Item 2. 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, 2023. 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, 2023 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. Preparation of our financial statements requires estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there are material differences between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

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

OVERVIEW

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

Our stores are generally situated in highly visible locations clustered around large population centers. 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 in real time across our portfolio in order to respond to changing market conditions. We believe our systems and processes allow us to more pro-actively manage revenues.

We operate in competitive markets, often where consumers have multiple stores from which to choose. Competition has impacted, and will continue to impact, our store results. We experience seasonal fluctuations in occupancy levels, with occupancy levels generally higher in the summer months due to increased moving activity. We believe that we are able to 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. We consider a store to be in the lease-up stage after it has been issued a certificate of occupancy, but before it has achieved stabilization. We consider a store to be stabilized once it has achieved either an 80% occupancy rate for a full year measured as of January 1 of the current year, or has been open for three years prior to January 1 of the current year.

PROPERTIES

As of June 30, 2024, we owned or had ownership interests in 2,389 operating stores. Of these stores, 1,912 are wholly-owned, five are in consolidated joint ventures, and 472 are in unconsolidated joint ventures. In addition, we managed an additional 1,423 stores for third parties bringing the total number of stores which we own and/or manage to 3,812. These stores are located in 42 states and Washington, D.C. The majority of our stores are clustered around large population centers. The clustering of assets around these population centers enables us to reduce our operating costs through economies of scale. Our acquisitions have given us an increased scale in many core markets as well as a foothold in many markets where we had no previous presence.

As of June 30, 2024, approximately 2,235,000 tenants were leasing storage units at the operating stores that we own and/or manage, primarily on a month-to-month basis, providing the flexibility to increase rental rates over time as market conditions permit. Existing tenants generally receive rate increases at least annually, for which no direct correlation has been drawn to our vacancy trends. Although leases are short-term in duration, the typical tenant tends to remain at our stores for an extended period of time. For stores that were stabilized as of June 30, 2024, the average length of stay for tenants who have vacated was approximately 17.5 months.

The average annual rent per square foot for our existing customers at stabilized stores, net of discounts and bad debt, was $20.38 for the three months ended June 30, 2024 and 2023. Average annual rent per square foot for new leases was $15.60 for the three months ended June 30, 2024, compared to $17.15 for the three months ended June 30, 2023. The average discounts, as a percentage of rental revenues, at all stabilized properties during these periods were 2.3% and 2.7%, respectively.

Our store portfolio is made up of different types of construction and building configurations. Most often sites are what we consider “hybrid” stores, a mix of drive-up and multi-floor buildings.

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

			June 30, 2024
			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			38			2,968,178			2			150,909			14			905,600			54			4,024,687
Arizona			47			3,557,234			26			2,090,168			43			3,597,543			116			9,244,945
California			217			17,812,279			50			3,715,629			130			12,151,077			397			33,678,985
Colorado			27			1,891,461			13			938,525			32			2,387,692			72			5,217,678
Connecticut			23			1,756,149			8			713,967			13			859,009			44			3,329,125
Delaware			—			—			2			143,640			4			307,281			6			450,921
Florida			247			18,536,270			56			4,655,500			182			14,226,330			485			37,418,100
Georgia			119			9,138,907			23			1,929,485			56			4,360,387			198			15,428,779
Hawaii			14			941,639			—			—			4			258,750			18			1,200,389
Idaho			2			131,689			—			—			3			290,407			5			422,096
Illinois			107			7,669,251			12			939,747			50			3,780,187			169			12,389,185
Indiana			92			4,042,285			1			57,760			27			1,983,907			120			6,083,952
Iowa			—			—			—			—			1			86,929			1			86,929
Kansas			1			50,314			2			108,921			4			314,519			7			473,754
Kentucky			15			1,093,249			1			51,796			13			1,036,033			29			2,181,078
Louisiana			10			771,728			—			—			17			1,253,493			27			2,025,221
Maine			5			352,887			—			—			12			753,996			17			1,106,883
Maryland			44			3,468,922			11			900,099			51			3,724,799			106			8,093,820
Massachusetts			65			4,138,857			16			984,579			40			2,550,353			121			7,673,789
Michigan			8			675,219			4			309,052			11			900,230			23			1,884,501
Minnesota			8			710,094			8			646,538			15			1,112,636			31			2,469,268
Mississippi			7			561,454			—			—			6			537,293			13			1,098,747
Missouri			29			2,353,476			7			508,324			21			1,692,237			57			4,554,037
Nebraska			—			—			—			—			4			372,210			4			372,210
Nevada			32			2,843,868			9			837,105			11			1,124,780			52			4,805,753
New Hampshire			17			1,277,778			2			84,693			20			870,485			39			2,232,956
New Jersey			89			7,082,660			33			2,617,729			64			4,982,843			186			14,683,232
New Mexico			12			762,097			10			681,410			15			1,084,074			37			2,527,581
New York			79			5,693,991			28			2,318,986			88			6,258,761			195			14,271,738
North Carolina			52			3,756,712			8			629,967			36			2,832,344			96			7,219,023
Ohio			50			3,432,140			5			327,017			21			1,584,362			76			5,343,519
Oklahoma			4			269,973			—			—			24			1,590,885			28			1,860,858
Oregon			8			550,120			2			166,658			6			431,467			16			1,148,245
Pennsylvania			31			2,369,148			12			941,646			53			3,939,738			96			7,250,532
Rhode Island			6			351,392			1			95,844			7			535,703			14			982,939
South Carolina			40			2,974,760			11			710,647			36			3,102,457			87			6,787,864
Tennessee			29			2,410,235			16			1,092,106			28			1,947,531			73			5,449,872
Texas			244			20,050,338			71			5,497,864			148			12,238,599			463			37,786,801
Utah			10			733,676			—			—			39			3,192,714			49			3,926,390
Virginia			73			5,941,618			10			759,216			35			2,458,088			118			9,158,922
Washington			14			1,089,844			2			199,465			16			1,285,895			32			2,575,204
Washington, DC			1			100,203			1			104,230			6			532,410			8			736,843
Wisconsin			1			97,638			9			882,949			17			1,430,914			27			2,411,501
Totals			1,917			144,409,733			472			36,792,171			1,423			110,866,948			3,812			292,068,852

(1) Includes five consolidated joint ventures and excludes approximately 18,000 units related to Bargold.

RESULTS OF OPERATIONS

Amounts in thousands, except store and share data

Comparison of the three and six months ended June 30, 2024 and 2023

Overview

Results for the three and six months ended June 30, 2024 included the operations of 2,389 stores (1,912 wholly-owned, five in consolidated joint ventures, and 472 in joint ventures accounted for using the equity method) compared to the results for the three and six months ended June 30, 2023, which included the operations of 1,457 stores (1,133 wholly-owned, one in a consolidated joint venture, and 323 in joint ventures accounted for using the equity method).

Revenues

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

			For the Three Months Ended June 30,																								For the Six Months Ended June 30,
			2024						2023						$ Change						% Change						2024						2023						$ Change						% Change
Revenues:
Property rental			$	697,100					$	440,747					$	256,353					58.2		%				$	1,385,144					$	874,709					$	510,435					58.4		%
Tenant reinsurance			83,705						48,433						35,272						72.8		%				165,052						96,137						68,915						71.7		%
Management fees and other income			29,858						22,206						7,652						34.5		%				60,006						43,590						16,416						37.7		%
Total revenues			$	810,663					$	511,386					$	299,277					58.5		%				$	1,610,202					$	1,014,436					$	595,766					58.7		%

**Property Rental—**The increase in property rental revenues for the three and six months ended June 30, 2024 was primarily the result of an increase of $501,213 associated with the merger of Life Storage (the “Life Storage Merger”), other acquisitions completed in 2023, and acquisitions completed in the first six months of 2024. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024.

**Tenant Reinsurance—**The increase in tenant reinsurance revenues was due primarily to an increase in the number of stores operated. We operated 3,812 stores at June 30, 2024 compared to 2,388 stores at June 30, 2023.

**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 six months ended June 30, 2024 was due to both an increase in the number of stores managed and an increase in the overall revenue of stores under management when compared to the same period last year. As of June 30, 2024, we managed 1,895 stores for joint ventures and third parties, compared to 1,254 stores as of June 30, 2023.

Expenses

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

			For the Three Months Ended June 30,																								For the Six Months Ended June 30,
			2024						2023						$ Change						% Change						2024						2023						$ Change						% Change
Expenses:
Property operations			$	196,902					$	114,637					$	82,265					71.8		%				$	401,420					$	231,803					$	169,617					73.2		%
Tenant reinsurance			19,631						9,482						10,149						107.0		%				38,136						18,571						19,565						105.4		%
General and administrative			39,901						34,842						5,059						14.5		%				83,623						69,605						14,018						20.1		%
Depreciation and amortization			194,809						79,086						115,723						146.3		%				391,775						157,576						234,199						148.6		%
Total expenses			$	451,243					$	238,047					$	213,196					89.6		%				$	914,954					$	477,555					$	437,399					91.6		%

**Property Operations—**The increase in property operations expense during the three and six months ended June 30, 2024 consists primarily of an increase of $152,504 related to the Life Storage Merger, other acquisitions completed in 2023, and acquisitions completed in the first six months of 2024. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024. Additionally, for the three and six months ended June 30,

2024 there was an increase of $17,340 at our stabilized stores primarily due to property and casualty insurance, payroll, marketing, and property tax, partially offset by utilities.

**Tenant Reinsurance—**Tenant reinsurance expense represents the costs that are incurred to provide tenant reinsurance. These increases are primarily related to an increase in stores. We operated 3,812 stores at June 30, 2024 compared to 2,388 stores at June 30, 2023.

**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. Our overall General and Administrative expense has increased primarily as a result of our increased size through acquisitions, business combinations and growth through our joint venture partners and managed portfolio.

**Depreciation and Amortization—**Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 761 wholly-owned stores in 2023 and an additional nine wholly-owned stores during the six months ended June 30, 2024. Additionally, the increase relates to the amortization of intangibles recorded as part of the Life Storage Merger.

Other Revenues and Expenses

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

			For the Three Months Ended June 30,																								For the Six Months Ended June 30,
			2024						2023						$ Change						% Change						2024						2023						$ Change						% Change
Loss on real estate assets held for sale			$	(54,659)					$	—					$	(54,659)					100.0		%				$	(54,659)					$	—					$	(54,659)					100.0		%
Interest expense			(137,133)						(86,372)						(50,761)						58.8		%				(270,020)						(166,471)						(103,549)						62.2		%
Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notes			(10,853)						—						(10,853)						100.0		%				(21,558)						—						(21,558)						100.0		%
Interest income			31,226						21,077						10,149						48.2		%				54,799						40,515						14,284						35.3		%
Equity in earnings and dividend income from unconsolidated real estate entities			17,255						13,254						4,001						30.2		%				32,262						23,559						8,703						36.9		%
Income tax expense			(9,844)						(5,986)						(3,858)						64.5		%				(16,586)						(10,294)						(6,292)						61.1		%
Total other revenues & expenses, net			$	(164,008)					$	(58,027)					$	(105,981)					182.6		%				$	(275,762)					$	(112,691)					$	(163,071)					144.7		%

Loss on real estate assets held for sale— During the three months ended June 30, 2024, the Company listed seven properties for sale. The properties have been recorded at current fair value less selling costs which resulted in an estimated loss of $54,659.

**Interest Expense—**The increase in interest expense during the three and six months ended June 30, 2024 was primarily the result of a higher debt balance and higher weighted average interest rate compared to the same period in the prior year. As of June 30, 2024, we had approximately $11.8 billion in total face value of debt, compared to approximately $7.5 billion at June 30, 2023. The increase in the face value of debt is due to the Life Storage Merger. The weighted average interest rate of the total of fixed- and variable-rate debt was 4.6% at June 30, 2024, compared to 4.5% at June 30, 2023.

**Non-cash Interest Expense Related to Amortization of Discount on Life Storage Unsecured Senior Notes—**Represents the amortization of the discount assigned to the fair value of the Life Storage unsecured senior notes assumed as part of the Life Storage Merger.

**Interest Income—**Interest income represents interest earned on variable interest rate bridge loans, debt securities and on notes receivable from Common and Preferred Operating Partnership unit holders. The increase in interest income during the three and six months ended June 30, 2024 was primarily the result of an increase in amount of bridge loans held combined with an increase in interest rates. The balance of bridge loans was $1,136,306 as of June 30, 2024, compared to $540,355 as of June 30, 2023.

**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. We added a total of 154 stores to new and existing joint ventures (145 stores from the Life Storage Merger) during 2023. These additional joint ventures have contributed to the increase. Dividend income represents dividends from our investment in preferred stock of SmartStop Self Storage REIT, Inc. and Strategic Storage Trust VI, Inc.

Income Tax Expense—The increase in income tax expense for the three and six months ended June 30, 2024 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 earnings. Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and we believe FFO more accurately reflects the value of our real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) as net income computed in accordance with GAAP, excluding gains or losses on sales of operating stores and impairment write downs of depreciable real estate assets, plus real estate related depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. We believe that to further understand our performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in our condensed consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.

The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of our performance, as an alternative to net cash flow from operating activities, as a measure of our liquidity, or as an indicator of our ability to make cash distributions.

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

			For the Three Months Ended June 30,												For the Six Months Ended June 30,
			2024						2023						2024						2023
Net income attributable to common stockholders			$	185,872					$	202,410					$	398,984					$	398,714
Adjustments:
Real estate depreciation			153,217						72,385						307,589						143,633
Amortization of intangibles			28,137						3,609						57,421						7,779
Loss on real estate assets held for sale			54,659						—						54,659						—
Unconsolidated joint venture real estate depreciation and amortization			8,009						4,722						15,849						9,661
Distributions paid on Series A Preferred Operating Partnership units			—						—						—						(159)
Income allocated to Operating Partnership noncontrolling interests			9,540						12,902						20,502						25,476
Funds from operations attributable to common stockholders and unit holders			$	439,434					$	296,028					$	855,004					$	585,104

SAME-STORE RESULTS

Our same-store pool for the periods presented consists of 1,078 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 June 30,												Percent						For the Six Months Ended June 30,												Percent
			2024						2023						Change						2024						2023						Change
Same-store rental revenues
Net rental income			$	403,087					$	400,279					0.7		%				$	801,879					$	795,538					0.8		%
Other operating income			16,162						16,425						(1.6)		%				32,027						31,745						0.9		%
Total same-store rental revenues			419,249						416,704						0.6		%				833,906						827,283						0.8		%
Same-store operating expenses
Payroll and benefits			23,959						22,464						6.7		%				48,465						44,990						7.7		%
Marketing			9,164						7,639						20.0		%				18,017						14,812						21.6		%
Office expense			12,937						12,925						0.1		%				26,352						25,981						1.4		%
Property operating expense			8,275						8,892						(6.9)		%				18,562						19,904						(6.7)		%
Repairs and maintenance			6,926						6,409						8.1		%				14,396						13,494						6.7		%
Property taxes			39,600						37,284						6.2		%				77,657						74,700						4.0		%
Insurance			5,066						4,315						17.4		%				10,328						8,236						25.4		%
Total same-store operating expenses			105,927						99,928						6.0		%				213,777						202,117						5.8		%
Same-store net operating income			$	313,322					$	316,776					(1.1)		%				$	620,129					$	625,166					(0.8)		%
Same-store square foot occupancy as of year end			94.3%						94.0%												94.3%						94.0%
Average same-store square foot occupancy			94.1%						93.7%												93.6%						93.2%
Properties included in same-store			1,078						1,078												1,078						1,078

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 June 30,												For the Six Months Ended June 30,
			2024						2023						2024						2023
Net Income			$	195,412					$	215,312					$	419,486					$	424,190
Adjusted to exclude:
Loss on real estate assets held for sale			54,659						—						54,659						—
Equity in earnings and dividend income from unconsolidated real estate entities			(17,255)						(13,254)						(32,262)						(23,559)
Interest expense			137,133						86,372						270,020						166,471
Non-cash interest expense related to amortization of discount on Life Storage unsecured senior notes			10,853						—						21,558						—
Depreciation and amortization			194,809						79,086						391,775						157,576
Income tax expense			9,844						5,986						16,586						10,294
General and administrative			39,901						34,842						83,623						69,605
Management fees, other income and interest income			(61,084)						(43,283)						(114,805)						(84,105)
Net tenant insurance			(64,074)						(38,951)						(126,916)						(77,566)
Non same-store rental revenue			(277,851)						(24,043)						(551,238)						(47,426)
Non same-store operating expense			90,975						14,709						187,643						29,686
Total same-store net operating income			$	313,322					$	316,776					$	620,129					$	625,166
Same-store rental revenues			$	419,249					$	416,704					$	833,906					$	827,283
Same-store operating expenses			105,927						99,928						213,777						202,117
Same-store net operating income			$	313,322					$	316,776					$	620,129					$	625,166

CASH FLOWS

Cash flows from operating activities for the six months ended June 30, 2024 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 Six Months Ended June 30,
			2024						2023
Net cash provided by operating activities			$	1,010,800					$	629,527
Net cash used in investing activities			(764,767)						(357,586)
Net cash used in financing activities			(269,572)						(316,763)
Significant components of net cash flow included:
Net income			$	419,486					$	424,190
Depreciation and amortization			391,775						157,576
Loss on real estate assets held for sale			54,659						—
Accounts payable, accrued expenses and other liabilities			113,469						66,587
Acquisition and development of real estate assets			(226,713)						(164,660)
Investment in unconsolidated real estate entities			(10,789)						(171,126)
Issuance and purchase of notes receivable, net of principal payments			(521,813)						(77,637)
Proceeds from unsecured term loans and senior notes and revolving lines of credit			3,263,470						2,479,592
Principal payments on unsecured term loans and senior notes and revolving lines of credit			(3,407,382)						(3,246,378)
Proceeds from issuance of public bonds, net			600,000						950,000
Dividends paid on common stock			(687,636)						(438,783)

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 twelve months. These cash needs include operating expenses, monthly debt service payments, recurring capital expenditures, acquisitions, funding for the bridge loan program, 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 2024, 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 June 30, 2024, we had $76,973 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 2024 and 2023, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

As of June 30, 2024, we had $11,803,723 face value of debt, resulting in a debt to total enterprise value ratio of 25.5%. As of June 30, 2024, the ratio of total fixed-rate debt and other instruments to total debt was 75.0% ($8,857,343 total fixed-rate debt including $1,383,303 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of the total of fixed- and variable-rate debt at June 30, 2024 was 4.6%. Certain real estate assets are pledged as collateral for our debt. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants at June 30, 2024.

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. In addition, we are pursuing additional sources of financing based on anticipated funding needs and growth assumptions.

We hold a BBB+/Stable rating from S&P, which was upgraded from BBB/Stable in July 2023 in connection with the Life Storage Merger, and a Baa2 rating from Moody's Investors Service. We intend to manage our balance sheet to maintain these ratings. Certain of our real estate assets are pledged as collateral for our debt. As of June 30, 2024, we had a total of 1,680 unencumbered stores as defined by our public bonds. Our unencumbered asset value was calculated as $32,357,105 and our total asset value was calculated as $38,192,174 according to the calculations as defined by our public bonds.

Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, dividends to stockholders and distributions to unit holders necessary to maintain our REIT qualification. We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. In addition, we evaluate, on an ongoing basis, the merits of strategic acquisitions and other relationships, which may require us to raise additional funds. We may also use Operating Partnership units as currency to fund acquisitions from self-storage owners.

On April 15, 2024, we entered into 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 million. 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 June 30, 2024, 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 purposes entities, which typically are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, except as disclosed in the notes to our condensed consolidated financial statements, we have not guaranteed any obligations of unconsolidated entities, nor do we have any commitments or intent to provide funding to any such entities. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

SEASONALITY

The self-storage business is subject to seasonal fluctuations. A greater portion of revenues and profits are realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.