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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2022
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ____________ to ____________.
Commission File Number: 001-33519
Public Storage
(Exact name of registrant as specified in its charter)
Maryland 95-3551121
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)
   
701 Western Avenue, Glendale, California
91201-2349
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (818) 244-8080.
Former name, former address and former fiscal, if changed since last report: N/A
Securities registered pursuant to Section 12b of the Act:
Title of Class Trading Symbol Name of each exchange on which registered
Common Shares, $0.10 par value PSA New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value PSAPrF New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value PSAPrG New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value PSAPrH New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value PSAPrI New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value PSAPrJ New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value PSAPrK New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value PSAPrL New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value PSAPrM New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value PSAPrN New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value PSAPrO New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value PSAPrP New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value PSAPrQ New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value PSAPrR New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value PSAPrS New York Stock Exchange
0.875% Senior Notes due 2032 PSA32 New York Stock Exchange
0.500% Senior Notes due 2030 PSA30 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated
filer
Non-accelerated filer Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of October 27, 2022:
Common Shares of beneficial interest, $0.10 par value per share – 175,638,388 shares



PUBLIC STORAGE
INDEX
PART I FINANCIAL INFORMATION Pages
Item 1. Consolidated Financial Statements (Unaudited)  
  Consolidated Balance Sheets
1
  Consolidated Statements of Income
2
  Consolidated Statements of Comprehensive Income
3
  Consolidated Statements of Equity and Redeemable Noncontrolling Interests
4-7
  Consolidated Statements of Cash Flows
8-9
  Condensed Notes to Consolidated Financial Statements
10-23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
24-51
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II
OTHER INFORMATION (Items 3, 4 and 5 are not applicable)
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits





PUBLIC STORAGE
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)

  September 30,
2022
December 31,
2021
(Unaudited)
ASSETS   
     
Cash and equivalents $ 883,787  $ 734,599 
Real estate facilities, at cost:
Land 5,240,841  5,134,060 
Buildings 18,535,053  17,673,773 
23,775,894  22,807,833 
Accumulated depreciation (8,346,598) (7,773,308)
15,429,296  15,034,525 
Construction in process 406,354  272,471 
15,835,650  15,306,996 
Investments in unconsolidated real estate entities 252,648  828,763 
Goodwill and other intangible assets, net 239,811  302,894 
Other assets 239,024  207,656 
Total assets $ 17,450,920  $ 17,380,908 
       
LIABILITIES AND EQUITY      
     
Notes payable $ 6,740,451  $ 7,475,279 
Accrued and other liabilities 589,712  482,091 
Total liabilities 7,330,163  7,957,370 
     
Commitments and contingencies (Note 14)
  
  
Redeemable noncontrolling interests —  68,249 
       
Equity:      
Public Storage shareholders’ equity:      
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (164,000 at December 31, 2021) at liquidation preference
4,350,000  4,100,000 
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,336,452 shares issued and outstanding (175,134,455 shares at December 31, 2021)
17,534  17,513 
Paid-in capital 5,878,739  5,821,667 
Accumulated deficit (122,631) (550,416)
Accumulated other comprehensive loss (96,470) (53,587)
Total Public Storage shareholders’ equity 10,027,172  9,335,177 
Noncontrolling interests 93,585  20,112 
Total equity 10,120,757  9,355,289 
Total liabilities, redeemable noncontrolling interests and equity $ 17,450,920  $ 17,380,908 

See accompanying notes.
1


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share amounts)
(Unaudited)

  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2022 2021 2022 2021
Revenues:
Self-storage facilities $ 1,027,374  $ 840,510  $ 2,917,675  $ 2,333,850 
Ancillary operations 60,757  54,421  175,946  157,658 
1,088,131  894,931  3,093,621  2,491,508 
Expenses:
Self-storage cost of operations 255,470  216,999  738,953  631,699 
Ancillary cost of operations 21,572  19,735  54,297  52,044 
Depreciation and amortization 220,772  188,552  661,608  508,139 
General and administrative 29,501  31,682  81,401  78,996 
Interest expense 34,113  23,736  100,178  60,980 
  561,428  480,704  1,636,437  1,331,858 
Other increases to net income:
Interest and other income 12,736  3,356  26,394  9,321 
Equity in earnings of unconsolidated real estate entities 8,180  32,860  100,129  81,382 
Foreign currency exchange gain 100,170  40,906  237,270  73,584 
Gain on sale of real estate 1,503  279  1,503  13,683 
Gain on sale of equity investment in PS Business Parks, Inc. 2,128,860  —  2,128,860  — 
Net income 2,778,152  491,628  3,951,340  1,337,620 
Allocation to noncontrolling interests (9,158) (1,537) (14,553) (4,067)
Net income allocable to Public Storage shareholders 2,768,994  490,091  3,936,787  1,333,553 
Allocation of net income to:
Preferred shareholders (48,678) (46,237) (145,716) (138,500)
Preferred shareholders - redemptions —  —  —  (16,989)
Restricted share units (8,155) (1,527) (11,405) (3,678)
Net income allocable to common shareholders $ 2,712,161  $ 442,327  $ 3,779,666  $ 1,174,386 
Net income per common share:
Basic $ 15.47  $ 2.53  $ 21.57  $ 6.72 
Diluted $ 15.38  $ 2.52  $ 21.44  $ 6.70 
Basic weighted average common shares outstanding 175,283 174,926 175,227 174,787
Diluted weighted average common shares outstanding 176,328 175,806 176,325 175,398

See accompanying notes.
2


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
(Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 2022 2021
Net income $ 2,778,152  $ 491,628  $ 3,951,340  $ 1,337,620 
Foreign currency exchange loss on investment in Shurgard (17,253) (6,898) (42,883) (9,579)
Total comprehensive income 2,760,899  484,730  3,908,457  1,328,041 
Allocation to noncontrolling interests (9,158) (1,537) (14,553) (4,067)
Comprehensive income allocable to Public Storage shareholders $ 2,751,741  $ 483,193  $ 3,893,904  $ 1,323,974 

See accompanying notes.
3


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Three Months Ended September 30, 2022
(Amounts in thousands, except share and per share amounts)
(Unaudited)

  Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss
Total
Public Storage Shareholders' Equity
Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests
Balances at June 30, 2022
$ 4,350,000  $ 17,524  $ 5,848,632  $ (182,213) $ (79,217) $ 9,954,726  $ 93,622  $ 10,048,348  $ — 
Issuance of common shares in connection with share-based compensation (97,189 shares)
—  10  16,445  —  —  16,455  —  16,455  — 
Taxes withheld upon net share settlement of restricted share units —  —  (779) —  —  (779) —  (779) — 
Share-based compensation expense —  —  14,441  —  —  14,441  —  14,441  — 
Contributions by noncontrolling interests —  —  —  —  —  —  561  561  — 
Net income —  —  —  2,778,152  —  2,778,152  —  2,778,152  — 
Net income allocated to noncontrolling interests —  —  —  (9,158) —  (9,158) 9,158  —  — 
Distributions to:
Preferred shareholders (Note 9) —  —  —  (48,678) —  (48,678) —  (48,678) — 
Noncontrolling interests —  —  —  —  —  —  (9,756) (9,756) — 
Common shareholders and restricted share unitholders ($15.15 per share) (Note 9)
—  —  —  (2,660,734) —  (2,660,734) —  (2,660,734) — 
Other comprehensive loss —  —  —  —  (17,253) (17,253) —  (17,253) — 
Balances at September 30, 2022
$ 4,350,000  $ 17,534  $ 5,878,739  $ (122,631) $ (96,470) $ 10,027,172  $ 93,585  $ 10,120,757  $ — 
See accompanying notes.
4


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Three Months Ended September 30, 2021
(Amounts in thousands, except share and per share amounts)
(Unaudited)

  Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss
Total
Public Storage Shareholders' Equity
Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests
Balances at June 30, 2021
$ 3,871,250  $ 17,486  $ 5,764,672  $ (863,742) $ (46,082) $ 8,743,584  $ 19,519  $ 8,763,103  $ — 
Issuance of 5,750 preferred shares
143,750  —  (4,777) —  —  138,973  —  138,973  — 
Issuance of common shares in connection with share-based compensation (183,823 shares)
—  19  33,795  —  —  33,814  —  33,814  — 
Share-based compensation expense, net of cash paid in lieu of common shares —  —  15,253  —  —  15,253  —  15,253  — 
Contributions by noncontrolling interests —  —  —  —  —  —  594  594  — 
Net income —  —  —  491,628  —  491,628  —  491,628  — 
Net income allocated to noncontrolling interests —  —  —  (1,537) —  (1,537) 1,537  —  — 
Distributions to:
Preferred shareholders —  —  —  (46,237) —  (46,237) —  (46,237) — 
Noncontrolling interests —  —  —  —  —  —  (1,706) (1,706) — 
Common shareholders and restricted share unitholders ($2.00 per share)
—  —  —  (351,226) —  (351,226) —  (351,226) — 
Other comprehensive loss —  —  —  —  (6,898) (6,898) —  (6,898) — 
Balances at September 30, 2021
$ 4,015,000  $ 17,505  $ 5,808,943  $ (771,114) $ (52,980) $ 9,017,354  $ 19,944  $ 9,037,298  $ — 
See accompanying notes.
5


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Nine Months Ended September 30, 2022
(Amounts in thousands, except share and per share amounts)
(Unaudited)
  Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss
Total
Public Storage Shareholders' Equity
Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests
Balances at December 31, 2021
$ 4,100,000  $ 17,513  $ 5,821,667  $ (550,416) $ (53,587) $ 9,335,177  $ 20,112  $ 9,355,289  $ 68,249 
Issuance of 10,000 preferred shares (Note 9)
250,000  —  (7,168) —  —  242,832  —  242,832  — 
Issuance of common shares in connection with share-based compensation (201,997 shares) (Note 11)
—  21  27,994  —  —  28,015  —  28,015  — 
Taxes withheld upon net share settlement of restricted share units (Note 11) —  —  (12,989) —  —  (12,989) —  (12,989) — 
Share-based compensation expense (Note 11) —  —  49,235  —  —  49,235  —  49,235  — 
Contributions by noncontrolling interests —  —  —  —  —  —  6,698  6,698  15,426 
Reclassification from redeemable noncontrolling interests to noncontrolling interests 83,826  83,826  (83,826)
Net income —  —  —  3,951,340  —  3,951,340  —  3,951,340  — 
Net income allocated to noncontrolling interests —  —  —  (14,553) —  (14,553) 13,893  (660) 660 
Distributions to:
Preferred shareholders (Note 9) —  —  —  (145,716) —  (145,716) —  (145,716) — 
Noncontrolling interests —  —  —  —  —  —  (30,944) (30,944) (509)
Common shareholders and restricted share unitholders ($19.15 per share) (Note 9)
—  —  —  (3,363,286) —  (3,363,286) —  (3,363,286) — 
Other comprehensive loss —  —  —  —  (42,883) (42,883) —  (42,883) — 
Balances at September 30, 2022
$ 4,350,000  $ 17,534  $ 5,878,739  $ (122,631) $ (96,470) $ 10,027,172  $ 93,585  $ 10,120,757  $ — 
See accompanying notes.
6


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS
Nine Months Ended September 30, 2021
(Amounts in thousands, except share and per share amounts)
(Unaudited)

  Cumulative Preferred Shares Common Shares Paid-in Capital Accumulated Deficit Accumulated
Other Comprehensive Loss
Total
Public Storage Shareholders' Equity
Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests
                         
Balances at December 31, 2020
$ 3,792,500  $ 17,458  $ 5,707,101  $ (914,791) $ (43,401) $ 8,558,867  $ 18,032  $ 8,576,899  $ — 
Issuance of 29,900 preferred shares
747,500  —  (22,189) —  —  725,311  —  725,311  — 
Redemption and shares called for redemption of 21,000 preferred shares
(525,000) —  —  —  —  (525,000) —  (525,000) — 
Issuance of common shares in connection with share-based compensation (466,518 shares)
—  47  81,365  —  —  81,412  —  81,412  — 
Share-based compensation expense, net of cash paid in lieu of common shares
—  —  42,698  —  —  42,698  —  42,698  — 
Acquisition of noncontrolling interests —  —  (32) —  —  (32) (1) (33) — 
Contributions by noncontrolling interests —  —  —  —  —  —  2,359  2,359  — 
Net income —  —  —  1,337,620  —  1,337,620  —  1,337,620  — 
Net income allocated to noncontrolling interests —  —  —  (4,067) —  (4,067) 4,067  —  — 
Distributions to:
Preferred shareholders —  —  —  (138,500) —  (138,500) —  (138,500) — 
Noncontrolling interests —  —  —  —  —  —  (4,513) (4,513) — 
Common shareholders and restricted share unitholders ($6.00 per share)
—  —  —  (1,051,376) —  (1,051,376) —  (1,051,376) — 
Other comprehensive loss —  —  —  —  (9,579) (9,579) —  (9,579) — 
Balances at September 30, 2021
$ 4,015,000  $ 17,505  $ 5,808,943  $ (771,114) $ (52,980) $ 9,017,354  $ 19,944  $ 9,037,298  $ — 

See accompanying notes.
7


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

  For the Nine Months Ended September 30,
  2022 2021
Cash flows from operating activities:      
Net income $ 3,951,340  $ 1,337,620 
Adjustments to reconcile net income to net cash flows from operating activities:
Gain on sale of equity investment in PS Business Parks, Inc. (2,128,860) — 
Gain on sale of real estate (1,503) (13,683)
Depreciation and amortization 661,608  508,139 
Equity in earnings of unconsolidated real estate entities (100,129) (81,382)
Distributions from cumulative equity in earnings of unconsolidated real estate entities 134,460  59,251 
Unrealized foreign currency exchange gain (236,698) (73,584)
Share-based compensation expense 44,597  47,647 
Other 55,975  30,712 
Total adjustments (1,570,550) 477,100 
Net cash flows from operating activities 2,380,790  1,814,720 
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities (337,896) (169,103)
Development and expansion of real estate facilities (231,483) (201,527)
Acquisition of real estate facilities and intangible assets (529,357) (2,845,284)
Distributions in excess of cumulative equity in earnings from unconsolidated real estate entities 13,670  8,765 
Proceeds from sale of real estate investments 1,543  16,070 
Proceeds from sale of equity investment in PS Business Parks, Inc. 2,636,011  — 
Net cash flows from (used in) investing activities 1,552,488  (3,191,079)
Cash flows from financing activities:
Repayments on notes payable (502,270) (1,585)
Issuance of notes payable, net of issuance costs —  3,300,160 
Issuance of preferred shares 242,832  725,311 
Issuance of common shares in connection with share-based compensation 27,913  81,412 
Redemption of preferred shares —  (825,000)
Taxes paid upon net share settlement of restricted share units (12,989) (10,438)
Acquisition of noncontrolling interests —  (33)
Contributions by noncontrolling interests 1,659  2,359 
Distributions paid to preferred shareholders, common shareholders and restricted share unitholders (3,508,581) (1,189,876)
Distributions paid to noncontrolling interests (31,453) (4,513)
Net cash flows (used in) from financing activities (3,782,889) 2,077,797 
Net cash flows from operating, investing, and financing activities 150,389  701,438 
Net effect of foreign exchange impact on cash and equivalents, including restricted cash —  313 
Increase in cash and equivalents, including restricted cash $ 150,389  $ 701,751 
See accompanying notes.
8


PUBLIC STORAGE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

  For the Nine Months Ended September 30,
  2022 2021
Cash and equivalents, including restricted cash at beginning of the period:
Cash and equivalents $ 734,599  $ 257,560 
Restricted cash included in other assets 26,691  25,040 
$ 761,290  $ 282,600 
Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents $ 883,787  $ 958,247 
Restricted cash included in other assets 27,892  26,104 
  $ 911,679  $ 984,351 
Supplemental schedule of non-cash investing and financing activities:
Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities $ (14,254) $ (18,243)
Construction or expansion of real estate facilities (71,006) (39,305)
Real estate acquired in exchange for noncontrolling interests (19,865) — 

See accompanying notes.
9


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)


1.Description of the Business
Public Storage (referred to herein as “the Company,” “we,” “us,” or “our”), a Maryland real estate investment trust (“REIT”), was organized in 1980. Our principal business activities include the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.
At September 30, 2022, we had direct and indirect equity interests in 2,836 self-storage facilities (with approximately 202.2 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.2 million net rentable square feet of commercial and retail space.
At September 30, 2022, we owned a 35% common equity interest in Shurgard Self Storage SA (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 259 self-storage facilities (with approximately 14 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.
On July 20, 2022, in connection with the closing of PS Business Parks, Inc.’s (“PSB”) merger transaction with affiliates of Blackstone Real Estate (“Blackstone”), we completed the sale of our 41% common equity interest in PSB in its entirety. Prior to the merger transaction, PSB was a REIT traded on the New York Stock Exchange under the “PSB” symbol, which owned commercial properties, primarily multi-tenant industrial, flex, and office space. Refer to Note 4. Investments in Unconsolidated Real Estate Entities for transaction information and our accounting treatment of the sale.
2.Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (“FASB”), and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).
Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
Summary of Significant Accounting Policies
There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
10


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

3.Real Estate Facilities

Activity in real estate facilities during the nine months ended September 30, 2022 is as follows:
Nine Months Ended September 30, 2022
  (Amounts in thousands)
Operating facilities, at cost:
Beginning balance $ 22,807,833 
Capital expenditures to maintain real estate facilities 329,253 
Acquisitions 514,541 
Dispositions (1,704)
Developed or expanded facilities opened for operation 125,971 
Ending balance 23,775,894 
Accumulated depreciation:
Beginning balance (7,773,308)
Depreciation expense (574,374)
Dispositions 1,084 
Ending balance (8,346,598)
Construction in process:
Beginning balance 272,471 
Costs incurred to develop and expand real estate facilities 259,854 
Developed or expanded facilities opened for operation (125,971)
Ending balance 406,354 
Total real estate facilities at September 30, 2022
$ 15,835,650 
During the nine months ended September 30, 2022, we acquired 44 self-storage facilities (3.2 million net rentable square feet of storage space), for a total cost of $501.9 million, consisting of $482.0 million in cash and $19.9 million in partnership units in our subsidiary. Approximately $14.4 million of the total cost was allocated to intangible assets. We completed development and redevelopment activities costing $126.0 million during the nine months ended September 30, 2022, adding 0.9 million net rentable square feet of self-storage space. Construction in process at September 30, 2022 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.
Additionally, on July 8, 2022, we acquired from PSB the commercial interests in five properties at three sites jointly occupied with certain of our self-storage facilities located in Maryland and Virginia, for $47.3 million. We recognized $27.0 million of real estate assets and $0.7 million of intangibles for the properties acquired, representing the cost of these commercial properties that we did not have interest in through our equity investment in PSB. We recognized the remaining $19.6 million as an increase to our basis in our equity investment in PSB, which represents the elimination of our portion of the gain recorded by PSB.
During the nine months ended September 30, 2022, we sold portions of real estate facilities in connection with eminent domain proceedings for $1.5 million in cash proceeds and recorded a related gain on sale of real estate of approximately $1.5 million.
11


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

4.Investments in Unconsolidated Real Estate Entities
The following tables set forth our investments in, and equity in earnings of, the Unconsolidated Real Estate Entities (amounts in thousands):
  Investments in Unconsolidated Real Estate Entities at
  September 30, 2022 December 31, 2021
PSB $ $ 515,312
Shurgard 252,648 313,451
Total $ 252,648 $ 828,763

  Equity in Earnings of Unconsolidated Real Estate Entities for the
  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 2022 2021
PSB $ 3,586 $ 27,110 $ 80,596 $ 62,494
Shurgard 4,594 5,750 19,533 18,888
Total $ 8,180 $ 32,860 $ 100,129 $ 81,382

Investment in PSB
Prior to the sale of our equity investment in PSB in its entirety on July 20, 2022, we owned 7,158,354 shares of PSB’s common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB, representing a 41% common equity interest in PSB.
On April 24, 2022, PSB entered into an Agreement and Plan of Merger whereby affiliates of Blackstone agreed to acquire all outstanding shares of PSB’s common stock for $187.50 per share in cash. On July 20, 2022, PSB announced that it completed the merger transaction with Blackstone. Each share of PSB common stock and each common unit of partnership interest we held in PSB were converted into the right to receive the merger consideration of $187.50 per share or unit, including a $5.25 closing cash dividend per share or unit, and a $0.22 prorated quarterly cash dividend per share or unit, for a total of $187.72 per share or unit. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion, which was classified within gain on sale of equity investment in PS Business Parks, Inc. in the Consolidated Statement of Income.
We classified the proceeds from the merger consideration of $2.6 billion or $182.25 per share or unit within cash flows from investing activities in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2022. During the nine months ended September 30, 2022 and 2021, we received cash distributions from PSB totaling $109.5 million and $45.6 million, respectively, which were classified within cash flows from operating activities in the Consolidated Statements of Cash Flows.
Investment in Shurgard
Throughout all periods presented, we effectively owned, directly and indirectly 31,268,459 Shurgard common shares, representing a 35% equity interest in Shurgard.
Based upon the closing price at September 30, 2022 (€41.60 per share of Shurgard common stock, at 0.980 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.3 billion.
Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). For each of the nine months ended September 30, 2022 and 2021, we received $2.6 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark. We eliminated $0.9 million of intra-entity profits and losses for each of the nine months ended September 30, 2022 and
12


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

2021, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.
During the nine months ended September 30, 2022 and 2021, we received cash dividends from Shurgard totaling $37.8 million and $21.5 million, respectively. Approximately $13.7 million and $8.8 million of total cash distributions from Shurgard during the nine months ended September 30, 2022 and 2021, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows.
At September 30, 2022, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by approximately $65.7 million ($74.7 million at December 31, 2021). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $9.0 million and $7.3 million during the nine months ended September 30, 2022 and 2021, respectively.
Shurgard is a publicly held entity trading on Euronext Brussels under the symbol “SHUR”.
5.Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (amounts in thousands):
At September 30, 2022 At December 31, 2021
Gross Book Value Accumulated Amortization Net Book Value Gross Book Value Accumulated Amortization Net Book Value
Goodwill $ 165,843  $ —  $ 165,843  $ 165,843  $ —  $ 165,843 
Shurgard® Trade Name 18,824  —  18,824  18,824  —  18,824 
Finite-lived intangible assets, subject to amortization 196,617  (141,473) 55,144  198,180  (79,953) 118,227 
Total goodwill and other intangible assets $ 381,284  $ (141,473) $ 239,811  $ 382,847  $ (79,953) $ 302,894 

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $20.0 million and $78.2 million for the three and nine months ended September 30, 2022, respectively, and $23.3 million and $49.0 million for the same periods in 2021. During the nine months ended September 30, 2022, intangibles increased $15.1 million in connection with the acquisition of real estate facilities. (Note 3).
The estimated future amortization expense for our finite-lived intangible assets at September 30, 2022 is as follows (amounts in thousands):
Year Amount
Remainder of 2022 $ 15,830 
2023 30,074 
Thereafter 9,240 
Total $ 55,144 
13


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

6.Credit Facility
We have a revolving credit agreement (the “Credit Facility”) with a $500 million borrowing limit that matures on April 19, 2024. Amounts drawn on the Credit Facility bear annual interest at rates ranging from LIBOR plus 0.7% to LIBOR plus 1.350% depending upon the ratio of our Total Indebtedness to Gross Asset Value (as defined in the Credit Facility) (LIBOR plus 0.75% at September 30, 2022). We are also required to pay a quarterly facility fee ranging from 0.07% per annum to 0.25% per annum depending upon the ratio of our Total Indebtedness to our Gross Asset Value (0.10% per annum at September 30, 2022). At September 30, 2022 and November 1, 2022, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $18.6 million at September 30, 2022 ($21.2 million at December 31, 2021). The Credit Facility has various customary restrictive covenants, with which we were in compliance at September 30, 2022.
7.Notes Payable
Our notes payable are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at September 30, 2022 and December 31, 2021 are set forth in the tables below:
     
Amounts at September 30, 2022
  Coupon Rate Effective Rate  Principal Unamortized Costs Book
 Value
Fair
 Value
      ($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024
SOFR+0.47%
1.766% $ 700,000  $ (1,101) $ 698,899  $ 685,550 
Notes due February 15, 2026
0.875% 1.030% 500,000  (2,507) 497,493  436,666 
Notes due November 9, 2026 1.500% 1.640% 650,000  (3,574) 646,426  573,097 
Notes due September 15, 2027
3.094% 3.218% 500,000  (2,624) 497,376  459,630 
Notes due May 1, 2028
1.850% 1.962% 650,000  (3,768) 646,232  543,338 
Notes due November 9, 2028 1.950% 2.044% 550,000  (2,939) 547,061  459,260 
Notes due May 1, 2029
3.385% 3.459% 500,000  (2,024) 497,976  450,179 
Notes due May 1, 2031
2.300% 2.419% 650,000  (5,869) 644,131  517,641 
Notes due November 9, 2031 2.250% 2.322% 550,000  (3,224) 546,776  430,706 
  5,250,000  (27,630) 5,222,370  4,556,067 
Euro Denominated Unsecured Debt
Notes due April 12, 2024
1.540% 1.540% 97,984  —  97,984  94,290 
Notes due November 3, 2025
2.175% 2.175% 237,135  —  237,135  227,663 
Notes due September 9, 2030 0.500% 0.640% 685,890  (8,890) 677,000  513,593 
Notes due January 24, 2032
0.875% 0.978% 489,921  (4,992) 484,929  354,996 
      1,510,930  (13,882) 1,497,048  1,190,542 
 Mortgage Debt, secured by 10 real estate facilities with a net book value of $57.5 million
3.811% 3.811% 21,033  —  21,033  20,703 
  $ 6,781,963  $ (41,512) $ 6,740,451  $ 5,767,312 
14


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

Amounts at
  December 31, 2021
  Book Value Fair Value
  ($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due September 15, 2022 $ 499,637  $ 506,362 
Notes due April 23, 2024 698,372  700,314 
Notes due February 15, 2026 496,939  488,141 
Notes due November 9, 2026 645,773  649,996 
Notes due September 15, 2027 496,980  535,206 
Notes due May 1, 2028 645,724  649,221 
Notes due November 9, 2028 546,701  548,241 
Notes due May 1, 2029 497,743  545,580 
Notes due May 1, 2031 643,617  656,546 
Notes due November 9, 2031 546,512  551,932 
  5,717,998  5,831,539 
Euro Denominated Unsecured Debt
Notes due April 12, 2024 113,431  117,526 
Notes due November 3, 2025 274,518  295,256 
Notes due September 9, 2030 784,287  769,561 
Notes due January 24, 2032 561,761  551,842 
  1,733,997  1,734,185 
Mortgage Debt 23,284  24,208 
  $ 7,475,279  $ 7,589,932 
U.S. Dollar Denominated Unsecured Notes
On August 15, 2022, the Company redeemed its 2.370% Senior Notes due September 15, 2022, with an aggregate principal amount of $500.0 million.
The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants, with which we were in compliance at September 30, 2022. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 14% at September 30, 2022) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 25x for the twelve months ended September 30, 2022) as well as covenants limiting the amount we can encumber our properties with mortgage debt.
Euro Denominated Unsecured Notes
Our Euro denominated unsecured notes (the “Euro Notes”) consist of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €100.0 million issued to institutional investors on April 12, 2016, (iii) €500.0 million issued in a public offering on January 24, 2020, and (iv) €700.0 million issued in a public offering on September 9, 2021. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.
We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange gain” on our income statement (gains of $100.9 million and $239.2 million for the three and nine months ended September 30, 2022, respectively, as compared to gains of $40.9 million and $73.6 million for the three and nine months ended September 30, 2021, respectively).
15


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

Mortgage Notes
We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.
At September 30, 2022, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.2% and 7.1%, and mature between February 1, 2023 and July 1, 2030.
At September 30, 2022, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):
  Unsecured Debt Mortgage Debt Total
Remainder of 2022
$ $ 212 $ 212
2023 19,219 19,219
2024 797,984 124 798,108
2025 237,135 131 237,266
2026 1,150,000 138 1,150,138
Thereafter 4,575,811 1,209 4,577,020
$ 6,760,930 $ 21,033 $ 6,781,963
Weighted average effective rate 1.9% 3.8% 1.9%
Cash paid for interest totaled $87.6 million and $49.8 million for the nine months ended September 30, 2022 and 2021, respectively. Interest capitalized as real estate totaled $4.2 million and $2.6 million for the nine months ended September 30, 2022 and 2021, respectively.
8.Noncontrolling Interests
There are noncontrolling interests related to several subsidiaries we consolidate of which we do not own 100% of the equity. At September 30, 2022, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are convertible on a one-for-one basis (subject to certain limitations) into common shares of the Company at the option of the unitholder. These include a total of 54,137 partnership units of $19.9 million issued to third-parties in connection with our acquisition of self-storage properties in the nine months ended September 30, 2022.
At March 31, 2022, there were 254,833 partnership units of $83.8 million classified as redeemable noncontrolling interests outside of total equity in our consolidated balance sheets, because the unitholders of these partnership units had the right to require redemption of their partnership units in cash if common shares of the Company were not publicly listed. In the second quarter of 2022, the related partnership agreements were amended with such cash redemption feature removed from these partnership units. We therefore reclassified $83.8 million from redeemable noncontrolling interests to noncontrolling interests in total equity during the three months ended June 30, 2022.
16


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

9.Shareholders’ Equity

Preferred Shares
At September 30, 2022 and December 31, 2021, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

     
At September 30, 2022
At December 31, 2021
Series Earliest Redemption Date Dividend Rate Shares Outstanding Liquidation Preference Shares Outstanding Liquidation Preference
      (Dollar amounts in thousands)
Series F 6/2/2022 5.150  % 11,200  $ 280,000  11,200  $ 280,000 
Series G 8/9/2022 5.050  % 12,000  300,000  12,000  300,000 
Series H 3/11/2024 5.600  % 11,400  285,000  11,400  285,000 
Series I 9/12/2024 4.875  % 12,650  316,250  12,650  316,250 
Series J 11/15/2024 4.700  % 10,350  258,750  10,350  258,750 
Series K 12/20/2024 4.750  % 9,200  230,000  9,200  230,000 
Series L 6/17/2025 4.625  % 22,600  565,000  22,600  565,000 
Series M 8/14/2025 4.125  % 9,200  230,000  9,200  230,000 
Series N 10/6/2025 3.875  % 11,300  282,500  11,300  282,500 
Series O 11/17/2025 3.900  % 6,800  170,000  6,800  170,000 
Series P 6/16/2026 4.000  % 24,150  603,750  24,150  603,750 
Series Q 8/17/2026 3.950  % 5,750  143,750  5,750  143,750 
Series R 11/19/2026 4.000  % 17,400  435,000  17,400  435,000 
Series S 1/13/2027 4.100  % 10,000  250,000  —  — 
Total Preferred Shares 174,000  $ 4,350,000  164,000  $ 4,100,000 
The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At September 30, 2022, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.
Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.
Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.
On January 13, 2022, we issued 10.0 million depositary shares, each representing 0.001 of a share of our 4.100% Series S Preferred Shares, at an issuance price of $25.00 per depositary share, for a total of $250.0 million in gross proceeds, and we incurred $7.2 million in issuance costs.
17


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

Dividends
Common share dividends paid, including amounts paid to our restricted share unitholders, totaled $2.7 billion ($15.15 per share) and $351.2 million ($2.00 per share) for the three months ended September 30, 2022 and 2021, respectively, and $3.4 billion ($19.15 per share) and $1.05 billion ($6.00 per share) for the nine months ended September 30, 2022 and 2021, respectively. Included in common share dividends paid for the three and nine months ended September 30, 2022 is $2.3 billion of a special cash dividend (“Special Dividend”) of $13.15 per common share paid on August 4, 2022 in connection with the sale of our equity investment in PSB on July 20, 2022. Preferred share dividends paid totaled $48.7 million and $46.2 million for the three months ended September 30, 2022 and 2021, respectively, and $145.7 million and $138.5 million for the nine months ended September 30, 2022 and 2021, respectively.
10.Related Party Transactions
At September 30, 2022, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 65 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children owned the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $1.7 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively.
On July 8, 2022, we acquired from PSB the commercial interests in five properties at three sites jointly occupied with certain of our self-storage facilities located in Maryland and Virginia, for $47.3 million. We recognized $27.0 million of real estate assets and $0.7 million of intangibles for the properties acquired, representing the cost of these commercial properties that we did not have interest in through our equity investment in PSB. We recognized the remaining $19.6 million as an increase in our basis in our equity investment in PSB, which represents the elimination of our portion of the gain recorded by PSB.
11.Share-Based Compensation
Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred stock units (“DSUs”), and unrestricted common stock issued in lieu of trustee compensation.
We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.4 million and $2.4 million share-based compensation cost was capitalized as real estate facilities for the three and nine months ended September 30, 2022, respectively, as compared to $0.8 million and $3.1 million for the same periods of 2021, respectively.
  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 2022 2021
  (Amounts in thousands)
Self-storage cost of operations $ 4,203  $ 4,506  $ 13,740  $ 16,272 
Ancillary cost of operations 203  342  690  1,122 
General and administrative 9,335  9,747  30,167  30,291 
Total $ 13,741  $ 14,595  $ 44,597  $ 47,685 

18


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

Included in share-based compensation is $2.9 million and $12.4 million during the three and nine months ended September 30, 2022, respectively, as compared to $4.8 million and $15.8 million for the same periods in 2021, of retirement acceleration as discussed in Note 2 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.
As of September 30, 2022, there was $96.8 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.
Stock Options
We have service-based, performance-based and market-based stock options outstanding, which generally vest over 3 to 5 years, expire 10 years after the grant date, and have an exercise price equal to the closing trading price of our common shares on the grant date. New shares are issued for options exercised. Employees cannot require the Company to settle their award in cash.
On August 4, 2022, we paid a Special Dividend of $13.15 per common share to shareholders of record as of August 1, 2022. Stock options that were outstanding at the time of the Special Dividend were adjusted pursuant to the anti-dilution provisions of the Company’s equity and performance-based incentive compensation plans that provide for equitable adjustments in the event of an extraordinary cash dividend. The anti-dilution adjustments proportionately increased the number of outstanding stock options and reduced the exercise prices of outstanding stock options by a conversion rate of 1.03275, resulting in an increase of 104,348 stock options outstanding. The adjustments did not result in incremental share-based compensation expense.
During the nine months ended September 30, 2022, 142,683 stock options were granted, 146,608 options were exercised, and no options were forfeited. In addition, we expect an incremental 61,250 stock options to be issued based on the estimated achievement of performance targets on our multi-year performance-based stock options granted during the nine months ended September 30, 2021. A total of 3,201,624 stock options were outstanding at September 30, 2022 (3,039,951 at December 31, 2021).
During the nine months ended September 30, 2022, we granted 65,000 stock options in connection with non-management trustee compensation. For the remaining 77,683 stock options granted during the nine months ended September 30, 2022, vesting is dependent upon meeting certain market conditions over the three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. These stock options require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning up to 200% of the target options originally granted.
For the three and nine months ended September 30, 2022, we incurred share-based compensation cost for outstanding stock options of $4.2 million and $15.8 million, respectively, as compared to $5.5 million and $20.5 million for the same periods in 2021.
Restricted Share Units
We have service-based, performance-based and market-based RSUs outstanding, which generally vest over 5 to 8 years from the grant date. Upon vesting, the grantee receives new common shares equal to the number of vested RSUs, less common shares withheld to satisfy the grantee’s statutory tax liabilities arising from the vesting. During the nine months ended September 30, 2022, 27,943 RSUs were granted, 18,487 RSUs were forfeited and 76,818 RSUs vested. The vesting resulted in the issuance of 55,079 common shares. A total of 503,460 RSUs were outstanding at September 30, 2022 (570,822 at December 31, 2021).
Included in the RSUs granted during the nine months ended September 30, 2022 are 21,985 RSUs where vesting is dependent upon meeting certain market conditions over a three-year period from January 1, 2022 through December 31, 2024, with continued service-based vesting through the first quarter of 2027. The amount of these RSUs that are earned and vested, if any, will be based, in addition to continued employment requirements, on the Company's
19


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

relative total shareholder return over the three-year period as compared to the weighted average total shareholder return of the specified peer groups and can result in grantees earning up to 200% of the target RSUs originally granted.
Also included in the RSUs granted during the nine months ended September 30, 2022 are 5,958 service-based RSUs.
For the three and nine months ended September 30, 2022, we incurred share-based compensation cost for RSUs of $9.7 million and $30.6 million, respectively, as compared to $9.6 million and $29.4 million for the same periods in 2021.
Trustee Deferral Program
Non-management trustees may elect to receive all or a portion of their cash retainers in cash, shares of unrestricted common stock, or fully-vested DSUs to be settled at a specified future date. Shares of unrestricted stock and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the nine months ended September 30, 2022, we granted 1,742 DSUs and 310 shares of unrestricted common stock.

20


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

12. Net Income per Common Share
We allocate net income to (i) noncontrolling interests based upon their contractual rights in the respective subsidiaries or for participating noncontrolling interests based upon their participation in both distributed and undistributed earnings of the Company, (ii) preferred shareholders, for distributions paid or payable, (iii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (an “preferred share redemption charge”), and (iv) RSUs, for non-forfeitable dividends paid and adjusted for participation rights in undistributed earnings of the Company.
We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options outstanding for diluted net income per common share. Potentially dilutive stock options representing 147,344 shares of common stock were excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2022, because their effect would have been antidilutive.
The following table reconciles the numerators and denominators of the basic and diluted net income per common shares computation for the three and nine months ended September 30, 2022 and 2021, respectively (in thousands, except per share amounts):
  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 2022 2021
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders $ 2,712,161 $ 442,327 $ 3,779,666 $ 1,174,386
Denominator for basic net income per share - weighted average common shares outstanding 175,283 174,926 175,227 174,787
Net effect of dilutive stock options - based on treasury stock method 1,045 880 1,098 611
Denominator for dilutive net income per share - weighted average common shares outstanding 176,328 175,806 176,325 175,398
Net income per common share:
Basic $ 15.47 $ 2.53 $ 21.57 $ 6.72
Dilutive $ 15.38 $ 2.52 $ 21.44 $ 6.70

21


PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

13.Segment Information
Our operating segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker.
Self-Storage Operations
The Self-Storage Operations reportable segment reflects the aggregated rental operations from the self-storage facilities we own from (i) Same Store Facilities, (ii) Acquired Facilities, (iii) Developed and Expanded Facilities, and (iv) Other Non-Same Store Facilities. The presentation in the table below sets forth the Net Operating Income (“NOI”) of this reportable segment, as well as the related depreciation expense. For all periods presented, substantially all of our real estate facilities, goodwill and other intangible assets, other assets, and accrued and other liabilities are associated with the Self-Storage Operations reportable segment.
Ancillary Operations
The Ancillary Operations reflects the combined operations of our tenant reinsurance, merchandise sales, and third party property management operating segments.
Presentation of Segment Information
The following table reconciles NOI and net income attributable to our reportable segment to our consolidated net income:
  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2022 2021 2022 2021
  (amounts in thousands)
Self-Storage Operations Reportable Segment
Revenue $ 1,027,374  $ 840,510  $ 2,917,675  $ 2,333,850 
Cost of operations (255,470) (216,999) (738,953) (631,699)
   Net operating income 771,904  623,511  2,178,722  1,702,151 
Depreciation and amortization (220,772) (188,552) (661,608) (508,139)
   Net income 551,132  434,959  1,517,114  1,194,012 
Ancillary Operations
Revenue 60,757  54,421  175,946  157,658 
Cost of operations (21,572) (19,735) (54,297) (52,044)
   Net operating income 39,185  34,686  121,649  105,614 
    Total net income allocated to segments 590,317  469,645  1,638,763  1,299,626 
Other items not allocated to segments:
General and administrative (29,501) (31,682) (81,401) (78,996)
Interest and other income 12,736  3,356  26,394  9,321 
Interest expense (34,113) (23,736) (100,178) (60,980)
Equity in earnings of unconsolidated real estate entities 8,180  32,860  100,129  81,382 
Foreign currency exchange gain 100,170  40,906  237,270  73,584 
Gain on sale of real estate 1,503  279  1,503  13,683 
Gain on sale of equity investment in PS Business Parks, Inc. 2,128,860  —  2,128,860  — 
     Net income $ 2,778,152  $ 491,628  $ 3,951,340  $ 1,337,620 
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PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2022
(Unaudited)

14. Commitments and Contingencies
Contingent Losses
We are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote.
Insurance and Loss Exposure
We carry property, earthquake, general liability, employee medical insurance, and workers compensation coverage through internationally recognized insurance carriers, subject to deductibles. Our deductible for general liability is $2.0 million per occurrence. Our annual deductible for property loss is $25.0 million per occurrence. This deductible decreases to $5.0 million once we reach $35.0 million in aggregate losses for occurrences that exceed $5.0 million. Insurance carriers’ aggregate limits on these policies of $75.0 million for property losses and $102.0 million for general liability losses are higher than estimates of maximum probable losses that could occur from individual catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple catastrophic events, these limits could be exceeded.
We reinsure a program that provides insurance to our customers from an independent third-party insurer. This program covers customer claims for losses to goods stored at our facilities as a result of specific named perils (earthquakes are not covered by this program), up to a maximum limit of $5,000 per storage unit. We reinsure all risks in this program, but purchase insurance to cover this exposure for a limit of $15.0 million for losses in excess of $5.0 million per occurrence. We are subject to licensing requirements and regulations in all states. Customers participate in the program at their option. At September 30, 2022, there were approximately 1.2 million certificates held by our self-storage customers, representing aggregate coverage of approximately $5.6 billion.
Commitments
We have construction commitments representing future expected payments for construction under contract totaling $265.7 million at September 30, 2022. We expect to pay approximately $71.4 million in the remainder of 2022, $185.8 million in 2023 and $8.5 million in 2024 for these construction commitments.
We have future contractual payments on land, equipment and office space under various lease commitments totaling $64.1 million at September 30, 2022. We expect to pay approximately $0.7 million in the remainder of 2022, $3.1 million in each of 2023 and 2024, $3.0 million in each of 2025 and 2026 and $51.2 million thereafter for these commitments.
15.    Subsequent Events
Subsequent to September 30, 2022, we acquired or were under contract to acquire 33 self-storage facilities across six states with 1.7 million net rentable square feet, for $262.6 million.
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ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement Regarding 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 2022 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, expectations regarding the impacts from inflation and a potential future recession, 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 that 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 factors and risks described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2022 and in our other filings with the SEC. These include changes in demand for our facilities, impacts of natural disasters, adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance, adverse economic effects from the COVID-19 pandemic, international military conflicts, or similar events impacting public health and/or economic activity, increases in the costs of our primary customer acquisition channels, adverse impacts to us and our customers from inflation, unfavorable foreign currency rate fluctuations, changes in federal or state tax laws related to the taxation of REITs, and security breaches, including ransomware, or a failure of our networks, systems or technology.
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 cautionary 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 Estimates
The preparation of consolidated 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.
During the nine months ended September 30, 2022, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.
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Overview
Our self-storage operations generate most of our net income and our earnings growth is impacted by the levels of growth within our Same Store Facilities (as defined below) as well as within our Acquired Facilities and Newly Developed and Expanded Facilities (both as defined below). 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, 2022, revenues generated by our Same Store Facilities increased by 14.7% ($105.4 million) and 15.4% ($315.9 million), respectively, as compared to the same periods in 2021, while Same Store cost of operations increased by 7.7% ($13.5 million) and 6.2% ($32.7 million), respectively. Demand and operating trends remained strong, leading to increases in our self-storage rental rates while maintaining high levels of occupancy.

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 2020, we acquired a total of 338 facilities with 30.1 million net rentable square feet for $6.4 billion. In our non-same store portfolio, we also have developed and expanded self-storage facilities of 17.3 million net rentable square feet for a total cost of $1.5 billion. During the three and nine months ended September 30, 2022, net operating income generated by our Acquired Facilities and Newly Developed and Expanded Facilities increased 74.9% ($51.8 million) and 122.6% ($179.7 million), respectively, as compared to the same periods in 2021.

We have experienced recent inflationary impacts on our cost of operations, including labor, utilities and repairs and maintenance, and costs of development and expansion activities, and we may continue to experience such impacts in the future. We have implemented various initiatives to manage the adverse impacts, such as enhancements in operational processes and investments in technology to reduce payroll hours, achievement of economies of scale from recent acquisitions with supervisory payroll allocated over a broader number of self-storage facilities, and investments in solar power and LED lights to lower utility usage.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed facilities), we have embarked on our multi-year Property of Tomorrow program to (i) rebrand our properties with more pronounced, attractive, and clearly identifiable color schemes and signage, (ii) enhance the energy efficiency of our properties, and (iii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. We expect to complete the program by the end of 2025. We expect to spend approximately $220 million over 2022 on this effort.

On April 24, 2022, PSB entered into an Agreement and Plan of Merger whereby affiliates of Blackstone agreed to acquire all outstanding shares of PSB’s common stock for $187.50 per share in cash. On July 20, 2022, PSB announced that it completed the merger transaction with Blackstone. Each share of PSB common stock and each common unit of partnership interest we held in PSB were converted into the right to receive the merger consideration of $187.50 per share or unit, including a $5.25 closing cash dividend per share or unit, and a $0.22 prorated quarterly cash dividend per share or unit, for a total of $187.72 per share or unit. At the close of the merger transaction, we received a total of $2.7 billion of cash proceeds and recognized a gain of $2.1 billion, which was classified within gain on sale of our equity investment in PS Business Parks, Inc. in the Consolidated Statement of Income.

In connection with the sale of our equity investment in PSB, on August 4, 2022, we paid a special cash dividend of $13.15 per common share, totaling approximately $2.3 billion, to shareholders of record as of August 1, 2022.

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Results of Operations

Operating Results for the Three Months Ended September 30, 2022 and 2021

For the three months ended September 30, 2022, net income allocable to our common shareholders was $2,712.2 million or $15.38 per diluted common share, compared to $442.3 million or $2.52 per diluted common share in 2021, representing an increase of $2,269.9 million or $12.86 per diluted common share. The increase is due primarily to (i) a $2.1 billion gain on sale of our equity investment in PSB, (ii) a $148.4 million increase in self-storage net operating income, and (iii) a $59.3 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable, partially offset by (iv) a $32.2 million increase in depreciation and amortization expense, (v) a $24.7 million decrease in equity in earnings of unconsolidated real estate entities due to the sale of our equity investment in PSB, and (vi) a $10.4 million increase in interest expense.

The $148.4 million increase in self-storage net operating income in the three months ended September 30, 2022 as compared to the same period in 2021 is a result of a $91.9 million increase attributable to our Same Store Facilities and a $56.5 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased 14.7% or $105.4 million in the three months ended September 30, 2022 as compared to the same period in 2021, due primarily to higher realized annual rent per occupied square foot, partially offset by decline in occupancy. Cost of operations for the Same Store Facilities increased by 7.7% or $13.5 million in the three months ended September 30, 2022 as compared to the same period in 2021, due primarily to increased property tax expense, marketing expense, other direct property costs, and centralized management costs. The increase in net operating income of $56.5 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and the fill-up of recently developed and expanded facilities.
Operating Results for the Nine Months Ended September 30, 2022 and 2021

For the nine months ended September 30, 2022, net income allocable to our common shareholders was $3,779.7 million or $21.44 per diluted common share, compared to $1,174.4 million or $6.70 per diluted common share in 2021, representing an increase of $2,605.3 million or $14.74 per diluted common share. The increase is due primarily to (i) a $2.1 billion gain on sale of our equity investment in PSB, (ii) a $476.6 million increase in self-storage net operating income, and (iii) a $163.7 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable, partially offset by (iv) a $153.5 million increase in depreciation and amortization expense, and (v) a $39.2 million increase in interest expense.

The $476.6 million increase in self-storage net operating income in the nine months ended September 30, 2022 as compared to the same period in 2021 is a result of a $283.2 million increase attributable to our Same Store Facilities and a $193.4 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased 15.4% or $315.9 million in the nine months ended September 30, 2022 as compared to the same period in 2021, due primarily to higher realized annual rent per occupied square foot, partially offset by decline in occupancy. Cost of operations for the Same Store Facilities increased by 6.2% or $32.7 million in the nine months ended September 30, 2022 as compared to the same period in 2021, due primarily to increased property tax expense, on-site property manager payroll expense, other direct property costs, and centralized management costs. The increase in net operating income of $193.4 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and the fill-up of recently developed and expanded facilities.
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Funds from Operations and Core Funds from Operations

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 consolidated 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, 2022, FFO was $4.66 per diluted common share as compared to $3.61 per diluted common share for the same period in 2021, representing an increase of 29.1%, or $1.05 per diluted common share.
For the nine months ended September 30, 2022, FFO was $13.08 per diluted common share as compared to $9.69 per diluted common share for the same period in 2021, representing an increase of 35.0%, or $3.39 per diluted common share.
We also present “Core FFO” and “Core FFO per share” non-GAAP measures that represent FFO and 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 and casualties, unrealized gain on private equity investments and our equity share of merger transaction costs, severance of a senior executive, and casualties from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share are not substitutes for net income and net income per share. Because other REITs may not compute Core FFO or Core FFO per share in the same manner as we do, may not use the same terminology or may not present such measures, Core FFO and Core FFO per share may not be comparable among REITs.
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The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share and Core FFO per share:
  Three Months Ended September 30, Nine Months Ended September 30,
  2022 2021 Percentage Change 2022 2021 Percentage Change
(Amounts in thousands, except per share data)
Reconciliation of Net Income to FFO and Core FFO:
Net income allocable to common shareholders $ 2,712,161  $ 442,327  513.2  % $ 3,779,666  $ 1,174,386  221.8  %
Eliminate items excluded from FFO:
Depreciation and amortization 218,963  187,611  657,131  505,218 
Depreciation from unconsolidated real estate investments 10,599  19,209  44,985  54,485 
Depreciation allocated to noncontrolling interests and restricted share unitholders (1,843) (1,318) (4,841) (3,413)
Gains on sale of real estate investments, including our equity share from investments (1,219) (12,572) (54,403) (31,156)
Gain on sale of equity investment in PS Business Parks, Inc. $ (2,116,839) $ —  $ (2,116,839) $ — 
FFO allocable to common shares $ 821,822  $ 635,257  29.4  % $ 2,305,699  $ 1,699,520  35.7  %
Eliminate the impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange gain (100,170) (40,906) (237,270) (73,584)
Preferred share redemption charge —  —  —  16,989 
Property losses and tenant claims due to casualties (a) 6,118  4,909  6,118  4,909 
Other items (344) 2,000  422  (543)
Core FFO allocable to common shares $ 727,426  $ 601,260  21.0  % $ 2,074,969  $ 1,647,291  26.0  %
Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:
Diluted Earnings per share $ 15.38  $ 2.52  510.3  % $ 21.44  $ 6.70  220.0  %
Eliminate amounts per share excluded from FFO:
Depreciation and amortization 1.29  1.17  3.95  3.17 
Gains on sale of real estate investments, including our equity share from investments (0.01) (0.08) (0.31) (0.18)
Gain on sale of equity investment in PS Business Parks, Inc. (12.00) —  (12.00) — 
FFO per share $ 4.66  $ 3.61  29.1  % $ 13.08  $ 9.69  35.0  %
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange gain (0.57) (0.23) (1.35) (0.42)
Preferred share redemption charge —  —  —  0.10 
Property losses and tenant claims due to casualties (a) 0.04  0.03  0.04  0.03 
Other items —  0.01  —  (0.01)
Core FFO per share $ 4.13  $ 3.42  20.8  % $ 11.77  $ 9.39  25.3  %
Diluted weighted average common shares 176,328  175,806  176,325  175,398 
(a)Property losses and tenant claims due to casualties were related to Hurricane Ian for the three and nine months ended September 30, 2022, and Hurricane Ida for the same periods in 2021, and were included in general and administrative expenses and ancillary cost of operations on the Consolidated Statements of Income.
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Analysis of Net Income - Self-Storage Operations
Our self-storage operations are analyzed in four groups: (i) the 2,282 facilities that we have owned and operated on a stabilized basis since January 1, 2020 (the “Same Store Facilities”), (ii) 338 facilities we acquired since January 1, 2020 (the “Acquired Facilities”), (iii) 150 facilities that have been newly developed or expanded, or that will commence expansion by December 31, 2022 (the “Newly Developed and Expanded Facilities”), and (iv) 66 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 2020 (the “Other Non-same Store Facilities”). See Note 13 to our September 30, 2022 consolidated 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,
  2022 2021 Percentage Change 2022 2021 Percentage Change
  (Dollar amounts and square footage in thousands)
Revenues:
Same Store Facilities $ 822,527  $ 717,109  14.7  % $ 2,360,735  $ 2,044,851  15.4  %
Acquired Facilities 108,989  51,007  113.7  % 290,858  94,502  207.8  %
Newly Developed and Expanded Facilities 71,362  52,806  35.1  % 197,337  140,497  40.5  %
Other Non-Same Store Facilities 24,496  19,588  25.1  % 68,745  54,000  27.3  %
1,027,374  840,510  22.2  % 2,917,675  2,333,850  25.0  %
Cost of operations:
Same Store Facilities 189,957  176,444  7.7  % 558,217  525,516  6.2  %
Acquired Facilities 38,058  16,555  129.9  % 101,949  35,693  185.6  %
Newly Developed and Expanded Facilities 21,265  18,075  17.6  % 59,986  52,710  13.8  %
Other Non-Same Store Facilities 6,190  5,925  4.5  % 18,801  17,780  5.7  %
255,470  216,999  17.7  % 738,953  631,699  17.0  %
Net operating income (a):
Same Store Facilities 632,570  540,665  17.0  % 1,802,518  1,519,335  18.6  %
Acquired Facilities 70,931  34,452  105.9  % 188,909  58,809  221.2  %
Newly Developed and Expanded Facilities 50,097  34,731  44.2  % 137,351  87,787  56.5  %
Other Non-Same Store Facilities 18,306  13,663  34.0  % 49,944  36,220  37.9  %
Total net operating income 771,904  623,511  23.8  % 2,178,722  1,702,151  28.0  %
Depreciation and amortization expense:
Same Store Facilities (119,154) (113,815) 4.7  % (349,185) (335,958) 3.9  %
Acquired Facilities (74,564) (52,090) 43.1  % (235,284) (102,154) 130.3  %
Newly Developed and Expanded Facilities (15,326) (13,668) 12.1  % (44,730) (42,179) 6.0  %
Other Non-Same Store Facilities (11,728) (8,979) 30.6  % (32,409) (27,848) 16.4  %
Total depreciation and amortization expense (220,772) (188,552) 17.1  % (661,608) (508,139) 30.2  %
Net income (loss):
Same Store Facilities 513,416  426,850  20.3  % 1,453,333  1,183,377  22.8  %
Acquired Facilities (3,633) (17,638) (79.4) % (46,375) (43,345) 7.0  %
Newly Developed and Expanded Facilities 34,771  21,063  65.1  % 92,621  45,608  103.1  %
Other Non-Same Store Facilities 6,578  4,684  40.4  % 17,535  8,372  109.4  %
Total net income $ 551,132  $ 434,959  26.7  % $ 1,517,114  $ 1,194,012  27.1  %
Number of facilities at period end:
Same Store Facilities 2,282  2,282 
Acquired Facilities 338  188  79.8  %
Newly Developed and Expanded Facilities 150  142  5.6  %
Other Non-Same Store Facilities 66  66 
2,836  2,678  5.9  %
Net rentable square footage at period end:
Same Store Facilities 149,476  149,476 
Acquired Facilities 30,072  15,370  95.7  %
Newly Developed and Expanded Facilities 17,320  16,239  6.7  %
Other Non-Same Store Facilities 5,310  5,292  0.3  %
202,178  186,377  8.5  %
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(a)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 13 to our September 30, 2022 consolidated 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, 2020. The composition of our Same Store Facilities allows us more effectively to evaluate the ongoing performance of our self-storage portfolio in 2020, 2021, and 2022 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 2,282 facilities (149.5 million net rentable square feet) that represent approximately 74% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at September 30, 2022. 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 the Same Store Facilities relative to our other self-storage facilities.

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