Extra Space Storage Inc.

10/30/2026 | Press release | Distributed by Public on 10/30/2026 14:32

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY LANGUAGE
The following discussion and analysis should be read in conjunction with our unaudited "Condensed Consolidated Financial Statements" and the "Notes to Condensed Consolidated Financial Statements (unaudited)" appearing elsewhere in this report and the "Consolidated Financial Statements," "Notes to Consolidated Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Form 10-K for the year ended December 31, 2025. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-Q entitled "Statement on Forward-Looking Information."
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements contained elsewhere in this report, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Our notes to the unaudited condensed consolidated financial statements contained elsewhere in this report and the audited financial statements contained in our Form 10-K for the year ended December 31, 2025 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the notes to the unaudited condensed consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.
OVERVIEW
We are a fully integrated, self-administered and self-managed real estate investment trust ("REIT") that owns, operates, manages, acquires, develops and redevelops self-storage properties ("stores") and provides lending to owners of stores located throughout the United States. We derive substantially all of our revenues from our two segments: self-storage operations and tenant reinsurance. Primary sources of revenue for our self-storage operations segment include rents received from tenants under leases at stores that are wholly-owned and in consolidated joint ventures. Our operating results depend materially on our ability to lease available self-storage units, to actively manage unit rental rates, and on the ability of our tenants to make required rental payments. Consequently, management spends a significant portion of its time maximizing cash flows from our diverse portfolio of stores. Revenue from our tenant reinsurance segment consists of insurance revenues from the reinsurance of risks relating to the loss of goods stored by tenants in our stores.
Our stores are generally situated in highly visible locations clustered around population centers. The clustering of our assets around these population centers enables us to reduce our operating costs through economies of scale. To maximize the performance of our stores, we employ industry-leading revenue management systems. Developed by our management team, these systems enable us to analyze, set and adjust rental rates daily across our portfolio in order to respond to changing market conditions. We believe our systems and processes allow us to more proactively manage revenues.
We operate in competitive markets, often where consumers have multiple stores from which to choose. Competition has impacted, and will continue to impact, our store results. We experience seasonal fluctuations in occupancy levels, with occupancy levels generally higher in the summer months due to increased moving activity. We believe that we are able to respond quickly and effectively to changes in local, regional and national economic conditions by adjusting rental rates through the combination of our revenue management team and our industry-leading technology systems.
PROPERTIES
As of September 30, 2026, we owned or had ownership interests in 2,448 operating stores. Of these stores, 2,028 are wholly-owned, 12 are in consolidated joint ventures, and 408 are in unconsolidated joint ventures. In addition, we managed 1,963 stores for third parties, bringing the total number of stores which we own and/or manage to 4,411. These stores are located in 43 states and Washington, D.C. The clustering of assets around population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.
As of September 30, 2026, approximately 2,567,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For same-store properties as of September 30, 2026, the average length of stay for tenants who had vacated was approximately 16.8 months.
Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider "hybrid" facilities, a mix of both drive-up buildings and multi-floor buildings.
The following table presents additional information regarding our net rentable square feet and the number of stores by state:
As of September 30, 2026
REIT Owned Joint Venture Owned Managed Total
Location
Property Count (1)
Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet Property Count Net Rentable Square Feet
Alabama 36 2,868,198 2 150,985 22 1,562,329 60 4,581,512
Arizona 52 4,081,024 26 2,108,245 75 6,034,840 153 12,224,109
Arkansas - - - - 5 558,772 5 558,772
California 227 18,767,424 42 3,204,268 164 15,304,760 433 37,276,452
Colorado 27 1,804,579 13 937,242 42 3,221,872 82 5,963,693
Connecticut 23 1,757,103 8 713,417 25 1,780,097 56 4,250,617
Delaware - - 1 76,423 7 529,575 8 605,998
Florida 258 20,061,202 41 3,259,899 269 21,256,495 568 44,577,596
Georgia 122 9,343,399 16 1,334,610 79 6,144,984 217 16,822,993
Hawaii 16 1,053,476 - - 4 275,805 20 1,329,281
Idaho 2 131,774 - - 6 756,237 8 888,011
Illinois 109 7,943,479 9 716,612 57 4,416,475 175 13,076,566
Indiana 94 4,211,391 1 57,617 33 2,570,384 128 6,839,392
Iowa - - - - 2 67,801 2 67,801
Kansas 1 50,304 2 108,646 3 237,718 6 396,668
Kentucky 14 1,044,292 1 51,205 17 1,278,992 32 2,374,489
Louisiana 10 772,823 1 88,770 18 1,358,226 29 2,219,819
Maine 5 352,657 - - 4 225,597 9 578,254
Maryland 45 3,600,991 8 628,332 63 4,918,498 116 9,147,821
Massachusetts 66 4,199,796 16 987,541 45 2,930,972 127 8,118,309
Michigan 12 926,673 4 308,857 18 1,465,830 34 2,701,360
Minnesota 7 587,219 8 645,484 9 727,801 24 1,960,504
Mississippi 7 565,357 - - 5 454,930 12 1,020,287
Missouri 29 2,387,705 7 507,878 31 2,374,741 67 5,270,324
Nebraska - - - - 9 733,159 9 733,159
Nevada 43 3,664,046 10 953,571 26 2,185,653 79 6,803,270
New Hampshire 18 1,319,574 - - 14 609,266 32 1,928,840
New Jersey 92 7,455,218 29 2,338,216 89 7,120,426 210 16,913,860
New Mexico 12 743,196 10 681,150 17 1,235,713 39 2,660,059
New York 83 6,049,771 23 1,970,007 93 6,523,248 199 14,543,026
North Carolina 56 4,132,237 5 396,706 73 5,695,411 134 10,224,354
Ohio 50 3,472,312 5 329,043 26 2,276,223 81 6,077,578
Oklahoma 4 270,353 - - 44 3,138,618 48 3,408,971
Oregon 8 549,669 3 243,560 5 365,546 16 1,158,775
Pennsylvania 33 2,561,277 10 817,293 70 5,345,005 113 8,723,575
Rhode Island 6 351,022 1 95,844 8 780,981 15 1,227,847
South Carolina 47 3,441,226 1 94,802 50 4,355,418 98 7,891,446
Tennessee 33 2,654,505 16 1,089,700 38 2,642,666 87 6,386,871
Texas 277 22,170,861 66 5,096,377 258 21,021,489 601 48,288,727
Utah 23 1,591,034 3 194,333 51 4,049,001 77 5,834,368
Virginia 74 6,085,628 9 700,530 43 3,201,860 126 9,988,018
Washington 16 1,285,179 1 77,535 21 1,664,970 38 3,027,684
Washington, D.C. 1 100,273 1 104,160 7 605,996 9 810,429
Wisconsin 2 187,015 9 860,919 18 1,651,482 29 2,699,416
Totals 2,040 154,595,262 408 31,929,777 1,963 155,655,862 4,411 342,180,901
(1) Includes 12 stores in consolidated joint ventures.
RESULTS OF OPERATIONS
Amounts in thousands, except store and share data
Comparison of the three and nine months ended September 30, 2026 and 2025
Overview
Results for the three and nine months ended September 30, 2026 included the operations of 2,448 stores (2,028 wholly-owned, 12 in consolidated joint ventures, and 408 in joint ventures accounted for using the equity method) compared to the results for the three and nine months ended September 30, 2025, which included the operations of 2,427 stores (2,005 wholly-owned, 11 in consolidated joint ventures, and 411 in joint ventures accounted for using the equity method). Material or unusual changes in the results of our operations are discussed below:
Revenues
The following table presents information on revenues earned for the periods indicated:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Revenues:
Property rental $ 760,837 $ 735,581 $ 25,256 3.4 % $ 2,240,214 $ 2,160,965 $ 79,249 3.7 %
Tenant reinsurance 94,197 90,341 3,856 4.3 % 276,400 263,625 12,775 4.8 %
Management fees and other income 34,758 32,538 2,220 6.8 % 103,357 95,485 7,872 8.2 %
Total revenues $ 889,792 $ 858,460 $ 31,332 3.6 % $ 2,619,971 $ 2,520,075 $ 99,896 4.0 %
Property rental-The increase in property rental revenue for the three and nine months ended September 30, 2026 compared to the same periods in the prior year was primarily the result of growth in our portfolio related to acquisitions completed in 2025 and acquisitions completed in the first nine months of 2026. We acquired 22 wholly-owned stores during the nine months ended September 30, 2026 and acquired 76 wholly-owned stores during the year ended December 31, 2025. These increases in revenue resulting from acquisitions were partially offset by property dispositions during the same periods. Additionally, property rental revenue increased for the three and nine months ended September 30, 2026 compared to the same periods in the prior year due to improved operating results from increases in average annual rent per occupied square foot over the comparative periods.
Tenant reinsurance-The increase in tenant reinsurance revenue for the three and nine months ended September 30, 2026 compared to the same periods in the prior year was due primarily to an increase in the number of stores operated. We operated 4,411 stores at September 30, 2026 compared to 4,238 stores at September 30, 2025.
Management fees and other income-Management fees and other income primarily represent the fees collected for our management of stores owned by third parties and unconsolidated joint ventures and other transaction fee income. The increase for the three and nine months ended September 30, 2026 compared to the same periods in the prior year was primarily due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same periods last year. As of September 30, 2026, we managed 1,963 stores for third party owners, compared to 1,811 stores as of September 30, 2025.
Expenses
The following table presents information on expenses for the periods indicated:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Expenses:
Property operations $ 238,837 $ 235,486 $ 3,351 1.4 % $ 708,858 $ 686,689 $ 22,169 3.2 %
Tenant reinsurance 17,927 17,781 146 0.8 % 53,119 51,842 1,277 2.5 %
General and administrative 45,740 43,479 2,261 5.2 % 139,564 134,405 5,159 3.8 %
Depreciation and amortization 189,598 177,466 12,132 6.8 % 561,003 535,088 25,915 4.8 %
Total expenses $ 492,102 $ 474,212 $ 17,890 3.8 % $ 1,462,544 $ 1,408,024 $ 54,520 3.9 %
Property operations-The increase in property operations expense during the three and nine months ended September 30, 2026 compared to the same periods in the prior year was due to growth in our portfolio related to acquisitions completed in 2025 and in the first nine months of 2026. The increase in expense resulting from acquisitions was partially offset by expense control across our portfolio in most expense categories over the same periods with the exception of property taxes.
Tenant reinsurance-Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance and is subject to volatility due to increased claims arising when significant events occur at stores.
General and administrative-General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, office expense, office rent, travel and professional fees. These expenses are recognized as incurred.
Depreciation and amortization-We amortize to expense intangible assets-customer intangibles on a straight-line basis over the average period that a tenant is expected to utilize the facility (currently estimated at 18 months). Depreciation and amortization expense increased for the three and nine months ended September 30, 2026 compared to the same periods in the prior year primarily as a result of the acquisition of new stores. We acquired 22 wholly-owned stores and disposed of two wholly-owned stores during the nine months ended September 30, 2026. We acquired 76 wholly-owned stores and disposed of 37 wholly-owned stores during the year ended December 31, 2025.
Other Revenues and Expenses
The following table presents information on other revenues and expenses for the periods indicated:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
Loss on real estate assets held for sale and sold, net $ (5,821) $ (105,128) $ 99,307 (94.5) % $ (5,821) $ (70,231) $ 64,410 (91.7) %
Interest expense (151,170) (149,650) (1,520) 1.0 % (445,189) (438,177) (7,012) 1.6 %
Non-cash interest expense related to amortization of discount on unsecured senior notes, net (9,711) (12,086) 2,375 (19.7) % (35,001) (35,169) 168 (0.5) %
Interest income 37,400 43,588 (6,188) (14.2) % 115,720 124,553 (8,833) (7.1) %
Equity in earnings and dividend income from unconsolidated real estate entities 17,010 15,669 1,341 8.6 % 48,572 51,884 (3,312) (6.4) %
Equity in earnings of unconsolidated real estate ventures - impairment (loss) on joint venture interests and gain on sale of joint venture interests (13,883) 9,354 (23,237) (248.4) % (13,036) 9,354 (22,390) (239.4) %
Income tax expense (12,070) (11,962) (108) 0.9 % (34,928) (32,591) (2,337) 7.2 %
Total other revenues & expenses, net $ (138,245) $ (210,215) $ 71,970 (34.2) % $ (369,683) $ (390,377) $ 20,694 (5.3) %
Loss on real estate assets held for sale and sold, net-During the three and nine months ended September 30, 2026 we recognized a loss on one store classified as held for sale as its estimated fair value, net of selling costs, was less than its carrying value and sold one store that was previously held for sale, resulting in a net loss of $5,821. As of September 30, 2025, we had 29 properties classified as held for sale. Of the 29 stores, 27 had an estimated fair value, net of selling costs, less than the carrying value of the assets, resulting in net losses of $105,128 and $70,231 for the three and nine months ended September 30, 2025, respectively. Additionally, we completed the sale of 12 previously held for sale stores, resulting in a net gain, which partially offset the loss recorded for the nine months ended September 30, 2025.
Interest expense-Represents the cost of our financing activities and primarily consists of interest incurred on borrowings under our commercial paper program, revolving lines of credit, senior notes and secured and unsecured term loans. Interest expense also includes commitment fees, letter of credit fees, and the amortization of financing costs associated with these arrangements.
Non-cash interest expense related to amortization of discount on unsecured senior notes, net-Represents the amortization of the discount assigned to the fair value of the Life Storage, Inc. ("Life Storage") unsecured senior notes assumed as part of our merger with Life Storage and net premium from bond offerings, offset by the discount from assumed debt.
Interest income-Interest income represents interest and any fees earned on bridge loans, debt securities and on a note receivable from a common Operating Partnership unit holder. The decrease in interest income during the three and nine months ended September 30, 2026 compared to the same periods in the prior year was primarily the result of a decrease in the amount of bridge loans outstanding. The balance of bridge loans outstanding was $1,401,151 as of September 30, 2026, compared to $1,544,719 as of September 30, 2025.
Equity in earnings and dividend income from unconsolidated real estate entities-Equity in earnings of unconsolidated real estate entities represents the income earned through our ownership interests in unconsolidated joint ventures. In these joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital. To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits. The increase for the three months ended September 30, 2026 compared to the same period in the prior year was primarily due to improved operating results of stores in unconsolidated joint ventures in which we have ownership interests. The decrease for the nine months ended September 30, 2026 compared to the same period in the prior year was primarily due to the transfer and distribution of membership interests in the PR II EXR JV LLC joint venture in March 2025 and the acquisition
of our partners' membership interests in the ESS-NYFL JV LP and ESS CA-TIVS JV LP joint ventures in April 2025. Also contributing to the decrease is the sale of our membership interests in both the Life Storage Spacemax LLC and the Extra Space Northern Properties VI LLC joint ventures, which occurred in July and October 2025, respectively. The number of stores in unconsolidated joint ventures in which we have ownership interests was 408 as of September 30, 2026, compared to 411 as of September 30, 2025. Dividend income represents dividends from our investments in preferred stock of Strategic Storage Trust VI, Inc. and Strategic Storage Growth Trust III, Inc.
Equity in earnings of unconsolidated real estate ventures - impairment (loss) on joint venture interests and gain on sale of joint venture interests- During the three months ended September 30, 2026, we fully impaired our investments in two joint ventures resulting in a loss of $13,883. During the three and nine months ended September 30, 2025, we recognized a net gain of $9,354 due to the sale of our membership interest in the Life Storage Spacemax LLC joint venture, which held six properties, in July 2025.
Income tax expense-The increase in income tax expense for the nine months ended September 30, 2026 compared to the same period in the prior year was primarily the result of an increase in book income and a decrease in permanent tax deductions related to stock awards.
FUNDS FROM OPERATIONS
Funds from operations ("FFO") provides relevant and meaningful information about our operating performance that is necessary, along with net income and cash flows, for an understanding of our operating results. We believe FFO is a meaningful disclosure as a supplement to net income. Net income assumes that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions, and we believe FFO more accurately reflects the value of our real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with GAAP, excluding gains or losses on sales of operating stores and impairment write-downs of depreciable real estate assets, plus real estate related depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in our condensed consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.
The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities, as a measure of our liquidity, or as an indicator of our ability to make cash distributions.
The following table presents the calculation of FFO for the periods indicated:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2026 2025 2026 2025
Net income attributable to common stockholders $ 247,759 $ 165,998 $ 752,207 $ 686,604
Adjustments:
Real estate depreciation 178,809 164,834 520,953 488,711
Amortization of intangibles 2,478 3,037 9,154 17,341
Loss on real estate assets held for sale and sold, net 5,821 105,128 5,821 70,231
Unconsolidated joint venture real estate depreciation and amortization 7,746 7,466 23,217 23,896
Impairment loss on unconsolidated joint venture interests and (gain) on sale of unconsolidated joint venture interests 13,883 (9,354) 13,036 (9,354)
Income allocated to Operating Partnership noncontrolling interests 11,686 8,035 35,537 35,070
Funds from operations attributable to common stockholders and unit holders $ 468,182 $ 445,144 $ 1,359,925 $ 1,312,499
SAME-STORE RESULTS
Our same-store pool for the periods presented consists of 1,869 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented. We consider a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80% or more for one calendar year. We believe that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including but not limited to occupancy, rental revenue growth, operating expense growth, net operating income growth, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of our stores as a whole. The following table presents operating data for our same-store portfolio.
For the Three Months Ended September 30, Percent For the Nine Months Ended September 30, Percent
2026 2025 Change 2026 2025 Change
Same-store rental revenues
Net rental income $ 675,218 $ 656,283 2.9 % $ 1,993,254 $ 1,946,595 2.4 %
Other operating income 26,463 26,717 (1.0) % 75,939 76,874 (1.2) %
Total same-store rental revenues 701,681 683,000 2.7 % 2,069,193 2,023,469 2.3 %
Same-store operating expenses
Payroll and benefits 40,689 42,632 (4.6) % 123,106 125,385 (1.8) %
Marketing 16,927 18,159 (6.8) % 48,089 49,969 (3.8) %
Office expense 18,599 17,737 4.9 % 55,301 53,624 3.1 %
Property operating expense 21,258 22,082 (3.7) % 62,819 63,645 (1.3) %
Repairs and maintenance 11,279 14,092 (20.0) % 39,272 42,933 (8.5) %
Property taxes 80,806 77,050 4.9 % 239,339 231,691 3.3 %
Insurance 7,449 8,921 (16.5) % 24,847 24,979 (0.5) %
Total same-store operating expenses 197,007 200,673 (1.8) % 592,773 592,226 0.1 %
Same-store net operating income $ 504,674 $ 482,327 4.6 % $ 1,476,420 $ 1,431,243 3.2 %
Same-store square foot occupancy as of period end 94.0% 93.7% 94.0% 93.7%
Average same-store square foot occupancy 94.3% 94.1% 93.7% 93.7%
Properties included in same-store 1,869 1,869 1,869 1,869
The following table presents additional information for our same-store portfolio:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
Same-store portfolio 2026 2025 2026 2025
Average annual rent per occupied square foot, net of discounts and bad debt $ 20.21 $ 19.72 $ 19.97 $ 19.53
New leases average annual rent per square foot $ 13.28 $ 13.55 $ 13.22 $ 13.24
Average discounts as a percentage of rental revenues 2.1 % 2.5 % 1.9 % 2.1 %
The following table presents a reconciliation of same-store net operating income to net income as presented on our condensed consolidated statements of operations for the periods indicated:
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2026 2025 2026 2025
Net Income $ 259,445 $ 174,033 $ 787,744 $ 721,674
Adjusted to exclude:
Loss on real estate assets held for sale and sold, net 5,821 105,128 5,821 70,231
Equity in earnings and dividend income from unconsolidated real estate entities (17,010) (15,669) (48,572) (51,884)
Impairment loss on unconsolidated joint venture interests and (gain) on sale of unconsolidated joint venture interests 13,883 (9,354) 13,036 (9,354)
Interest expense 151,170 149,650 445,189 438,177
Non-cash interest expense related to amortization of discount on unsecured senior notes, net 9,711 12,086 35,001 35,169
Depreciation and amortization 189,598 177,466 561,003 535,088
Income tax expense 12,070 11,962 34,928 32,591
General and administrative 45,740 43,479 139,564 134,405
Management fees, other income and interest income (72,158) (76,126) (219,077) (220,038)
Net tenant insurance (76,270) (72,560) (223,281) (211,783)
Non same-store rental revenue (59,156) (52,581) (171,021) (137,496)
Non same-store operating expense 41,830 34,813 116,085 94,463
Total same-store net operating income $ 504,674 $ 482,327 $ 1,476,420 $ 1,431,243
Same-store rental revenues $ 701,681 $ 683,000 $ 2,069,193 $ 2,023,469
Same-store operating expenses 197,007 200,673 592,773 592,226
Same-store net operating income $ 504,674 $ 482,327 $ 1,476,420 $ 1,431,243
CASH FLOWS
Cash flows from operating activities for the nine months ended September 30, 2026 increased when compared to the same period in the prior year. Cash flows used in investing activities relate primarily to our acquisition and development of new stores, sales of stores, investments in unconsolidated real estate entities, and notes receivable from bridge loans and fluctuate depending on our actions in those areas. Cash flows from financing activities depend primarily on our debt and equity financing activities. A summary of cash flows along with significant components are as follows:
For the Nine Months Ended September 30,
2026 2025
Net cash provided by operating activities $ 1,543,393 $ 1,482,396
Net cash used in investing activities (286,416) (697,662)
Net cash used in financing activities (1,280,483) (811,803)
Significant components of net cash flow included:
Net income $ 787,744 $ 721,674
Depreciation and amortization 561,003 535,088
Acquisition and development of real estate assets (375,974) (698,614)
Return of investment in unconsolidated real estate ventures 3,154 231,130
Issuance of notes receivable, net of sales and principal payments 91,070 (276,043)
Net proceeds from unsecured term loans, senior notes, revolving lines of credit, public bonds and commercial paper 139,468 305,741
Repurchase of common stock (328,622) (8,615)
Dividends paid on common stock (1,025,344) (1,031,930)
We believe that cash flows generated by operations, along with our existing cash and cash equivalents, the availability of funds under our existing lines of credit, and our access to capital markets will be sufficient to meet all of our reasonably anticipated cash needs during the next 12 months. These cash needs include operating expenses, monthly debt service payments, acquisitions, funding for the bridge loan program, recurring capital expenditures, building redevelopments and expansions, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification.
We expect to generate positive cash flow from operations in 2026, and we consider projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our tenants. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds under our existing lines of credit, curtail planned capital expenditures, or seek other additional sources of financing.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2026, we had $114,824 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2026 and 2025, we experienced no loss or lack of access to our cash and cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.
The following table presents information relating to our debt:
September 30, 2026
Total face value of debt $ 13,621,366
Total enterprise value ratio 32.1%
Total fixed-rate debt and other instruments to total debt
79.6% (1)
Weighted average interest rate of total debt 4.4%
(1) $10,840,461 total fixed-rate debt including $777,000 on which we have interest rate swaps that have been included as fixed-rate debt.
We expect to fund our short-term liquidity requirements, including operating expenses, recurring capital expenditures, dividends to stockholders, distributions to holders of Operating Partnership units and interest on our outstanding indebtedness,
out of our operating cash flow, cash on hand and borrowings under our revolving lines of credit and commercial paper. In addition, we are pursuing additional sources of financing based on anticipated funding needs and growth assumptions.
Our commercial paper program provides us the ability to issue, repay and re-issue short-term unsecured commercial paper notes. The aggregate principal amount outstanding under the program at any time cannot exceed $1,000,000, and the net proceeds of the commercial paper notes are expected to be used for general corporate purposes. The maturities of the notes generally range from overnight to three months, with a maximum of up to 397 days. The commercial paper notes are issued under customary terms in the commercial paper market and are issued at a discount from par or, alternatively, can be issued at par and bear varying interest rates on a fixed or floating basis. At any point in time, we expect to maintain available commitments under our credit facility in an amount at least equal to the amount of commercial paper notes outstanding. At September 30, 2026, we had $850,000 in issuances outstanding under the commercial paper program.
We hold a BBB+/Stable rating from S&P and a Baa2/Stable rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of September 30, 2026, we had a total of 1,796 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $30,709,273 and our total asset value was calculated as $36,503,421 according to the calculations as defined by our public bonds. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at September 30, 2026.
Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification. We evaluate, on an ongoing basis, the merits of strategic acquisitions and other relationships, which may require us to raise additional funds. We may also use Operating Partnership units as currency to fund acquisitions from self-storage owners. In addition, we may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
On April 15, 2024, we entered into an equity distribution agreement (the "Equity Distribution Agreement") with certain sales agents and forward purchasers named therein. Under the terms of the Equity Distribution Agreement, we may issue and sell, and the forward purchasers may sell, from time to time through or to the sales agents, shares of our common stock having an aggregate offering price of up to $800,000. The shares of common stock will be offered pursuant to our effective registration statement on Form S-3 (Registration Statement No. 333-278690) previously filed with and declared effective by the Securities and Exchange Commission (the "SEC") and a prospectus supplement and accompanying prospectus, filed with the SEC. As of September 30, 2026, no shares have been sold under the Equity Distribution Agreement, which we refer to as our "at the market" equity program.
OFF-BALANCE SHEET ARRANGEMENTS
Except as disclosed in the notes to our consolidated financial statements of our most recently filed Annual Report on Form 10-K, we do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our condensed consolidated financial statements, we have not guaranteed any obligations of unconsolidated entities, nor do we have any commitments or intent to provide funding to any such entities. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
SEASONALITY
The self-storage business is subject to seasonal fluctuations. A greater portion of revenues and profits is typically realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.
Extra Space Storage Inc. published this content on October 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 30, 2026 at 20:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]