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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File Number: 001-32269

EXTRA SPACE STORAGE INC.
(Exact name of registrant as specified in its charter) 
Maryland 20-1076777
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

2795 East Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84121
(Address of principal executive offices)

Registrant’s telephone number, including area code: (801365-4600

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $0.01 par valueEXRNew York Stock Exchange

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  ☐

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

1


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

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

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of November 1, 2021, was 133,891,804.
2

Table of Contents
EXTRA SPACE STORAGE INC.

TABLE OF CONTENTS
 

3


STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information presented in this report contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.

All forward-looking statements, including without limitation, management’s examination of historical operating trends and estimates of future earnings, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks referenced in “Part II. Item 1A. Risk Factors” below and in “Part I. Item 1A. Risk Factors” included in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to:
 
adverse changes in general economic conditions, the real estate industry and the markets in which we operate;
failure to close pending acquisitions and developments on expected terms, or at all;
the effect of competition from new and existing stores or other storage alternatives, which could cause rents and occupancy rates to decline;
potential liability for uninsured losses and environmental contamination;
the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing real estate investment trusts (“REITs”), tenant reinsurance and other aspects of our business, which could adversely affect our results;
disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases, including reduced demand for self-storage space and ancillary products and services such as tenant reinsurance, and potential decreases in occupancy and rental rates and staffing levels, which could adversely affect our results;
increased interest rates;
reductions in asset valuations and related impairment charges;
our lack of sole decision-making authority with respect to our joint venture investments;
the effect of recent or future changes to U.S. tax laws;
the failure to maintain our REIT status for U.S. federal income tax purposes; and
economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities.

We disclaim any duty or obligation to update or revise any forward-looking statements set forth in this report to reflect new information, future events or otherwise.
4


PART I.     FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Extra Space Storage Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands, except share data)
 
September 30, 2021December 31, 2020
(unaudited)
Assets:
Real estate assets, net$8,272,671 $7,893,802 
Real estate assets - operating lease right-of-use assets229,184 252,172 
Investments in unconsolidated real estate entities373,765 397,444 
Investments in debt securities and notes receivable606,115 593,810 
Cash and cash equivalents65,565 109,124 
Restricted cash15,717 18,885 
Other assets, net145,342 130,611 
Total assets $9,708,359 $9,395,848 
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net$5,409,828 $4,797,303 
Revolving lines of credit174,000 949,000 
Operating lease liabilities234,118 263,485 
Cash distributions in unconsolidated real estate ventures63,196 47,126 
Accounts payable and accrued expenses164,674 130,012 
Other liabilities279,668 272,798 
Total liabilities 6,325,484 6,459,724 
Commitments and contingencies
Noncontrolling Interests and Equity:
Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding
  
Common stock, $0.01 par value, 500,000,000 shares authorized, 133,819,163 and 131,357,961 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
1,338 1,314 
Additional paid-in capital3,283,848 3,000,458 
Accumulated other comprehensive loss(64,155)(99,093)
Accumulated deficit(229,269)(354,900)
Total Extra Space Storage Inc. stockholders' equity2,991,762 2,547,779 
Noncontrolling interest represented by Preferred Operating Partnership units, net 170,248 172,052 
Noncontrolling interests in Operating Partnership, net and other noncontrolling interests220,865 216,293 
Total noncontrolling interests and equity3,382,875 2,936,124 
Total liabilities, noncontrolling interests and equity$9,708,359 $9,395,848 

See accompanying notes to unaudited condensed consolidated financial statements.
5


Extra Space Storage Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except share data)
(unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
Revenues:
Property rental$351,355 $290,423 $976,448 $856,438 
Tenant reinsurance44,258 39,294 126,211 107,985 
Management fees and other income16,879 13,307 47,320 38,299 
Total revenues412,492 343,024 1,149,979 1,002,722 
Expenses:
Property operations92,794 92,322 274,316 271,659 
Tenant reinsurance 7,509 7,189 21,405 20,725 
General and administrative24,395 23,894 74,276 72,242 
Depreciation and amortization61,516 56,412 179,685 167,705 
Total expenses186,214 179,817 549,682 532,331 
Gain on real estate transactions  63,883  
Income from operations226,278 163,207 664,180 470,391 
Interest expense(39,670)(42,213)(120,605)(127,610)
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes (1,233) (3,675)
Interest income11,729 3,145 36,871 6,488 
Income before equity in earnings and dividend income from unconsolidated real estate ventures and income tax expense198,337 122,906 580,446 345,594 
Equity in earnings and dividend income from unconsolidated real estate entities8,255 5,605 23,533 15,692 
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest  6,251  
Income tax expense(6,772)(4,657)(16,330)(10,013)
Net income199,820 123,854 593,900 351,273 
Net income allocated to Preferred Operating Partnership noncontrolling interests(3,529)(3,248)(10,647)(9,498)
Net income allocated to Operating Partnership and other noncontrolling interests(8,015)(5,973)(24,031)(16,052)
Net income attributable to common stockholders$188,276 $114,633 $559,222 $325,723 
Earnings per common share
Basic $1.41 $0.89 $4.19 $2.52 
Diluted $1.40 $0.88 $4.19 $2.50 
Weighted average number of shares
Basic133,809,750 128,862,341 133,197,903 129,044,954 
Diluted140,425,269 129,871,096 139,854,881 130,066,121 
Cash dividends paid per common share$1.25 $0.90 $3.25 $2.70 

See accompanying notes to unaudited condensed consolidated financial statements.
6

Extra Space Storage Inc.
Condensed Consolidated Statements of Comprehensive Income
(amounts in thousands)
(unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2021202020212020
Net income$199,820 $123,854 $593,900 $351,273 
Other comprehensive income (loss):
   Change in fair value of interest rate swaps8,055 11,181 36,685 (83,791)
Total comprehensive income207,875 135,035 630,585 267,482 
   Less: comprehensive income attributable to noncontrolling interests11,924 9,854 36,425 21,501 
Comprehensive income attributable to common stockholders$195,951 $125,181 $594,160 $245,981 


See accompanying notes to unaudited condensed consolidated financial statements.
7

Extra Space Storage Inc.
Condensed Consolidated Statement of Noncontrolling Interests and Equity
(amounts in thousands, except share data)
(unaudited)

 Noncontrolling InterestsExtra Space Storage Inc. Stockholders' Equity 
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Noncontrolling Interests and Equity
Balances at December 31, 2019$175,948 $205,419 $366 129,534,407 $1,295 $2,868,681 $(28,966)$(301,049)$2,921,694 
Issuance of common stock upon the exercise of options— — — 77,400 1 943 — — 944 
Issuance of common stock in connection with share based compensation— — — 73,602 1 2,979 — — 2,980 
Restricted stock grants cancelled— — — (1,767)— — — — — 
Buyback of common stock, net of offering costs— — — (653,597)(7)— — (52,197)(52,204)
Redemption of Operating Partnership units for stock— (330)— 8,862 — 330 — — — 
Net income (loss)3,112 4,877 (6)— — — — 108,179 116,162 
Other comprehensive loss(563)(3,807)— — — — (84,874)— (89,244)
Distributions to Operating Partnership units held by noncontrolling interests(3,178)(5,327)— — — — — — (8,505)
Dividends paid on common stock at $0.90 per share
— — — — — — — (117,197)(117,197)
Balances at March 31, 2020$175,319 $200,832 $360 129,038,907 $1,290 $2,872,933 $(113,840)$(362,264)$2,774,630 
Issuance of common stock upon the exercise of options— — — 13,610 — 726 — — 726 
Issuance of common stock in connection with share based compensation— — — 60,032 1 4,883 — — 4,884 
Restricted stock grants cancelled— — — (889)— — — — — 
Buyback of common stock, net of offering costs— — — (172,600)(1)— — (15,614)(15,615)
Redemption of Operating Partnership units for stock— (3,675)— 100,000 1 3,674 — — — 
Redemption of Preferred D Units in the Operating Partnership for Stock(2,724)— — 30,495 — 2,724 — — — 
Noncontrolling interest in consolidated joint venture— — 68 — — — — — 68 
Net income (loss)3,139 5,216 (9)— — — — 102,911 111,257 
Other comprehensive loss(41)(271)— — — — (5,416)— (5,728)
Distributions to Operating Partnership units held by noncontrolling interests(3,151)(5,235)— — — — — — (8,386)
Dividends paid on common stock at $0.90 per share
— — — — — — — (116,318)(116,318)
Balances at June 30, 2020$172,542 $196,867 $419 129,069,555 $1,291 $2,884,940 $(119,256)$(391,285)$2,745,518 
Issuance of common stock upon the exercise of options— — — 18,605 — 1,200 — — 1,200 
Issuance of common stock in connection with share based compensation— — — 8,289 — 3,452 — — 3,452 
Restricted stock grants cancelled— — — (949)— — — — — 
8

Extra Space Storage Inc.
Condensed Consolidated Statement of Noncontrolling Interests and Equity
(amounts in thousands, except share data)
(unaudited)

 Noncontrolling InterestsExtra Space Storage Inc. Stockholders' Equity 
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Noncontrolling Interests and Equity
Buyback of common stock, net of offering costs— — — (600)— — — (54)(54)
Repayment of receivable with Preferred operating units pledged as collateral on loan— 8,226 — — — — — — 8,226 
Redemption of Preferred B Units in the Operating Partnership for cash(1,000)— — — — — — — (1,000)
Net income (loss)3,248 5,986 (13)— — — — 114,633 123,854 
Other comprehensive income83 550 — — — — 10,548 — 11,181 
Distributions to Operating Partnership units held by noncontrolling interests(3,135)(5,235)— — — — — — (8,370)
Dividends paid on common stock at $0.90 per share
— — — — — — — (116,185)(116,185)
Balances at September 30, 2020$171,738 $206,394 $406 129,094,900 $1,291 $2,889,592 $(108,708)$(392,891)$2,767,822 




Noncontrolling InterestExtra Space Storage Inc. Stockholders' Equity
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Noncontrolling Interests and Equity
Balances at December 31, 2020$172,052 $215,892 $401 131,357,961 $1,314 $3,000,458 $(99,093)$(354,900)$2,936,124 
Issuance of common stock upon the exercise of options— — — 56,722 — 4,254 — — 4,254 
Issuance of common stock in connection with share based compensation— — — 89,793 — 3,652 — — 3,652 
Restricted stock grants cancelled— — — (2,499)— — — — — 
Issuance of common stock, net of offering costs— — — 2,185,685 22 273,698 — — 273,720 
Redemption of Operating Partnership units for stock— (193)— 5,000 — 193 — — — 
Noncontrolling interest in consolidated joint venture— — (50)— — — — — (50)
Net income (loss)3,680 8,828 (5)— — — — 202,998 215,501 
Other comprehensive income144 956 — — — — 21,913 — 23,013 
Distributions to Operating Partnership units held by noncontrolling interests(3,224)(5,801)— — — — — — (9,025)
Dividends paid on common stock at $1.00 per share
— — — — — — — (132,540)(132,540)
Balances at March 31, 2021$172,652 $219,682 $346 133,692,662 $1,336 $3,282,255 $(77,180)$(284,442)$3,314,649 
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Extra Space Storage Inc.
Condensed Consolidated Statement of Noncontrolling Interests and Equity
(amounts in thousands, except share data)
(unaudited)

Noncontrolling InterestExtra Space Storage Inc. Stockholders' Equity
Preferred Operating PartnershipOperating PartnershipOtherSharesPar ValueAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Noncontrolling Interests and Equity
Issuance of common stock in connection with share based compensation— — — 44,990 — 4,983 — — 4,983 
Restricted stock grants cancelled— — — (4,972)— — — — — 
Offering costs associated with previous stock issuance— — — — — (211)— — (211)
Redemption of Operating Partnership units for stock— (2,185)— 58,429 1 2,184 — — — 
Redemption of Operating Partnership units for cash— (113)— — — (359)— — (472)
Repayment of receivable with Operating Partnership units pledged as collateral— 411 — — — — — — 411 
Noncontrolling interest in consolidated joint venture— — 150 — — — — — 150 
Net income3,438 7,190 3 — — — — 167,948 178,579 
Other comprehensive income35 232 — — — — 5,350 — 5,617 
Distributions to Operating Partnership units held by noncontrolling interests(3,223)(5,751)— — — — — — (8,974)
Dividends paid on common stock at $1.00 per share
— — — — — — — (133,777)(133,777)
Balances at June 30, 2021$172,902 $219,466 $499 133,791,109 $1,337 $3,288,852 $(71,830)$(250,271)$3,360,955 
Issuance of common stock upon the exercise of options— — — 5,600 — 318 — — 318 
Issuance of common stock in connection with share based compensation— — — 10,913 — 4,012 — — 4,012 
Restricted stock grants cancelled— — — (4,582)— — — — — 
Offering costs associated with previous stock issuance— — — — — (151)— — (151)
Redemption of Operating Partnership units for stock— (34)— 858 — 34 — — — 
Redemption of Preferred B Units in the Operating Partnership for stock(2,834)— — 15,265 1 2,833 — — — 
Purchase of remaining equity interest in existing consolidated joint venture— — — — — (12,050)— — (12,050)
Noncontrolling interest in consolidated joint venture— — (225)— — — — — (225)
Net income3,529 8,015 — — — — 188,276 199,820 
Other comprehensive income50 330 — — — — 7,675 — 8,055 
Distributions to Operating Partnership units held by noncontrolling interests(3,399)(7,186)— — — — — — (10,585)
Dividends paid on common stock at $1.25 per share
— — — — — — — (167,274)(167,274)
Balances at September 30, 2021$170,248 $220,591 $274 133,819,163 $1,338 $3,283,848 $(64,155)$(229,269)$3,382,875 

See accompanying notes to unaudited condensed consolidated financial statements.
10


Extra Space Storage Inc.
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)

 For the Nine Months Ended September 30,
 20212020
Cash flows from operating activities:
Net income$593,900 $351,273 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization179,685 167,705 
Amortization of deferred financing costs6,656 7,356 
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes 3,675 
Non-cash lease expense1,396 799 
Compensation expense related to stock-based awards12,647 11,316 
Accrual of interest income added to principal of debt securities and notes receivable(25,871) 
Gain on real estate transactions(63,883) 
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest(6,251) 
Distributions from unconsolidated real estate ventures in excess of earnings4,640 5,097 
Changes in operating assets and liabilities:
Other assets(10,612)(17,977)
Accounts payable and accrued expenses33,907 41,780 
Other liabilities3,054 12,243 
Net cash provided by operating activities729,268 583,267 
Cash flows from investing activities:
Acquisition of real estate assets(589,382)(151,244)
Development and redevelopment of real estate assets(42,719)(46,112)
Proceeds from sale of real estate assets and investments in real estate ventures196,241 234 
Investment in unconsolidated real estate entities(20,834)(13,937)
Return of investment in unconsolidated real estate ventures31,534 371 
Issuance and purchase of notes receivable(