PUBLIC STORAGE – 10-Q – Management report and analysis of the financial position and operating results

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Forward Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include statements relating to our 2021 outlook and
all underlying assumptions, our expected acquisition, disposition, development
and redevelopment activity, supply and demand for our self-storage facilities,
information relating to operating trends in our markets, expectations regarding
operating expenses, including property tax changes, our strategic priorities,
expectations with respect to financing activities, rental rates, cap rates and
yields, leasing expectations, our credit ratings, and all other statements other
than statements of historical fact. Such statements are based on management's
beliefs and assumptions made based on information currently available to
management. All statements in this document, other than statements of historical
fact, are forward-looking statements which may be identified by the use of the
words "outlook," "guidance," "expects," "believes," "anticipates," "should,"
"estimates," and similar expressions.
These forward-looking statements involve known and unknown risks and
uncertainties, which may cause our actual results and performance to be
materially different from those expressed or implied in the forward-looking
statements. Factors and risks that may impact future results and performance
include, but are not limited to, those described in Part 1, Item 1A, "Risk
Factors" in our most recent Annual Report on Form 10-K for the year ended
December 31, 2020 filed with the Securities and Exchange Commission (the "SEC")
on February 24, 2021 and in our other filings with the SEC including:
•general risks associated with the ownership and operation of real estate,
including changes in demand, risk related to development, expansion, and
acquisition of self-storage facilities, potential liability for environmental
contamination, natural disasters, and adverse changes in laws and regulations
governing property tax, real estate, and zoning;
•risks associated with downturns in the national and local economies in the
markets in which we operate, including risks related to current economic
conditions and the economic health of our customers;
•risks associated with the COVID-19 Pandemic (the "COVID Pandemic") or similar
events, including but not limited to illness or death of our employees or
customers, negative impacts to the economic environment and to self-storage
customers that could reduce the demand for self-storage or reduce our ability to
collect rent, and/or potential regulatory actions to (i) close our facilities if
we were determined not to be an "essential business" or for other reasons, (ii)
limit our ability to increase rent or otherwise limit the rent we can charge, or
(iii) limit our ability to collect rent or evict delinquent tenants;
•the risk that there could be an out-migration of population from certain
high-cost major markets, if it is determined that the ability to "work from
home," which has become more prominent during the COVID Pandemic, could allow
certain workers to live in less expensive localities, which could negatively
impact the occupancies and revenues of our properties in such major high-cost
markets;
•the risk that more jurisdictions will reinstitute COVID Pandemic restrictions,
which were previously eased, in response to increases in infections, including
as a result of variants such as the Delta variant, or if additional pandemics
occur;
•the risk that we could experience a change in the move-out patterns of our
long-term customers due to economic uncertainty and increases in unemployment
resulting from changes in macro environment, which could lead to lower
occupancies and rent "roll down" as long-term customers are replaced with new
customers at lower rates;
•the risk of negative impacts on the cost and availability of debt and equity
capital as a result of the COVID Pandemic, which could have a material impact
upon our capital and growth plans;
•the risk that the COVID Pandemic could adversely impact our ability to retain
and hire employees, including as a result of vaccine or testing mandates;
•the impact of competition from new and existing self-storage and commercial
facilities and other storage alternatives;
•the risk that our existing self-storage facilities may be at a disadvantage in
competing with newly developed facilities with more visual and customer appeal;
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•risks related to increased reliance on Google and Sparefoot as customer
acquisition channels;
•difficulties in our ability to successfully evaluate, finance, integrate into
our existing operations, and manage properties that we acquire directly or
through the acquisition of entities that own and operate self-storage
facilities, or to consummate announced acquisitions in the expected timeframe or
at all;
•risks associated with international operations including, but not limited to,
unfavorable foreign currency rate fluctuations, changes in tax laws, and local
and global economic uncertainty that could adversely affect our earnings and
cash flows;
•risks related to our participation in joint ventures;
•the impact of the legal and regulatory environment as well as national, state,
and local laws and regulations including, without limitation, those governing
environmental issues, taxes, our tenant reinsurance business, and labor,
including risks related to the impact of new laws and regulations;
•risks of increased tax expense associated either with a possible failure by us
to qualify as a real estate investment trust ("REIT"), or with challenges to the
determination of taxable income for our taxable REIT subsidiaries;
•risks due to ballot initiatives or other actions that could remove the
protections of Proposition 13 with respect to our real estate and result in
substantial increases in our assessed values and property tax bills in
California;
•changes in United States ("U.S.") federal or state tax laws related to the
taxation of REITs and other corporations;
•security breaches, including ransomware, or a failure of our networks, systems
or technology could adversely impact our operations or our business, customer,
and employee relationships or result in fraudulent payments;
•risks associated with the self-insurance of certain business risks, including
property and casualty insurance, employee health insurance, and workers
compensation liabilities;
•difficulties in raising capital at a reasonable cost;
•delays and cost overruns on our projects to develop new facilities or expand
our existing facilities;
•difficulties in our ability to hire and retain skilled management and staff;
•ineffective succession planning for our CEO, executive management and our other
key employees;
•ongoing litigation and other legal and regulatory actions that may divert
management's time and attention, require us to pay damages and expenses, or
restrict the operation of our business; and
•economic uncertainty due to the impact of war or terrorism.
These forward-looking statements speak only as of the date of this report or as
of the dates indicated in the statements. All of our forward-looking statements,
including those in this report, are qualified in their entirety by this
statement. We expressly disclaim any obligation to update publicly or otherwise
revise any forward-looking statements, whether because of new information, new
estimates, or other factors, events or circumstances after the date of these
forward-looking statements, except when expressly required by law. Given these
risks and uncertainties, you should not rely on any forward-looking statements
in this report, or which management may make orally or in writing from time to
time, neither as predictions of future events nor guarantees of future
performance.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with U.S. generally accepted accounting principles ("GAAP") requires us to make
judgments, assumptions, and estimates that affect the amounts reported. On an
ongoing basis, we evaluate our estimates and assumptions. These estimates and
assumptions are based on current facts, historical experience, and various other
factors that we believe are reasonable under the circumstances to determine
reported amounts of assets, liabilities, revenues, and expenses that are not
readily apparent from other sources.
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During the nine months ended September 30, 2021, there were no material changes
to our critical accounting policies and estimates as compared to the critical
accounting policies and estimates disclosed in Management's Discussion and
Analysis of Financial Condition and Results of Operations contained in Part II,
Item 7 of our Form 10-K for the year ended December 31, 2020.
Overview
Our self-storage operations generate most of our net income and our earnings
growth is most impacted by the level of organic growth within our Same Store
Facilities. Accordingly, a significant portion of management's time is devoted
to maximizing cash flows from our existing self-storage facility portfolio.

During the three and nine months ended September 30, 2021, revenues generated by
our Same Store Facilities (as defined below) increased 14.0% and 9.4%,
respectively, while Same Store cost of operations decreased. Demand and
operating trends have continued to improve, leading to increases in our
self-storage rental rates in all markets while maintaining high levels of
occupancy. Our operating trends have benefited from our ability to reduce labor
costs through technology improvements and reduced need for Internet marketing.
At September 30, 2021, contract rent per occupied foot was 10.7% higher and
square foot occupancy was 1.2% higher for our Same Store Facilities as compared
to September 30, 2020, suggesting continued revenue growth during the remainder
of 2021.

In addition to managing our existing facilities for organic growth, we have
grown and plan to continue to grow through the acquisition and development of
new facilities and expansion of our existing self-storage facilities. Since the
beginning of 2019, we acquired a total of 232 facilities with 18.5 million net
rentable square feet for $4.1 billion, and within our non-same store portfolio
have developed and expanded self-storage space for a total cost of $1.6 billion,
adding 17.0 million net rentable square feet.

On April 28, 2021, as part of our portfolio growth, we acquired the ezStorage
portfolio consisting of 48 properties (4.1 million net rentable square feet) for
$1.8 billion. These properties are located in submarkets with strong demand
drivers and other desirable characteristics across Washington DC, Virginia, and
Maryland.

Subsequent to September 30, 2021, we are under contract to acquire the All
Storage portfolio consisting of 56 properties (7.5 million net rentable square
feet) for $1.5 billion. These properties are located in submarkets with strong
demand drivers and other desirable characteristics across Dallas-Ft. Worth (52
properties) and Oklahoma City. The acquisition, which is subject to the
satisfaction of customary closing conditions, is expected to close in two
separate tranches, with seven self-storage facilities closing in November 2021
and 49 self-storage facilities closing in December 2021.

Our strong financial profile continues to enable effective access to capital
markets in order to support our growth, and during the nine months ended
September 30, 2021, we raised an aggregate of $3.3 billion in three public debt
offerings and $747.5 million in two public offerings of our preferred shares.

In order to enhance the competitive position of certain of our facilities
relative to local competitors (including newly developed facilities), we have
embarked on a multi-year program to rebrand our properties, to include more
pronounced, attractive, and clearly identifiable color schemes and signage, as
well as to upgrade the configuration and layout of the offices and other
customer zones to improve the customer experience. The timing and scope of the
program will evolve as the work is executed and we expect to spend approximately
$120.0 million in 2021 on this effort.
Results of Operations



Operating results for the three months ended September 30, 2021 and 2020

For the three months ended September 30, 2021, net income allocable to our
common shareholders was $442.3 million or $2.52 per diluted common share,
compared to $246.9 million or $1.41 per diluted common share in 2020
representing an increase of $195.4 million or $1.11 per diluted common share.
The increase is due primarily to (i) a $148.7 million increase in self-storage
net operating income (described below), (ii) a $82.8 million increase due to the
impact of foreign currency exchange gains and losses associated with our Euro
denominated debt, (iii) a $23.3 million increase due to the impact of the
redemption of preferred shares in the three months ended September 30, 2020,
partially offset by (iv) a $50.2 million increase in depreciation and
amortization expense.

The $148.7 million increase in self-storage net operating income is a result of
a $96.2 million increase in our Same Store Facilities (as defined below), and a
$52.5 million increase in our Non-Same Store Facilities (as defined below).
Revenues for the Same Store Facilities increased 14.0% or $87.8 million in the
three months ended September 30, 2021 as compared to 2020, due primarily to
higher realized annual rent per available square foot and weighted average
square foot
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occupancy. Cost of operations for the Same Store Facilities decreased by 4.6% or
$8.5 million in the three months ended September 30, 2021 as compared to 2020,
due primarily to a 43.3% ($7.0 million) decrease in marketing expenses, an 8.4%
($2.6 million) decrease in on-site property manager payroll, and a change in
property tax timing contributing to a 2.7% ($2.0 million) decrease in property
tax expense. The increase in net operating income of $52.5 million for the
Non-Same Store Facilities is due primarily to the impact of facilities acquired
in 2020 and 2021 and the fill-up of recently developed and expanded facilities.


Operating results for the nine months ended September 30, 2021 and 2020

For the nine months ended September 30, 2021, net income allocable to our common
shareholders was $1,174.4 million or $6.70 per diluted common share, compared to
$806.2 million or $4.62 per diluted common share in 2020 representing an
increase of $368.2 million or $2.08 per diluted common share. The increase is
due primarily to (i) a $316.7 million increase in self-storage net operating
income (described below), (ii) a $125.8 million increase due to the impact of
foreign currency exchange gains and losses associated with our Euro denominated
debt, partially offset by (iii) a $96.3 million increase in depreciation and
amortization expense and (iv) a $25.8 million increase in general and
administrative expense due primarily to increased share-based compensation
expense.

The $316.7 million increase in self-storage net operating income is a result of
a $216.9 million increase in our Same Store Facilities (as defined below), and a
$99.8 million increase in our Non-Same Store Facilities (as defined below).
Revenues for the Same Store Facilities increased 9.4% or $175.2 million in the
nine months ended September 30, 2021 as compared to 2020, due primarily to
higher realized annual rent per available square foot and weighted average
square foot occupancy. Cost of operations for the Same Store Facilities
decreased by 7.4% or $41.7 million in the nine months ended September 30, 2021
as compared to 2020, due primarily to (i) a 19.5% ($20.0 million) decrease in
on-site property manager payroll, (ii) a 37.1% ($18.0 million) decrease in
marketing expenses and (iii) a change in property tax timing contributing to our
6.2% ($13.4 million) decrease in property tax expense. The increase in net
operating income of $99.8 million for the Non-Same Store Facilities is due
primarily to the impact of facilities acquired in 2020 and 2021 and the fill-up
of recently developed and expanded facilities.


Operations Fund and Basic Operations Fund

Funds from Operations ("FFO") and FFO per share are non-GAAP measures defined by
the National Association of Real Estate Investment Trusts and are considered
helpful measures of REIT performance by REITs and many REIT analysts. FFO
represents net income before depreciation and amortization, which is excluded
because it is based upon historical costs and assumes that building values
diminish ratably over time, while we believe that real estate values fluctuate
due to market conditions. FFO also excludes gains or losses on sale of real
estate assets and real estate impairment charges, which are also based upon
historical costs and are impacted by historical depreciation. FFO and FFO per
share are not a substitute for net income or earnings per share. FFO is not a
substitute for net cash flow in evaluating our liquidity or ability to pay
dividends, because it excludes investing and financing activities presented on
our statements of cash flows. In addition, other REITs may compute these
measures differently, so comparisons among REITs may not be helpful.
For the three months ended September 30, 2021, FFO was $3.61 per diluted common
share, as compared to $2.28 per diluted common share for the same period in
2020, representing an increase of 58.3%, or $1.33 per diluted common share.
For the nine months ended September 30, 2021, FFO was $9.69 per diluted common
share, as compared to $7.18 per diluted common share for the same period in
2020, representing an increase of 35.0%, or $2.51 per diluted common share.
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The following tables reconcile the diluted earnings per share of the FFO per share and
state the calculation of the FFO per share:

                                                          Three Months Ended                          Nine Months Ended
                                                             September 30,                              September 30,
                                                        2021                  2020                2021                 2020

                                                                  (Amounts in thousands, except per share data)
Reconciliation of Diluted Earnings per Share to
FFO per Share:

Diluted Earnings per Share                       $      2.52              $    1.41          $      6.70          $      4.62
Eliminate amounts per share excluded from FFO:
Depreciation and amortization                           1.17                   0.88                 3.17                 2.63
Gains on sale of real estate investments,
including our equity share from investments            (0.08)                 (0.01)               (0.18)               (0.07)
FFO per share                                    $      3.61              $ 

2.28 $ 9.69 $ 7.18

Calculation of FFO per Share:

Net income allocable to common shareholders      $   442,327              $ 246,916          $ 1,174,386          $   806,169
Eliminate items excluded from FFO:
Depreciation and amortization                        187,611                137,526              505,218              409,484
Depreciation from unconsolidated real estate
investments                                           19,209                 17,492               54,485               52,607
Depreciation allocated to noncontrolling
interests and restricted share unitholders            (1,318)                  (954)              (3,413)              (2,853)
Gains on sale of real estate investments,
including our equity share from investments          (12,572)                (3,174)             (31,156)             (12,415)
FFO allocable to common shares                   $   635,257              $ 397,806          $ 1,699,520          $ 1,252,992
Diluted weighted average common shares               175,806                174,626              175,398              174,606
FFO per share                                    $      3.61              $    2.28          $      9.69          $      7.18


We also present "Core FFO per share," a non-GAAP measure that represents FFO per
share excluding the impact of (i) foreign currency exchange gains and losses,
(ii) charges related to the redemption of preferred securities, and (iii)
certain other non-cash and/or nonrecurring income or expense items primarily
representing, with respect to the periods presented below, the impact of loss
contingency accruals, casualties, transactional due diligence, and advisory
costs . We review Core FFO per share to evaluate our ongoing operating
performance and we believe it is used by investors and REIT analysts in a
similar manner. However, Core FFO per share is not a substitute for net income
per share. Because other REITs may not compute Core FFO per share in the same
manner as we do, may not use the same terminology or may not present such a
measure, Core FFO per share may not be comparable among REITs.
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The following table reconciles the FFO per share and the Core FFO per share:

                                                          Three Months Ended                                               Nine Months Ended
                                                            September 30,                                                    September 30,
                                            2021                2020          Percentage Change             2021                2020          Percentage Change

FFO per share                         $    3.61              $  2.28                     58.3  %       $    9.69             $  7.18                     35.0  %
Eliminate the per share impact of
items excluded from Core FFO,
including our equity share from
investments:
Foreign currency exchange (gain) loss     (0.23)                0.24                                       (0.42)               0.30
Preferred share redemption charge             -                 0.13                                        0.10                0.22
Property losses and tenant claims due
to casualties                              0.03                    -                                        0.03                   -
Other items                                0.01                (0.02)                                      (0.01)              (0.02)
Core FFO per share                    $    3.42              $  2.63                     30.0  %       $    9.39             $  7.68                     22.3  %

Analysis of net income by segment to present

The following discussion and analysis is presented and organized in accordance
with Note 11 to our September 30, 2021 financial statements, "Segment
Information." Accordingly, refer to the table presented in Note 11 in order to
reconcile such amounts to our total net income and for further information on
our reportable segments.
Self-Storage Operations
Our self-storage operations are analyzed in four groups: (i) the 2,274
facilities that we have owned and operated on a stabilized basis since January
1, 2019 (the "Same Store Facilities"), (ii) 232 facilities we acquired after
December 31, 2018 (the "Acquired facilities"), (iii) 139 facilities that have
been newly developed or expanded, or that we expect to commence expansion by
December 31, 2021 (the "Newly developed and expanded facilities"), and (iv) 33
other facilities, which are otherwise not stabilized with respect to occupancies
or rental rates since January 1, 2019 (the "Other non-same store facilities").
See Note 11 to our September 30, 2021 financial statements "Segment
Information," for a reconciliation of the amounts in the tables below to our
total net income.
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Self-Storage Operations
Summary                                      Three Months Ended September 30,                                     Nine Months Ended September 30,
                                     2021                2020           Percentage Change               2021                    2020            Percentage Change

                                                                         (Dollar amounts and square footage in thousands)
Revenues:
Same Store facilities            $  716,050          $ 628,286                     14.0  %       $      2,042,832          $ 1,867,663                      9.4  %
Acquired facilities                  62,187             11,001                    465.3  %                124,751               28,103                    343.9  %
Newly developed and expanded
facilities                           55,100             38,375                     43.6  %                145,960              108,449                     34.6  %
Other non-same store facilities       7,173              6,287                     14.1  %                 20,307               18,477                      9.9  %
                                    840,510            683,949                     22.9  %              2,333,850            2,022,692                     15.4  %
Cost of operations (a):
Same Store facilities               175,609            184,068                     (4.6) %                523,323              565,057                     (7.4) %
Acquired facilities                  20,064              4,880                    311.1  %                 45,918               13,630                    236.9  %
Newly developed and expanded
facilities                           19,059             17,735                      7.5  %                 55,572               51,016                      8.9  %
Other non-same store facilities       2,267              2,496                     (9.2) %                  6,886                7,526                     (8.5) %
                                    216,999            209,179                      3.7  %                631,699              637,229                     (0.9) %
Net operating income (b):
Same Store facilities               540,441            444,218                     21.7  %              1,519,509            1,302,606                     16.7  %
Acquired facilities                  42,123              6,121                    588.2  %                 78,833               14,473                    444.7  %
Newly developed and expanded
facilities                           36,041             20,640                     74.6  %                 90,388               57,433                     57.4  %
Other non-same store facilities       4,906              3,791                     29.4  %                 13,421               10,951                     22.6  %
Total net operating income          623,511            474,770                     31.3  %              1,702,151            1,385,463                     22.9  %

Depreciation and amortization
expense:
Same Store facilities              (112,656)          (112,092)                     0.5  %               (332,079)            (333,650)                    (0.5) %
Acquired facilities                 (55,986)            (7,223)                   675.1  %               (114,297)             (22,292)                   412.7  %
Newly developed and expanded
facilities                          (14,977)           (13,596)                    10.2  %                (46,126)             (39,796)                    15.9  %
Other non-same store facilities      (4,933)            (5,422)                    (9.0) %                (15,637)             (16,113)                    (3.0) %
Total depreciation and
amortization expense               (188,552)          (138,333)                    36.3  %               (508,139)            (411,851)                    23.4  %

Net income (loss):
Same Store facilities               427,785            332,126                     28.8  %              1,187,430              968,956                     22.5  %
Acquired facilities                 (13,863)            (1,102)                  1158.0  %                (35,464)              (7,819)                   353.6  %
Newly developed and expanded
facilities                           21,064              7,044                    199.0  %                 44,262               17,637                    151.0  %
Other non-same store facilities         (27)            (1,631)                   (98.3) %                 (2,216)              (5,162)                   (57.1) %
Total net income                 $  434,959          $ 336,437                     29.3  %       $      1,194,012          $   973,612                     22.6  %

Number of facilities at period
end:
Same Store facilities                                                                                       2,274                2,274                           -
Acquired facilities                                                                                           232                   63                    268.3  %
Newly developed and expanded
facilities                                                                                                    139                  133                      4.5  %
Other non-same store facilities                                                                                33                   34                     (2.9) %
                                                                                                            2,678                2,504                      6.9  %
Net rentable square footage at
period end:
Same Store facilities                                                                                     148,695              148,695                           -
Acquired facilities                                                                                        18,524                4,539                    308.1  %
Newly developed and expanded
facilities                                                                                                 17,000               15,469                      9.9  %
Other non-same store facilities                                                                             2,158                2,303                     (6.3) %
                                                                                                          186,377              171,006                      9.0  %


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(a)We revised our prior period financial statements to correct the presentation
of share-based compensation expense and dividends paid on RSUs between general
and administrative expense and self-storage cost of operations. As a result, we
revised our statements of income for the three and nine months ended
September 30, 2020 with an increase in self-storage cost of operations of $3.1
million and $9.4 million, respectively, and a corresponding decrease to general
and administrative expenses. This immaterial correction had no impact on our
total expenses or net income. The correction also had no impact on our balance
sheet, statements of comprehensive income, statements of equity, or cash flows
as of and for the three and nine months ended September 30, 2020.
(b)Net operating income or "NOI" is a non-GAAP financial measure that excludes
the impact of depreciation and amortization expense, which is based upon
historical real estate costs and assumes that building values diminish ratably
over time, while we believe that real estate values fluctuate due to market
conditions. We utilize NOI in determining current property values, evaluating
property performance, and in evaluating property operating trends. We believe
that investors and analysts utilize NOI in a similar manner. NOI is not a
substitute for net income, operating cash flow, or other related financial
measures, in evaluating our operating results. See Note 11 to our September 30,
2021 financial statements for a reconciliation of NOI to our total net income
for all periods presented.
Same Store Facilities

The Same Store Facilities consist of facilities we have owned and operated on a
stabilized level of occupancy, revenues, and cost of operations since January 1,
2019. Our Same Store Facilities decreased from 2,278 facilities at June 30, 2021
to 2,274 facilities at September 30, 2021. The composition of our Same Store
Facilities allows us more effectively to evaluate the ongoing performance of our
self-storage portfolio in 2019, 2020, and 2021 and exclude the impact of fill-up
of unstabilized facilities, which can significantly affect operating trends. We
believe investors and analysts use Same Store information in a similar manner.
However, because other REITs may not compute Same Store Facilities in the same
manner as we do, may not use the same terminology or may not present such a
measure, Same Store Facilities may not be comparable among REITs.

The following table summarizes the historical operating results of these 2,274
facilities (148.7 million net rentable square feet) that represent approximately
80% of the aggregate net rentable square feet of our U.S. consolidated
self-storage portfolio at September 30, 2021. It includes various measures and
detail that we do not include in the analysis of the developed, acquired, and
other non-same store facilities, due to the relative magnitude and importance of
our same store facilities relative to our self-storage facilities.

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Selected operating data for the same warehouse facilities (2,274 facilities)

                                                   Three Months Ended September 30,                                       Nine Months Ended September 30,
                                          2021                2020            Percentage Change                 2021                    2020             Percentage Change

                                                                         

(Amounts in thousands of dollars, except for data per square foot)
Income (a):
Rental income

                         $  694,589          $ 609,150                         14.0%       $       1,982,274          $ 1,803,659                          9.9%
Late charges and administrative fees      21,461             19,136                         12.1%                  60,558               64,004                        (5.4)%
Total revenues                           716,050            628,286                         14.0%               2,042,832            1,867,663                          9.4%

Direct cost of operations (a):
Property taxes                            69,573             71,533                        (2.7)%                 203,172              216,595                        (6.2)%
On-site property manager payroll          28,116             30,701                        (8.4)%                  82,412              102,390                       (19.5)%
Repairs and maintenance                   13,078             12,954                          1.0%                  39,139               37,302                          4.9%
Utilities                                 11,051             11,278                        (2.0)%                  31,102               31,665                        (1.8)%
Marketing                                  9,143             16,131                       (43.3)%                  30,535               48,512                       (37.1)%
Other direct property costs               18,851             17,071                         10.4%                  55,433               50,872                          9.0%
Total direct cost of operations          149,812            159,668                        (6.2)%                 441,793              487,336                        (9.3)%
Direct net operating income (b)          566,238            468,618                         20.8%               1,601,039            1,380,327                         16.0%

Indirect cost of operations (a):
Supervisory payroll                       (8,320)            (9,831)                      (15.4)%                 (27,768)             (31,786)                      (12.6)%
Centralized management costs             (13,757)           (11,464)                        20.0%                 (39,990)             (36,510)                         9.5%
Share-based compensation                  (3,720)            (3,105)                        19.8%                 (13,772)              (9,425)                        46.1%
Net operating income                     540,441            444,218                         21.7%               1,519,509            1,302,606                         16.7%

Depreciation charge (112,656) (112,092)

                 0.5%                (332,079)            (333,650)                       (0.5)%
Net income                            $  427,785          $ 332,126                         28.8%       $       1,187,430          $   968,956                         22.5%

Gross margin (before indirect costs,
depreciation and amortization
expense)                                      79.1%              74.6%                       6.0%                      78.4%                73.9%                       6.1%

Gross margin (before depreciation and
amortization expense)                         75.5%              70.7%                       6.8%                      74.4%                69.7%                       6.7%

Weighted average for the period:
Square foot occupancy                         96.8%              95.5%                       1.4%                      96.5%                94.3%                       2.3%

Realized annual rental income per
(c):
Occupied square foot                  $       19.30       $      17.16                      12.5%       $              18.42       $        17.16                       7.3%
Available square foot                 $       18.68       $      16.39                      14.0%       $              17.77       $        16.18                       9.8%

At September 30:
Square foot occupancy                                                                                                  95.7%                94.6%                       1.2%
Annual contract rent per occupied
square foot (d)                                                                                         $              19.56       $        17.67                      10.7%


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(a)Revenues and cost of operations do not include tenant reinsurance and
merchandise sale revenues and expenses generated at the facilities. See
"Ancillary Operations" below for more information.
(b)Direct net operating income ("Direct NOI"), a subtotal within NOI, is a
non-GAAP financial measure that excludes the impact of supervisory payroll,
centralized management costs and share-based compensation in addition to
depreciation and amortization expense. We utilize direct net operating income in
evaluating property performance and in evaluating property operating trends as
compared to our competitors.
(c)Realized annual rent per occupied square foot is computed by dividing rental
income, before late charges and administrative fees, by the weighted average
occupied square feet for the period. Realized annual rent per available square
foot ("REVPAF") is computed by dividing rental income, before late charges and
administrative fees, by the total available net rentable square feet for the
period. These measures exclude late charges and administrative fees in order to
provide a better measure of our ongoing level of revenue. Late charges are
dependent upon the level of delinquency and administrative fees are dependent
upon the level of move-ins. In addition, the rates charged for late charges and
administrative fees can vary independently from rental rates. These measures
take into consideration promotional discounts, which reduce rental income.
(d)Annual contract rent represents the agreed upon monthly rate that is paid by
our tenants in place at the time of measurement. Contract rates are initially
set in the lease agreement upon move-in and we adjust them from time to time
with notice. Contract rent excludes other fees that are charged on a per-item
basis, such as late charges and administrative fees, does not reflect the impact
of promotional discounts, and does not reflect the impact of rents that are
written off as uncollectible.
Analysis of Same Store Revenue
We believe a balanced occupancy and rate strategy maximizes our revenues over
time. We regularly adjust the rental rates and promotional discounts offered
(generally, "$1.00 rent for the first month"), as well as our marketing efforts
to maximize revenue from new tenants to replace tenants that vacate.
We typically increase rental rates to our long-term tenants (generally, those
who have been with us for at least a year) every six to twelve months. As a
result, the number of long-term tenants we have in our facilities is an
important factor in our revenue growth. The level of rate increases to long-term
tenants is based upon balancing the additional revenue from the increase against
the negative impact of incremental move-outs, by considering the customer's
in-place rent and prevailing market rents, among other factors.
Revenues generated by our Same Store Facilities increased 14.0% and 9.4% for the
three and nine months ended September 30, 2021, respectively, as compared to the
same periods in 2020. The increase is due primarily to (i) a 12.5% and 7.3%
increase in realized annual rent per occupied square foot for the three and nine
months ended September 30, 2021, respectively, as compared to the same periods
in 2020, and (ii) a 1.4% and 2.3% increase in average occupancy for the three
and nine months ended September 30, 2021, respectively, as compared to the same
periods in 2020. The same store revenue growth for the nine months ended
September 30, 2021 was partially offset by a 5.4% decrease in late charges and
administrative fees as compared to the same period in 2020.
Our growth in revenues, weighted average square foot occupancy, realized annual
rent per occupied square foot, and REVPAF for the nine months ended
September 30, 2021 as compared to the same period in 2020 was evident in
substantially all of our markets including each of our top 15 markets.
For the three and nine months ended September 30, 2020, our revenues were
impacted by our decision to temporarily curtail our tenant rate increase program
and additional pricing limitations to existing tenants imposed by local
governments due to "State of Emergency" declarations in response to the COVID
Pandemic and other disasters in the during 2020. Although most restrictions have
recently been lifted, we continue to expect a portion of our revenues to remain
impacted throughout 2021.
The increase of realized annual rent per occupied square foot in the three and
nine months ended September 30, 2021 as compared to the same periods in 2020 was
due to (i) a 23.5% and 28.1% year over year increase in average rates per square
foot charged to new tenants moving in during the three and nine months, as a
result of strong customer demand across all markets, combined with (ii) rate
increases to existing tenants in 2021 as compared to the curtailed increases in
2020. At September 30, 2021, annual contract rent per occupied square foot was
10.7% higher as compared to September 30, 2020.
We experienced high occupancy levels throughout the first nine months of 2021.
Our average square foot occupancy levels increased 1.4% and 2.3% on a year over
year basis during the three and nine months ended September 30, 2021,
respectively. At September 30, 2021, our square foot occupancy was 95.7%. The
improvement in occupancy trends was due primarily to improved trends in
move-outs, with year over year move-outs down 6.1% and 8.9% in the three and
nine months ended September 30, 2021, respectively. This resulted in an
increased average length of stay for the three and nine months ended
September 30, 2021. An increased average length of stay supports revenue growth,
due to more long-term tenants who are eligible for rate increases, and a reduced
requirement to replace vacating tenants with new tenants
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which can lead to increased promotional costs and decrease our pricing leverage.
With higher occupancy and pricing trends, we reduced promotional discounts given
to new move-in customers for the three and nine months ended September 30, 2021
by 70.3% and 49.2%, respectively, as compared to the same periods in 2020.
Demand historically has been higher in the summer months than in the winter
months and, as a result, rental rates charged to new tenants have typically been
higher in the summer months than in the winter months. Demand fluctuates due to
various local and regional factors, including the overall economy. Demand into
our system is also impacted by new supply of self-storage space as well as
alternatives to self-storage.
Late Charges and Administrative Fees
Late charges and administrative fees increased 12.1% for the three months ended
September 30, 2021 as compared to the same period of 2020 due primarily to
delinquent rent fees being waived in 2020 during the COVID Pandemic. Late
charges and administrative fees decreased 5.4% year over year for the nine
months ended September 30, 2021 due to (i) an acceleration in average
collections whereby a greater percentage of tenants paid their monthly rent
promptly to avoid the incurrence of such fees and (ii) reduced move-in
administrative fees due to lower move-ins.
Selected Key Statistical Data
The following table sets forth average annual contract rent per square foot and
total square footage for tenants moving in and moving out during the three and
nine months ended September 30, 2021 and 2020. It also includes promotional
discounts, which vary based upon the move-in contractual rates, move-in volume,
and percentage of tenants moving in who receive the discount.
                                         Three Months Ended September 30,                           Nine Months Ended September 30,
                                    2021                2020              Change              2021                2020              Change

                                                         (Amounts in

thousands, excluding amounts per square foot)

Tenants moving in during the
period:
Average annual contract rent
per square foot                 $    18.47          $   14.95                 23.5%       $    16.92          $   13.21                 28.1%
Square footage                      23,590             26,548               (11.1)%           71,356             80,138               (11.0)%
Contract revenue gained from
move-ins                        $  108,927          $  99,223                  9.8%       $  905,508          $ 793,967                 14.0%
Promotional discounts given     $    5,858          $  19,697               (70.3)%       $   29,996          $  59,105               (49.2)%

Tenants moving out during the
period:
Average annual contract rent
per square foot                 $    18.24          $   15.52                 17.5%       $    17.21          $   15.52                 10.9%
Square footage                      24,885             26,496                (6.1)%           68,914             75,611                (8.9)%
Contract revenue lost from
move-outs                       $  113,476          $ 102,804                 10.4%       $  889,507          $ 880,112                  1.1%



Revenue Expectations
At September 30, 2021, in place contractual rent was 11.9% higher on a
year-over-year basis (comprised of a 1.2% increase in square foot occupancy and
a 10.7% increase in annual contract rent per occupied foot).
For the remainder of 2021, we expect continued year-over-year revenue growth
supported by strength in rates as a result of stable customer demand.
Analysis of Same Store Cost of Operations
Cost of operations (excluding depreciation and amortization) decreased 4.6% and
7.4% in the three and nine months ended September 30, 2021, respectively, as
compared to the same periods in 2020, due primarily to decreased marketing,
on-site property manager payroll, and property tax expense.
Property tax expense decreased 2.7% and 6.2% in the three and nine months ended
September 30, 2021, respectively, as compared to the same periods in 2020. In
2020 our property tax expense was recognized on an accelerated basis in each of
the first three quarters. We expect decreases through the third quarter to be
offset by an increase in the fourth quarter of 2021, resulting in an approximate
increase of 4.8% for the year ending December 31, 2021 compared to
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the same period in 2020, mainly due to higher valuation values ​​and,
to a lesser extent, the increase in tax rates. A summary of our real 2020 and 2021
the estimated quarterly property tax expense is presented below. Amount for the
three months ended December 31, 2021 is based on our current 2021 estimates
full year property tax charge.

                                                                      Actual
                                                2021                   2020

                                                 (Amounts in thousands)
         For the three months ended:
         March 31                      $                66,481    $        72,692
         June 30                                        67,118             72,370
         September 30                                   69,573             71,533

         December 31                                    66,737             41,164
                                       $               269,909    $       257,759


On-site property manager payroll expense decreased 8.4% and 19.5% in the three
and nine months ended September 30, 2021, respectively, as compared to the same
periods in 2020. The decrease is due to (i) a temporary $3.00 hourly incentive
increase and enhancement of paid time off benefits to all of our property
managers between April 1, 2020 and June 30, 2020 in response to the COVID
Pandemic and (ii) a year-over-year decline in hours worked due to staffing
reductions from reduced move-in and move-out activity and revisions to other
operational processes. In addition, since the second quarter of 2021, we have
been experiencing very competitive labor conditions in most geographical
markets. In response, on October 1, 2021, we increased the wages of all of our
property employees by an average of 7.5%, bringing our average pay for
non-resident property employees, those not receiving rent and utility free
housing, to $15 per hour.
Repairs and maintenance expense increased 1.0% and 4.9% in the three and nine
months ended September 30, 2021, respectively, as compared to the same periods
in 2020. Repairs and maintenance expense levels are dependent upon many factors
such as (i) sporadic occurrences such as accidents, damage, and equipment
malfunctions, (ii) short-term local supply and demand factors for material and
labor, and (iii) weather conditions, which can impact costs such as snow
removal, roof repairs, and HVAC maintenance and repairs.
Our utility expenses consist primarily of electricity costs, which are dependent
upon energy prices and usage levels. Changes in usage levels are driven
primarily by weather and temperature. Utility expense decreased 2.0% and 1.8% in
the three and nine months ended September 30, 2021, respectively, as compared to
the same periods in 2020. The decrease experienced in the three and nine months
ended September 30, 2021 is due primarily to investments we are making in energy
saving technology such as solar power and LED lights, which generate favorable
returns on investment in the form of lower utility usage. We continue to expect
a decline in utility expense throughout the remainder of 2021.
Marketing expense comprised principally Internet advertising and the operating
costs of our telephone reservation center. Internet advertising expense,
comprising primarily keyword search fees assessed on a "per click" basis, varies
based upon demand for self-storage space, the quantity of people inquiring about
self-storage through online search, occupancy levels, the number and
aggressiveness of bidding competitors, and other factors. These factors are
volatile; accordingly, Internet advertising can increase or decrease
significantly in the short-term. We decreased marketing expense by 43.3% and
37.1% in the three and nine months ended September 30, 2021, respectively, as
compared to the same periods in 2020, given strong demand and high occupancies
in many of our same store properties.
Other direct property costs include administrative expenses specific to each
self-storage facility, such as property insurance, telephone and data
communication lines, business license costs, bank charges related to processing
the facilities' cash receipts, tenant mailings, credit card fees, eviction
costs, and the cost of operating each property's rental office. These costs
increased 10.4% and 9.0% in the three and nine months ended September 30, 2021,
respectively, as compared to the same periods in 2020. We continue to experience
increased credit card fees due to a long-term trend of more customers paying
with credit cards rather than cash, checks, or other methods of payment with
lower transaction costs.
Supervisory payroll expense, which represents cash compensation paid to the
management personnel who directly and indirectly supervise the on-site property
managers, decreased 15.4% and 12.6% in the three and nine months ended
September 30, 2021, respectively, as compared to the same periods in 2020, due
primarily to lower headcount in 2021 and incentives related to the COVID
Pandemic in 2020.
Centralized management costs represents administrative and cash compensation
expenses for shared general corporate functions to the extent their efforts are
devoted to self-storage operations. Such functions include information
technology support, hardware, and software, as well as centralized
administration of payroll, benefits, training, repairs and maintenance, customer
service, pricing and marketing, operational accounting and finance, and legal
costs. Centralized
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management costs increased 20.0% and 9.5% in the three and nine months ended
September 30, 2021, respectively, as compared to the same periods in 2020. The
increase was due primarily to an increase in IT team costs that support property
operations. We expect increases in centralized management costs in the remainder
2021 due to increased headcount.
Share-based compensation expense includes the amortization of restricted share
units and stock options granted to management personnel who directly and
indirectly supervise the on-site property managers, as well as those employees
responsible for providing shared general corporate functions to the extent their
efforts are devoted to self-storage operations. Such functions are listed above
under centralized management costs. Share-based compensation expense varies
based upon the level of grants and their related vesting and amortization
periods, forfeitures, as well as the Company's common share price on the date of
each grant. For the three and nine months ended September 30, 2021, share-based
compensation expense increased 19.8% and 46.1%, respectively, as compared to the
same periods in 2020, due primarily to the absence of comparable
performance-based share-based compensation expense for the three and nine months
ended September 30, 2020 and the accelerated compensation costs recognized in
the three and nine months ended September 30, 2021 associated with modifying our
share-based compensation plans in July 2020, to allow immediate vesting upon
retirement.
Analysis of Same Store Depreciation and Amortization
Depreciation and amortization for Same Store Facilities increased 0.5% and
decreased 0.5% in the three and nine months ended September 30, 2021,
respectively, as compared to the same periods in 2020. We expect modest
increases in depreciation expense in the remainder of 2021 due to elevated
levels of capital expenditures.
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Quarterly Financial Data
The following table summarizes selected quarterly financial data with respect to
the Same Store Facilities:
                                                                              For the Quarter Ended
                                      March 31                   June 30                     September 30                     December 31                     Entire Year

                                                                            (Amounts in thousands, except for per square foot amounts)
Total revenues:
2021                              $         646,897       $             679,885       $                  716,050
2020                              $         625,818       $             613,559       $                  628,286       $                 637,256       $                2,504,919

Total cost of operations:
2021                              $         180,768       $             166,946       $                  175,609
2020                              $         188,922       $             192,067       $                  184,068       $                 146,394       $                  711,451

Property taxes:
2021                              $          66,481       $              67,118       $                   69,573
2020                              $          72,692       $              72,370       $                   71,533       $                  41,164       $                  257,759

Repairs and maintenance:
2021                              $          13,008       $              13,053       $                   13,078
2020                              $          12,698       $              11,650       $                   12,954       $                  13,461       $                   50,763

Marketing:
2021                              $          14,558       $               6,834       $                    9,143
2020                              $          14,782       $              17,599       $                   16,131       $                  13,505       $                   62,017

REVPAF:
2021                              $           16.86       $               17.77       $                    18.68
2020                              $           16.12       $               16.01       $                    16.39       $                   16.62       $                    16.29

Weighted average realized annual rent per occupied square foot:
2021                              $           17.63       $               18.32       $                    19.30
2020                              $           17.33       $               17.00       $                    17.16       $                   17.46       $                    17.24

Weighted average occupancy levels for the period:
2021                                          95.6%                       97.0%                            96.8%
2020                                          93.0%                       94.2%                            95.5%                           95.2%                            94.5%


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Analysis of Market Trends
The following tables set forth selected market trends in our Same Store
Facilities:
Same Store Facilities Operating Trends by Market

                                           As of September 30, 2021                                                For the Three Months Ended September 30,
                                           Number           Square                Realized Rent per                                                                    Realized Rent per
                                             of              Feet                Occupied Square Foot                      Average Occupancy                         Available Square Foot
                                         Facilities       (millions)
                                                                            2021         2020       Change          2021          2020         Change            2021            2020       Change
Los Angeles                                        213             15.2 $    27.98    $ 25.96           7.8  %        98.4  %       97.4  %        1.0  % $     27.53         $ 25.29           8.9  %
San Francisco                                      130              8.1      28.57      26.37           8.3  %        97.1  %       97.5  %       (0.4) %       27.74           25.71           7.9  %
New York                                            90              6.4      27.94      25.71           8.7  %        96.5  %       96.7  %       (0.2) %       26.98           24.86           8.5  %
Seattle-Tacoma                                      87              5.9      22.69      20.26          12.0  %        96.1  %       95.3  %        0.8  %       21.80           19.32          12.8  %
Miami                                               83              5.8      23.19      19.40          19.5  %        97.5  %       95.5  %        2.1  %       22.60           18.52          22.0  %
Washington DC                                       89              5.5      23.44      20.98          11.7  %        95.4  %       95.6  %       (0.2) %       22.37           20.06          11.5  %
Chicago                                            129              8.1      17.31      14.78          17.1  %        96.2  %       95.6  %        0.6  %       16.66           14.13          17.9  %
Atlanta                                             98              6.4      15.09      12.99          16.2  %        97.1  %       93.5  %        3.9  %       14.65           12.15          20.6  %
Dallas-Ft. Worth                                   102              6.6      15.29      13.28          15.1  %        96.2  %       93.7  %        2.7  %       14.71           12.45          18.2  %
Houston                                             92              6.4      14.12      12.46          13.3  %        94.7  %       92.8  %        2.0  %       13.37           11.56          15.7  %
Orlando-Daytona                                     70              4.5      15.29      13.49          13.3  %        96.3  %       94.7  %        1.7  %       14.72           12.78          15.2  %
Philadelphia                                        56              3.5      19.09      16.95          12.6  %        97.5  %       97.0  %        0.5  %       18.62           16.45          13.2  %
West Palm Beach                                     40              2.9      21.73      17.87          21.6  %        96.6  %       95.3  %        1.4  %       21.00           17.03          23.3  %
Tampa                                               52              3.5      16.12      13.52          19.2  %        96.7  %       94.3  %        2.5  %       15.59           12.75          22.3  %
Charlotte                                           50              3.8      12.94      10.97          18.0  %        96.7  %       94.1  %        2.8  %       12.51           10.32          21.2  %
All other markets                                  893             56.1      16.08      14.13          13.8  %        96.8  %       95.5  %        1.4  %       15.57           13.50          15.3  %
Totals                                           2,274            148.7 $    19.30    $ 17.16          12.5  %        96.8  %       95.5  %        1.4  % $     18.68         $ 16.39          14.0  %



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Same-store facility operating trends by market (continued)

                                                                                                         For the Three Months Ended September 30,
                                              Revenues ($000's)                         Direct Expenses ($000's)                      Indirect Expenses ($000's)                  Net Operating Income ($000's)
                                       2021         2020         Change             2021             2020         Change            2021          2020         Change            2021            2020         Change
Los Angeles                        $ 106,385    $  97,749            8.8  % $      14,802        $  15,875            (6.8) % $       2,503    $  2,351            6.5  % $        89,080    $  79,523           12.0  %
San Francisco                         57,351       52,987            8.2  %         9,243            9,124             1.3  %         1,604       1,501            6.9  %          46,504       42,362            9.8  %
New York                              44,463       40,787            9.0  %        10,589           11,598            (8.7) %         1,304       1,201            8.6  %          32,570       27,988           16.4  %
Seattle-Tacoma                        32,951       29,251           12.6  %         5,620            6,091            (7.7) %           999       1,015           (1.6) %          26,332       22,145           18.9  %
Miami                                 33,813       27,763           21.8  %         7,437            7,976            (6.8) %           959         960           (0.1) %          25,417       18,827           35.0  %
Washington DC                         31,506       28,253           11.5  %         6,622            7,006            (5.5) %           929         879            5.7  %          23,955       20,368           17.6  %
Chicago                               35,024       29,753           17.7  %        13,904           14,020            (0.8) %         1,396       1,298            7.6  %          19,724       14,435           36.6  %
Atlanta                               24,695       20,524           20.3  %         4,414            5,001           (11.7) %         1,094       1,013            8.0  %          19,187       14,510           32.2  %
Dallas-Ft. Worth                      25,106       21,283           18.0  %         5,836            6,747           (13.5) %         1,037         984            5.4  %          18,233       13,552           34.5  %
Houston                               22,119       19,145           15.5  %         7,021            6,921             1.4  %         1,014         954            6.3  %          14,084       11,270           25.0  %
Orlando-Daytona                       17,036       14,824           14.9  %         3,309            3,992           (17.1) %           792         705           12.3  %          12,935       10,127           27.7  %
Philadelphia                          17,053       15,075           13.1  %         3,728            4,030            (7.5) %           651         663           (1.8) %          12,674       10,382           22.1  %
West Palm Beach                       15,436       12,530           23.2  %         3,362            3,258             3.2  %           510         497            2.6  %          11,564        8,775           31.8  %
Tampa                                 13,999       11,476           22.0  %         3,127            3,442            (9.2) %           575         510           12.7  %          10,297        7,524           36.9  %
Charlotte                             12,404       10,264           20.8  %         2,421            2,420               -  %           511         481            6.2  %           9,472        7,363           28.6  %
All other markets                    226,709      196,622           15.3  %        48,377           52,167            (7.3) %         9,919       9,388            5.7  %         168,413      135,067           24.7  %
Totals                             $ 716,050    $ 628,286           14.0  % $     149,812        $ 159,668            (6.2) % $      25,797    $ 24,400            5.7  % $       540,441    $ 444,218           21.7  %



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Same-store facility operating trends by market (continued)

                                           As of September 30, 2021                                                   For the Nine Months Ended September 30,
                                           Number           Square                   Realized Rent per                                                                      Realized Rent per
                                             of              Feet                  Occupied Square Foot                         Average Occupancy                         Available Square Foot
                                         Facilities       (millions)
                                                                               2021           2020       Change          2021          2020         Change            2021            2020       Change
Los Angeles                                        213             15.2 $    27.20         $ 25.87           5.1  %        98.2  %       96.3  %        2.0  % $     26.72         $ 24.90           7.3  %
San Francisco                                      130              8.1      27.67           26.35           5.0  %        97.5  %       95.5  %        2.1  %       26.96           25.15           7.2  %
New York                                            90              6.4      27.08           25.76           5.1  %        96.5  %       94.8  %        1.8  %       26.13           24.43           7.0  %
Seattle-Tacoma                                      87              5.9      21.66           20.23           7.1  %        95.8  %       94.0  %        1.9  %       20.74           19.03           9.0  %
Miami                                               83              5.8      21.77           19.70          10.5  %        97.0  %       93.8  %        3.4  %       21.12           18.48          14.3  %
Washington DC                                       89              5.5      22.36           21.04           6.3  %        95.6  %       94.2  %        1.5  %       21.38           19.82           7.9  %
Chicago                                            129              8.1      16.30           14.88           9.5  %        96.0  %       93.6  %        2.6  %       15.64           13.92          12.4  %
Atlanta                                             98              6.4      14.18           13.17           7.7  %        96.2  %       92.5  %        4.0  %       13.64           12.19          11.9  %
Dallas-Ft. Worth                                   102              6.6      14.43           13.37           7.9  %        96.0  %       92.9  %        3.3  %       13.84           12.42          11.4  %
Houston                                             92              6.4      13.43           12.64           6.2  %        94.4  %       91.8  %        2.8  %       12.68           11.61           9.2  %
Orlando-Daytona                                     70              4.5      14.47           13.53           6.9  %        96.2  %       94.2  %        2.1  %       13.92           12.75           9.2  %
Philadelphia                                        56              3.5      18.21           16.72           8.9  %        97.4  %       95.8  %        1.7  %       17.73           16.03          10.6  %
West Palm Beach                                     40              2.9      20.35           18.00          13.1  %        96.8  %       94.2  %        2.8  %       19.70           16.96          16.2  %
Tampa                                               52              3.5      15.08           13.68          10.2  %        96.3  %       92.9  %        3.7  %       14.52           12.71          14.2  %
Charlotte                                           50              3.8      12.14           11.07           9.7  %        95.9  %       92.3  %        3.9  %       11.65           10.22          14.0  %
All other markets                                  893             56.1      15.26           14.07           8.5  %        96.4  %       94.4  %        2.1  %       14.71           13.28          10.8  %
Totals                                           2,274            148.7 $    18.42         $ 17.16           7.3  %        96.5  %       94.3  %        2.3  % $     17.77         $ 16.18           9.8  %



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Same-store facility operating trends by market (continued)

                                                                                                                  For the Nine Months Ended September 30,
                                                  Revenues ($000's)                            Direct Expenses ($000's)                       Indirect Expenses ($000's)                      Net Operating Income ($000's)
                                         2021           2020          Change              2021             2020          Change            2021          2020         Change               2021                2020          Change
Los Angeles                         $   309,560    $   289,372             7.0  % $      43,786        $  49,067            (10.8) % $       8,076    $  7,630             5.8  % $       257,698         $   232,675            10.8  %
San Francisco                           166,975        156,057             7.0  %        26,144           28,237             (7.4) %         5,097       4,752             7.3  %         135,734             123,068            10.3  %
New York                                129,251        121,249             6.6  %        31,942           36,059            (11.4) %         4,076       3,890             4.8  %          93,233              81,300            14.7  %
Seattle-Tacoma                           93,997         86,751             8.4  %        17,291           19,058             (9.3) %         3,116       3,081             1.1  %          73,590              64,612            13.9  %
Miami                                    94,884         83,440            13.7  %        20,204           24,161            (16.4) %         3,099       3,060             1.3  %          71,581              56,219            27.3  %
Washington DC                            90,275         84,169             7.3  %        19,835           21,656             (8.4) %         2,977       2,857             4.2  %          67,463              59,656            13.1  %
Chicago                                  98,584         88,269            11.7  %        38,191           40,447             (5.6) %         4,330       4,233             2.3  %          56,063              43,589            28.6  %
Atlanta                                  69,054         62,154            11.1  %        13,681           15,608            (12.3) %         3,555       3,196            11.2  %          51,818              43,350            19.5  %
Dallas-Ft. Worth                         70,909         63,964            10.9  %        17,132           20,695            (17.2) %         3,297       3,151             4.6  %          50,480              40,118            25.8  %
Houston                                  62,932         57,889             8.7  %        20,153           20,533             (1.9) %         3,184       3,095             2.9  %          39,595              34,261            15.6  %
Orlando-Daytona                          48,397         44,561             8.6  %        10,174           12,202            (16.6) %         2,478       2,156            14.9  %          35,745              30,203            18.3  %
Philadelphia                             48,695         44,354             9.8  %        11,455           12,126             (5.5) %         2,031       2,114            (3.9) %          35,209              30,114            16.9  %
West Palm Beach                          43,471         37,589            15.6  %         9,404            9,713             (3.2) %         1,634       1,553             5.2  %          32,433              26,323            23.2  %
Tampa                                    39,156         34,456            13.6  %         9,068           10,510            (13.7) %         1,847       1,639            12.7  %          28,241              22,307            26.6  %
Charlotte                                34,659         30,590            13.3  %         6,808            7,326             (7.1) %         1,626       1,551             4.8  %          26,225              21,713            20.8  %
All other markets                       642,033        582,799            10.2  %       146,525          159,938             (8.4) %        31,107      29,763             4.5  %         464,401             393,098            18.1  %
Totals                              $ 2,042,832    $ 1,867,663             9.4  % $     441,793        $ 487,336             (9.3) % $      81,530    $ 77,721             4.9  % $     1,519,509         $ 1,302,606            16.7  %



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Acquired Facilities
The Acquired Facilities represent 232 facilities that we acquired in 2019, 2020,
and within the first nine months of 2021. As a result of the stabilization
process and timing of when these facilities were acquired, year-over-year
changes can be significant. The following table summarizes operating data with
respect to the Acquired Facilities:
ACQUIRED FACILITIES                           Three Months Ended September 30,                                     Nine Months Ended September 30,
                                         2021                  2020            Change (a)              2021                 2020                   Change (a)

                                                                    ($ amounts in thousands, except for per square foot amounts)
Revenues (b):
2019 Acquisitions                $             11,180       $     8,141       $    3,039          $       30,249       $        22,735       $                7,514
2020 Acquisitions                              15,613             2,860           12,753                  38,451                 5,368                       33,083
2021 Acquisitions                              35,394                 -           35,394                  56,051                     -                       56,051
  Total revenues                               62,187            11,001           51,186                 124,751                28,103                       96,648

Cost of operations (b):
2019 Acquisitions                               3,509             3,034              475                  10,225                 9,960                          265
2020 Acquisitions                               6,113             1,846            4,267                  18,990                 3,670                       15,320
2021 Acquisitions                              10,442                 -           10,442                  16,703                     -                       16,703
  Total cost of operations                     20,064             4,880           15,184                  45,918                13,630                       32,288

Net operating income:
2019 Acquisitions                               7,671          5,107               2,564                  20,024                12,775                        7,249
2020 Acquisitions                               9,500          1,014               8,486                  19,461                 1,698                       17,763
2021 Acquisitions                              24,952              -              24,952                  39,348                     -                       39,348
  Net operating income                         42,123          6,121              36,002                  78,833                14,473                       64,360
Depreciation and amortization
expense                               (55,986)                (7,223)            (48,763)              (114,297)              (22,292)                     (92,005)
  Net loss                       $    (13,863)              $ (1,102)         $  (12,761)         $     (35,464)       $       (7,819)       $             (27,645)

At September 30:
Square foot occupancy:
2019 Acquisitions                                                                                          94.0%                 91.5%                         2.7%
2020 Acquisitions                                                                                          90.0%                 80.0%                        12.5%
2021 Acquisitions                                                                                          87.0%                     -                            -
                                                                                                           89.1%                 88.0%                         1.3%
Annual contract rent per
occupied square foot:
2019 Acquisitions                                                                                 $        14.96       $         11.41                        31.1%
2020 Acquisitions                                                                                          14.03                 13.00                         7.9%
2021 Acquisitions                                                                                          17.57                     -                            -
                                                                                                  $        16.12       $         11.85                        36.0%
Number of facilities:
2019 Acquisitions                                                                                             44                    44                            -
2020 Acquisitions                                                                                             62                    19                           43
2021 Acquisitions                                                                                            126                     -                          126
                                                                                                             232                    63                          169
Net rentable square feet (in
thousands):
2019 Acquisitions                                                                                          3,154                 3,154                            -
2020 Acquisitions                                                                                          5,075                 1,385                        3,690
2021 Acquisitions                                                                                         10,295                     -                       10,295
                                                                                                          18,524                 4,539                       13,985


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FACILITIES ACQUIRED (Continued)

                                                As of
                                         September 30, 2021
Costs to acquire (in thousands):
2019 Acquisitions                   $                     429,850
2020 Acquisitions                                         796,065
2021 Acquisitions                                       2,845,284
                                    $                   4,071,199


(a)Represents the percentage change with respect to square foot occupancy and
annual contract rent per occupied square foot, and the absolute nominal change
with respect to all other items.
(b)Revenues and cost of operations do not include tenant reinsurance and
merchandise sale revenues and expenses generated at the facilities. See
"Ancillary Operations" below for more information.
We believe that our economies of scale in marketing and operations allows us to
generate higher net operating income from newly acquired facilities than was
achieved by the previous owners. However, it can take 12 or more months for us
to fully achieve the higher net operating income, or even longer in the case of
an acquired facility with low occupancy levels and/or below market in place
rents, and the ultimate levels of net operating income to be achieved can be
affected by changes in general economic conditions. As a result, there can be no
assurance that we will achieve our expectations with respect to these newly
acquired facilities.
The Acquired Facilities have an aggregate of approximately 18.5 million net
rentable square feet, including 3.6 million in Maryland, 1.9 million in
Virginia, 1.8 million in Texas, 0.8 million in Florida, 0.7 million in each of
Arizona and Georgia, 0.6 million in each of California, Illinois, Indiana, Ohio
and South Carolina, 0.5 million in each of Idaho, Michigan, Nebraska, North
Carolina and Pennsylvania, 0.4 million in each of Colorado, Minnesota and
Washington, 0.3 million in each of Alabama, Massachusetts, Missouri and
Tennessee and 1.1 million in other states.
For the nine months ended September 30, 2021, the weighted average annualized
yield on cost, based upon net operating income, for the 44 facilities acquired
in 2019 was 6.2%. The yield for the facilities acquired in 2020 is not
meaningful due to the presence of unstabilized facilities. The yield for the
facilities acquired in the nine months ended September 30, 2021 is not
meaningful due to our limited ownership period.
On April 28, 2021, we closed the acquisition of the ezStorage portfolio,
consisting of 48 properties (4.1 million net rentable square feet) for
acquisition cost of $1.8 billion, which includes 47 self-storage facilities and
one property that is under construction. Included in the 2021 Acquisition
results in the table above are revenues of $22.7 million, NOI of $17.8 million
(including Direct NOI of $18.4 million) and square footage occupancy of 93.8%
for the three months ended September 30, 2021.
Subsequent to September 30, 2021, we acquired or were under contract to acquire
107 self-storage facilities across 16 states with 11.8 million net rentable
square feet, for $2.3 billion. These include the All Storage portfolio of 56
properties (7.5 million net rentable square feet) that we are under contract to
acquire for $1.5 billion. The acquisition, which is subject to the satisfaction
of customary closing conditions, is expected to close in two separate tranches,
with seven self-storage facilities closing in November 2021 and 49 self-storage
facilities closing in December 2021.
We are actively seeking to acquire additional facilities and the environment for
new acquisitions has improved. We are observing increased selling activity for
both new constructed non-stabilized and stabilized properties. However, future
acquisition volume will depend upon whether additional owners will be motivated
to market their facilities, which will in turn depend upon factors such as
economic conditions and the level of seller confidence.
Analysis of Depreciation and Amortization of Acquired Facilities
Depreciation and amortization with respect to the Acquired Facilities for the
three months ended September 30, 2021 and 2020 totaled $56.0 million and
$7.2 million, respectively, and $114.3 million and $22.3 million for the nine
months ended September 30, 2021 and 2020, respectively. These amounts include
(i) depreciation of the acquired buildings, which is recorded generally on a
straight line basis over a 25 year period, and (ii) amortization of cost
allocated to the tenants in place upon acquisition of a facility, which is
recorded based upon the benefit of such existing tenants to each period and thus
is highest when the facility is first acquired and declines as such tenants
vacate. With respect to the Acquired Facilities owned at September 30, 2021,
depreciation of buildings and amortization of tenant intangibles is expected to
aggregate approximately $166.2 million in the year ending December 31, 2021.
There will be additional depreciation and amortization of tenant intangibles
with respect to new buildings that are acquired in the remainder of 2021.
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Developed and Expanded Facilities
The developed and expanded facilities include 68 facilities that were developed
on new sites since January 1, 2016, and 71 facilities subject to expansion of
their net rentable square footage. Of these expansions, 44 were completed at
January 1, 2020, 19 were completed in the 21 months ended September 30, 2021,
and 8 are currently in process or are expected to commence renovation in 2021.
The following table summarizes operating data with respect to the Developed and
Expanded Facilities:
DEVELOPED AND EXPANDED
FACILITIES                                      Three Months Ended September 30,                                 Nine Months Ended September 30,
                                     2021                2020                  Change (a)                  2021                2020             Change (a)

                                                                ($ amounts in thousands, except for per square foot amounts)
Revenues (b):
Developed in 2016                $      9,241       $         7,237       $               2,004       $        25,459       $    20,942       $        4,517
Developed in 2017                       7,317                 5,520                       1,797                20,021            15,761                4,260
Developed in 2018                       7,569                 5,267                       2,302                20,391            14,467                5,924
Developed in 2019                       3,313                 1,831                       1,482                 8,470             4,349                4,121
Developed in 2020                       1,062                    79                         983                 2,093                86                2,007
Developed in 2021                         558                     -                         558                   706                 -                  706
Expansions completed before 2020       17,568                11,978                       5,590                46,770            33,738               

13,032

Expansions completed in 2020 or
2021                                    6,554                 3,935                       2,619                16,178            11,601                4,577
Expansions in process                   1,918                 2,528                       (610)                 5,872             7,505              (1,633)
   Total revenues                      55,100                38,375                      16,725               145,960           108,449               37,511

Cost of operations (b):
Developed in 2016                       2,384                 2,480                        (96)                 7,214             7,584                (370)
Developed in 2017                       2,540                 2,702                       (162)                 7,461             7,685                (224)
Developed in 2018                       2,669                 2,605                          64                 7,774             7,993                (219)
Developed in 2019                       1,222                 1,159                          63                 3,917             3,546                  371
Developed in 2020                         432                   157                         275                 1,275               209                1,066
Developed in 2021                         400                     -                         400                   890                 -                  890
Expansions completed before 2020        6,323                 6,456                       (133)                18,512            17,571                 

941

Expansions completed in 2020 or
2021                                    2,615                 1,559                       1,056                 6,981             4,560                2,421
Expansions in process                     474                   617                       (143)                 1,548             1,868                (320)
   Total cost of operations            19,059                17,735                       1,324                55,572            51,016                4,556

Net operating income (loss):
Developed in 2016                       6,857                 4,757                       2,100                18,245            13,358                4,887
Developed in 2017                       4,777                 2,818                       1,959                12,560             8,076                4,484
Developed in 2018                       4,900                 2,662                       2,238                12,617             6,474                6,143
Developed in 2019                       2,091                   672                       1,419                 4,553               803                3,750
Developed in 2020                         630                  (78)                         708                   818             (123)                  941
Developed in 2021                         158                     -                         158                 (184)                 -                (184)
Expansions completed before 2020       11,245                 5,522                       5,723                28,258            16,167               

12,091

Expansions completed in 2020 or
2021                                    3,939                 2,376                       1,563                 9,197             7,041                2,156
Expansions in process                   1,444                 1,911                       (467)                 4,324             5,637              (1,313)
   Net operating income                36,041                20,640                      15,401                90,388            57,433               32,955
Depreciation and amortization
expense                              (14,977)              (13,596)                     (1,381)              (46,126)          (39,796)              (6,330)
   Net income                    $     21,064       $         7,044       $              14,020       $        44,262       $ 17,637          $    26,625



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DEVELOPED AND ENLARGED FACILITIES (Continued)

                                                                            As of September 30,
                                                           2021                    2020                  Change (a)

                                                        ($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:
Developed in 2016                                               93.0%                    91.8%                     1.3%
Developed in 2017                                               91.7%                    89.2%                     2.8%
Developed in 2018                                               90.5%                    87.1%                     3.9%
Developed in 2019                                               89.9%                    84.7%                     6.1%
Developed in 2020                                               90.0%                    31.7%                   183.9%
Developed in 2021                                               44.0%                        -                        -
Expansions completed before 2020                                89.9%                    82.3%                     9.2%
Expansions completed in 2020 or 2021                            78.3%                    67.1%                    16.7%
Expansions in process                                           82.5%                    82.9%                   (0.5)%
                                                                87.3%                    83.0%                     5.2%
Annual contract rent per occupied square foot:
Developed in 2016                                    $          18.26       $            14.73                    24.0%
Developed in 2017                                               15.35                    12.08                    27.1%
Developed in 2018                                               16.18                    11.99                    34.9%
Developed in 2019                                               13.65                     8.64                    58.0%
Developed in 2020                                               15.16                     8.96                    69.2%
Developed in 2021                                               13.64                        -                        -
Expansions completed before 2020                                13.43                    10.25                    31.0%
Expansions completed in 2020 or 2021                            15.33                    15.14                     1.3%
Expansions in process                                           20.12                    18.59                     8.2%
                                                     $          15.15       $            11.99                    26.4%
Number of facilities:
Developed in 2016                                                  16                       16                        -
Developed in 2017                                                  16                       16                        -
Developed in 2018                                                  18                       18                        -
Developed in 2019                                                  11                       11                        -
Developed in 2020                                                   3                        2                        1
Developed in 2021                                                   4                        -                        4
Expansions completed before 2020                                   44                       44                        -
Expansions completed in 2020 or 2021                               19                       18                        1
Expansions in process                                               8                        8                        -
                                                                  139                      133                        6
Net rentable square feet (in thousands) (c):
Developed in 2016                                               2,141                    2,141                        -
Developed in 2017                                               2,040                    2,040                        -
Developed in 2018                                               2,069                    2,069                        -
Developed in 2019                                               1,057                    1,057                        -
Developed in 2020                                                 347                      246                      101
Developed in 2021                                                 502                        -                      502
Expansions completed before 2020                                5,822                    5,818                        4
Expansions completed in 2020 or 2021                            2,576                    1,619                      957
Expansions in process                                             446                      479                     (33)
                                                               17,000                   15,469                    1,531


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                                                       As of
                                                September 30, 2021
Costs to develop (in thousands):
Developed in 2016                          $                     257,585
Developed in 2017                                                239,871
Developed in 2018                                                262,187
Developed in 2019                                                150,387
Developed in 2020                                                 42,063
Developed in 2021                                                 89,125
Expansions completed before 2020 (d)                             381,940
Expansions completed in 2020 or 2021 (d)                         178,768
                                           $                   1,601,926


(a)Represents the percentage change with respect to square foot occupancy and
annual contract rent per occupied square foot, and the absolute nominal change
with respect to all other items.
(b)Revenues and cost of operations do not include tenant reinsurance and
merchandise sales generated at the facilities. See "Ancillary Operations" below
for more information.
(c)The facilities included above have an aggregate of approximately 17.0 million
net rentable square feet at September 30, 2021, including 6.0 million in Texas,
2.6 million in Florida, 1.9 million in California, 1.5 million in Colorado, 1.1
million in Minnesota, 0.8 million in North Carolina, 0.6 million in Washington,
0.4 million in each of Missouri and Virginia, 0.3 million in each of Georgia,
Michigan, New Jersey and South Carolina and 0.5 million in other states.
(d)These amounts only include the direct cost incurred to expand and renovate
these facilities, and do not include (i) the original cost to develop or acquire
the facility or (ii) the lost revenue on space demolished during the
construction and fill-up period.
It typically takes at least three to four years for a newly developed or
expanded self-storage facility to stabilize with respect to revenues. Physical
occupancy can be achieved as early as two to three years following completion of
the development or expansion, through offering lower rental rates during
fill-up. As a result, even after achieving high occupancy, there can still be a
period of elevated revenue growth as the tenant base matures and higher rental
rates are achieved.
We believe that our development and redevelopment activities generate favorable
risk-adjusted returns over the long run. However, in the short run, our earnings
are diluted during the construction and stabilization period due to the cost of
capital to fund the development cost, as well as the related construction and
development overhead expenses included in general and administrative expense.
Our existing unstabilized facilities continued to fill up in terms of
occupancies consistent with our general expectations during the nine months
ended September 30, 2021, and we expect that trend to continue. Our unstabilized
facilities are affected by the same market dynamics that affect our Same Store
properties. Accordingly, whether we ultimately achieve our yield expectations,
and the timeframe for reaching stabilized cash flows, depends largely upon the
same factors affecting aggregate demand, move-ins, move-outs, and realized
annual rent per occupied square foot for our Same Store Facilities as set forth
under "Analysis of Same Store Revenue" above.
At September 30, 2021, we had a development pipeline to develop 21 new
self-storage facilities and expand 31 existing self-storage facilities, which
will add approximately 4.6 million net rentable square feet at a cost of
$730.6 million. We expect to continue to seek to add projects to maintain a
robust pipeline. Our ability to do so continues to be challenged by various
constraints such as difficulty in finding projects that meet our risk-adjusted
yield expectations, and challenges in obtaining building permits for
self-storage facilities in certain municipalities.
We typically underwrite new developments to stabilize at approximately an 8.0%
NOI yield on cost. Our developed facilities have thus far leased-up as expected
and are at various stages of their revenue stabilization periods. The actual
annualized yields that we may achieve on these facilities upon stabilization
will depend on many factors, including local and current market conditions in
the vicinity of each property and the level of new and existing supply.
We have 21 additional newly developed facilities in process, which will have a
total of 1.7 million net rentable square feet of storage space and have an
aggregate development cost totaling approximately $272.8 million. We expect
these facilities to open over the next 18 to 24 months.
The expansion of an existing facility involves the construction of new space on
an existing facility, either on existing unused land or through the demolition
of existing buildings in order to facilitate densification. The construction
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costs for an expanded facility may include, in addition to adding space, adding
amenities such as climate control to existing space, improving the visual appeal
of the facility, and to a much lesser extent, the replacement of existing doors,
roofs, and HVAC.
The return profile on the expansion of existing facilities differs from a new
facility, due to a lack of land cost, and there can be less cash flow risk
because we have more direct knowledge of the local demand for space on the site
as compared to a new facility. However, many expansions involve the demolition
of existing revenue-generating space with the loss of the related revenues
during the construction and fill-up period.
The facilities under "expansions completed" represent those facilities where the
expansions have been completed at September 30, 2021 We incurred a total of
$560.7 million in direct cost to expand these facilities, demolished a total of
1.1 million net rentable square feet of storage space, and built a total of
5.3 million net rentable square feet of new storage space.
The facilities under "expansions in process" represent those facilities where
development is in process at September 30, 2021 or which will commence
construction by December 31, 2021. We have a pipeline to add a total of
2.9 million net rentable square feet of storage space by expanding existing
self-storage facilities for an aggregate direct development cost of
$457.8 million.
Analysis of Depreciation and Amortization of Developed and Expanded Facilities
Depreciation and amortization with respect to the Developed and Expanded
Facilities totaled $15.0 million and $46.1 million for the three and nine months
ended September 30, 2021, respectively, as compared to $13.6 million and
$39.8 million for the same periods in 2020. These amounts represent depreciation
of the developed buildings and, in the case of the expanded facilities, the
legacy depreciation on the existing buildings. With respect to the Developed and
Expanded Facilities completed at September 30, 2021, depreciation of buildings
is expected to aggregate approximately $62.5 million in the year ending
December 31, 2021. There will be additional depreciation of new buildings that
are developed or expanded in the remainder of 2021.
Other non-same store facilities
The "other non-same store facilities" represent facilities which, while not
newly acquired, developed, or expanded, are not fully stabilized since January
1, 2019, due primarily to casualty events such as hurricanes, floods, and fires.
The other non-same store facilities have an aggregate of 2.2 million net
rentable square feet, including 0.6 million in Texas, 0.3 million in California,
0.2 million in each of Georgia, Ohio and Tennessee and 0.7 million in other
states.
The net operating income for these facilities was $4.9 million and $13.4 million
in the three and nine months ended September 30, 2021, respectively, as compared
to $3.8 million and $11.0 million for the same periods in 2020. During the three
and nine months ended September 30, 2021, the average occupancy for these
facilities totaled 93.1% and 91.8%, respectively, as compared to 89.8% and 84.2%
for the same periods in 2020, and the realized rent per occupied square feet
totaled $14.27 and $13.66, respectively, as compared to $12.77 and $13.31 for
the same periods in 2020.
Over the longer term, we expect the growth in operations of these facilities to
be similar to that of our Same Store facilities. However, in the short run, year
over year comparisons will vary due to the impact of the underlying events which
resulted in these facilities being classified as non-same store.
Depreciation and amortization with respect to the other non-same store
facilities totaled $4.9 million and $15.6 million for the three and nine months
ended September 30, 2021, respectively, as compared to $5.4 million and
$16.1 million for the same periods in 2020. We expect that depreciation for the
remainder of 2021 will approximate the level experienced in the nine months
ended September 30, 2021.

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Ancillary Operations
Ancillary revenues and expenses include amounts associated with the reinsurance
of policies against losses to goods stored by tenants in our self-storage
facilities in the U.S., management of property owned by unrelated third parties,
and the sale of merchandise at our self-storage facilities. The following table
sets forth our ancillary operations:
                                                  Three Months Ended September 30,                                  Nine Months Ended September 30,
                                         2021                2020                  Change                 2021                  2020                  Change

                                                                                        (Amounts in thousands)
Revenues:
Tenant reinsurance premiums          $     42,774       $        38,698       $           4,076       $     123,271       $        110,327       $          12,944
Merchandise                                 7,384                 8,010                   (626)              21,932                 23,005                 (1,073)
Third party property management             4,263                 3,888                     375              12,455                 10,508                   1,947
Total revenues                             54,421                50,596                   3,825             157,658                143,840                  13,818
Cost of operations:
Tenant reinsurance                         11,029                 6,544                   4,485              26,115                 20,611                   5,504
Merchandise                                 4,476                 4,850                   (374)              13,148                 13,510                   (362)
Third party property management             4,230                 3,780                     450              12,781                  9,960                   2,821
Total cost of operations                   19,735                15,174                   4,561              52,044                 44,081                   7,963
Net operating income (loss):
Tenant reinsurance                         31,745                32,154                   (409)              97,156                 89,716                   7,440
Merchandise                                 2,908                 3,160                   (252)               8,784                  9,495                   (711)
Third party property management                33                   108                    (75)               (326)                    548                   (874)
Total net operating income           $     34,686       $        35,422       $           (736)       $     105,614       $         99,759       $           5,855


Tenant reinsurance operations: Our customers have the option of purchasing
insurance from a non-affiliated insurance company to cover certain losses to
their goods stored at our facilities. A wholly-owned, consolidated subsidiary of
Public Storage fully reinsures such policies and thereby assumes all risk of
losses under these policies and receives reinsurance premiums substantially
equal to the premiums collected from our tenants, from the non-affiliated
insurance company. Such reinsurance premiums are shown as "Tenant reinsurance
premiums" in the above table.
Tenant reinsurance premium revenue increased $4.1 million or 10.5% for the three
months ended September 30, 2021, and increased $12.9 million or 11.7% for the
nine months ended September 30, 2021, in each case as compared to the same
period in 2020. The increase is due to higher average premiums and an increase
in our tenant base with respect to acquired, newly developed, and expanded
facilities. Tenant reinsurance revenue with respect to the Same Store Facilities
totaled $33.7 million and $100.0 million for the three and nine months ended
September 30, 2021, respectively, as compared to $32.8 million and $95.2 million
for the same periods in 2020.
We expect future growth will come primarily from customers of newly acquired and
developed facilities, as well as additional tenants at our existing unstabilized
self-storage facilities.
Cost of operations primarily includes claims paid as well as claims adjustment
expenses. Claims expenses vary based upon the number of insured tenants and the
volume of events which drive covered customer losses, such as burglary, as well
as catastrophic weather events affecting multiple properties such as hurricanes
and floods. Cost of operations were $11.0 million and $26.1 million for the
three and nine months ended September 30, 2021, respectively, as compared to
$6.5 million and $20.6 million for the same periods in 2020.
Merchandise sales: We sell locks, boxes, and packing supplies at our
self-storage facilities and the level of sales of these items is primarily
impacted by the level of move-ins and other customer traffic at our self-storage
facilities. We do not expect any significant changes in revenues or
profitability from our merchandise sales in the remainder of 2021.
Third party property management: At September 30, 2021, we manage 102 facilities
for unrelated third parties, and were under contract to manage 43 additional
facilities including 37 facilities that are currently under construction. While
we expect this business to increase in scope and size, we do not expect any
significant changes in overall profitability of this business in the near term
as we seek new properties to manage and are in the earlier stages of lease-up
for newly managed properties.
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Revenues and cost operations from our third party management activities of $3.9
million and $3.8 million, respectively, for the three months ended September 30,
2020, and $10.5 million and $10.0 million, respectively, for the nine months
ended September 30, 2020, previously reported within interest and other income,
have been reclassified to third party property management revenues and third
party property management cost of operations, respectively, to conform to the
September 30, 2021 presentation.
Equity in earnings of unconsolidated real estate entities
For all periods presented, we have equity investments in PSB and Shurgard, which
we account for on the equity method and record our pro-rata share of the net
income of these entities. The following table, and the discussion below, sets
forth our equity in earnings of unconsolidated real estate entities:
                                                Three Months Ended September 30,                                 Nine Months Ended September 30,
                                       2021                2020                  Change                 2021                2020                  Change

                                                                                     (Amounts in thousands)
Equity in earnings:
PSB                                $     27,110       $        16,548       $          10,562       $     62,494       $        51,513       $          10,981
Shurgard                                  5,750                 4,692                   1,058             18,888                11,350                   7,538
Total equity in earnings           $     32,860       $        21,240       $          11,620       $     81,382       $        62,863       $          18,519


Investment in PSB: Throughout all periods presented, we owned 7,158,354 shares
of PS Business Parks, Inc. ("PSB") common stock and 7,305,355 limited
partnership units in an operating partnership controlled by PSB, representing an
approximate 42% common equity interest. The limited partnership units are
convertible at our option, subject to certain conditions, on a one-for-one basis
into PSB common stock.
At September 30, 2021, PSB wholly-owned approximately 28 million rentable square
feet of commercial space and had a 95% interest in a 395-unit apartment complex.
PSB also manages commercial space that we own pursuant to property management
agreements.
Equity in earnings from PSB increased $10.6 million and $11.0 million in the
three and nine months ended September 30, 2021, respectively, as compared to the
same periods in 2020. Included in our equity earnings from PSB is our equity
share of gains on sale of real estate totaling $12.4 million and $20.3 million
for the three and nine months ended September 30, 2021, respectively, as
compared to $3.2 million and $11.3 million in the same periods in 2020. PSB's
filings and selected financial information, including discussion of the factors
that affect its earnings, can be accessed through the SEC, and on PSB's website,
www.psbusinessparks.com. Information on this website is not incorporated by
reference herein and is not a part of this Quarterly Report on Form 10-Q.
Investment in Shurgard: Throughout all periods presented, we effectively owned,
directly and indirectly, 31,268,459 Shurgard common shares, representing an
approximate 35% equity interest in Shurgard. Shurgard's common shares trade on
Euronext Brussels under the "SHUR" symbol.
At September 30, 2021, Shurgard owned 247 self-storage facilities with
approximately 13 million net rentable square feet. Shurgard pays us license fees
for use of the Shurgard® trademark, as described in more detail in Note 4 to our
September 30, 2021 financial statements.
Equity in earnings from Shurgard increased $1.1 million and $7.5 million in the
three and nine months ended September 30, 2021, respectively, as compared to the
same periods in 2020. Shurgard's public filings and publicly reported
information, including discussion of the factors that affect its earnings, can
be obtained on its website, https://corporate.shurgard.eu and on the website of
the Luxembourg Stock Exchange, http://www.bourse.lu. Information on these
websites is not incorporated by reference herein and is not a part of this
Quarterly Report on Form 10-Q.
For purposes of recording our equity in earnings from Shurgard, the Euro was
translated at exchange rates of approximately 1.159 U.S. Dollars per Euro at
September 30, 2021 (1.226 at December 31, 2020), and average exchange rates of
1.179 and 1.168 for the three months ended September 30, 2021 and 2020,
respectively, and average exchange rates of 1.196 and 1.124 for the nine months
ended September 30, 2021 and 2020, respectively.


                                       53
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Analysis of elements not assigned to segments


General and administrative expense: The following table sets forth our general
and administrative expense:
                                                   Three Months Ended September 30,                                 Nine Months Ended September 30,
                                          2021                2020                  Change                 2021                2020                  Change

                                                                                        (Amounts in thousands)

Share-based compensation expense $ 9,746 $ 5,278

   $           4,468       $     30,019       $        11,080       $          18,939
Costs of senior executives                     850                   327                     523              2,550                 2,294                     256
Development and acquisition costs            1,857                 1,620                     237              5,411                 8,319               

(2,908)

Tax compliance costs and taxes paid          4,433                 1,711                   2,722              7,879                 4,740                   3,139
Legal costs                                  4,065                 1,933                   2,132              7,619                 5,189                   2,430
Public company costs                         1,723                   963                     760              4,940                 3,171                   1,769
Other costs                                  9,008                 6,430                   2,578             20,578                18,441                   2,137
Total                                 $     31,682       $        18,262       $          13,420       $     78,996       $        53,234       $          25,762


Share-based compensation expense includes the amortization of restricted share
units and stock options granted to certain corporate employees and trustees. We
corrected our prior period financial statement presentation of share-based
compensation expense and dividends paid on RSUs between general and
administrative expense and self-storage cost of operations. As a result, we
revised our statement of income for the three and nine months ended
September 30, 2020 with an increase in self-storage cost of operations of
$3.1 million and $9.4 million, respectively, and a corresponding decrease to
general and administrative expenses. This immaterial correction had no impact on
our total expenses or net income. The correction also had no impact on the
balance sheet, statements of comprehensive income, statements of equity, or cash
flows as of and for the three and nine months ended September 30, 2020.
Share-based compensation expense for management personnel who directly and
indirectly supervise the on-site property managers, as well as those employees
responsible for providing shared general corporate functions to the extent their
efforts are devoted to self-storage operations, are included as self-storage
cost of operations. See "Same Store Facilities" for further information.
Share-based compensation expense varies based upon the level of grants and their
related vesting and amortization periods, forfeitures, as well as the Company's
common share price on the date of each grant.
In July 2020, our share-based compensation plans were modified to allow
immediate vesting upon retirement ("Retirement Acceleration"), and to extend the
exercisability of outstanding stock options up to a year after retirement, for
currently outstanding and future grants. Employees are eligible for Retirement
Acceleration if they meet certain conditions including length of service, age,
notice of intent to retire, and facilitation of succession for their role.
For the three and nine months ended September 30, 2021, share-based compensation
expense increased $4.5 million and $18.9 million, respectively, as compared to
the same periods in 2020, primarily due to (i) the absence of comparable
performance-based share-based compensation expense for the three and nine months
ended September 30, 2020, (ii) the accelerated compensation costs recognized in
the three and nine months ended September 30, 2021 associated with modifying our
share-based compensation plans in July 2020, to allow immediate vesting upon
retirement and (iii) revaluation of certain awards previously classified as a
liability during the second quarter of 2021.
Development and acquisition costs primarily represent internal and external
expenses related to our development and acquisition of real estate facilities
and varies primarily based upon the level of activities. The amounts in the
above table are net of $3.5 million and $10.0 million for the three and nine
months ended September 30, 2021, respectively, as compared to $2.8 million and
$8.9 million for the same periods in 2020, in development costs that were
capitalized to newly developed and redeveloped self-storage facilities. During
the nine months ended September 30, 2020, we incurred $3.2 million in costs
associated with the write-off of cancelled development projects.
Tax compliance costs and taxes paid include taxes paid to various state and
local authorities, the costs of filing tax returns, and other costs associated
with complying with federal and state tax laws. Such costs vary primarily based
upon the tax rates and the level of our operations of the various states in
which we do business. For the three and nine months ended September 30, 2021,
state income tax increased $2.8 million and $3.2 million, respectively, as
compared to the same
                                       54
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periods in 2020, due to rising taxable income in certain states where there are
differences between federal and state tax laws. We expect continued increases in
state income taxes through the end of 2021.
Legal costs include internal personnel as well as fees paid to legal firms and
other third parties with respect to general corporate legal matters and risk
management, and varies based upon the level of legal activity.
Public company costs represent the incremental costs of operating as a
publicly-traded company, such as internal and external investor relations
expenses, stock listing and transfer agent fees, Board costs, and costs
associated with maintaining compliance with applicable laws and regulations,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Sarbanes-Oxley Act of 2002.
Other costs represent certain professional and consulting fees, payroll, and
overhead that are not attributable to our property operations. Such costs
include nonrecurring and variable items, including $1.6 million in due diligence
costs incurred in the three months ended September 30, 2020, in connection with
our non-binding proposal, which we did not proceed with, to acquire 100% of the
stapled securities of National Storage REIT. The level of these costs depends
upon corporate activities and initiatives.
Interest and other income: Interest and other income is comprised primarily of
the net income from our commercial operations, interest earned on cash balances,
and trademark license fees received from Shurgard, as well as sundry other
income items that are received from time to time in varying amounts. Amounts
attributable to commercial operations was $2.0 million and $6.2 million in the
three and nine months ended September 30, 2021, respectively, as compared to the
$2.1 million and $6.4 million for the same periods of 2020. Excluding the
aforementioned amounts attributable to our commercial operations, interest and
other income decreased $3.7 million and $9.4 million in the three and nine
months ended September 30, 2021, respectively, as compared to the same periods
in 2020. The reduction was primarily due to $3.5 million and $5.5 million in
aggregate received during the three and nine months ended September 30, 2020,
respectively, related to litigation settlements and the early repayment of notes
receivable. Interest earned on cash balances decreased by $3.4 million from the
nine months ended September 30, 2020 to the same period in 2021, reflecting a
year-over-year decrease in average interest rate as well as average cash balance
on hand. The level of other interest and income items in the remainder of 2021
will be dependent upon the level of cash balances we retain, interest rates, and
the level of other income items.
Interest expense: For the three and nine months ended September 30, 2021, we
incurred $24.6 million and $63.6 million, respectively, of interest on our
outstanding debt, as compared to $15.1 million and $44.6 million for the same
periods in 2020. In determining interest expense, these amounts were offset by
capitalized interest of $0.9 million and $2.6 million during the three and nine
months ended September 30, 2021, respectively, associated with our development
activities, as compared to $0.8 million and $2.5 million for the same periods in
2020. The increase of interest expense in the three and nine months ended
September 30, 2021, as compared to the same periods in 2020, is due to our
issuances of (i) $500 million of senior notes on January 19, 2021 bearing
interest at an annual rate of 0.875% and maturing on February 15, 2026, (ii)
$700 million, $650 million and $650 million of senior notes on April 23, 2021
bearing interest at an annual rate of SOFR +0.47% (reset quarterly), 1.85% and
2.30%, respectively, and (iii) €700 million of Euro-denominated unsecured notes
on September 9, 2021 bearing interest at an annual rate of 0.500% and maturing
on September 9, 2030. At September 30, 2021, we had $5.8 billion of debt
outstanding, with a weighted average interest rate of approximately 1.8%.
Foreign Currency Exchange Gain (Loss): For the three and nine months ended
September 30, 2021, we recorded foreign currency gains of $40.9 million and
$73.6 million, respectively, representing the changes in the U.S. Dollar
equivalent of our Euro-denominated unsecured notes due to fluctuations in
exchange rates. For the three and nine months ended September 30, 2020, we
recorded foreign currency translation losses of $41.9 million and $52.3 million,
respectively. The Euro was translated at exchange rates of approximately 1.159
U.S. Dollars per Euro at September 30, 2021, 1.226 at December 31, 2020, 1.172
at September 30, 2020 and 1.122 at December 31, 2019. Future gains and losses on
foreign currency will be dependent upon changes in the relative value of the
Euro to the U.S. Dollar, and the level of Euro-denominated debt outstanding.
Gain on Sale of Real Estate: In the three and nine months ended September 30,
2021, we recorded $0.3 million and $13.7 million in gains, respectively, and in
the nine months ended September 30, 2020, we recorded gains totaling
$1.1 million, primarily in connection with the partial or complete sale of real
estate facilities pursuant to eminent domain proceedings.
Net Income Allocable to Preferred Shareholders: Net income allocable to
preferred shareholders based upon distributions decreased from $53.9 million and
$158.8 million in the three and nine months ended September 30, 2020,
respectively, to $46.2 million and $138.5 million in the same period in 2021.
This decrease is due primarily to lower average coupon rates of recently issued
preferred stock compared to recent series we have redeemed. We also allocated
income from our common shareholders to the holders of our preferred shares of
$17.0 million in the nine months ended September 30, 2021, and $23.3 million and
$38.4 million in the three and nine months ended September 30, 2020,
                                       55
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respectively, in connection with the redemption of preferred securities. Based
upon our preferred shares outstanding at September 30, 2021, our quarterly
distribution to our preferred shareholders is expected to be approximately $46.1
million.
Liquidity and Capital Resources
While operating as a REIT allows us to minimize the payment of U.S. federal
corporate income tax expense, we are required to distribute at least 90% of our
taxable income to our shareholders. This requirement limits cash flow from
operations that can be retained and reinvested in the business, increasing our
reliance upon raising capital to fund growth.
Because raising capital is important to our growth, we endeavor to maintain a
strong financial profile characterized by strong credit metrics, including low
leverage relative to our total capitalization and operating cash flows. We are
one of the highest rated REITs, as rated by major rating agencies Moody's and
Standard & Poor's. Our senior debt has an "A" credit rating by Standard & Poor's
and "A2" by Moody's. Our credit ratings on each of our series of preferred
shares are "A3" by Moody's and "BBB+" by Standard & Poor's. Our credit profile
enable us to effectively access both the public and private capital markets to
raise capital.
While we must distribute our taxable income, we are nonetheless able to retain
operating cash flow to the extent that our tax depreciation exceeds our
maintenance capital expenditures. In recent years, we have retained
approximately $200 million to $300 million per year in cash flow.
Capital needs in excess of retained cash flow are met with: (i) medium and
long-term debt, (ii) preferred equity, and (iii) common equity. We select among
these sources of capital based upon relative cost, availability, the desire for
leverage, and considering potential constraints caused by certain features of
capital sources, such as debt covenants. We view our line of credit, as well as
any short-term bank loans, as bridge financing.
We have a $500.0 million revolving line of credit which we occasionally use as
temporary "bridge" financing until we are able to raise longer term capital. As
of September 30, 2021 and November 1, 2021, there were no borrowings outstanding
on the revolving line of credit, however, we do have approximately $21.2 million
of outstanding letters of credit which limits our borrowing capacity to
$478.8 million. Our line of credit matures on April 19, 2024.
We believe that we have significant financial flexibility to adapt to changing
conditions and opportunities. Currently, market rates of interest for our debt,
and market coupon rates for our preferred equity, are at historically low levels
and we have significant access to these sources of capital. Based upon our
substantial current liquidity relative to our capital requirements noted below,
we would not expect any potential capital market dislocations to have a material
impact upon our expected capital and growth plans over the next 12 months.
However, if capital market conditions were to change significantly in the long
run, our access to or cost of debt and preferred equity capital could be
negatively impacted and potentially affect future investment activities.
Liquidity and Capital Resource Analysis: We believe that our net cash provided
by our operating activities will continue to be sufficient to enable us to meet
our ongoing requirements for interest payments on debt, maintenance capital
expenditures and distributions to our shareholders for the foreseeable future.
Our expected capital resources include: (i) $958.2 million of cash as of
September 30, 2021 and (ii) approximately $600.0 million of expected retained
operating cash flow over the next twelve months. Retained operating cash flow
represents our expected cash flow provided by operating activities, less
shareholder distributions and capital expenditures.
Our currently identified capital needs consist primarily of (i) $2.3 billion in
property acquisitions currently under contract, (ii) $502.2 million of remaining
spending on our current development pipeline, which will be incurred primarily
in the next 18 to 24 months, and (iii) $502.6 million in scheduled principal
repayments in 2022, including $500.0 million for our senior notes which mature
on September 15, 2022. We expect our capital needs to increase over the next
year as we add projects to our development pipeline and acquire additional
properties. Additional potential capital needs could result from various
activities including the redemption of outstanding preferred securities,
repurchases of common stock, or mergers and acquisition activities; however,
there can be no assurance of any such activities transpiring in the near or
longer term.
In the near term, to fund property acquisitions under contract including our
$1.5 billion acquisition of All Storage portfolio, we expect to issue unsecured
debt. Over the long term, to the extent that our capital needs exceed our
capital resources, we believe we have a variety of possibilities to raise
additional capital including issuing common or preferred securities, issuing
debt, or entering into joint venture arrangements to acquire or develop
facilities.
Required Debt Repayments: As of September 30, 2021, the principal outstanding on
our debt totaled approximately $5.8 billion, consisting of $23.6 million of
secured debt, $1.8 billion of Euro-denominated unsecured debt
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and $ 4.0 billion of we Unsecured dollar denominated debt. Approximate
the main deadlines are as follows (amounts in thousands):

                         Remainder of 2021    $          251
                         2022                        502,574
                         2023                         19,219
                         2024                        816,020
                         2025                        280,615
                         Thereafter                4,192,080
                                              $    5,810,759


On January 19, 2021, we completed a public offering of $500 million aggregate
principal amount of senior notes bearing interest at an annual rate of 0.875%
and maturing on February 15, 2026. On April 23, 2021, we completed a public
offering of $700 million, $650 million and $650 million aggregate principal
amount of senior notes bearing interest at an annual rate of SOFR + 0.47%, 1.85%
and 2.30%, respectively, and maturing on April 23, 2024, May 1, 2028 and May 1,
2031, respectively. On September 9, 2021, we completed a public offering of
€700.0 million aggregate principal amount of senior notes bearing interest at an
annual rate of 0.500% and maturing on September 9, 2030.
Our debt is well-laddered and we plan to refinance our 2022 unsecured notes when
it comes due in September 2022.
Capital Expenditure Requirements: Capital expenditures include general
maintenance, major repairs or replacements to elements of our facilities to keep
our facilities in good operating condition and maintain their visual appeal.
Capital expenditures do not include costs relating to the development of new
facilities or redevelopment of existing facilities to increase their available
rentable square footage.
Capital expenditures totaled $177.6 million in the first nine months of 2021,
and are expected to approximate $250.0 million for the year ending December 31,
2021. In addition to standard capital repairs of building elements reaching the
end of their useful lives, our capital expenditures in recent years have
included incremental expenditures to enhance the competitive position of certain
of our facilities relative to local competitors pursuant to a multi-year
program. Such investments include development of more pronounced, attractive,
and clearly identifiable color schemes and signage, upgrades to the
configuration and layout of the offices and other customer zones to improve the
customer experience. We expect to spend approximately $120 million in 2021 on
this effort. In addition, we have made investments in LED lighting and the
installation of solar panels, which are expected to approximate $36 million for
the year ending December 31, 2021.
We believe that these incremental investments improve customer satisfaction, the
attractiveness and competitiveness of our facilities to new and existing
customers and, in the case of LED lighting and solar panels, reduce operating
costs.
Requirement to Pay Distributions: For all periods presented herein, we have
elected to be treated as a REIT, as defined in the Code. For each taxable year
in which we qualify for taxation as a REIT, we will not be subject to U.S.
federal corporate income tax on our "REIT taxable income" (generally, taxable
income subject to specified adjustments, including a deduction for dividends
paid and excluding our net capital gain) that is distributed to our
shareholders. We believe we have met these requirements in all periods presented
herein, and we expect to continue to qualify as a REIT.
On October 27, 2021, our Board declared a regular common quarterly dividend of
$2.00 per common share totaling approximately $350 million, which will be paid
at the end of December 2021. Our consistent, long-term dividend policy has been
to distribute our taxable income. Future quarterly distributions with respect to
the common shares will continue to be determined based upon our REIT
distribution requirements after taking into consideration distributions to the
preferred shareholders and will be funded with cash flows from operating
activities.
The annual distribution requirement with respect to our Preferred Shares
outstanding at September 30, 2021 is approximately $184.2 million per year.
We estimate we will pay approximately $6.2 million per year in distributions to
noncontrolling interests outstanding at September 30, 2021.
Real Estate Investment Activities: We continue to seek to acquire additional
self-storage facilities from third parties. Subsequent to September 30, 2021, we
acquired or were under contract to acquire 107 self-storage facilities for a
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total purchase price of $2.3 billion. 10 of these properties are under
construction and expected to close as they are completed in the remainder of
2021 and 2022.
We are actively seeking to acquire additional facilities. However, future
acquisition volume will depend upon whether additional owners will be motivated
to market their facilities, which will in turn depend upon factors such as
economic conditions and the level of seller confidence.
As of September 30, 2021, we had development and expansion projects at a total
cost of approximately $730.6 million. Costs incurred through September 30, 2021
were $228.4 million, with the remaining cost to complete of $502.2 million
expected to be incurred primarily in the next 18 to 24 months. Some of these
projects are subject to contingencies such as entitlement approval. We expect to
continue to seek to add projects to maintain and increase our robust pipeline.
Our ability to do so continues to be challenged by various constraints such as
difficulty in finding projects that meet our risk-adjusted yield expectations,
and challenges in obtaining building permits for self-storage facilities in
certain municipalities.
Redemption of Preferred Securities: Historically, we have taken advantage of
refinancing higher coupon preferred securities with lower coupon preferred
securities. In the future, we may also elect to finance the redemption of
preferred securities with proceeds from the issuance of debt. As of November 1,
2021, our 4.900% Series E Preferred Shares ($350 million) is eligible for
redemption, at our option and with 30 days' notice. See Note 8 to our
September 30, 2021 financial statements for the redemption dates of all of our
series of preferred shares. Redemption of such preferred shares will depend upon
many factors, including the rate at which we could issue replacement preferred
securities. None of our preferred securities are redeemable at the option of the
holders.
Repurchases of Common Shares: Our Board has authorized management to repurchase
up to 35,000,000 of our common shares on the open market or in privately
negotiated transactions. During the three months ended September 30, 2021, we
did not repurchase any of our common shares. From the inception of the
repurchase program through November 1, 2021, we have repurchased a total of
23,721,916 common shares at an aggregate cost of approximately $679.1 million.
Future levels of common share repurchases will be dependent upon our available
capital, investment alternatives and the trading price of our common shares.
Contractual Obligations
Our significant contractual obligations as September 30, 2021 and their impact
on our cash flows and liquidity are summarized below for the years ending
December 31 (amounts in thousands):
                                                                                 Remainder of
                                                        Total                            2021                     2022                     2023                     2024                     2025                       Thereafter

Interest and principal payments on debt
(1)                                     $           6,412,827       $                  24,531       $          596,188       $          103,920       $          897,029       $          357,120       $                4,434,039
Leases commitments (2)                                 66,325                             668                    3,122                    2,966                    2,934                    2,897                           53,738
Construction commitments (3)                          134,064                          38,313                   93,871                    1,880                        -                        -                                -
Total                                   $           6,613,216       $                  63,512       $          693,181       $          108,766       $          899,963       $          360,017       $                4,487,777


(1)Represents contractual principal and interest payments. Amounts with respect
to certain Euro-denominated debt are based upon exchange rates at September 30,
2021. See Note 6 to our September 30, 2021 financial statements for further
information.
(2)Represents future contractual payments on land, equipment and office space
under various lease commitments.
(3)Represents future expected payments for construction under contract at
September 30, 2021.
The annual distribution requirement with respect to our Preferred Shares
outstanding at September 30, 2021 is approximately $184.2 million per year.
Dividends are paid when and if declared by our Board and accumulate if not paid.
Off-Balance Sheet Arrangements: At September 30, 2021, we had no material
off-balance sheet arrangements as defined under Regulation S-K 303(a)(4) and the
instructions thereto.
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