount was being amortized over the term of the loan receivable. In February 2022, a junior mezzanine lender exercised its right to buy the Company’s position for the full principal balance plus interest due, as a result of which the Company sold this note for a total of $103,315 in cash. The remaining unamortized discount was recognized in the quarter as interest income.

The Company provides bridge loan financing to third-party self-storage operators. These notes receivable consist of mortgage loans receivable, collateralized by self-storage properties. These notes receivable typically have a term of three years with two one-year extensions, and have variable interest rates. The Company intends to sell the majority of the mortgage receivables. During the nine months ended September 30, 2022 the Company sold a total principal amount of $204,887 of its mortgage bridge loans receivable to third parties for a total of $203,695 in cash and closed on $314,542 in new mortgage bridge loans.

23

EXTRA SPACE STORAGE INC.

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

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

10.    DEBT

In March 2022, the Operating Partnership executed a public bond issuance by selling $400.0 million principal amount of 3.900% Senior Notes due 2029 (the "Notes Due 2029"). Interest on the Notes Due 2029 is paid semi-annually in arrears on April 1 and October 1 of each year. The Notes Due 2029 will mature on April 1, 2029, and the Operating Partnership may redeem the Notes Due 2029 at its option and sole discretion at any time prior to April 1, 2029 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

In September 2021, the Operating Partnership executed a public bond issuance by selling $600.0 million principal amount of 2.350% Senior Notes due 2032 (the "Notes Due 2032"). Interest on the Notes Due 2032 is paid semi-annually in arrears on March 15 and September 15 of each year. The Notes Due 2032 will mature on March 15, 2032, and the Operating Partnership may redeem the Notes Due 2032 at its option and sole discretion at any time prior to March 15, 2032 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

In May 2021, the Operating Partnership executed its initial public bond issuance by selling $450.0 million principal amount of 2.550% Senior Notes due 2031 (the "Notes Due 2031"). Interest on the Notes Due 2031 is paid semi-annually in arrears on June 1 and December 1 of each year. The Notes Due 2031 will mature on June 1, 2031, and the Operating Partnership may redeem the Notes Due 2031 at its option and sole discretion at any time prior to March 31, 2031 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

The Operating Partner may redeem the Notes Due 2029, the Notes Due 2031 and/or the Notes Due 2032 in whole at any time or in part from time to time, at the Operating Partnership’s option and sole discretion, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) a make-whole premium calculated in accordance with the indenture governing the notes, plus, in each case, accrued and unpaid interest thereon to, but not including, the applicable redemption date. Notwithstanding the foregoing, on or after the date three months prior to the maturity date of the applicable notes, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date.

Certain events are considered events of default, which may result in the accelerated maturity of the Notes Due 2029, the Notes Due 2031 and/or the Notes Due 2032, including, among other things, a default for 30 days in the payment of any installment of interest under the notes or a default in the payment of the principal amount or redemption price due with respect to the notes, when the same become due and payable.

The Notes Due 2029, the Notes Due 2031 and the Notes Due 2032 are unsecured, and are fully and unconditionally guaranteed by the Company, ESS Holdings Business Trust I, and ESS Holdings Business Trust II (the "Guarantors," and together with the Operating Partnership, the "Obligated Group"), on a joint and several basis. The guarantee of the Notes Due 2031 and the Notes Due 2032 will be a senior unsecured obligation of each Guarantor. The Guarantors have no material operations separate from the operation of the Operating Partnership and no material assets, other than their respective investments directly or indirectly in the Operating Partnership, and therefore the assets, liabilities, and results of operations of the Obligated Group are not materially different than those reported in the Company's financial statements.

24

EXTRA SPACE STORAGE INC.

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

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

The components of term debt are summarized as follows:

Term Debt	September 30, 2022		December 31, 2021		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	526,722	$	930,830	2.46% - 4.50%		February 2023 - February 2030
Secured variable-rate (1)	774,375		392,679			4.04% - 4.48%	August 2023 - September 2030
Unsecured fixed-rate	3,840,376		3,575,000		2.35% - 4.39%		January 2025 - March 2032
Unsecured variable-rate	1,284,624		550,000			4.09% - 4.39%	February 2024 - July 2029
Total	6,426,097		5,448,509
Less: Unamortized debt issuance costs	(32,563)		(25,762)
Total	$	6,393,534	$	5,422,747
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Term SOFR and Daily Simple SOFR.

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at September 30, 2022:

2022	$	—
2023	391,725
2024	425,000
2025	711,202
2026	807,815
Thereafter	4,090,355
	$	6,426,097

As of September 30, 2022, the terms of the Second Amended and Restated Credit Agreement dated June 22, 2021 (the "Credit Agreement") are as follows:

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,250,000	June 2025
Tranche 1 Term Loan Facility (1)	400,000		January 2027
Tranche 2 Term Loan Facility (1)	425,000		October 2026
Tranche 3 Term Loan Facility (1)	245,000		January 2025
Tranche 4 Term Loan Facility (1)	255,000		June 2026
Tranche 5 Term Loan Facility (1)	425,000		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
	$	3,600,000

(1) The term loan amounts have been fully drawn as of September 30, 2022.

Pursuant to the terms of the Credit Agreement, the Company may request an extension of the term of the revolving credit facility for up to two additional periods of six months each, after satisfying certain conditions.

As of September 30, 2022, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) Term or Daily Simple SOFR plus the Applicable Margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or

25

EXTRA SPACE STORAGE INC.

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

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

(d) the SOFR rate plus 1.00%. Per the Credit Agreement, the applicable SOFR rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the SOFR rate margin ranging from 0.7% to 1.6% per annum and the applicable base rate margin ranging from 0.00% to 0.60% per annum.

The Credit Agreement is guaranteed by the Company and is not secured by any assets of the Company. The Company's unsecured debt is subject to certain financial covenants. As of September 30, 2022, the Company was in compliance with all of its financial covenants.

In July 2022, the Company completed an accordion transaction in its credit facility, which added a $175.0 million unsecured debt tranche maturing January 2028 and a $425.0 million unsecured debt tranche maturing July 2029. The current interest rates for the tranches are Adjusted Term SOFR/Adjusted Daily Simple SOFR ("ASOFR") + 0.95% and ASOFR + 1.25%, respectively.

On October 5, 2022, the Company executed two interest rate swap agreements with a total combined notional amount of $200 million. The interest rate swaps were designed as cash flow hedges, with two-year terms and all-in rates of 5.24% and 5.25%.

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 September 30, 2022
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	15,000	$	140,000	4.3%	7/1/2023	SOFR plus 1.35%
Credit Line 2 (3)(4)	585,000		1,250,000		3.9%	6/20/2025	SOFR plus 0.95%
	$	600,000	$	1,390,000
(1) Daily Simple SOFR
(2) Secured by mortgages on certain real estate assets. No remaining extensions available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of September 30, 2022. Rate is subject to change based on the Company's investment grade rating.

As of September 30, 2022, the Company’s percentage of fixed-rate debt to total debt was 62.2%. The weighted average interest rates of the Company’s fixed and variable-rate debt were 3.2% and 4.2%, respectively. The combined weighted average interest rate was 3.6%.

11.    DERIVATIVES

The Company is exposed to certain risks 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 by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposure that arises 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.

26

EXTRA SPACE STORAGE INC.

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

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

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 these objectives, 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 three and nine months ended September 30, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. In the coming 12 months, the Company estimates that $29,746 will be reclassified as an increase to interest income.

The Company held 15 derivative financial instruments which had a total combined notional amount of $1,439,256 as of September 30, 2022.

Fair Values of Derivative Instruments

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

	Asset / Liability Derivatives
Derivatives designated as hedging instruments:	September 30, 2022		December 31, 2021
Other assets	$	54,977	$	271
Other liabilities	$	—	$	39,569

Effect of Derivative Instruments

The table below presents the effect of the Company’s derivative financial instruments on the condensed 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 Three Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Three Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	25,350	$	(736)	Interest expense	$	1,131	$	(8,794)

	Gain (loss) recognized in OCI For the Nine Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Nine Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	82,449	$	10,316	Interest expense	$	(13,536)	$	(26,386)

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.

27

EXTRA SPACE STORAGE INC.

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

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

As of September 30, 2022, the Company did not have any net liability positions in the fair value of derivatives. 

12.    STOCKHOLDERS’ EQUITY

On January 7, 2022, the Company issued 186,766 shares of its common stock to acquire two stores for $40,965.

On August 9, 2021, the Company filed its $800,000 "at the market" equity program with the Securities and Exchange Commission using a shelf registration statement on Form S-3, and entered into separate equity distribution agreements with ten sales agents. No shares have been sold under the current "at the market" equity program. From January 1, 2021, through August 8, 2021, the Company sold 585,685 shares of common stock under its prior "at the market" equity program resulting in net proceeds of $66,617.

On March 23, 2021, the Company sold 1,600,000 shares of its common stock in a registered offering structured as a bought deal at a price of $129.13 per share resulting in net proceeds of $206,572.

On October 15, 2020, the Company's board of directors authorized a new share repurchase program allowing for the repurchase of shares with an aggregate value up to $400,000. During the nine months ended September 30, 2022, the Company repurchased 381,786 shares at an average price of $165.03 per share, paying a total of $63,008. As of September 30, 2022, the Company had remaining authorization to repurchase shares with an aggregate value up to $336,992.

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 condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

At September 30, 2022 and December 31, 2021, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets. The partnership agreement of the Operating Partnership (as amended, the "Partnership Agreement") provides for the designation and issuance of the OP Units. As of September 30, 2022 and December 31, 2021, noncontrolling interests in Preferred OP Units were presented net of notes receivable from Preferred OP Unit holders of $100,000 as more fully described below. The balances for each of the specific Preferred OP Units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

	September 30, 2022		December 31, 2021
Series A Units	$	16,490	$	15,606
Series B Units	33,568		38,068
Series D Units	211,436		205,436
	$	261,494	$	259,110

28

EXTRA SPACE STORAGE INC.

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

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

Series A Participating Redeemable Preferred Units

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.

The Series A Units were issued in June 2007. Series A Units in the amount of $101,700 bear a fixed priority return of 2.3% and originally had a fixed liquidation value of $115,000. The remaining balance participates in distributions with, and has a liquidation value equal to that of the OP Units. The Series A Units are redeemable at the option of the holder, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock. As a result of the redemption of 114,500 Series A Units in October 2014, the remaining fixed liquidation value was reduced to $101,700, which represents 875,480 Series A Units.

On June 25, 2007, the Operating Partnership loaned the holder of the Series A Units $100,000. The loan bears interest at 2.1%. The loan is secured by the borrower’s Series A Units. No future redemption of Series A Units can be made unless the loan secured by the Series A Units is also repaid. The Series A Units are shown on the balance sheet net of the $100,000 loan because the borrower under the loan is also the holder of the Series A Units.

Series B Redeemable Preferred Units

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 were issued in 2013 and 2014. The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $33,568 which represents 1,342,727 Series B Units. Holders of the Series B Units receive distributions at an annual rate of 6.0%. These distributions are cumulative. The Series B Units became 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.

On May 10, 2022, 45,000 Series B Units were redeemed for $1,125 in cash.

Series C Redeemable Preferred Units

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

As of September 30, 2022 and December 31, 2021, there were no outstanding Series C Units.

Series D Redeemable Preferred Units

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 interests 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 $211,436, which represents 8,457,422 Series D Units. Holders of the Series D Units receive distributions at an annual rate between 3.0% and 5.0%. These distributions are cumulative. The Series D Units 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, certain of the Series D Units are exchangeable for OP Units at the option of the holder until the tenth anniversary of the date of issuance, with the number of OP Units to be issued equal to $25.00 per Series D Unit, divided by the value of a share of common stock as of the exchange date.

The Series D Units have been issued at various times from 2014 to 2022. On June 1, 2022, the Operating Partnership issued a total of 240,000 Series D units valued at $6,000 in connection with the acquisition of Bargold.

29

EXTRA SPACE STORAGE INC.

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

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

14.    NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP AND OTHER NONCONTROLLING INTERESTS

Noncontrolling Interest in Operating Partnership

The Company’s interest in its stores is held through the Operating Partnership. Between its general partner and limited partner interests, the Company held a 93.4% ownership interest in the Operating Partnership as of September 30, 2022. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.6% are held by certain former owners of assets acquired by the Operating Partnership. As of September 30, 2022 and December 31, 2021, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $1,900 because a borrower under the note receivable is also a holder of OP Units. This note receivable originated in December 2014, bears interest at 5.0% per annum and matures on December 15, 2024.

The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. OP Units are redeemable at the option of the holder, which redemption may be satisfied at the Company's option in cash, based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption, or shares of the Company's common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Partnership Agreement. As of September 30, 2022, the ten-day average closing price of the Company's common stock was $173.48 and there were 7,221,445 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on September 30, 2022 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,252,776 in cash consideration to redeem the units.

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

	For the Nine Months Ended September 30,
	2022		2021
OP Units redeemed for common stock	—		64,287
OP Units redeemed for cash	18,028		3,000
Cash paid for OP Units redeemed	$	3,504	$	472
OP Units issued in conjunction with business combination and acquisitions	711,037		—
Value of OP Units issued in conjunction with business combination and acquisitions	$	141,000	$	—

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 OP Units and classifies the noncontrolling interest represented by the OP Units as stockholders’ equity in the accompanying condensed 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 condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interests of third parties in three consolidated joint ventures as of September 30, 2022. Each joint venture owns one store and all three properties are under development. The voting interest of the third-party owners are between 3.0% and 10.0%.

30

EXTRA SPACE STORAGE INC.

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

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

15.    SEGMENT INFORMATION

The Company’s segment disclosures present the measure used by the chief operating decision makers ("CODMs") for purposes of assessing each segment’s performance. The Company’s CODMs are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company’s reportable operating segments. NOI for the Company's self-storage operations represents total property revenue less direct property operating expenses. NOI for the Company's tenant reinsurance segment represents tenant reinsurance revenues less tenant reinsurance expense.

The Company has two reportable segments: (1) self-storage operations and (2) tenant reinsurance. The self-storage operations activities include rental operations of wholly-owned stores. The Company's consolidated revenues equal total segment revenues plus property management fees and other income. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in the stores operated by the Company. Excluded from segment revenues and net operating income is property management fees and other income.

For all periods presented, substantially all of the Company's real estate assets, intangible assets, other assets, and accrued and other liabilities are associated with the self-storage operations segment. Financial information for the Company’s business segments is set forth below:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Self-Storage Operations	$	428,787	$	351,355	$	1,216,639	$	976,448
Tenant Reinsurance	47,869		44,258		138,093		126,211
Total segment revenues	$	476,656	$	395,613	$	1,354,732	$	1,102,659
Operating expenses:
Self-Storage Operations	$	114,577	$	92,794	$	322,371	$	274,316
Tenant Reinsurance	10,770		7,509		25,349		21,405
Total segment operating expenses	$	125,347	$	100,303	$	347,720	$	295,721
Net operating income:
Self-Storage Operations	$	314,210	$	258,561	$	894,268	$	702,132
Tenant Reinsurance	37,099		36,749		112,744		104,806
Total segment net operating income:	$	351,309	$	295,310	$	1,007,012	$	806,938
Other components of net income:
Management fees and other income	$	22,246	$	16,879	$	62,720	$	47,320
Transaction related costs	—		—		(1,465)		—
General and administrative expense	(32,275)		(24,395)		(93,288)		(74,276)
Depreciation and amortization expense	(71,423)		(61,516)		(208,396)		(179,685)
Gain on real estate transactions	—		—		14,249		63,883
Interest expense	(56,245)		(39,670)		(146,249)		(120,605)
Interest income	18,125		11,729		52,174		36,871
Equity in earnings and dividend income from unconsolidated real estate entities	11,149		8,255		30,436		23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		6,251
Income tax expense	(6,760)		(6,772)		(15,516)		(16,330)
Net income	$	236,126	$	199,820	$	701,677	$	593,900

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EXTRA SPACE STORAGE INC.

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

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

16.    COMMITMENTS AND CONTINGENCIES

As of September 30, 2022, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business. Because litigation is inherently unpredictable, the outcome of these matters cannot presently be determined with any degree of certainty. 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. 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.

As of September 30, 2022, the Company was under agreement to acquire 15 stores at a total purchase price of $272,928. Seven stores are scheduled to close in 2022 and eight stores are scheduled to close in 2023 and thereafter. Additionally, the Company is under agreement to acquire seven stores with joint venture partners, for a total investment of $24,431. Three stores are scheduled to close in 2022 and four stores are scheduled to close in 2023.

The Company owns and/or operates stores located in Florida and South Carolina that were impacted by Hurricane Ian during the quarter ended September 30, 2022. Losses incurred to date by this hurricane include property damage, net of insurance recoveries, of $3,200, and tenant reinsurance claims of $3,000, which are included in property operations and tenant reinsurance on the Company's condensed consolidated statements of operations, respectively.

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 stores, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to its stores could result in future material environmental liabilities.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Amounts in thousands, except store and share data

CAUTIONARY LANGUAGE

The following discussion and analysis should be read in conjunction with our unaudited “Condensed Consolidated Financial Statements” and the “Notes to Condensed Consolidated Financial Statements (unaudited)” appearing elsewhere in this report and the “Consolidated Financial Statements,” “Notes to Consolidated Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Form 10-K for the year ended December 31, 2021. 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-Q entitled “Statement on Forward-Looking Information.”

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements contained elsewhere in this report, which have been prepared in accordance with GAAP. Our notes to the unaudited condensed consolidated financial statements contained elsewhere in this report and the audited financial statements contained in our Form 10-K for the year ended December 31, 2021 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the notes to the unaudited condensed consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.

OVERVIEW

We are a fully integrated, self-administered and self-managed real estate investment trust (“REIT”), formed to own, operate, manage, acquire, develop and redevelop self-storage properties (“stores”). We derive substantially all of our revenues from our two segments: storage operations and tenant reinsurance. Primary sources of revenue for our storage operations segment include rents received from tenants under leases at each of our wholly-owned stores. Our operating results depend materially on our ability to lease available self-storage units, to actively manage unit rental rates, and on the ability of our tenants to make required rental payments. Consequently, management spends a significant portion of their time maximizing cash flows from our diverse portfolio of stores. Revenue from our tenant reinsurance segment consists of insurance revenues from the reinsurance of risks relating to the loss of goods stored by tenants in our stores.

Our stores are generally situated in highly visible locations clustered around large population centers. These areas 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. To maximize the performance of our stores, we employ industry-leading revenue management systems. Developed internally, 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 pro-actively manage revenues.

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. We believe that we are able to

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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 proprietary pricing systems. 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 January 1 of the current year.

COVID-19 UPDATE

The United States and other countries around the world continue to navigate the effects of the COVID-19 pandemic. Governmental authorities in impacted regions have taken various actions in an effort to slow the spread of COVID-19, including issuance of varying forms of states of emergency orders. In response to these evolving orders and the COVID-19 pandemic, we implemented a wide range of practices to protect and support our employees and customers. Although most governmental restrictions have lifted and many work practices have returned to normal, our customers may continue to be impacted by the COVID-19 pandemic and related governmental responses. Given the uncertainty resulting from the pandemic, our business may be impacted by the effects of the COVID-19 pandemic.

PROPERTIES

As of September 30, 2022, we owned or had ownership interests in 1,441 operating stores. Of these stores, 1,126 are wholly-owned, and 315 are in unconsolidated joint ventures. In addition, we managed an additional 886 stores for third parties bringing the total number of stores which we own and/or manage to 2,327. These stores are located in 41 states and Washington, D.C. The majority of our stores are clustered around large population centers. 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.

As of September 30, 2022, approximately 1,365,000 tenants were leasing storage units at the 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 September 30, 2022, the average length of stay was approximately 16.0 months.

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $21.52 for the three months ended September 30, 2022, compared to $18.26 for the three months ended September 30, 2021. Average annual rent per square foot for new leases was $18.58 for the three months ended September 30, 2022, compared to $20.80 for the three months ended September 30, 2021. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 3.1% and 3.6%, respectively.

Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider “hybrid” stores, a mix of drive-up and multi-floor buildings. We have a number of multi-floor buildings with elevator access only, and a number of stores featuring ground-floor access only.

The following table presents additional information regarding net rentable square feet and the number of stores by state.

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	September 30, 2022
	REIT Owned		Joint Venture Owned		Managed		Total
Location	Property Count(1)	Net Rentable Square Feet	Property Count	Net Rentable Square Feet	Property Count	Net Rentable Square Feet	Property Count	Net Rentable Square Feet
Alabama	9	650,428	1	75,711	6	430,502	16	1,156,641
Arizona	25	1,779,761	10	768,046	20	1,711,092	55	4,258,899
California	177	13,599,018	49	3,593,676	98	8,761,358	324	25,954,052
Colorado	17	1,150,022	9	664,885	25	1,785,200	51	3,600,107
Connecticut	7	538,946	7	575,724	7	484,561	21	1,599,231
Delaware	—	—	2	143,615	1	71,704	3	215,319
Florida	111	8,550,154	43	3,554,367	113	8,924,206	267	21,028,727
Georgia	67	5,181,751	14	1,143,469	25	1,925,604	106	8,250,824
Hawaii	13	864,026	—	—	3	159,393	16	1,023,419
Idaho	—	—	—	—	3	181,484	3	181,484
Illinois	60	3,693,456	10	741,135	29	2,037,732	99	6,472,323
Indiana	90	3,842,934	1	58,166	18	1,268,412	109	5,169,512
Kansas	1	50,209	2	108,920	6	452,863	9	611,992
Kentucky	13	958,290	1	51,663	9	783,503	23	1,793,456
Louisiana	5	387,184	—	—	11	809,431	16	1,196,615
Maine	—	—	—	—	8	577,216	8	577,216
Maryland	34	2,853,783	11	899,002	38	2,701,514	83	6,454,299
Massachusetts	47	3,010,962	10	641,005	29	1,840,330	86	5,492,297
Michigan	8	668,298	4	305,876	8	567,122	20	1,541,296
Minnesota	7	584,720	4	305,010	16	1,171,986	27	2,061,716
Mississippi	3	234,365	—	—	—	—	3	234,365
Missouri	6	431,696	2	119,750	14	1,060,064	22	1,611,510
Nebraska	—	—	—	—	3	278,106	3	278,106
Nevada	14	1,039,697	4	474,241	7	744,024	25	2,257,962
New Hampshire	2	134,564	2	84,693	5	359,232	9	578,489
New Jersey	63	4,996,852	17	1,228,131	36	2,774,531	116	8,999,514
New Mexico	11	699,807	10	683,470	12	900,155	33	2,283,432
New York	28	2,046,988	18	1,511,956	39	2,445,578	85	6,004,522
North Carolina	23	1,736,990	5	401,437	19	1,520,295	47	3,658,722
Ohio	24	1,464,363	5	325,163	8	609,579	37	2,399,105
Oklahoma	1	62,463	—	—	20	1,608,192	21	1,670,655
Oregon	8	550,557	1	65,245	10	738,433	19	1,354,235
Pennsylvania	21	1,545,851	9	679,815	35	2,576,837	65	4,802,503
Rhode Island	2	134,802	—	—	4	322,003	6	456,805
South Carolina	23	1,713,492	11	709,124	25	2,164,831	59	4,587,447
Tennessee	22	1,856,904	13	881,301	10	823,893	45	3,562,098
Texas	111	9,118,774	26	2,067,861	81	6,975,397	218	18,162,032
Utah	10	698,077	—	—	24	1,908,427	34	2,606,504
Virginia	53	4,267,635	9	703,650	31	2,178,528	93	7,149,813
Washington	9	685,346	—	—	14	1,147,294	23	1,832,640
Washington, DC	1	100,039	1	103,640	6	540,423	8	744,102
Wisconsin	—	—	4	370,693	10	814,461	14	1,185,154
Totals	1,126	81,883,204	315	24,040,440	886	69,135,496	2,327	175,059,140

(1)    Excludes 17,000 units related to the Bargold transaction. See Note 7 in the Notes to the Condensed Consolidated Financial Statements.

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RESULTS OF OPERATIONS

Comparison of the three and nine months ended September 30, 2022 and 2021

Overview

Results for the three and nine months ended September 30, 2022 included the operations of 1,441 stores (1,126 wholly-owned and 315 in joint ventures accounted for using the equity method) compared to the results for the three and nine months ended September 30, 2021, which included the operations of 1,227 stores (966 wholly-owned, four in consolidated joint ventures, and 257 in joint ventures accounted for using the equity method).

Revenues

The following table presents information on revenues earned for the periods indicated:

 

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Revenues:
Property rental	$	428,787	$	351,355	$	77,432	22.0	%	$	1,216,639	$	976,448	$	240,191	24.6	%
Tenant reinsurance	47,869		44,258		3,611		8.2	%	138,093		126,211		11,882		9.4	%
Management fees and other income	22,246		16,879		5,367		31.8	%	62,720		47,320		15,400		32.5	%
Total revenues	$	498,902	$	412,492	$	86,410	20.9	%	$	1,417,452	$	1,149,979	$	267,473	23.3	%

Property Rental—The increase in property rental revenues for the three and nine months ended September 30, 2022 was primarily the result of an increase of $51,550 and $180,884 at our stabilized stores related primarily to higher average rates to existing customers. Property rental revenue also increased by $25,598 and $66,079 associated with acquisitions completed in 2022 and 2021. We acquired 147 wholly-owned stores during the nine months ended September 30, 2022 and a total of 74 stores during the year ended December 31, 2021.

Tenant Reinsurance—The increase in our tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 2,327 stores at September 30, 2022 compared to 2,054 stores at September 30, 2021.

Management Fees and Other Income—Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income. The increase for the three and nine months ended September 30, 2022 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year. As of September 30, 2022, we managed 1,201 stores for joint ventures and third parties, compared to 1,088 stores as of September 30, 2021. Additionally, for the three and nine months ended September 30, 2022, the Company earned an additional $1,359 and $3,306 of other transaction fee income.

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Expenses

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

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Expenses:
Property operations	$	114,577	$	92,794	$	21,783	23.5	%	$	322,371	$	274,316	$	48,055	17.5	%
Tenant reinsurance	10,770		7,509		3,261		43.4	%	25,349		21,405		3,944		18.4	%
Transaction related costs	—		—		—		—	%	1,465		—		1,465		—	%
General and administrative	32,275		24,395		7,880		32.3	%	93,288		74,276		19,012		25.6	%
Depreciation and amortization	71,423		61,516		9,907		16.1	%	208,396		179,685		28,711		16.0	%
Total expenses	$	229,045	$	186,214	$	42,831	23.0	%	$	650,869	$	549,682	$	101,187	18.4	%

Property Operations—The increase in property operations expense during the three and nine months ended September 30, 2022 consists primarily of an increase of $9,827 and $24,943 related to acquisitions completed in 2022 and 2021. We acquired 147 wholly-owned stores during the nine months ended September 30, 2022 and a total of 36 stores during the nine months ended September 30, 2021. These amounts also include increases related to the acquisition of Bargold in June 2022. Additionally, for the three and nine months ended September 30, 2022 there was an increase of $10,357 and $24,427 at our stabilized stores. These increases for the three months ended relate primarily to payroll due to wage increases and increased hours and property taxes. For the nine months ended, increases relate primarily to payroll due to wage increases and increased hours, credit card fees due to increased revenue and property taxes. For both the three and nine months ended, there was a $3,200 charge related to estimated losses for Hurricane Ian (shown net of expected insurance recoveries).

Tenant Reinsurance—Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. We operated 2,327 stores at September 30, 2022 compared to 2,054 stores at September 30, 2021. For the three and nine months ended, tenant reinsurance expense included a $3,000 charge for estimated tenant reinsurance claims to be paid by our captive for damages incurred from Hurricane Ian.

Transaction related costs—The $1,465 in acquisition costs during the nine months ended September 30, 2022 represents the costs that were incurred in the acquisition of Bargold Storage Systems, LLC ("Bargold"). See footnote 7, Acquisitions and Dispositions, for additional details.

General and Administrative—General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, office expense, office rent, travel and professional fees. Payroll has continued to increase as a result of outsized inflation. We did not observe any material trends in specific travel or other expenses apart from inflationary pressures and from the increase due to the management of additional stores. Also, during the three and nine months ended September 30, 2022 increases relate in part to the acquisition of Bargold in June 2022 and various entities doing business as Storage Express in September 2022.

Depreciation and Amortization—Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 147 wholly-owned stores during the nine months ended September 30, 2022 and a total of 36 stores during the nine months ended September 30, 2021.

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Other Revenues and Expenses

The following table presents information about other revenues and expenses for the periods indicated:

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Gain on real estate transactions	$	—	$	—	$	—	—	%	$	14,249	$	63,883	$	(49,634)	(77.7)	%
Interest expense	(56,245)		(39,670)		(16,575)		41.8	%	(146,249)		(120,605)		(25,644)		21.3	%
Interest income	18,125		11,729		6,396		54.5	%	52,174		36,871		15,303		41.5	%
Equity in earnings and dividend income from unconsolidated real estate entities	11,149		8,255		2,894		35.1	%	30,436		23,533		6,903		29.3	%
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		—	%	—		6,251		(6,251)		100.0	%
Income tax expense	(6,760)		(6,772)		12		(0.2)	%	(15,516)		(16,330)		814		(5.0)	%
Total other revenues & expenses, net	$	(33,731)	$	(26,458)	$	(7,273)	27.5	%	$	(64,906)	$	(6,397)	$	(58,509)	914.6	%

Gain on Real Estate Transactions—During the nine months ended September 30, 2022, we sold two stores. We recognized a total gain of $14,249 related to the sale of these assets. During the nine months ended September 30, 2021, we sold 16 stores to a newly established unconsolidated joint venture. We recognized a total gain of $64,424 related to this transaction. This gain was partially offset by losses related to the sale of notes receivable and solar assets.

Interest Expense—The increase in interest expense during the three and nine months ended September 30, 2022 was primarily the result of a higher weighted average interest rate and debt balance compared to the same period in the prior year.

Interest Income—Interest income represents interest earned on bridge loans, notes receivable and debt securities and income earned on notes receivable from Common and Preferred Operating Partnership unit holders. The increase in interest income during the three and nine months ended September 30, 2022 was primarily the result of an increase in the note receivable for the Company's bridge loan program along with an increase in interest rates. The bridge loan receivable balance increased to $298,108 as of September 30, 2022 compared to $247,411 as of September 30, 2021. The increase for the nine months ended September 30, 2022, also relates to interest earned from the repayment of the senior mezzanine note receivable which was paid off in February 2022 and included recording the remaining balance of unamortized discount into interest income.

Equity in Earnings and Dividend Income from Unconsolidated Real Estate Entities—Equity in earnings of unconsolidated real estate entities represents the income earned through our ownership interests in unconsolidated joint ventures. In these joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital. To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits. Dividend income represents dividends from our $200,000 investment in preferred stock of SmartStop.

Equity in Earnings of Unconsolidated Real Estate Ventures - Gain on Sale of Real Estate Assets and Purchase of Joint Venture Partner's Interest - In June 2021, the Company sold its interest in two unconsolidated joint ventures to its joint venture partner. The Company received proceeds of $1,888 in cash, and recorded a gain of $525. Also in June 2021, the WICNN JV LLC and GFN JV, LLC joint ventures sold all 17 of the stores owned by the joint ventures to a third party. Subsequent to the sales, these joint ventures were dissolved. As a result of these transactions, the Company recorded a gain of $5,739.

Income Tax Expense—For the three months ended September 30, 2022 we did not observe any material change when compared to the same period in the prior year.

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FUNDS FROM OPERATIONS

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 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 our condensed 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.

The following table presents the calculation of FFO for the periods indicated:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to common stockholders	$	220,719	$	188,276	$	656,428	$	559,222
Adjustments:
Real estate depreciation	65,483		58,177		191,940		170,462
Amortization of intangibles	3,279		1,262		8,741		2,963
Gain on real estate transactions	—		—		(14,249)		(63,883)
Unconsolidated joint venture real estate depreciation and amortization	4,381		3,051		12,349		8,635
Unconsolidated joint venture gain on sale of real estate assets and purchase of partner's interest	—		—		—		(6,251)
Distributions paid on Series A Preferred Operating Partnership units	(572)		(572)		(1,716)		(1,716)
Income allocated to Operating Partnership noncontrolling interests	15,407		11,544		45,249		34,678
Funds from operations attributable to common stockholders and unit holders	$	308,697	$	261,738	$	898,742	$	704,110

SAME-STORE RESULTS

Our same-store pool for the periods presented consists of 869 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

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portfolio.

	For the Three Months Ended September 30,				Percent		For the Nine Months Ended September 30,				Percent
	2022		2021		Change		2022		2021		Change
Same-store rental revenues	$	371,918	$	322,111	15.5	%	$	1,075,412	$	900,266	19.5	%
Same-store operating expenses	87,450		77,683		12.6	%	255,661		233,383		9.5	%
Same-store net operating income	$	284,468	$	244,428	16.4	%	$	819,751	$	666,883	22.9	%
Same-store square foot occupancy as of quarter end	95.2%		96.7%				95.2%		96.7%
Properties included in same-store	869		869				869		869

Same-store revenues for the three and nine months ended September 30, 2022 increased compared to the same periods in 2021 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy.

Same-store expenses increased for the three and nine months ended September 30, 2022 compared to the same period in 2021 due to increases in payroll, credit card processing fees, utilities, property taxes and insurance.

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net Income	$	236,126	$	199,820	$	701,677	$	593,900
Adjusted to exclude:
Gain on real estate transactions	—		—		(14,249)		(63,883)
Equity in earnings and dividend income from unconsolidated real estate entities	(11,149)		(8,255)		(30,436)		(23,533)
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		(6,251)
Interest expense	56,245		39,670		146,249		120,605
Depreciation and amortization	71,423		61,516		208,396		179,685
Income tax expense	6,760		6,772		15,516		16,330
Transaction related costs	—		—		1,465		—
General and administrative	32,275		24,395		93,288		74,276
Management fees, other income and interest income	(40,371)		(28,608)		(114,894)		(84,191)
Net tenant insurance	(37,099)		(36,749)		(112,744)		(104,806)
Non same-store rental revenue	(56,869)		(29,244)		(141,227)		(76,182)
Non same-store operating expense	27,127		15,111		66,710		40,933
Total same-store net operating income	$	284,468	$	244,428	$	819,751	$	666,883
Same-store rental revenues	$	371,918	$	322,111	$	1,075,412	$	900,266
Same-store operating expenses	87,450		77,683		255,661		233,383
Same-store net operating income	$	284,468	$	244,428	$	819,751	$	666,883

CASH FLOWS

Cash flows from operating activities for the nine months ended September 30, 2022 increased when compared to the same period in the prior year as a result of our continued total revenue growth. Cash flows used in investing activities relates primarily to our acquisition and development of REIT and joint venture assets, as well as activity on our bridge loan program.

40

Cash flows from financing activities depend primarily on our debt and equity financing activities. A summary of cash flows along with significant components are as follows:

	For the Nine Months Ended September 30,
	2022		2021
Net cash provided by operating activities	$	948,021	$	729,268
Net cash used in investing activities	(1,242,254)		(417,792)
Net cash provided by (used in) financing activities	312,393		(358,204)
Significant components of net cash flow included:
Net income	$	701,677	$	593,900
Acquisition and development of real estate assets	(1,156,429)		(632,101)
Cash paid for business combination	(157,301)		—
Investment in unconsolidated real estate entities	(102,670)		(20,834)
Issuance and purchase of notes receivable	(314,542)		(143,270)
Proceeds from sale of notes receivable	203,695		116,822
Principal payments received from notes receivable	264,774		36,874
Proceeds from the sale of common stock, net of offering costs	—		273,358
Proceeds from notes payable and revolving lines of credit	3,983,865		3,323,000
Principal payments on notes payable and revolving lines of credit	(3,341,881)		(4,526,549)
Proceeds from issuance of public bonds, net	396,100		1,040,349
Dividends paid on common stock	(604,429)		(433,591)

We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next 12 months. These cash needs include operating expenses, monthly debt service payments, recurring capital expenditures, acquisitions, redevelopments and expansions, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification.

We expect to generate positive cash flow from operations in 2022, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our tenants. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds under our existing lines of credit, curtail planned capital expenditures, or seek other additional sources of financing.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2022, we had $86,991 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2022 and 2021, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

As of September 30, 2022, we had $7,026,097 face value of debt, resulting in a debt to total enterprise value ratio of 22.4%. As of September 30, 2022, the ratio of total fixed-rate debt and other instruments to total debt was 62.2% ($4,367,099 total fixed-rate debt including $1,439,264 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 September 30, 2022 was 3.6%. 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 September 30, 2022.

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,

41

out of our operating cash flow, cash on hand and borrowings under our revolving lines of credit. In addition, we are pursuing additional sources of financing based on anticipated funding needs and growth assumptions.

We currently hold a BBB/Stable rating from S&P and a Baa2 rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of September 30, 2022, we had a total of 900 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $16,636,222 and our total asset value was calculated as $21,568,602 according to the calculations as defined by our public bonds.

Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, dividends to stockholders and distributions to unit holders necessary to maintain our REIT qualification. We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. 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 may also use Operating Partnership units as currency to fund acquisitions from self-storage owners.

The COVID-19 pandemic has had negative impacts on capital markets and may continue to do so in the future. Based upon the current availability of our credit facility and our credit rating, we do not expect such capital market dislocations to have a material impact upon our ability to satisfy obligations and maturities or our growth plans during the year. However, we continue to monitor the potential impact of these trends on our future plans.

OFF-BALANCE SHEET ARRANGEMENTS

Except as disclosed in the notes to our consolidated financial statements of our most recently filed Annual Report on Form 10-K, 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 condensed consolidated 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.

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 3.    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 September 30, 2022, we had approximately $7.0 billion in total face value of debt, of which approximately $2.7 billion was subject to variable interest rates (excluding debt with interest rate swaps). If LIBOR or SOFR 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 $26.6 million annually.

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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.

ITEM 4.    CONTROLS AND PROCEDURES

(1)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 Securities and Exchange Commission, 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 a 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 our disclosure obligations 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 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.

(2)Changes in internal control over financial reporting

There were no changes 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 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.     OTHER INFORMATION

ITEM 1.    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. 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.

ITEM 1A.    RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition and results of operations. There have been no material changes to the risk factors described in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2021. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and results of operations.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On September 15, 2022, we issued a total of 619,294 common Operating Partnership units (“OP Units”) at an average price of $201.84 per share (a total value of $125.0 million) in connection with the acquisition of various entities doing business as Storage Express. The OP Units were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

The terms of the OP Units are governed by the Operating Partnership’s Fourth Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”). The OP Units will be redeemable, at the option of the holders following the expiration of a lock-up period of at least one year from the date of issuance. The redemption obligation may be satisfied, at the Company’s option, in cash or shares of the Company’s common stock. If the Company chooses to satisfy its redemption obligation with respect to the OP Units in its common stock, each OP Unit would receive one share of common stock, subject to adjustment pursuant to the Partnership Agreement.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.    OTHER INFORMATION

None.

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ITEM 6.    EXHIBITS

22.1    Issuer and Guarantors of Guaranteed Securities

31.1     Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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.

101     The following materials from Extra Space Storage Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, are formatted in XBRL (eXtensible Business Reporting Language): (1) the Condensed Consolidated Balance Sheets, (2) the Condensed Consolidated Statements of Operations, (3) the Condensed Consolidated Statements of Comprehensive Income (4) the Condensed Consolidated Statement of Noncontrolling Interests and Equity, (5) the Condensed Consolidated Statements of Cash Flows and (6) notes to these financial statements.

104    Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	EXTRA SPACE STORAGE INC.
	Registrant
Date: November 4, 2022	/s/ Joseph D. Margolis
	Joseph D. Margolis
	Chief Executive Officer (Principal Executive Officer)
Date: November 4, 2022	/s/ P. Scott Stubbs
	P. Scott Stubbs
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

46

EX-22.1

Exhibit 22.1

Issuer and Guarantors of Guaranteed Securities

The following entities are included in the Obligated Group, as defined in the Quarterly Report on Form 10-Q of Extra Space Storage Inc. to which this document is being filed as an exhibit, for the 3.900% Senior Notes due 2029, the 2.550% Senior Notes due 2031 and the 2.350% Senior Notes due 2032 (collectively, the "Notes"). The guarantors have fully and unconditionally guaranteed the Notes on a joint and several basis.

Name of Issuer or Guarantor	Reported as Issuer or Guarantor	State of Incorporation or Organization
Extra Space Storage LP	Issuer	Delaware
Extra Space Storage Inc.	Parent Guarantor	Maryland
ESS Holdings Business Trust I	Subsidiary Guarantor	Massachusetts
ESS Holdings Business Trust II	Subsidiary Guarantor	Massachusetts

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joseph D. Margolis, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Extra Space Storage Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2022	By:	/s/ Joseph D. Margolis
	Name:	Joseph D. Margolis
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, P. Scott Stubbs, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Extra Space Storage Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2022	By:	/s/ P. Scott Stubbs
	Name:	P. Scott Stubbs
	Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of 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

The undersigned, the Chief Executive Officer of Extra Space Storage Inc. (the “Company”), hereby certifies to his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the “Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Joseph D. Margolis
Name:	Joseph D. Margolis
Title:	Chief Executive Officer
Date:	November 4, 2022

The undersigned, the Chief Financial Officer of Extra Space Storage Inc. (the “Company”), hereby certifies to his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 (the “Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ P. Scott Stubbs
Name:	P. Scott Stubbs
Title:	Executive Vice President and Chief Financial Officer
Date:	November 4, 2022

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-32269
Entity Registrant Name	EXTRA SPACE STORAGE INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	20-1076777
Entity Address, Address Line One	2795 East Cottonwood Parkway, Suite 300
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84121
City Area Code	801
Local Phone Number	365-4600
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	EXR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		133,921,528
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001289490
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Assets:
Real estate assets, net	$ 9,877,080	$ 8,834,649
Real estate assets - operating lease right-of-use assets	226,984	227,949
Investments in unconsolidated real estate entities	568,691	457,326
Investments in debt securities and notes receivable	658,663	719,187
Cash and cash equivalents	86,991	71,126
Restricted cash	7,363	5,068
Other assets, net	414,873	159,172
Total assets	11,840,645	10,474,477
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net	1,296,830	1,320,755
Unsecured term loans, net	2,339,419	1,741,926
Unsecured senior notes, net	2,757,285	2,360,066
Revolving lines of credit	600,000	535,000
Operating lease liabilities	233,832	233,356
Cash distributions in unconsolidated real estate ventures	66,141	63,582
Accounts payable and accrued expenses	191,183	142,285
Other liabilities	286,657	291,531
Total liabilities	7,771,347	6,688,501
Commitments and contingencies
Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.01 par value, 500,000,000 shares authorized, 133,918,037 and 133,922,305 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	1,339	1,339
Additional paid-in capital	3,339,961	3,285,948
Accumulated other comprehensive income (loss)	48,521	(42,546)
Accumulated deficit	(139,250)	(128,245)
Total Extra Space Storage Inc. stockholders' equity	3,250,571	3,116,496
Noncontrolling interest represented by Preferred Operating Partnership units, net	261,494	259,110
Noncontrolling interests in Operating Partnership, net and other noncontrolling interests	557,233	410,370
Total noncontrolling interests and equity	4,069,298	3,785,976
Total liabilities, noncontrolling interests and equity	$ 11,840,645	$ 10,474,477

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000	50,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	500,000,000	500,000,000
Common stock, issued (in shares)	133,918,037	133,922,305
Common stock, outstanding (in shares)	133,918,037	133,922,305

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Property rental	$ 428,787	$ 351,355	$ 1,216,639	$ 976,448
Tenant reinsurance	47,869	44,258	138,093	126,211
Management fees and other income	22,246	16,879	62,720	47,320
Total revenues	498,902	412,492	1,417,452	1,149,979
Expenses:
Property operations	114,577	92,794	322,371	274,316
Tenant reinsurance	10,770	7,509	25,349	21,405
Transaction related costs	0	0	1,465	0
General and administrative	32,275	24,395	93,288	74,276
Depreciation and amortization	71,423	61,516	208,396	179,685
Total expenses	229,045	186,214	650,869	549,682
Gain on real estate transactions	0	0	14,249	63,883
Income from operations	269,857	226,278	780,832	664,180
Interest expense	(56,245)	(39,670)	(146,249)	(120,605)
Interest income	18,125	11,729	52,174	36,871
Income before equity in earnings and dividend income from unconsolidated real estate ventures and income tax expense	231,737	198,337	686,757	580,446
Equity in earnings and dividend income from unconsolidated real estate entities	11,149	8,255	30,436	23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	0	0	0	6,251
Income tax expense	(6,760)	(6,772)	(15,516)	(16,330)
Net income	236,126	199,820	701,677	593,900
Net income allocated to Preferred Operating Partnership noncontrolling interests	(4,454)	(3,529)	(13,278)	(10,647)
Net income allocated to Operating Partnership and other noncontrolling interests	(10,953)	(8,015)	(31,971)	(24,031)
Net income attributable to common stockholders	$ 220,719	$ 188,276	$ 656,428	$ 559,222
Earnings per common share
Basic (in dollars per share)	$ 1.65	$ 1.41	$ 4.89	$ 4.19
Diluted (in dollars per share)	$ 1.65	$ 1.40	$ 4.89	$ 4.19
Weighted average number of shares
Basic (in shares)	133,913,652	133,809,750	134,094,490	133,197,903
Diluted (in shares)	141,504,215	140,425,269	141,567,845	139,854,881
Cash dividends paid per common share (in dollars per share)	$ 1.50	$ 1.25	$ 4.50	$ 3.25

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 236,126	$ 199,820	$ 701,677	$ 593,900
Other comprehensive income:
Change in fair value of interest rate swaps	24,222	8,055	95,984	36,685
Total comprehensive income	260,348	207,875	797,661	630,585
Less: comprehensive income attributable to noncontrolling interests	16,663	11,924	50,166	36,425
Comprehensive income attributable to common stockholders	$ 243,685	$ 195,951	$ 747,495	$ 594,160

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Condensed Consolidated Statement of Noncontrolling Interests and Equity - USD ($) $ in Thousands	Total	Series D Units	Redemption of Operating Partnership units for stock	Redemption of Operating Partnership units for cash	Redemption of Operating Partnership units for cash Series B Units	Noncontrolling Interest - Preferred Operating Partnership	Noncontrolling Interest - Preferred Operating Partnership Series D Units	Noncontrolling Interest - Preferred Operating Partnership Redemption of Operating Partnership units for stock	Noncontrolling Interest - Preferred Operating Partnership Redemption of Operating Partnership units for cash Series B Units	Noncontrolling Interest - Operating Partnership	Noncontrolling Interest - Operating Partnership Redemption of Operating Partnership units for stock	Noncontrolling Interest - Operating Partnership Redemption of Operating Partnership units for cash	Noncontrolling Interest - Other	Common Stock	Common Stock Redemption of Operating Partnership units for stock	Additional Paid-in Capital	Additional Paid-in Capital Redemption of Operating Partnership units for stock	Additional Paid-in Capital Redemption of Operating Partnership units for cash	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance, beginning of period at Dec. 31, 2020	$ 2,936,124					$ 172,052				$ 215,892			$ 401	$ 1,314		$ 3,000,458			$ (99,093)	$ (354,900)
Balance, beginning of period (in shares) at Dec. 31, 2020														131,357,961
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of options (in shares)														56,722
Issuance of common stock upon the exercise of options	4,254															4,254
Issuance of common stock in connection with share based compensation (in shares)														89,793
Issuance of common stock in connection with share based compensation	3,652															3,652
Restricted stock grants cancelled (in shares)														(2,499)
Issuance of common stock, net of offering costs (in shares)														2,185,685
Issuance of common stock, net of offering costs	273,720													$ 22		273,698
Redemption of operating partnership units			$ 0								$ (193)						$ 193
Redemption of Operating Partnership units (in shares)															5,000
Noncontrolling interest in consolidated joint venture	(50)												(50)
Net income	215,501					3,680				8,828			(5)							202,998
Other comprehensive income	23,013					144				956									21,913
Distributions to Operating Partnership units held by noncontrolling interests	(9,025)					(3,224)				(5,801)
Dividends paid on common stock	(132,540)																			(132,540)
Balance, end of period at Mar. 31, 2021	3,314,649					172,652				219,682			346	$ 1,336		3,282,255			(77,180)	(284,442)
Balance, end of period (in shares) at Mar. 31, 2021														133,692,662
Balance, beginning of period at Dec. 31, 2020	2,936,124					172,052				215,892			401	$ 1,314		3,000,458			(99,093)	(354,900)
Balance, beginning of period (in shares) at Dec. 31, 2020														131,357,961
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	593,900
Balance, end of period at Sep. 30, 2021	3,382,875					170,248				220,591			274	$ 1,338		3,283,848			(64,155)	(229,269)
Balance, end of period (in shares) at Sep. 30, 2021														133,819,163
Balance, beginning of period at Mar. 31, 2021	3,314,649					172,652				219,682			346	$ 1,336		3,282,255			(77,180)	(284,442)
Balance, beginning of period (in shares) at Mar. 31, 2021														133,692,662
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)														44,990
Issuance of common stock in connection with share based compensation	4,983															4,983
Restricted stock grants cancelled (in shares)														(4,972)
Offering costs associated with previous stock issuance	(211)															(211)
Redemption of operating partnership units			0	$ (472)							(2,185)	$ (113)			$ 1		2,184	$ (359)
Redemption of Operating Partnership units (in shares)															58,429
Repayment of receivable with Operating Partnership units pledged as collateral	411									411
Noncontrolling interest in consolidated joint venture	150												150
Net income	178,579					3,438				7,190			3							167,948
Other comprehensive income	5,617					35				232									5,350
Distributions to Operating Partnership units held by noncontrolling interests	(8,974)					(3,223)				(5,751)
Dividends paid on common stock	(133,777)																			(133,777)
Balance, end of period at Jun. 30, 2021	3,360,955					172,902				219,466			499	$ 1,337		3,288,852			(71,830)	(250,271)
Balance, end of period (in shares) at Jun. 30, 2021														133,791,109
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of options (in shares)														5,600
Issuance of common stock upon the exercise of options	318															318
Issuance of common stock in connection with share based compensation (in shares)														10,913
Issuance of common stock in connection with share based compensation	4,012															4,012
Restricted stock grants cancelled (in shares)														(4,582)
Issuance of common stock, net of offering costs	(151)															(151)
Redemption of operating partnership units			0								$ (34)						34
Redemption of Operating Partnership units (in shares)															858
Redemption of Preferred B Units in the Operating Partnership for stock			$ 0					$ (2,834)							$ 1		$ 2,833
Redemption of preferred B units in the Operating Partnership for stock (in shares)															15,265
Purchase of remaining equity interest in existing consolidated joint venture	(12,050)															(12,050)
Noncontrolling interest in consolidated joint venture													(225)
Net income	199,820					3,529				8,015										188,276
Other comprehensive income	8,055					50				330									7,675
Distributions to Operating Partnership units held by noncontrolling interests	(10,585)					(3,399)				(7,186)
Dividends paid on common stock	(167,274)																			(167,274)
Balance, end of period at Sep. 30, 2021	3,382,875					170,248				220,591			274	$ 1,338		3,283,848			(64,155)	(229,269)
Balance, end of period (in shares) at Sep. 30, 2021														133,819,163
Balance, beginning of period at Dec. 31, 2021	$ 3,785,976					259,110				410,053			317	$ 1,339		3,285,948			(42,546)	(128,245)
Balance, beginning of period (in shares) at Dec. 31, 2021	133,922,305													133,922,305
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)														142,784
Issuance of common stock in connection with share based compensation	$ 4,542															4,542
Restricted stock grants cancelled (in shares)														(779)
Redemption of operating partnership units				(2,672)	$ (3,375)				$ (3,375)			(829)						(1,843)
Issuance of common stock in conjunction with acquisitions	40,965													$ 4		40,961
Issuance of common stock in conjunction with acquisitions (in shares)														186,766
Net income	217,717					4,333				9,805										203,579
Other comprehensive income	51,649					313				2,333									49,003
Distributions to Operating Partnership units held by noncontrolling interests	(14,111)					(4,330)				(9,781)
Dividends paid on common stock	(202,527)																			(202,527)
Balance, end of period at Mar. 31, 2022	3,878,164					256,051				411,581			317	$ 1,343		3,329,608			6,457	(127,193)
Balance, end of period (in shares) at Mar. 31, 2022														134,251,076
Balance, beginning of period at Dec. 31, 2021	$ 3,785,976					259,110				410,053			317	$ 1,339		3,285,948			(42,546)	(128,245)
Balance, beginning of period (in shares) at Dec. 31, 2021	133,922,305													133,922,305
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Buyback of common stock, net of offering costs	$ (63,008)
Buyback of common stock, net of offering costs (in shares)	(381,786)
Net income	$ 701,677
Balance, end of period at Sep. 30, 2022	$ 4,069,298					261,494				556,578			655	$ 1,339		3,339,961			48,521	(139,250)
Balance, end of period (in shares) at Sep. 30, 2022	133,918,037													133,918,037
Balance, beginning of period at Mar. 31, 2022	$ 3,878,164					256,051				411,581			317	$ 1,343		3,329,608			6,457	(127,193)
Balance, beginning of period (in shares) at Mar. 31, 2022														134,251,076
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)														38,016
Issuance of common stock in connection with share based compensation	5,245															5,245
Restricted stock grants cancelled (in shares)														(7,122)
Issuance of noncontrolling interests in conjunction with business combinations	16,000	$ 6,000					$ 6,000			16,000
Redemption of operating partnership units				$ (832)	$ (1,125)				$ (1,125)			$ (296)						$ (536)
Buyback of common stock, net of offering costs	(63,008)													$ (4)						(63,004)
Buyback of common stock, net of offering costs (in shares)														(381,786)
Net income	247,834					4,491				11,213										232,130
Other comprehensive income	20,113					120				895									19,098
Distributions to Operating Partnership units held by noncontrolling interests	(14,127)					(4,306)				(9,821)
Dividends paid on common stock	(201,024)																			(201,024)
Balance, end of period at Jun. 30, 2022	3,893,240					261,231				429,572			317	$ 1,339		3,334,317			25,555	(159,091)
Balance, end of period (in shares) at Jun. 30, 2022														133,900,184
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with share based compensation (in shares)														19,654
Issuance of common stock in connection with share based compensation	5,644															5,644
Restricted stock grants cancelled (in shares)														(1,801)
Issuance of noncontrolling interests in conjunction with business combinations	125,000
Noncontrolling interest in consolidated joint venture	338												338
Net income	236,126					4,454				10,953										220,719
Other comprehensive income	24,222					145				1,111									22,966
Distributions to Operating Partnership units held by noncontrolling interests	(14,394)					(4,336)				(10,058)
Dividends paid on common stock	(200,878)																			(200,878)
Balance, end of period at Sep. 30, 2022	$ 4,069,298					$ 261,494				$ 556,578			$ 655	$ 1,339		$ 3,339,961			$ 48,521	$ (139,250)
Balance, end of period (in shares) at Sep. 30, 2022	133,918,037													133,918,037

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Condensed Consolidated Statement of Noncontrolling Interests and Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021
Statement of Stockholders' Equity [Abstract]
Dividends paid on common stock (in dollars per share)	$ 1.50	$ 1.50	$ 1.50	$ 1.25	$ 1.00	$ 1.00

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net income	$ 701,677	$ 593,900
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	208,396	179,685
Amortization of deferred financing costs	6,352	6,656
Non-cash lease expense	1,441	1,396
Compensation expense related to stock-based awards	15,431	12,647
Accrual of interest income added to principal of debt securities and notes receivable	(28,514)	(25,871)
Gain on real estate transactions	(14,249)	(63,883)
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	0	(6,251)
Distributions from unconsolidated real estate ventures in excess of earnings	9,380	4,640
Changes in operating assets and liabilities:
Other assets	(4,207)	(10,612)
Accounts payable and accrued expenses	48,898	33,907
Other liabilities	3,416	3,054
Net cash provided by operating activities	948,021	729,268
Cash flows from investing activities:
Acquisition of real estate assets	(1,124,777)	(589,382)
Cash paid for business combination	(157,301)	0
Development and redevelopment of real estate assets	(31,652)	(42,719)
Proceeds from sale of real estate assets and investments in real estate ventures	39,367	196,241
Investment in unconsolidated real estate entities	(102,670)	(20,834)
Return of investment in unconsolidated real estate ventures	342	31,534
Issuance and purchase of notes receivable	(314,542)	(143,270)
Principal payments received from notes receivable	264,774	36,874
Proceeds from sale of notes receivable	203,695	116,822
Purchase of equipment and fixtures	(19,490)	(3,058)
Net cash used in investing activities	(1,242,254)	(417,792)
Cash flows from financing activities:
Proceeds from the sale of common stock, net of offering costs	0	273,358
Proceeds from notes payable and revolving lines of credit	3,983,865	3,323,000
Principal payments on notes payable and revolving lines of credit	(3,341,881)	(4,526,549)
Proceeds from issuance of public bonds, net	396,100	1,040,349
Deferred financing costs	(7,618)	(10,698)
Net proceeds from exercise of stock options	0	4,572
Repurchase of common stock	(63,008)	0
Redemption of Operating Partnership units held by noncontrolling interests	(3,504)	(472)
Redemption of Preferred B Units for cash	(4,500)	0
Proceeds from principal payments on note receivable collateralized by OP Units	0	411
Dividends paid on common stock	(604,429)	(433,591)
Distributions to noncontrolling interests	(42,632)	(28,584)
Net cash provided by (used in) financing activities	312,393	(358,204)
Net increase (decrease) in cash, cash equivalents, and restricted cash	18,160	(46,728)
Cash, cash equivalents, and restricted cash, beginning of the period	76,194	128,009
Cash, cash equivalents, and restricted cash, end of the period	94,354	81,281
Supplemental schedule of cash flow information
Interest paid	137,683	116,937
Income taxes paid	14,489	21,365
Redemption of Operating Partnership units held by noncontrolling interests for common stock
Noncontrolling interests in Operating Partnership	0	(2,412)
Common stock and paid-in capital	0	2,412
Acquisition and establishment of operating lease right of use assets and lease liabilities
Real estate assets - operating lease right-of-use assets	1,689	2,911
Operating lease liabilities	(1,689)	(2,911)
Acquisitions of real estate assets
Real estate assets, net	173,873	3,021
Value of equity issued	(165,965)	0
Investment in unconsolidated real estate ventures	(1,085)	(2,673)
Finance lease liability	(6,823)	(348)
Accrued construction costs and capital expenditures
Acquisition of real estate assets	0	756
Accounts payable and accrued expenses	0	(756)
Redemption of Preferred Operating Partnership units for common stock
Preferred Operating Partnership units	0	(2,834)
Additional paid-in capital	0	2,834
Establishment of finance lease assets and lease liabilities
Real estate assets, net	0	41,438
Other liabilities	0	(41,438)
Investment in unconsolidated real estate ventures received on sale of stores to joint venture
Investment in unconsolidated real estate ventures	0	33,878
Real estate assets	0	(33,878)
Preferred OP Units
Issuance of OP and Preferred OP units in conjunction with business combinations
Equity interests issued	(6,000)	0
Common OP Units
Issuance of OP and Preferred OP units in conjunction with business combinations
Equity interests issued	$ (16,000)	$ 0

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Organization

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

ORGANIZATION

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 self-storage properties ("stores") located throughout the United States. The Company was formed to continue 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 invests in stores by acquiring wholly-owned stores or by acquiring an equity interest in real estate entities. At September 30, 2022, the Company had direct and indirect equity interests in 1,441 stores. In addition, the Company managed 886 stores for third parties, bringing the total number of stores which it owns and/or manages to 2,327. These stores are located in 41 states and Washington, D.C. The Company also offers tenant reinsurance at its owned and managed stores that insures the value of goods in the storage units.

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Basis of Presentation

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission.

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The Company also elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes are made to applicable debt and derivative contracts. Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope", which refines the scope of Topic 848 and clarifies some of its guidance. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company has begun transitioning debt over to Secured Overnight Financing Rate ("SOFR") as part of the reference rate reform.

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Fair Value Disclosures

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Disclosures

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 FASB’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 the Company and its counterparties. However, as of September 30, 2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	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	$	—	$	54,977	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of September 30, 2022 or December 31, 2021.

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 an impairment loss on the assets held for sale. The operations of assets held for sale or sold during the period is presented as part of normal operations for all periods presented. As of September 30, 2022, the Company had no operating stores classified as held for sale which are included in real estate assets, net.

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 annually 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.

In connection with the Company’s acquisition of stores, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their relative 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. Any 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 capitalized as part of the purchase price. For acquisitions that meet the definition of a business, the Company estimates the fair value of the identifiable assets and liabilities of the acquired entity on the acquisition date. We measure goodwill as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. Acquisition-related expenses arising from the transaction are expensed as incurred. The Company includes the results of operations of the businesses that it acquires beginning on the acquisition date.

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, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021 approximate fair value. Restricted cash is comprised of funds deposited with financial institutions located throughout the United States primarily relating to earnest money deposits on potential acquisitions.

The fair values of the Company’s notes receivable from Preferred and Common Operating Partnership unit holders and other fixed rate notes receivable were based on the discounted estimated future cash flows 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 were estimated using the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality.

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

	September 30, 2022				December 31, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	95,276	$	101,900	$	101,824	$	101,900
Fixed rate notes receivable	$	3,839	$	3,867	$	105,954	$	104,251
Fixed rate debt	$	3,899,556	$	4,367,099	$	4,643,072	$	4,506,435

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Real Estate Assets

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Real Estate Assets

REAL ESTATE ASSETSThe components of real estate assets are summarized as follows:

	September 30, 2022		December 31, 2021
Land	$	2,327,366	$	2,151,319
Buildings, improvements and other intangibles	9,256,894		8,227,094
Right of use asset - finance lease	136,259		117,718
Intangible assets - tenant relationships	147,460		134,577
Intangible lease rights	16,543		12,443
	11,884,522		10,643,151
Less: accumulated depreciation and amortization	(2,061,814)		(1,867,750)
Net operating real estate assets	9,822,708		8,775,401
Real estate under development/redevelopment	54,372		59,248
Real estate assets, net	$	9,877,080	$	8,834,649
Real estate assets held for sale included in real estate assets, net	$	—	$	8,436

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Other Assets

9 Months Ended

Sep. 30, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

OTHER ASSETS

The components of other assets are summarized as follows:

	September 30, 2022		December 31, 2021
Equipment and fixtures, net	$	42,713	$	29,060
Deferred line of credit financing costs, net	6,173		7,408
Prepaid expenses and deposits	60,866		39,384
Receivables, net	79,333		83,050
Goodwill	170,811		—
Fair value of interest rate swaps	54,977		270
	$	414,873	$	159,172

We evaluate goodwill for impairment annually in the fourth quarter and whenever events, circumstances, and other related factors indicate that fair value of the related reporting unit may be less than the carrying value. If we determine that the fair value of the reporting unit exceeds the aggregate carrying amount, no impairment charge is recorded. Otherwise, we record an impairment charge to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Common Share

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

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 (i.e. those that reduce earnings per common share) are included.

For the purposes of computing the diluted impact of the potential exchange of the Preferred Operating Partnership units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the intent and ability to settle the redemption in shares, the Company divided the total value of the Preferred Operating Partnership units by the average share price for the period presented. The average share price for the three months ended September 30, 2022 and 2021 was $189.11 and $176.78, respectively.

The following table presents the number of 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 Three Months Ended September 30,		For the Nine Months Ended September 30,
	2022	2021	2022	2021
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	177,506	225,972	181,408	271,132
Series D Units	1,118,056	663,888	1,089,389	784,139
	1,295,562	889,860	1,270,797	1,055,271

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 $101,700 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 $101,700 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. Accordingly, the number of shares included in the computation for diluted earnings per share related to the Series A Units is equal to the number of Series A Units outstanding, with no additional shares included related to the fixed $101,700 amount.

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to common stockholders	$	220,719	$	188,276	$	656,428	$	559,222
Earnings and dividends allocated to participating securities	(313)		(260)		(914)		(800)
Earnings for basic computations	220,406		188,016		655,514		558,422
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,954		9,810		37,932		29,395
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	(572)		(572)		(1,716)		(1,716)
Net income for diluted computations	$	232,788	$	197,254	$	691,730	$	586,101
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	133,913,652		133,809,750		134,094,490		133,197,903
OP Units	6,709,854		5,733,936		6,592,606		5,767,132
Series A Units	875,480		875,480		875,480		875,480
Shares related to dilutive stock options	5,229		6,103		5,269		14,366
Average number of common shares outstanding - diluted	141,504,215		140,425,269		141,567,845		139,854,881
Earnings per common share
Basic	$	1.65	$	1.41	$	4.89	$	4.19
Diluted	$	1.65	$	1.40	$	4.89	$	4.19

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Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Acquisitions and Dispositions

ACQUISITIONS AND DISPOSITIONS

Store Acquisitions

The following table shows the Company’s acquisitions of stores for the three and nine months ended September 30, 2022 and 2021. The table excludes purchases of raw land and improvements made to existing assets. All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

												Total
Quarter	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q3 2022	118	$	639,071	$	—	$	338	$	(2,291)	$	125,000	$	762,118
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	147	$	1,045,914	$	6,823	$	1,085	$	(1,206)	$	165,965	$	1,218,581
Q3 2021	12	$	185,497	$	348	$	—	$	747	$	—	$	186,592
Q2 2021	15	190,729		—		2,673		381		—		193,783
Q1 2021	9	148,940		—		—		2,944		—		151,884
Total 2021	36	$	525,166	$	348	$	2,673	$	4,072	$	—	$	532,259

On September 15, 2022 the Company completed the acquisition of multiple entities doing business as Storage Express for a purchase price of $590.0 million. A portion of the consideration paid was in the form of the issuance of 619,294 OP units (a total value of $125.0 million) and the remainder in cash. The portfolio included 106 operating stores and eight parcels of land for future development, all located in Illinois, Indiana, Kentucky and Ohio. This acquisition did not meet the definition of a business under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" and was therefore considered an asset acquisition.

Subsequent to September 30, 2022 the Company purchased six operating stores for a total purchase price of $147 million.

Other Investments

On June 1, 2022 the Company completed the acquisition of Bargold Storage Systems, LLC ("Bargold") for a purchase price of approximately $179.3 million. Bargold leases space in apartment buildings, primarily in New York City and its boroughs, builds out the space as storage units, and subleases the units to tenants. As of June 1, 2022, Bargold had approximately 17,000 storage units with an approximate occupancy of 97%. This acquisition is considered a business combination under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

The following table summarizes the total consideration transferred to acquire Bargold:

Total cash paid by the company	$	157,302
Fair value of Series D Units issued	16,000
Fair value of OP Units issued	6,000
Total consideration transferred	$	179,302

As part of this acquisition, we recorded an expense of $1,465 related to transaction costs.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	$	179,302

The following table summarizes the revenues and earnings related to Bargold since the acquisition date of June 1, 2022, which are included in the Company's consolidated statement of operations for the nine months ended September 30, 2022:

Total revenues	$	5,389
Net income from operations	$	1,773

Pro Forma Information

As noted above, during the nine months ended September 30, 2022, the Company acquired Bargold. The following pro forma financial information is based on the combined historical financial statements of the Company and Bargold, however, only includes revenue and presents the Company's results as if the acquisition had occurred on January 1, 2021. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.

	For the Nine Months Ended September 30, 2022		For the Year Ended December 31, 2021
	Pro Forma		Pro Forma
Total revenues	$	1,424,098	$	1,592,021

Dispositions

The Company disposed of two previously held for sale stores during the nine months ended September 30, 2022 , for approximately $38.7 million, resulting in a gain of $14.2 million.

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Investments in Unconsolidated Real Estate Entities

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Real Estate Entities

INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

Investments in unconsolidated real estate entities and cash distributions in unconsolidated real estate ventures represent the Company's interest in preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") and the Company's noncontrolling interest in real estate joint ventures that own stores. The Company accounts for its investment in SmartStop preferred stock, which does not have a readily determinable fair value, at the transaction price less impairment, if any. The Company accounts for its investments in joint ventures using the equity method of accounting. The Company initially records these investments at cost and subsequently adjusts for cash contributions, distributions and net equity in income or loss, which is allocated in accordance with the provisions of the applicable partnership or joint venture agreement.

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

The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets. The net equity of certain joint ventures is less than zero because distributions have exceeded the Company's investment in and share of income from these joint ventures. This is generally the result of financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.

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

	Number of Stores	Equity Ownership %	Excess Profit % (1)	September 30,		December 31,
				2022		2021
PRISA Self Storage LLC	85	4%	4%	$	8,606	$	8,792
Storage Portfolio II JV LLC	36	10%	30%	(6,863)		(6,116)
Storage Portfolio IV JV LLC	32	10%	30%	49,584		40,174
Storage Portfolio I LLC	24	34%	49%	(40,957)		(40,168)
PR II EXR JV LLC	23	25%	25%	110,553		70,403
ESS-CA TIVS JV LP	16	55%	60%	31,222		32,288
VRS Self Storage, LLC	16	45%	54%	(15,055)		(14,269)
ACPF-EXR JV LLC	12	10%	30%	19,227		—
ESS-NYFL JV LP	11	16%	24%	11,409		11,796
Extra Space Northern Properties Six LLC	10	10%	35%	(3,266)		(3,029)
Alan Jathoo JV LLC	9	10%	10%	7,460		7,621
ESS Bristol Investments LLC	8	10%	30%	2,122		2,628
ESS - BGO Atlanta GA JV LLC	6	20%	35%	25,713		—
PR EXR Self Storage, LLC	5	25%	40%	58,703		59,393
Storage Portfolio III JV LLC	5	10%	30%	5,484		5,596
Storage Portfolio V JV LLC	5	10%	30%	8,557		—
Other unconsolidated real estate ventures	12	20-50%	20-50%	30,051		18,635
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Net Investments in and Cash distributions in unconsolidated real estate entities	315			$	502,550	$	393,744

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

(2) The Company invested in shares of convertible preferred stock of SmartStop. The dividend rate for the preferred shares is 6.25% per annum, subject to increase after five years. The preferred shares are generally not redeemable for five years, except in the case of a change of control or initial listing of SmartStop. Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's condensed consolidated statements of operations.

During the nine months ended September 30, 2022, the Company contributed a total of $102,670 of cash to its joint ventures, for its pro-rata portion of the purchase price of 29 operating stores.

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Investments in Debt Securities and Notes Receivable

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments in Debt Securities and Notes Receivable

INVESTMENTS IN DEBT SECURITIES AND NOTES RECEIVABLEInvestments in debt securities and notes receivable consists of the Company's investment in mandatorily redeemable preferred stock of Jernigan Capital, Inc. ("JCAP") in connection with JCAP's acquisition by affiliates of NexPoint Advisors, L.P. ("NexPoint Investment") and receivables due to the Company under its bridge loan program. Information about these

balances is as follows:

	September 30, 2022		December 31, 2021
Debt securities - NexPoint Series A Preferred Stock	$	200,000	$	200,000
Debt securities - NexPoint Series B Preferred Stock	100,000		100,000
Notes Receivable - Bridge Loans	298,108		279,042
Notes Receivable - Senior Mezzanine Loan, net	—		102,079
Dividends Receivable	60,555		38,066
	$	658,663	$	719,187

In November 2020, the Company invested $300,000 in the preferred stock of JCAP in connection with the acquisition of JCAP by affiliates of NexPoint Advisors, L.P. This investment consists of 200,000 Series A Preferred Shares valued at a total of $200,000, and 100,000 Series B Preferred Shares valued at a total of $100,000. The JCAP preferred stock is mandatorily redeemable after five years, with two one-year extension options. NexPoint may redeem the Preferred Shares at any time, subject to certain prepayment penalties. The Company accounts for the JCAP preferred stock as a held to maturity debt security at amortized cost. The Series A Preferred Shares and the Series B Preferred Shares have initial dividend rates of 10.0% and 12.0%, respectively. If the investment is not retired after five years, the preferred dividends increase annually.

In July 2020, the Company purchased a senior mezzanine note receivable with a principal amount of $103,000. This note receivable bore interest at 5.5%, matured in December 2023 and was collateralized through an equity interest in which it or its subsidiaries wholly own 62 storage facilities. The Company paid cash of $101,142 for the loan receivable and accounted for the discount at amortized cost. The discount was being amortized over the term of the loan receivable. In February 2022, a junior mezzanine lender exercised its right to buy the Company’s position for the full principal balance plus interest due, as a result of which the Company sold this note for a total of $103,315 in cash. The remaining unamortized discount was recognized in the quarter as interest income.

The Company provides bridge loan financing to third-party self-storage operators. These notes receivable consist of mortgage loans receivable, collateralized by self-storage properties. These notes receivable typically have a term of three years with two one-year extensions, and have variable interest rates. The Company intends to sell the majority of the mortgage receivables. During the nine months ended September 30, 2022 the Company sold a total principal amount of $204,887 of its mortgage bridge loans receivable to third parties for a total of $203,695 in cash and closed on $314,542 in new mortgage bridge loans.

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Debt

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt

DEBT

In March 2022, the Operating Partnership executed a public bond issuance by selling $400.0 million principal amount of 3.900% Senior Notes due 2029 (the "Notes Due 2029"). Interest on the Notes Due 2029 is paid semi-annually in arrears on April 1 and October 1 of each year. The Notes Due 2029 will mature on April 1, 2029, and the Operating Partnership may redeem the Notes Due 2029 at its option and sole discretion at any time prior to April 1, 2029 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

In September 2021, the Operating Partnership executed a public bond issuance by selling $600.0 million principal amount of 2.350% Senior Notes due 2032 (the "Notes Due 2032"). Interest on the Notes Due 2032 is paid semi-annually in arrears on March 15 and September 15 of each year. The Notes Due 2032 will mature on March 15, 2032, and the Operating Partnership may redeem the Notes Due 2032 at its option and sole discretion at any time prior to March 15, 2032 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

In May 2021, the Operating Partnership executed its initial public bond issuance by selling $450.0 million principal amount of 2.550% Senior Notes due 2031 (the "Notes Due 2031"). Interest on the Notes Due 2031 is paid semi-annually in arrears on June 1 and December 1 of each year. The Notes Due 2031 will mature on June 1, 2031, and the Operating Partnership may redeem the Notes Due 2031 at its option and sole discretion at any time prior to March 31, 2031 for cash equal to the outstanding principal amount plus the present value of the remaining scheduled interest payments, plus any accrued but unpaid interest.

The Operating Partner may redeem the Notes Due 2029, the Notes Due 2031 and/or the Notes Due 2032 in whole at any time or in part from time to time, at the Operating Partnership’s option and sole discretion, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) a make-whole premium calculated in accordance with the indenture governing the notes, plus, in each case, accrued and unpaid interest thereon to, but not including, the applicable redemption date. Notwithstanding the foregoing, on or after the date three months prior to the maturity date of the applicable notes, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest thereon to, but not including, the applicable redemption date.

Certain events are considered events of default, which may result in the accelerated maturity of the Notes Due 2029, the Notes Due 2031 and/or the Notes Due 2032, including, among other things, a default for 30 days in the payment of any installment of interest under the notes or a default in the payment of the principal amount or redemption price due with respect to the notes, when the same become due and payable.

The Notes Due 2029, the Notes Due 2031 and the Notes Due 2032 are unsecured, and are fully and unconditionally guaranteed by the Company, ESS Holdings Business Trust I, and ESS Holdings Business Trust II (the "Guarantors," and together with the Operating Partnership, the "Obligated Group"), on a joint and several basis. The guarantee of the Notes Due 2031 and the Notes Due 2032 will be a senior unsecured obligation of each Guarantor. The Guarantors have no material operations separate from the operation of the Operating Partnership and no material assets, other than their respective investments directly or indirectly in the Operating Partnership, and therefore the assets, liabilities, and results of operations of the Obligated Group are not materially different than those reported in the Company's financial statements.

The components of term debt are summarized as follows:

Term Debt	September 30, 2022		December 31, 2021		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	526,722	$	930,830	2.46% - 4.50%		February 2023 - February 2030
Secured variable-rate (1)	774,375		392,679			4.04% - 4.48%	August 2023 - September 2030
Unsecured fixed-rate	3,840,376		3,575,000		2.35% - 4.39%		January 2025 - March 2032
Unsecured variable-rate	1,284,624		550,000			4.09% - 4.39%	February 2024 - July 2029
Total	6,426,097		5,448,509
Less: Unamortized debt issuance costs	(32,563)		(25,762)
Total	$	6,393,534	$	5,422,747
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Term SOFR and Daily Simple SOFR.

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at September 30, 2022:

2022	$	—
2023	391,725
2024	425,000
2025	711,202
2026	807,815
Thereafter	4,090,355
	$	6,426,097

As of September 30, 2022, the terms of the Second Amended and Restated Credit Agreement dated June 22, 2021 (the "Credit Agreement") are as follows:

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,250,000	June 2025
Tranche 1 Term Loan Facility (1)	400,000		January 2027
Tranche 2 Term Loan Facility (1)	425,000		October 2026
Tranche 3 Term Loan Facility (1)	245,000		January 2025
Tranche 4 Term Loan Facility (1)	255,000		June 2026
Tranche 5 Term Loan Facility (1)	425,000		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
	$	3,600,000

(1) The term loan amounts have been fully drawn as of September 30, 2022.

Pursuant to the terms of the Credit Agreement, the Company may request an extension of the term of the revolving credit facility for up to two additional periods of six months each, after satisfying certain conditions.

As of September 30, 2022, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) Term or Daily Simple SOFR plus the Applicable Margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or

(d) the SOFR rate plus 1.00%. Per the Credit Agreement, the applicable SOFR rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the SOFR rate margin ranging from 0.7% to 1.6% per annum and the applicable base rate margin ranging from 0.00% to 0.60% per annum.

The Credit Agreement is guaranteed by the Company and is not secured by any assets of the Company. The Company's unsecured debt is subject to certain financial covenants. As of September 30, 2022, the Company was in compliance with all of its financial covenants.

In July 2022, the Company completed an accordion transaction in its credit facility, which added a $175.0 million unsecured debt tranche maturing January 2028 and a $425.0 million unsecured debt tranche maturing July 2029. The current interest rates for the tranches are Adjusted Term SOFR/Adjusted Daily Simple SOFR ("ASOFR") + 0.95% and ASOFR + 1.25%, respectively.

On October 5, 2022, the Company executed two interest rate swap agreements with a total combined notional amount of $200 million. The interest rate swaps were designed as cash flow hedges, with two-year terms and all-in rates of 5.24% and 5.25%.

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 September 30, 2022
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	15,000	$	140,000	4.3%	7/1/2023	SOFR plus 1.35%
Credit Line 2 (3)(4)	585,000		1,250,000		3.9%	6/20/2025	SOFR plus 0.95%
	$	600,000	$	1,390,000
(1) Daily Simple SOFR
(2) Secured by mortgages on certain real estate assets. No remaining extensions available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of September 30, 2022. Rate is subject to change based on the Company's investment grade rating.

As of September 30, 2022, the Company’s percentage of fixed-rate debt to total debt was 62.2%. The weighted average interest rates of the Company’s fixed and variable-rate debt were 3.2% and 4.2%, respectively. The combined weighted average interest rate was 3.6%.

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Derivatives

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

DERIVATIVESThe Company is exposed to certain risks 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 by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposure that arises 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 these objectives, 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 three and nine months ended September 30, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. In the coming 12 months, the Company estimates that $29,746 will be reclassified as an increase to interest income.

The Company held 15 derivative financial instruments which had a total combined notional amount of $1,439,256 as of September 30, 2022.

Fair Values of Derivative Instruments

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

	Asset / Liability Derivatives
Derivatives designated as hedging instruments:	September 30, 2022		December 31, 2021
Other assets	$	54,977	$	271
Other liabilities	$	—	$	39,569

Effect of Derivative Instruments

The table below presents the effect of the Company’s derivative financial instruments on the condensed 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 Three Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Three Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	25,350	$	(736)	Interest expense	$	1,131	$	(8,794)

	Gain (loss) recognized in OCI For the Nine Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Nine Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	82,449	$	10,316	Interest expense	$	(13,536)	$	(26,386)

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 September 30, 2022, the Company did not have any net liability positions in the fair value of derivatives.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

On January 7, 2022, the Company issued 186,766 shares of its common stock to acquire two stores for $40,965.

On August 9, 2021, the Company filed its $800,000 "at the market" equity program with the Securities and Exchange Commission using a shelf registration statement on Form S-3, and entered into separate equity distribution agreements with ten sales agents. No shares have been sold under the current "at the market" equity program. From January 1, 2021, through August 8, 2021, the Company sold 585,685 shares of common stock under its prior "at the market" equity program resulting in net proceeds of $66,617.

On March 23, 2021, the Company sold 1,600,000 shares of its common stock in a registered offering structured as a bought deal at a price of $129.13 per share resulting in net proceeds of $206,572.

On October 15, 2020, the Company's board of directors authorized a new share repurchase program allowing for the repurchase of shares with an aggregate value up to $400,000. During the nine months ended September 30, 2022, the Company repurchased 381,786 shares at an average price of $165.03 per share, paying a total of $63,008. As of September 30, 2022, the Company had remaining authorization to repurchase shares with an aggregate value up to $336,992

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Noncontrolling Interest Represented by Preferred Operating Partnership Units

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Noncontrolling Interest Represented by Preferred Operating Partnership Units

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 condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

At September 30, 2022 and December 31, 2021, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets. The partnership agreement of the Operating Partnership (as amended, the "Partnership Agreement") provides for the designation and issuance of the OP Units. As of September 30, 2022 and December 31, 2021, noncontrolling interests in Preferred OP Units were presented net of notes receivable from Preferred OP Unit holders of $100,000 as more fully described below. The balances for each of the specific Preferred OP Units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

	September 30, 2022		December 31, 2021
Series A Units	$	16,490	$	15,606
Series B Units	33,568		38,068
Series D Units	211,436		205,436
	$	261,494	$	259,110

Series A Participating Redeemable Preferred Units

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.

The Series A Units were issued in June 2007. Series A Units in the amount of $101,700 bear a fixed priority return of 2.3% and originally had a fixed liquidation value of $115,000. The remaining balance participates in distributions with, and has a liquidation value equal to that of the OP Units. The Series A Units are redeemable at the option of the holder, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock. As a result of the redemption of 114,500 Series A Units in October 2014, the remaining fixed liquidation value was reduced to $101,700, which represents 875,480 Series A Units.

On June 25, 2007, the Operating Partnership loaned the holder of the Series A Units $100,000. The loan bears interest at 2.1%. The loan is secured by the borrower’s Series A Units. No future redemption of Series A Units can be made unless the loan secured by the Series A Units is also repaid. The Series A Units are shown on the balance sheet net of the $100,000 loan because the borrower under the loan is also the holder of the Series A Units.

Series B Redeemable Preferred Units

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 were issued in 2013 and 2014. The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $33,568 which represents 1,342,727 Series B Units. Holders of the Series B Units receive distributions at an annual rate of 6.0%. These distributions are cumulative. The Series B Units became 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.

On May 10, 2022, 45,000 Series B Units were redeemed for $1,125 in cash.

Series C Redeemable Preferred Units

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

As of September 30, 2022 and December 31, 2021, there were no outstanding Series C Units.

Series D Redeemable Preferred Units

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 interests 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 $211,436, which represents 8,457,422 Series D Units. Holders of the Series D Units receive distributions at an annual rate between 3.0% and 5.0%. These distributions are cumulative. The Series D Units 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, certain of the Series D Units are exchangeable for OP Units at the option of the holder until the tenth anniversary of the date of issuance, with the number of OP Units to be issued equal to $25.00 per Series D Unit, divided by the value of a share of common stock as of the exchange date.

The Series D Units have been issued at various times from 2014 to 2022. On June 1, 2022, the Operating Partnership issued a total of 240,000 Series D units valued at $6,000 in connection with the acquisition of Bargold.

NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP AND OTHER NONCONTROLLING INTERESTS

Noncontrolling Interest in Operating Partnership

The Company’s interest in its stores is held through the Operating Partnership. Between its general partner and limited partner interests, the Company held a 93.4% ownership interest in the Operating Partnership as of September 30, 2022. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.6% are held by certain former owners of assets acquired by the Operating Partnership. As of September 30, 2022 and December 31, 2021, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $1,900 because a borrower under the note receivable is also a holder of OP Units. This note receivable originated in December 2014, bears interest at 5.0% per annum and matures on December 15, 2024.

The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. OP Units are redeemable at the option of the holder, which redemption may be satisfied at the Company's option in cash, based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption, or shares of the Company's common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Partnership Agreement. As of September 30, 2022, the ten-day average closing price of the Company's common stock was $173.48 and there were 7,221,445 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on September 30, 2022 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,252,776 in cash consideration to redeem the units.

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

	For the Nine Months Ended September 30,
	2022		2021
OP Units redeemed for common stock	—		64,287
OP Units redeemed for cash	18,028		3,000
Cash paid for OP Units redeemed	$	3,504	$	472
OP Units issued in conjunction with business combination and acquisitions	711,037		—
Value of OP Units issued in conjunction with business combination and acquisitions	$	141,000	$	—

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 OP Units and classifies the noncontrolling interest represented by the OP Units as stockholders’ equity in the accompanying condensed 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 condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interests of third parties in three consolidated joint ventures as of September 30, 2022. Each joint venture owns one store and all three properties are under development. The voting interest of the third-party owners are between 3.0% and 10.0%.

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Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests

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 condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

At September 30, 2022 and December 31, 2021, the noncontrolling interests represented by the Preferred OP Units qualified for classification as permanent equity on the Company's condensed consolidated balance sheets. The partnership agreement of the Operating Partnership (as amended, the "Partnership Agreement") provides for the designation and issuance of the OP Units. As of September 30, 2022 and December 31, 2021, noncontrolling interests in Preferred OP Units were presented net of notes receivable from Preferred OP Unit holders of $100,000 as more fully described below. The balances for each of the specific Preferred OP Units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

	September 30, 2022		December 31, 2021
Series A Units	$	16,490	$	15,606
Series B Units	33,568		38,068
Series D Units	211,436		205,436
	$	261,494	$	259,110

Series A Participating Redeemable Preferred Units

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.

The Series A Units were issued in June 2007. Series A Units in the amount of $101,700 bear a fixed priority return of 2.3% and originally had a fixed liquidation value of $115,000. The remaining balance participates in distributions with, and has a liquidation value equal to that of the OP Units. The Series A Units are redeemable at the option of the holder, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock. As a result of the redemption of 114,500 Series A Units in October 2014, the remaining fixed liquidation value was reduced to $101,700, which represents 875,480 Series A Units.

On June 25, 2007, the Operating Partnership loaned the holder of the Series A Units $100,000. The loan bears interest at 2.1%. The loan is secured by the borrower’s Series A Units. No future redemption of Series A Units can be made unless the loan secured by the Series A Units is also repaid. The Series A Units are shown on the balance sheet net of the $100,000 loan because the borrower under the loan is also the holder of the Series A Units.

Series B Redeemable Preferred Units

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 were issued in 2013 and 2014. The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $33,568 which represents 1,342,727 Series B Units. Holders of the Series B Units receive distributions at an annual rate of 6.0%. These distributions are cumulative. The Series B Units became 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.

On May 10, 2022, 45,000 Series B Units were redeemed for $1,125 in cash.

Series C Redeemable Preferred Units

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

As of September 30, 2022 and December 31, 2021, there were no outstanding Series C Units.

Series D Redeemable Preferred Units

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 interests 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 $211,436, which represents 8,457,422 Series D Units. Holders of the Series D Units receive distributions at an annual rate between 3.0% and 5.0%. These distributions are cumulative. The Series D Units 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, certain of the Series D Units are exchangeable for OP Units at the option of the holder until the tenth anniversary of the date of issuance, with the number of OP Units to be issued equal to $25.00 per Series D Unit, divided by the value of a share of common stock as of the exchange date.

The Series D Units have been issued at various times from 2014 to 2022. On June 1, 2022, the Operating Partnership issued a total of 240,000 Series D units valued at $6,000 in connection with the acquisition of Bargold.

NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP AND OTHER NONCONTROLLING INTERESTS

Noncontrolling Interest in Operating Partnership

The Company’s interest in its stores is held through the Operating Partnership. Between its general partner and limited partner interests, the Company held a 93.4% ownership interest in the Operating Partnership as of September 30, 2022. The remaining ownership interests in the Operating Partnership (including Preferred OP Units) of 6.6% are held by certain former owners of assets acquired by the Operating Partnership. As of September 30, 2022 and December 31, 2021, the noncontrolling interests in the Operating Partnership are shown on the balance sheet net of a note receivable of $1,900 because a borrower under the note receivable is also a holder of OP Units. This note receivable originated in December 2014, bears interest at 5.0% per annum and matures on December 15, 2024.

The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. OP Units are redeemable at the option of the holder, which redemption may be satisfied at the Company's option in cash, based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption, or shares of the Company's common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Partnership Agreement. As of September 30, 2022, the ten-day average closing price of the Company's common stock was $173.48 and there were 7,221,445 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on September 30, 2022 and the Company elected to pay the OP Unit holders cash, the Company would have paid $1,252,776 in cash consideration to redeem the units.

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

	For the Nine Months Ended September 30,
	2022		2021
OP Units redeemed for common stock	—		64,287
OP Units redeemed for cash	18,028		3,000
Cash paid for OP Units redeemed	$	3,504	$	472
OP Units issued in conjunction with business combination and acquisitions	711,037		—
Value of OP Units issued in conjunction with business combination and acquisitions	$	141,000	$	—

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 OP Units and classifies the noncontrolling interest represented by the OP Units as stockholders’ equity in the accompanying condensed 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 condensed 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 and (2) the redemption value as of the end of the period in which the determination is made.

Other Noncontrolling Interests

Other noncontrolling interests represent the ownership interests of third parties in three consolidated joint ventures as of September 30, 2022. Each joint venture owns one store and all three properties are under development. The voting interest of the third-party owners are between 3.0% and 10.0%.

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Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

The Company’s segment disclosures present the measure used by the chief operating decision makers ("CODMs") for purposes of assessing each segment’s performance. The Company’s CODMs are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company’s reportable operating segments. NOI for the Company's self-storage operations represents total property revenue less direct property operating expenses. NOI for the Company's tenant reinsurance segment represents tenant reinsurance revenues less tenant reinsurance expense.

The Company has two reportable segments: (1) self-storage operations and (2) tenant reinsurance. The self-storage operations activities include rental operations of wholly-owned stores. The Company's consolidated revenues equal total segment revenues plus property management fees and other income. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in the stores operated by the Company. Excluded from segment revenues and net operating income is property management fees and other income.

For all periods presented, substantially all of the Company's real estate assets, intangible assets, other assets, and accrued and other liabilities are associated with the self-storage operations segment. Financial information for the Company’s business segments is set forth below:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Self-Storage Operations	$	428,787	$	351,355	$	1,216,639	$	976,448
Tenant Reinsurance	47,869		44,258		138,093		126,211
Total segment revenues	$	476,656	$	395,613	$	1,354,732	$	1,102,659
Operating expenses:
Self-Storage Operations	$	114,577	$	92,794	$	322,371	$	274,316
Tenant Reinsurance	10,770		7,509		25,349		21,405
Total segment operating expenses	$	125,347	$	100,303	$	347,720	$	295,721
Net operating income:
Self-Storage Operations	$	314,210	$	258,561	$	894,268	$	702,132
Tenant Reinsurance	37,099		36,749		112,744		104,806
Total segment net operating income:	$	351,309	$	295,310	$	1,007,012	$	806,938
Other components of net income:
Management fees and other income	$	22,246	$	16,879	$	62,720	$	47,320
Transaction related costs	—		—		(1,465)		—
General and administrative expense	(32,275)		(24,395)		(93,288)		(74,276)
Depreciation and amortization expense	(71,423)		(61,516)		(208,396)		(179,685)
Gain on real estate transactions	—		—		14,249		63,883
Interest expense	(56,245)		(39,670)		(146,249)		(120,605)
Interest income	18,125		11,729		52,174		36,871
Equity in earnings and dividend income from unconsolidated real estate entities	11,149		8,255		30,436		23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		6,251
Income tax expense	(6,760)		(6,772)		(15,516)		(16,330)
Net income	$	236,126	$	199,820	$	701,677	$	593,900

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

As of September 30, 2022, the Company was involved in various legal proceedings and was subject to various claims and complaints arising in the ordinary course of business. Because litigation is inherently unpredictable, the outcome of these matters cannot presently be determined with any degree of certainty. 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. 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.

As of September 30, 2022, the Company was under agreement to acquire 15 stores at a total purchase price of $272,928. Seven stores are scheduled to close in 2022 and eight stores are scheduled to close in 2023 and thereafter. Additionally, the Company is under agreement to acquire seven stores with joint venture partners, for a total investment of $24,431. Three stores are scheduled to close in 2022 and four stores are scheduled to close in 2023.

The Company owns and/or operates stores located in Florida and South Carolina that were impacted by Hurricane Ian during the quarter ended September 30, 2022. Losses incurred to date by this hurricane include property damage, net of insurance recoveries, of $3,200, and tenant reinsurance claims of $3,000, which are included in property operations and tenant reinsurance on the Company's condensed consolidated statements of operations, respectively.

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 stores, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to its stores could result in future material environmental liabilities.

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance that provides transition relief for reference rate reform, including optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform if certain criteria are met. ASU 2020-04 is effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. The Company also elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes are made to applicable debt and derivative contracts. Application of these expedients preserves the presentation of derivatives and debt contracts consistent with past presentation. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope", which refines the scope of Topic 848 and clarifies some of its guidance. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. The Company has begun transitioning debt over to Secured Overnight Financing Rate ("SOFR") as part of the reference rate reform.

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Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall. 

	Fair Value Measurements at Reporting Date Using
Description	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	$	—	$	54,977	$	—
Other liabilities - Cash flow hedge swap agreements	$	—	$	—	$	—

Schedule of Fair Value of Financial Instruments

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

	September 30, 2022				December 31, 2021
	Fair Value		Carrying Value		Fair Value		Carrying Value
Notes receivable from Preferred and Common Operating Partnership unit holders	$	95,276	$	101,900	$	101,824	$	101,900
Fixed rate notes receivable	$	3,839	$	3,867	$	105,954	$	104,251
Fixed rate debt	$	3,899,556	$	4,367,099	$	4,643,072	$	4,506,435

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Real Estate Assets (Tables)

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Schedule of Components of Real Estate Assets

The components of real estate assets are summarized as follows:

	September 30, 2022		December 31, 2021
Land	$	2,327,366	$	2,151,319
Buildings, improvements and other intangibles	9,256,894		8,227,094
Right of use asset - finance lease	136,259		117,718
Intangible assets - tenant relationships	147,460		134,577
Intangible lease rights	16,543		12,443
	11,884,522		10,643,151
Less: accumulated depreciation and amortization	(2,061,814)		(1,867,750)
Net operating real estate assets	9,822,708		8,775,401
Real estate under development/redevelopment	54,372		59,248
Real estate assets, net	$	9,877,080	$	8,834,649
Real estate assets held for sale included in real estate assets, net	$	—	$	8,436

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Other Assets (Tables)

9 Months Ended

Sep. 30, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Other Assets

The components of other assets are summarized as follows:

	September 30, 2022		December 31, 2021
Equipment and fixtures, net	$	42,713	$	29,060
Deferred line of credit financing costs, net	6,173		7,408
Prepaid expenses and deposits	60,866		39,384
Receivables, net	79,333		83,050
Goodwill	170,811		—
Fair value of interest rate swaps	54,977		270
	$	414,873	$	159,172

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Antidilutive Shares Excluded from Computation of Earnings Per Share

The following table presents the number of 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 Three Months Ended September 30,		For the Nine Months Ended September 30,
	2022	2021	2022	2021
	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)	Equivalent Shares (if converted)
Series B Units	177,506	225,972	181,408	271,132
Series D Units	1,118,056	663,888	1,089,389	784,139
	1,295,562	889,860	1,270,797	1,055,271

Schedule of Computation of Earnings Per Common Share

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to common stockholders	$	220,719	$	188,276	$	656,428	$	559,222
Earnings and dividends allocated to participating securities	(313)		(260)		(914)		(800)
Earnings for basic computations	220,406		188,016		655,514		558,422
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,954		9,810		37,932		29,395
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	(572)		(572)		(1,716)		(1,716)
Net income for diluted computations	$	232,788	$	197,254	$	691,730	$	586,101
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	133,913,652		133,809,750		134,094,490		133,197,903
OP Units	6,709,854		5,733,936		6,592,606		5,767,132
Series A Units	875,480		875,480		875,480		875,480
Shares related to dilutive stock options	5,229		6,103		5,269		14,366
Average number of common shares outstanding - diluted	141,504,215		140,425,269		141,567,845		139,854,881
Earnings per common share
Basic	$	1.65	$	1.41	$	4.89	$	4.19
Diluted	$	1.65	$	1.40	$	4.89	$	4.19

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Acquisitions and Dispositions (Tables)

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

Schedule of Operating Properties Acquired

All store acquisitions are considered asset acquisitions under ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business."

												Total
Quarter	Number of Stores	Cash Paid		Finance Lease Liability		Investments in Real Estate Ventures		Net Liabilities/ (Assets) Assumed		Value of Equity Issued		Real estate assets
Q3 2022	118	$	639,071	$	—	$	338	$	(2,291)	$	125,000	$	762,118
Q2 2022	15	220,933		6,823		—		811		—		228,567
Q1 2022	14	185,910		—		747		274		40,965		227,896
Total 2022	147	$	1,045,914	$	6,823	$	1,085	$	(1,206)	$	165,965	$	1,218,581
Q3 2021	12	$	185,497	$	348	$	—	$	747	$	—	$	186,592
Q2 2021	15	190,729		—		2,673		381		—		193,783
Q1 2021	9	148,940		—		—		2,944		—		151,884
Total 2021	36	$	525,166	$	348	$	2,673	$	4,072	$	—	$	532,259

Reconciliation of Purchase Price

The following table summarizes the total consideration transferred to acquire Bargold:

Total cash paid by the company	$	157,302
Fair value of Series D Units issued	16,000
Fair value of OP Units issued	6,000
Total consideration transferred	$	179,302

Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date.

Cash and cash equivalents	$	175
Fixed assets	6,411
Developed technology	500
Trademarks	500
Customer relationships	1,870
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	$	179,302

Revenues and Earnings of Acquired Company

The following table summarizes the revenues and earnings related to Bargold since the acquisition date of June 1, 2022, which are included in the Company's consolidated statement of operations for the nine months ended September 30, 2022:

Total revenues	$	5,389
Net income from operations	$	1,773

The following pro forma financial information is based on the combined historical financial statements of the Company and Bargold, however, only includes revenue and presents the Company's results as if the acquisition had occurred on January 1, 2021. Net income was excluded as it was impracticable to report expenses due to the lack of historical accrual basis accounting.

	For the Nine Months Ended September 30, 2022		For the Year Ended December 31, 2021
	Pro Forma		Pro Forma
Total revenues	$	1,424,098	$	1,592,021

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Investments in Unconsolidated Real Estate Entities (Tables)

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Schedule of investments in unconsolidated real estate ventures

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

	Number of Stores	Equity Ownership %	Excess Profit % (1)	September 30,		December 31,
				2022		2021
PRISA Self Storage LLC	85	4%	4%	$	8,606	$	8,792
Storage Portfolio II JV LLC	36	10%	30%	(6,863)		(6,116)
Storage Portfolio IV JV LLC	32	10%	30%	49,584		40,174
Storage Portfolio I LLC	24	34%	49%	(40,957)		(40,168)
PR II EXR JV LLC	23	25%	25%	110,553		70,403
ESS-CA TIVS JV LP	16	55%	60%	31,222		32,288
VRS Self Storage, LLC	16	45%	54%	(15,055)		(14,269)
ACPF-EXR JV LLC	12	10%	30%	19,227		—
ESS-NYFL JV LP	11	16%	24%	11,409		11,796
Extra Space Northern Properties Six LLC	10	10%	35%	(3,266)		(3,029)
Alan Jathoo JV LLC	9	10%	10%	7,460		7,621
ESS Bristol Investments LLC	8	10%	30%	2,122		2,628
ESS - BGO Atlanta GA JV LLC	6	20%	35%	25,713		—
PR EXR Self Storage, LLC	5	25%	40%	58,703		59,393
Storage Portfolio III JV LLC	5	10%	30%	5,484		5,596
Storage Portfolio V JV LLC	5	10%	30%	8,557		—
Other unconsolidated real estate ventures	12	20-50%	20-50%	30,051		18,635
SmartStop Self Storage REIT, Inc. Preferred Stock (2)	n/a	n/a	n/a	200,000		200,000
Net Investments in and Cash distributions in unconsolidated real estate entities	315			$	502,550	$	393,744

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

(2) The Company invested in shares of convertible preferred stock of SmartStop. The dividend rate for the preferred shares is 6.25% per annum, subject to increase after five years. The preferred shares are generally not redeemable for five years, except in the case of a change of control or initial listing of SmartStop. Dividend income from this investment is included on the equity in earnings and dividend income from unconsolidated real estate entities line on the Company's condensed consolidated statements of operations.

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Investments in Debt Securities and Notes Receivable (Tables)

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments in Debt Securities and Bridge Loans Receivable

Information about these balances is as follows:

	September 30, 2022		December 31, 2021
Debt securities - NexPoint Series A Preferred Stock	$	200,000	$	200,000
Debt securities - NexPoint Series B Preferred Stock	100,000		100,000
Notes Receivable - Bridge Loans	298,108		279,042
Notes Receivable - Senior Mezzanine Loan, net	—		102,079
Dividends Receivable	60,555		38,066
	$	658,663	$	719,187

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Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Components of Debt

The components of term debt are summarized as follows:

Term Debt	September 30, 2022		December 31, 2021		Fixed Rate	Variable Rate (2)	Maturity Dates
Secured fixed-rate (1)	$	526,722	$	930,830	2.46% - 4.50%		February 2023 - February 2030
Secured variable-rate (1)	774,375		392,679			4.04% - 4.48%	August 2023 - September 2030
Unsecured fixed-rate	3,840,376		3,575,000		2.35% - 4.39%		January 2025 - March 2032
Unsecured variable-rate	1,284,624		550,000			4.09% - 4.39%	February 2024 - July 2029
Total	6,426,097		5,448,509
Less: Unamortized debt issuance costs	(32,563)		(25,762)
Total	$	6,393,534	$	5,422,747
(1) The loans are collateralized by mortgages on real estate assets and the assignment of rents.
(2) Basis rates include 30-day USD LIBOR, Term SOFR and Daily Simple SOFR.

Schedule of Maturities of Notes Payable

The following table summarizes the scheduled maturities of term debt, excluding available extensions, at September 30, 2022:

2022	$	—
2023	391,725
2024	425,000
2025	711,202
2026	807,815
Thereafter	4,090,355
	$	6,426,097

Schedule of Information on Lines of Credit

As of September 30, 2022, the terms of the Second Amended and Restated Credit Agreement dated June 22, 2021 (the "Credit Agreement") are as follows:

	Debt Capacity		Maturity Date
Revolving Credit Facility	$	1,250,000	June 2025
Tranche 1 Term Loan Facility (1)	400,000		January 2027
Tranche 2 Term Loan Facility (1)	425,000		October 2026
Tranche 3 Term Loan Facility (1)	245,000		January 2025
Tranche 4 Term Loan Facility (1)	255,000		June 2026
Tranche 5 Term Loan Facility (1)	425,000		February 2024
Tranche 6 Term Loan Facility (1)	175,000		January 2028
Tranche 7 Term Loan Facility (1)	425,000		July 2029
	$	3,600,000

(1) The term loan amounts have been fully drawn as of September 30, 2022.

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 September 30, 2022
Revolving Lines of Credit	Amount Drawn		Capacity		Interest Rate	Maturity	Basis Rate (1)
Credit Line 1 (2)	$	15,000	$	140,000	4.3%	7/1/2023	SOFR plus 1.35%
Credit Line 2 (3)(4)	585,000		1,250,000		3.9%	6/20/2025	SOFR plus 0.95%
	$	600,000	$	1,390,000
(1) Daily Simple SOFR
(2) Secured by mortgages on certain real estate assets. No remaining extensions available.
(3) Unsecured. Two six-month extensions available.
(4) Basis Rate as of September 30, 2022. Rate is subject to change based on the Company's investment grade rating.

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of balance sheet classification and fair value of entity's derivative financial instruments

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

	Asset / Liability Derivatives
Derivatives designated as hedging instruments:	September 30, 2022		December 31, 2021
Other assets	$	54,977	$	271
Other liabilities	$	—	$	39,569

Schedule of information relating to gain (loss) recognized on swap agreements

The table below presents the effect of the Company’s derivative financial instruments on the condensed 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 Three Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Three Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	25,350	$	(736)	Interest expense	$	1,131	$	(8,794)

	Gain (loss) recognized in OCI For the Nine Months Ended September 30,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI For the Nine Months Ended September 30,
Type	2022		2021			2022		2021
Swap Agreements	$	82,449	$	10,316	Interest expense	$	(13,536)	$	(26,386)

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Noncontrolling Interest Represented by Preferred Operating Partnership Units (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Balances of OP Units

The balances for each of the specific Preferred OP Units as presented in the Statement of Noncontrolling Interests and Equity as of the periods indicated is as follows:

	September 30, 2022		December 31, 2021
Series A Units	$	16,490	$	15,606
Series B Units	33,568		38,068
Series D Units	211,436		205,436
	$	261,494	$	259,110

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Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Redeemable Noncontrolling Interest

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

	For the Nine Months Ended September 30,
	2022		2021
OP Units redeemed for common stock	—		64,287
OP Units redeemed for cash	18,028		3,000
Cash paid for OP Units redeemed	$	3,504	$	472
OP Units issued in conjunction with business combination and acquisitions	711,037		—
Value of OP Units issued in conjunction with business combination and acquisitions	$	141,000	$	—

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Financial Information of Business Segments

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Self-Storage Operations	$	428,787	$	351,355	$	1,216,639	$	976,448
Tenant Reinsurance	47,869		44,258		138,093		126,211
Total segment revenues	$	476,656	$	395,613	$	1,354,732	$	1,102,659
Operating expenses:
Self-Storage Operations	$	114,577	$	92,794	$	322,371	$	274,316
Tenant Reinsurance	10,770		7,509		25,349		21,405
Total segment operating expenses	$	125,347	$	100,303	$	347,720	$	295,721
Net operating income:
Self-Storage Operations	$	314,210	$	258,561	$	894,268	$	702,132
Tenant Reinsurance	37,099		36,749		112,744		104,806
Total segment net operating income:	$	351,309	$	295,310	$	1,007,012	$	806,938
Other components of net income:
Management fees and other income	$	22,246	$	16,879	$	62,720	$	47,320
Transaction related costs	—		—		(1,465)		—
General and administrative expense	(32,275)		(24,395)		(93,288)		(74,276)
Depreciation and amortization expense	(71,423)		(61,516)		(208,396)		(179,685)
Gain on real estate transactions	—		—		14,249		63,883
Interest expense	(56,245)		(39,670)		(146,249)		(120,605)
Interest income	18,125		11,729		52,174		36,871
Equity in earnings and dividend income from unconsolidated real estate entities	11,149		8,255		30,436		23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	—		—		—		6,251
Income tax expense	(6,760)		(6,772)		(15,516)		(16,330)
Net income	$	236,126	$	199,820	$	701,677	$	593,900

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Organization (Detail)	Sep. 30, 2022 store state
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating storage facilities in which the entity has equity interests (in stores)	1,441
Number of stores owned by franchisees and third parties	886
Number of operating stores owned and/or managed	2,327
Number of states in which operating storage facilities are located | state	41

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Fair Value Disclosures - Assets and Liabilities on a Recurring Basis (Detail) - Recurring Basis $ in Thousands	Sep. 30, 2022 USD ($)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	$ 0
Other liabilities	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	54,977
Other liabilities	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other assets	0
Other liabilities	$ 0

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Fair Value Disclosures - Additional Information (Detail)	Sep. 30, 2022 store
Fair Value Disclosures [Abstract]
Number of operating stores held-for-sale	0

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Fair Value Disclosures - Schedule of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value
Fair Value of Financial Instruments [Line Items]
Notes receivable from Preferred and Common Operating Partnership unit holders	$ 95,276	$ 101,824
Fixed rate notes receivable	3,839	105,954
Fixed rate debt	3,899,556	4,643,072
Carrying Value
Fair Value of Financial Instruments [Line Items]
Notes receivable from Preferred and Common Operating Partnership unit holders	101,900	101,900
Fixed rate notes receivable	3,867	104,251
Fixed rate debt	$ 4,367,099	$ 4,506,435

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Real Estate Assets - Schedule of Components of Real Estate Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Real Estate [Abstract]
Land	$ 2,327,366	$ 2,151,319
Buildings, improvements and other intangibles	9,256,894	8,227,094
Right of use asset - finance lease	136,259	117,718
Intangible assets - tenant relationships	147,460	134,577
Intangible lease rights	16,543	12,443
Gross operating real estate assets	11,884,522	10,643,151
Less: accumulated depreciation and amortization	(2,061,814)	(1,867,750)
Net operating real estate assets	9,822,708	8,775,401
Real estate under development/redevelopment	54,372	59,248
Real estate assets, net	9,877,080	8,834,649
Real estate assets held for sale included in real estate assets, net	$ 0	$ 8,436

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Real Estate Assets - Additional Information (Details)	Sep. 30, 2022 store
Real Estate [Abstract]
Number of operating stores held-for-sale	0

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Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Equipment and fixtures, net	$ 42,713	$ 29,060
Deferred line of credit financing costs, net	6,173	7,408
Prepaid expenses and deposits	60,866	39,384
Receivables, net	79,333	83,050
Goodwill	170,811	0
Fair value of interest rate swaps	54,977	270
Other assets, net	$ 414,873	$ 159,172

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Earnings Per Common Share - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Average share price (in dollars per share)	$ 189.11	$ 176.78
Series A Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exchangeable preferred operating partnership units settled in cash, minimum	$ 101,700

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Earnings Per Common Share - Antidilutive Shares (Detail) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	1,295,562	889,860	1,270,797	1,055,271
Series B Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	177,506	225,972	181,408	271,132
Series D Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per common share (in shares)	1,118,056	663,888	1,089,389	784,139

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Earnings Per Common Share - Schedule of Computation (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income attributable to common stockholders	$ 220,719	$ 188,276	$ 656,428	$ 559,222
Earnings and dividends allocated to participating securities	(313)	(260)	(914)	(800)
Earnings for basic computations	220,406	188,016	655,514	558,422
Income allocated to noncontrolling interest - Preferred Operating Partnership Units and Operating Partnership Units	12,954	9,810	37,932	29,395
Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units)	(572)	(572)	(1,716)	(1,716)
Net income for diluted computations	$ 232,788	$ 197,254	$ 691,730	$ 586,101
Weighted average common shares outstanding:
Average number of common shares outstanding - basic	133,913,652	133,809,750	134,094,490	133,197,903
OP Units (in shares)	6,709,854	5,733,936	6,592,606	5,767,132
Shares related to exchangeable senior notes and dilutive stock options (in shares)	5,229	6,103	5,269	14,366
Average number of common shares outstanding - diluted (in shares)	141,504,215	140,425,269	141,567,845	139,854,881
Earnings per common share
Basic (in dollars per share)	$ 1.65	$ 1.41	$ 4.89	$ 4.19
Diluted (in dollars per share)	$ 1.65	$ 1.40	$ 4.89	$ 4.19
Series A Units
Weighted average common shares outstanding:
Preferred Units (in shares)	875,480	875,480	875,480	875,480

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Acquisitions and Dispositions - Store Acquisitions (Detail) $ in Thousands		1 Months Ended	3 Months Ended						9 Months Ended
	Sep. 15, 2022 USD ($) store land_parcel shares	Nov. 04, 2022 USD ($) store	Sep. 30, 2022 USD ($) store shares	Jun. 30, 2022 USD ($) store	Mar. 31, 2022 USD ($) store	Sep. 30, 2021 USD ($) store	Jun. 30, 2021 USD ($) store	Mar. 31, 2021 USD ($) store	Sep. 30, 2022 USD ($) store shares	Sep. 30, 2021 USD ($) store	Dec. 31, 2021 shares
Business Acquisition [Line Items]
Number of Stores | store	106		118	15	14	12	15	9	147	36
Cash Paid			$ 639,071	$ 220,933	$ 185,910	$ 185,497	$ 190,729	$ 148,940	$ 1,045,914	$ 525,166
Finance Lease Liability			0	6,823	0	348	0	0	6,823	348
Investments in Real Estate Ventures			338	0	747	0	2,673	0	1,085	2,673
Net Liabilities/ (Assets) Assumed			(2,291)	811	274	747	381	2,944	(1,206)	4,072
Value of Equity Issued			125,000	0	40,965	0	0	0	165,965	0
Total	$ 590,000		$ 762,118	$ 228,567	$ 227,896	$ 186,592	$ 193,783	$ 151,884	$ 1,218,581	532,259
Preferred stock, issued (in shares) | shares			0						0		0
Number of parcels of land acquired | land_parcel	8
Purchase price									$ 102,670	$ 20,834
Noncontrolling Interest - Operating Partnership
Business Acquisition [Line Items]
Value of Equity Issued	$ 125,000
Preferred stock, issued (in shares) | shares	619,294
Subsequent Event
Business Acquisition [Line Items]
Number of stores purchased | store		6
Purchase price		$ 147,000

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Acquisitions and Dispositions - Other Investments (Details) storage_unit in Thousands, $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 01, 2022 USD ($) storage_unit	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Purchase price
Transaction related costs		$ 0	$ 0	$ 1,465	$ 0
Fair values of assets acquired and liabilities assumed
Goodwill		$ 170,811		170,811		$ 0
Pro forma information
Total revenues				1,424,098		$ 1,592,021
Common OP Units
Purchase price
Equity interests issued				16,000	$ 0
Bargold
Business Acquisition [Line Items]
Number of storage units | storage_unit	17
Occupancy rate	97.00%
Bargold
Purchase price
Total cash paid by the company	$ 157,302
Purchase price	179,302
Transaction related costs	1,465
Fair values of assets acquired and liabilities assumed
Cash and cash equivalents	175
Fixed assets	6,411
Other assets	125
Accounts payables and accrued liabilities assumed	(1,090)
Nets asset acquired	8,491
Goodwill	170,811
Total assets acquired	179,302
Pro forma information
Total revenues				5,389
Net income from operations				$ 1,773
Bargold | Developed technology
Fair values of assets acquired and liabilities assumed
Intangible assets	500
Bargold | Trademarks
Fair values of assets acquired and liabilities assumed
Intangible assets	500
Bargold | Customer relationships
Fair values of assets acquired and liabilities assumed
Intangible assets	1,870
Bargold | Series D Units
Purchase price
Equity interests issued	16,000
Bargold | Common OP Units
Purchase price
Equity interests issued	$ 6,000

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Acquisitions and Dispositions - Dispositions (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($) store
Business Combination and Asset Acquisition [Abstract]
Number of properties disposed | store	2
Proceeds from sale of real estate assets and investments in real estate ventures	$ 38.7
Gain on sale	$ 14.2

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Investments in Unconsolidated Real Estate Entities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) property store	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	315
Investment balance	$ 502,550		$ 393,744
Purchase price	$ 102,670	$ 20,834
Number of joint venture stores purchased | store	29
PRISA Self Storage LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	85
Equity Ownership %	4.00%
Excess Profit %	4.00%
Investment balance	$ 8,606		8,792
Storage Portfolio II JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	36
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ (6,863)		(6,116)
Storage Portfolio IV JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	32
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ 49,584		40,174
Storage Portfolio I LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	24
Equity Ownership %	34.00%
Excess Profit %	49.00%
Investment balance	$ (40,957)		(40,168)
PR II EXR JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	23
Equity Ownership %	25.00%
Excess Profit %	25.00%
Investment balance	$ 110,553		70,403
ESS-CA TIVS JV LP
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	16
Equity Ownership %	55.00%
Excess Profit %	60.00%
Investment balance	$ 31,222		32,288
VRS Self Storage, LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	16
Equity Ownership %	45.00%
Excess Profit %	54.00%
Investment balance	$ (15,055)		(14,269)
ESS-NYFL JV LP
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	11
Equity Ownership %	16.00%
Excess Profit %	24.00%
Investment balance	$ 11,409		11,796
Extra Space Northern Properties Six LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	10
Equity Ownership %	10.00%
Excess Profit %	35.00%
Investment balance	$ (3,266)		(3,029)
Alan Jathoo JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	9
Equity Ownership %	10.00%
Excess Profit %	10.00%
Investment balance	$ 7,460		7,621
ESS Bristol Investments LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	8
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ 2,122		2,628
ACPF-EXR JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	12
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ 19,227		0
ESS - BGO Atlanta GA JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	6
Equity Ownership %	20.00%
Excess Profit %	35.00%
Investment balance	$ 25,713		0
PR EXR Self Storage, LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	5
Equity Ownership %	25.00%
Excess Profit %	40.00%
Investment balance	$ 58,703		59,393
Storage Portfolio III JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	5
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ 5,484		5,596
Storage Portfolio V JV LLC
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	5
Equity Ownership %	10.00%
Excess Profit %	30.00%
Investment balance	$ 8,557		0
Other unconsolidated real estate ventures
Schedule of Equity Method Investments [Line Items]
Number of Stores | property	12
Investment balance	$ 30,051		18,635
Other unconsolidated real estate ventures | Minimum
Schedule of Equity Method Investments [Line Items]
Equity Ownership %	20.00%
Excess Profit %	20.00%
Other unconsolidated real estate ventures | Maximum
Schedule of Equity Method Investments [Line Items]
Equity Ownership %	50.00%
Excess Profit %	50.00%
SmartStop Self Storage REIT, Inc. Preferred Stock
Schedule of Equity Method Investments [Line Items]
Investment balance	$ 200,000		$ 200,000
Investment, preferred dividend rate	6.25%
Period after which preferred stock dividend is subject to increase	5 years
Investment redemption restriction period	5 years

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Investments in Debt Securities and Notes Receivable - Schedule (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Schedule of Held-to-maturity Securities [Line Items]
Dividends Receivable	$ 60,555	$ 38,066
Investments in debt securities and notes receivable	658,663	719,187
Notes Receivable-Bridge Loans
Schedule of Held-to-maturity Securities [Line Items]
Notes receivable	298,108	279,042
Notes Receivable-Senior Mezzanine Loan
Schedule of Held-to-maturity Securities [Line Items]
Notes receivable	0	102,079
JCAP Series A Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Debt securities	200,000	200,000
JCAP Series B Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Debt securities	$ 100,000	$ 100,000

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Investments in Debt Securities and Notes Receivable - Additional Information (Details) $ in Thousands	1 Months Ended			9 Months Ended
	Feb. 28, 2022 USD ($)	Nov. 30, 2020 USD ($) extension_option shares	Jul. 31, 2020 USD ($) store	Sep. 30, 2022 USD ($) extension_option	Sep. 30, 2021 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 300,000
Debt securities, term		5 years
Debt securities, extension option | extension_option		2
Debt securities, extension term		1 year
Debt securities, period after which preferred dividends increase annually		5 years
Collateral, number of facilities | store			62
Payments for issuance/purchase of notes receivable				$ 314,542	$ 143,270
Proceeds from sale of notes receivable				$ 203,695	$ 116,822
Bridge loans, extension option | extension_option				2
Bridge loans, extension term				1 year
Notes Receivable-Senior Mezzanine Loan
Schedule of Held-to-maturity Securities [Line Items]
Purchase of note receivable			$ 103,000
Note receivable interest rate			5.50%
Payments for issuance/purchase of notes receivable			$ 101,142
Proceeds from sale of notes receivable	$ 103,315
Notes Receivable-Bridge Loans
Schedule of Held-to-maturity Securities [Line Items]
Payments for issuance/purchase of notes receivable				$ 314,542
Proceeds from sale of notes receivable				$ 203,695
Bridge loans, original maturities				3 years
Principal amount of notes sold				$ 204,887
JCAP Series A Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 200,000
Investment in debt securities (in shares) | shares		200,000
Debt securities, dividend rate		10.00%
JCAP Series B Preferred Stock
Schedule of Held-to-maturity Securities [Line Items]
Investment in debt securities		$ 100,000
Investment in debt securities (in shares) | shares		100,000
Debt securities, dividend rate		12.00%

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Debt - Additional Information (Details) $ in Thousands		1 Months Ended	9 Months Ended
	Oct. 05, 2022 USD ($) store	Jul. 31, 2022 USD ($)	Sep. 30, 2022 USD ($) extension_option derivative	Mar. 31, 2022 USD ($)	Sep. 30, 2021 USD ($)	May 31, 2021 USD ($)
Debt Instrument [Line Items]
Number of derivative financial instruments | derivative			15
Combined notional amount			$ 1,439,256
Fixed rate to total debt percentage			62.20%
Fixed rate debt			3.20%
Variable rate debt			4.20%
Weighted average interest rate			3.60%
Swap Agreements | Subsequent Event
Debt Instrument [Line Items]
Number of derivative financial instruments | store	2
Combined notional amount	$ 200,000
Term	2 years
Swap Agreement One | Subsequent Event
Debt Instrument [Line Items]
Fixed interest rate	5.24%
Swap Agreement Two | Subsequent Event
Debt Instrument [Line Items]
Fixed interest rate	5.25%
Senior Notes
Debt Instrument [Line Items]
Redemption price			100.00%
Senior Notes | Senior Notes Due 2031
Debt Instrument [Line Items]
Principal amount of notes issued						$ 450,000
Debt stated interest rate						2.55%
Senior Notes | Senior Notes Due 2032
Debt Instrument [Line Items]
Principal amount of notes issued					$ 600,000
Debt stated interest rate					2.35%
Senior Notes | Senior Notes Due 2029
Debt Instrument [Line Items]
Principal amount of notes issued				$ 400,000
Debt stated interest rate				3.90%
Line of Credit
Debt Instrument [Line Items]
Number of extensions available | extension_option			2
Extension term			6 months
Capacity			$ 3,600,000
Line of Credit | Unsecured Debt Tranche One
Debt Instrument [Line Items]
Capacity		$ 175,000
Line of Credit | Unsecured Debt Tranche Two
Debt Instrument [Line Items]
Capacity		$ 425,000
Line of Credit | Base rate
Debt Instrument [Line Items]
Basis spread on variable rate			0.00%
Line of Credit | Base rate | Investment grade election | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			0.00%
Line of Credit | Base rate | Investment grade election | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			0.60%
Line of Credit | Federal funds rate
Debt Instrument [Line Items]
Basis spread on variable rate			0.50%
Line of Credit | SOFR
Debt Instrument [Line Items]
Basis spread on variable rate			1.00%
Line of Credit | SOFR | Investment grade election | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate			0.70%
Line of Credit | SOFR | Investment grade election | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			1.60%
Line of Credit | Adjusted SOFR | Unsecured Debt Tranche One
Debt Instrument [Line Items]
Basis spread on variable rate		0.95%
Line of Credit | Adjusted SOFR | Unsecured Debt Tranche Two
Debt Instrument [Line Items]
Basis spread on variable rate		1.25%

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Debt - Schedule of Components of Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Variable Rate	3.60%
Notes Payable
Debt Instrument [Line Items]
Total	$ 6,426,097	$ 5,448,509
Less: Unamortized debt issuance costs	(32,563)	(25,762)
Total	6,393,534	5,422,747
Notes Payable | Secured notes payable
Debt Instrument [Line Items]
Fixed rate notes payable	526,722	930,830
Variable rate notes payable	$ 774,375	392,679
Notes Payable | Secured notes payable | Minimum
Debt Instrument [Line Items]
Fixed Rate	2.46%
Variable Rate	4.04%
Notes Payable | Secured notes payable | Maximum
Debt Instrument [Line Items]
Fixed Rate	4.50%
Variable Rate	4.48%
Notes Payable | Unsecured notes payable
Debt Instrument [Line Items]
Fixed rate notes payable	$ 3,840,376	3,575,000
Variable rate notes payable	$ 1,284,624	$ 550,000
Notes Payable | Unsecured notes payable | Minimum
Debt Instrument [Line Items]
Fixed Rate	2.35%
Variable Rate	4.09%
Notes Payable | Unsecured notes payable | Maximum
Debt Instrument [Line Items]
Fixed Rate	4.39%
Variable Rate	4.39%

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Debt - Schedule of Maturities of Notes Payable (Details) - Notes Payable - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
2022	$ 0
2023	391,725
2024	425,000
2025	711,202
2026	807,815
Thereafter	4,090,355
Total	$ 6,426,097	$ 5,448,509

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Debt - Schedule of Credit Agreement (Details) - Line of Credit	Sep. 30, 2022 USD ($)
Line of Credit Facility [Line Items]
Debt Capacity	$ 3,600,000,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt Capacity	1,250,000,000
Tranche 1 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	400,000,000
Tranche 2 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	425,000,000
Tranche 3 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	245,000,000
Tranche 4 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	255,000,000
Tranche 5 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	425,000,000
Tranche 6 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	175,000,000
Tranche 7 Term Loan Facility
Line of Credit Facility [Line Items]
Debt Capacity	$ 425,000,000

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Debt - Schedule of Information on Lines of Credit (Details)	9 Months Ended
	Sep. 30, 2022 USD ($) extension_option	Jul. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Amount Drawn	$ 600,000,000		$ 535,000,000
Line of Credit
Debt Instrument [Line Items]
Capacity	$ 3,600,000,000
Number of extensions available | extension_option	2
Extension term	6 months
Lines Of Credit
Debt Instrument [Line Items]
Amount Drawn	$ 600,000,000
Capacity	1,390,000,000
Credit Line 1
Debt Instrument [Line Items]
Amount Drawn	15,000,000
Capacity	$ 140,000,000
Interest Rate	4.30%
Credit Line 2
Debt Instrument [Line Items]
Amount Drawn	$ 585,000,000
Capacity	$ 1,250,000,000
Interest Rate	3.90%
Number of extensions available | extension_option	2
Extension term	6 months
Unsecured Debt Tranche One | Line of Credit
Debt Instrument [Line Items]
Capacity		$ 175,000,000
Unsecured Debt Tranche Two | Line of Credit
Debt Instrument [Line Items]
Capacity		$ 425,000,000
LIBOR | Credit Line 1
Debt Instrument [Line Items]
Basis spread on variable rate	1.35%
LIBOR | Credit Line 2
Debt Instrument [Line Items]
Basis spread on variable rate	0.95%

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Derivatives - Additional Information (Detail) $ in Thousands	Sep. 30, 2022 USD ($) derivative
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Estimated amount of unrealized gains (losses) expected to be reclassified as interest expense in next fiscal year	$ 29,746
Number of derivative financial instruments | derivative	15
Combined notional amount	$ 1,439,256

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Derivatives - Schedule of Balance Sheet Classification and Fair Value of Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Other assets
Derivative [Line Items]
Other assets	$ 54,977	$ 271
Other liabilities
Derivative [Line Items]
Other liabilities	$ 0	$ 39,569

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Derivatives - Gain (Loss) Recognized on Swap Agreements (Detail) - Swap Agreements - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative [Line Items]
Gain (loss) recognized in OCI	$ 25,350	$ (736)	$ 82,449	$ 10,316
Gain (loss) reclassified from OCI	$ 1,131	$ (8,794)	$ (13,536)	$ (26,386)

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Stockholders' Equity (Detail)				3 Months Ended		7 Months Ended	9 Months Ended
	Jan. 07, 2022 USD ($) store shares	Aug. 09, 2021 USD ($) sales_agent	Mar. 23, 2021 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Aug. 08, 2021 USD ($) shares	Sep. 30, 2022 USD ($) $ / shares shares	Oct. 15, 2020 USD ($)
Class of Stock [Line Items]
Issuance of common stock in conjunction with acquisitions (in shares) | shares	186,766
Number of stores acquired through issuance of common stock | store	2
Issuance of common stock in conjunction with acquisitions	$ 40,965,000				$ 40,965,000
Number of sales agents | sales_agent		10
Shares issued (in shares) | shares			1,600,000
Net proceeds			$ 206,572,000
Average sales price (in dollars per share) | $ / shares			$ 129.13
Share repurchase program, authorized amount								$ 400,000,000
Repurchase of common stock (in shares) | shares							381,786
Repurchase of common stock, average price (in dollars per share) | $ / shares							$ 165.03
Repurchase of common stock				$ 63,008,000			$ 63,008,000
Share repurchase program, remaining authorization							$ 336,992,000
At the Market Equity Distribution Agreement
Class of Stock [Line Items]
Aggregate offering price of common shares		$ 800,000,000
Shares issued (in shares) | shares						585,685
Net proceeds						$ 66,617,000

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Noncontrolling Interest Represented by Preferred Operating Partnership Units - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended		9 Months Ended	24 Months Ended
	Jun. 01, 2022	May 10, 2022	Jun. 25, 2007	Oct. 31, 2014	Jun. 30, 2007	Sep. 30, 2022	Dec. 31, 2014	Dec. 31, 2021
Noncontrolling Interest [Line Items]
Loans and notes to affiliates						$ 100,000		$ 100,000
Preferred units outstanding (in shares)						7,221,445
Note receivable interest rate						5.00%
Combined notional amount						$ (1,439,256)
Series A Units
Noncontrolling Interest [Line Items]
Fixed priority return on preferred OP units, amount				$ 101,700	$ 101,700
Fixed priority return on preferred OP units, stated return rate					2.30%
Fixed priority return on preferred OP units, liquidation value					$ 115,000
Preferred units outstanding (in shares)				875,480
Series B Units
Noncontrolling Interest [Line Items]
Preferred units outstanding (in shares)							1,342,727
Redemption of Operating Partnership units (in shares)		45,000
Redemption of operating partnership units		$ 1,125
Liquidation value (in dollars per share)							$ 25.00
Fixed liquidation value							$ 33,568
Annual rate of return percentage							6.00%
Series D Units
Noncontrolling Interest [Line Items]
Liquidation value (in dollars per share)						$ 25.00
Fixed liquidation value						$ 211,436
Fixed liquidation value (in shares)						8,457,422
Issuance of units (in shares)	240,000
Issuance of units	$ 6
Series D Units | Minimum
Noncontrolling Interest [Line Items]
Annual rate of return percentage						3.00%
Series D Units | Maximum
Noncontrolling Interest [Line Items]
Annual rate of return percentage						5.00%
Operating Partnership Holders of A Units | Series A Units
Noncontrolling Interest [Line Items]
Loans and notes to affiliates			$ 100,000
Maximum number of preferred OP units converted prior to the maturity date of the loan (in shares)				114,500
Note receivable interest rate			2.10%

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Noncontrolling Interest Represented by Preferred Operating Partnership Units - Balances of OP Units (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	$ 261,494	$ 259,110
Series A Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	16,490	15,606
Series B Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	33,568	38,068
Series D Units
Noncontrolling Interest [Line Items]
Noncontrolling interest represented by Preferred Operating Partnership units, net	$ 211,436	$ 205,436

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Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests - Additional Information (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) joint_venture property $ / shares shares	Dec. 31, 2021 USD ($)
Noncontrolling Interest [Line Items]
Note receivable interest rate	5.00%
Period used as a denomination to determine the average closing price of common stock	10 days
Ten day average closing stock price (in dollars per share) | $ / shares	$ 173.48
Preferred units outstanding (in shares) | shares	7,221,445
Consideration to be paid on redemption of common OP units	$ 1,252,776
Number of consolidated joint ventures | joint_venture	3
Noncontrolling Interest - Operating Partnership
Noncontrolling Interest [Line Items]
Loan receivable, reduction of noncontrolling interests	$ 1,900	$ 1,900
Common Stock
Noncontrolling Interest [Line Items]
OP units conversion ratio	1
Other noncontrolling interests
Noncontrolling Interest [Line Items]
Number of operating stores owned | property	3
Noncontrolling Interest - Operating Partnership
Noncontrolling Interest [Line Items]
Ownership interest held	93.40%
Ownership interest held by joint venture partner	6.60%
Other noncontrolling interests | Minimum
Noncontrolling Interest [Line Items]
Ownership interest held by joint venture partner	3.00%
Other noncontrolling interests | Maximum
Noncontrolling Interest [Line Items]
Ownership interest held by joint venture partner	10.00%

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Noncontrolling Interest in Operating Partnership and Other Noncontrolling Interests - Schedule of OP Unit Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Noncontrolling Interest [Abstract]
OP Units redeemed for common stock (in shares)	0	64,287
OP Units redeemed for cash (in shares)	18,028	3,000
Cash paid for OP Units redeemed	$ 3,504	$ 472
OP Units issued in conjunction with acquisitions (in units)	711,037	0
Value of OP Units issued in conjunction with business combination and acquisitions	$ 141,000	$ 0

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Segment Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	2

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Segment Information - Schedule of Financial Information (Detail) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Revenues:	$ 498,902			$ 412,492			$ 1,417,452	$ 1,149,979
Operating expenses:	229,045			186,214			650,869	549,682
Net operating income:	269,857			226,278			780,832	664,180
Management fees and other income	22,246			16,879			62,720	47,320
Transaction related costs	0			0			(1,465)	0
General and administrative expense	(32,275)			(24,395)			(93,288)	(74,276)
Depreciation and amortization expense	(71,423)			(61,516)			(208,396)	(179,685)
Gain on real estate transactions	0			0			14,249	63,883
Interest expense	(56,245)			(39,670)			(146,249)	(120,605)
Interest income	18,125			11,729			52,174	36,871
Equity in earnings and dividend income from unconsolidated real estate entities	11,149			8,255			30,436	23,533
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest	0			0			0	6,251
Income tax expense	(6,760)			(6,772)			(15,516)	(16,330)
Net income	236,126	$ 247,834	$ 217,717	199,820	$ 178,579	$ 215,501	701,677	593,900
Operating Segments
Segment Reporting Information [Line Items]
Revenues:	476,656			395,613			1,354,732	1,102,659
Operating expenses:	125,347			100,303			347,720	295,721
Net operating income:	351,309			295,310			1,007,012	806,938
Self-Storage Operations | Operating Segments
Segment Reporting Information [Line Items]
Revenues:	428,787			351,355			1,216,639	976,448
Operating expenses:	114,577			92,794			322,371	274,316
Net operating income:	314,210			258,561			894,268	702,132
Tenant Reinsurance | Operating Segments
Segment Reporting Information [Line Items]
Revenues:	47,869			44,258			138,093	126,211
Operating expenses:	10,770			7,509			25,349	21,405
Net operating income:	$ 37,099			$ 36,749			$ 112,744	$ 104,806

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Commitments and Contingencies (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) store	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) store	Sep. 30, 2021 USD ($)
Other Commitments [Line Items]
Property operations | $	$ 114,577	$ 92,794	$ 322,371	$ 274,316
Tenant reinsurance | $	10,770	$ 7,509	$ 25,349	$ 21,405
Hurricane
Other Commitments [Line Items]
Loss from hurricane | $	3,200
Tenant reinsurance | $	$ 3,000
Commitment to acquire stores
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	15		15
Purchase price | $	$ 272,928		$ 272,928
Commitment to acquire stores, scheduled to close in current fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	7		7
Commitment to acquire stores, scheduled to close in next fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	8		8
Commitment to acquire stores with joint venture partners
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	7		7
Purchase price | $	$ 24,431		$ 24,431
Commitment to acquire stores with joint venture partners, scheduled to close in current fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	3		3
Commitment to acquire stores with joint venture partners, scheduled to close in next fiscal year
Other Commitments [Line Items]
Number of real estate properties to be acquired | store	4		4