Public Storage (PSA) 10-K risk factor changes: FY2020 vs FY2019

See Note 13 to our December 31, [removed: 2019] [added: 2020] financial statements for a description of the risks of losses that are not covered by third-party insurance contracts.

Our property tax expense, which totaled approximately [removed: $280.5] [added: $297.8] million during the year ended December 31, [removed: 2019,] [added: 2020,] generally depends upon the assessed value of our real estate facilities as determined by assessors and government agencies, and accordingly could be subject to substantial increases if such agencies changed their valuation approaches or opinions or if new laws are enacted, especially if new approaches are adopted or laws are enacted that result in increased property tax assessments in states or geographies where we have a high concentration of facilities.

See also [removed: “*We] [added: “We] have exposure to increased property tax in [removed: California*”] [added: California”] below.

*Development of self-storage facilities can subject us to risks.* At December 31, [removed: 2019,] [added: 2020,] we [removed: have] [added: had] a pipeline of development projects totaling [removed: $619.2] [added: $561.4] million (subject to contingencies), and we expect to continue to seek additional development projects.

In periods when the capital and credit markets experience significant volatility, the amounts, sources, and cost of [added: capital available to us may be adversely affected.]

We own approximately 35% of the common shares of Shurgard, and this investment has a [removed: $339.9] [added: $341.1] million book value and a [removed: $1.2] [added: $1.4] billion market value (based upon the closing trading price of Shurgard’s common stock) at December 31, [removed: 2019.][added: 2020.]

We recognized [removed: $15.5] [added: $15.7] million in equity in earnings, and received [removed: $23.1] [added: $34.9] million in dividends, in [removed: 2019,] [added: 2020,] with respect to Shurgard.

*Impediments of Shurgard’s public ownership structure:* Shurgard’s strategic decisions, involving activities such as borrowing money, capital contributions, raising capital from third parties, as well as [removed: selling or acquiring significant assets, are determined by its board of directors.]

We own approximately 42% of the common equity of PSB, and this investment has a [removed: $427.9] [added: $432.0] million book value and a [removed: $2.4] [added: $1.9] billion market value (based upon the closing trading price of PSB’s common stock) at December 31, [removed: 2019.][added: 2020.]

We recognized [removed: $54.1] [added: $64.8] million in equity in earnings, and received $60.7 million in dividends, in [removed: 2019,] [added: 2020,] with respect to PSB.

These risks are set forth in PSB’s Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] under “Item 1A.

Wayne Hughes, our former Chairman and his family, which includes his daughter, Tamara Hughes [removed: Gustavson] [added: Gustavson, a current member of our Board of Trustees (our “Board”),] and his son, B.

Wayne Hughes, Jr., [removed: who are both members] [added: a former member] of [removed: our] [added: the] Board [removed: of Trustees] [added: who retired effective December 31, 2020,] (collectively, the “Hughes Family”), owned approximately [removed: 14.1%] [added: 13.0%] of our aggregate outstanding common shares.

Our declaration of trust permits the Hughes Family to own up to 35.66% of our outstanding common shares while it generally restricts the ownership by other persons and entities to 3% of our outstanding common shares unless our Board [removed: of Trustees] grants an ownership waiver, as has occurred in certain cases for large mutual fund companies.

Similarly, current provisions of our declaration of trust and powers of our Board could have the same effect, including (1) limitations on removal of trustees, (2) restrictions on the acquisition of our shares of beneficial interest, (3) the power to issue additional common shares, preferred shares or equity shares on terms approved by the Board without obtaining shareholder approval, (4) the advance notice provisions of our bylaws and (5) the Board’s ability under Maryland law, without obtaining shareholder approval, to implement takeover defenses that we may not yet have and to [removed: take, or refrain from taking, other actions that could have the effect of delaying, deterring or preventing a transaction or a change in control.]

[removed: If] [added: We would incur adverse tax consequences if] we failed to qualify as a REIT, [added: and] we would have to pay substantial [added: U.S. federal corporate] income taxes.

A qualifying REIT does not generally incur [added: U.S.] federal [added: corporate] income tax on its [removed: net] [added: “REIT taxable income” (generally, taxable] income [added: subject to specified adjustments, including a deduction for dividends paid and excluding net capital gain)] that [removed: is distributed] [added: it distributes] to its shareholders.

[removed: There can be no assurance that we qualify or will continue to qualify as a REIT, because of the highly technical nature of the REIT rules, the ongoing importance of factual determinations, the possibility of] unidentified issues in prior periods, or changes in our circumstances, as well as share ownership limits in our articles of incorporation that do not necessarily ensure that our shareholder base is sufficiently diverse for us to qualify as a REIT.

For any year we fail to qualify as a REIT, unless certain relief provisions apply (the granting of such relief could nonetheless result in significant excise or penalty taxes), we would not be allowed a deduction for dividends paid, we would be subject to [added: U.S. federal] corporate [added: income] tax on our taxable income, and generally we would not be allowed to elect REIT status until the fifth year after such a disqualification.

Approximately [removed: 59%] [added: 64%] of our new storage customers in [removed: 2019] [added: 2020] were sourced directly or indirectly through “unpaid” search and “paid” search campaigns on Google.

Changes made by the Tax Cuts and Jobs [removed: Act (the “TCJA”),] [added: Act,] signed into law on December 22, 2017, limit our ability to deduct compensation in excess of $1 million paid to certain senior executives.

Even if we qualify as a REIT for [added: U.S.] federal [added: corporate] income tax purposes, we may be subject to some federal, foreign, state and local taxes on our income and property.

Since January 1, 2001, certain consolidated corporate subsidiaries of the Company have elected to be treated as [removed: “taxable] [added: taxable] REIT [removed: subsidiaries”] [added: subsidiaries (“TRSs”)] for [added: U.S.] federal [added: corporate] income tax purposes, and are taxable as regular corporations and subject to certain limitations on intercompany transactions.

If tax authorities determine that amounts paid by our [removed: taxable REIT subsidiaries] [added: TRSs] to us are not reasonable compared to similar arrangements among unrelated parties, we could be subject to a 100% penalty tax on the excess payments, and ongoing intercompany arrangements could have to change, resulting in higher ongoing tax payments.

Approximately [removed: $580] [added: $583] million of our [removed: 2019] [added: 2020] net operating income is from our properties in California, and we incurred approximately [removed: $42] [added: $44] million in related property tax expense.

If the [removed: original or replacement initiative were to be adopted, it would end the] beneficial effect of Proposition 13 [added: were ended] for our properties, [removed: and] our property tax expense could increase substantially, adversely affecting our cash flow from operations and net income.

We have over [removed: 5,900] [added: 5,400] employees, more than [removed: 1.4] [added: 1.6] million customers, and we conduct business at facilities with [removed: 169] [added: 175] million net rentable square feet of storage space.

The [added: CPRA amends and expands the] California Consumer Privacy Act [removed: (the “CCPA”)] [added: (CCPA), which] went into effect on January 1, 2020.

It therefore remains unclear what, if any, modifications will be made to the [removed: CCPA] [added: CPRA] or how it will be interpreted.

While we believe we have developed processes to comply with [removed: CCPA] [added: current privacy] requirements, a regulatory agency may not agree with certain of our implementation decisions, which could subject us to litigation, regulatory actions or changes to our business practices that could increase costs or reduce revenues.

Other states have also considered or are considering privacy laws similar to [removed: the CCPA.][added: those passed in California.]

Similar laws may be implemented in other jurisdictions [removed: that] [added: in which] we do business [removed: in] and in ways that may be more restrictive than [removed: the CCPA,] [added: those in California,] increasing the cost of compliance, as well as the risk of noncompliance, on our business.

Risks Related to Our Business

Significant competition from self-storage operators, property developers, and other storage alternatives may adversely impact our ability to attract and retain customers and may negatively impact our ability to generate revenue.

There is also an increasing influx of capital from outside financing sources driving more money, development, and supply into the industry.

*Demand for self-storage facilities may be affected by customer perceptions and factors outside of our control.* Significantly lower logistics costs could introduce new competitors such as valet-style storage services and reduce the demand for traditional self-storage.

Customer preferences and/or needs for self-storage could change, decline, or shift to other product types thereby impacting our business model and ability to grow and/or generate revenues.

Shifts in population and demographics could cause the geographical distribution of our portfolio to be suboptimal and affect our ability to maintain occupancy and attract new customers.

Security incidents could result in the perception that our properties are not safe.

If our customers do not feel our properties are safe, they may select competitors for their self-storage needs, or if there is an industry perception of inadequate security customer use of self-storage could be negatively impacted.

Economic downturns or adverse economic or industry conditions could adversely impact our financial results, growth, and access to capital.

selling or acquiring significant assets, are determined by its board of directors.

We are subject to risks from the COVID Pandemic and we may in the future be subject to risks from other public health crises.

Since being reported in December 2019, the COVID Pandemic has spread globally, including to every state in the United States, adversely affecting public health and economic activity.

Our business is subject to risks from the COVID Pandemic, including, among others:

risk of illness or death of our employees or customers;

continuing negative impacts on the economic conditions in our markets which have reduced and we expect will continue to reduce the demand for self-storage;

risk that there could be an out-migration of population from certain high-cost major markets, if it is determined that the ability to “work from home,” which has become more prominent during the COVID Pandemic, could allow certain workers to live in less expensive localities, which could negatively impact the occupancies and revenues of our properties in such high-cost major markets;

continuing, new or reinstituted government restrictions that (i) limit or prevent use of our facilities, (ii) limit our ability to increase rent or otherwise limit the rent we can charge, (iii) limit our ability to collect rent or evict delinquent tenants, or (iv) limit our ability to complete development and redevelopment projects;

risk that even after the initial restrictions due to the COVID Pandemic ease, they could be reinstituted in case of future waves of infection or if additional pandemics occur;

risk that we could experience a change in the move-out patterns of our long-term customers due to economic uncertainty and increases in unemployment as a result of the COVID Pandemic.

This could lead to lower occupancies and rent “roll down” as long-term customers are replaced with new customers at lower rates; and

risk of negative impacts on the cost and availability of debt and equity capital as a result of the COVID Pandemic, which could have a material impact upon our capital and growth plans.

We believe that the degree to which the COVID Pandemic adversely impacts our business, operating results, cash flows and/or financial condition will be driven primarily by the duration, spread and severity of the pandemic itself, the speed and effectiveness of vaccine and treatment developments, as well as the duration of indirect economic impacts such as recession, dislocation in capital markets, and job loss, as well as potential longer term changes in

consumer behavior, all of which are uncertain and difficult to predict.

As a result, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Future pandemics or public health crises could have similar impacts.

We have been and may in the future be adversely impacted by emergency regulations adopted in response to significant events, such as natural disasters or public health crises, that could adversely impact our operations.

In response to significant events, local, state and federal governments have and may in the future adopt regulations that could impact our operations.

For example, in response to wildfires in 2018 and 2019, the State of California and some localities in California adopted temporary regulations that imposed certain limits on the rents we could charge at certain of our facilities and the extent to we could increase rents to existing tenants.

As noted above, in response to the COVID Pandemic, certain localities adopted restrictions on the use of certain of our facilities, limited our ability to increase rents, limited our ability to collect rent or evict delinquent tenants, and limited our ability to complete development and redevelopment projects.

Similar restrictions could be imposed in the future in response to significant events and these restrictions could adversely impact our operations.

Our marketing and pricing strategies may fail to be effective or may be constrained by factors outside of our control.

Marketing initiatives, including our increasing dependence on Google to source customers, may fail to be effective and could negatively impact financial performance.

In addition, the inability to utilize our pricing methodology due to regulatory or market constraints could also significantly impact our financial results.

Our failure to modernize and adopt advancements in information technology may hinder or prevent us from achieving strategic objectives.

Our inability to adapt and deliver new capabilities in time with strategic requirements may cause the organization to miss market competitive timing, first mover position, or to suffer material loss due to failed technology choices or implementation.

Ineffective succession planning for our CEO and executive management, as well as for our other key employees, may impact the execution of our strategic plan.

We may not effectively or appropriately identify ready-now succession candidates for CEO and executive management team which may negatively impact our ability to meet key strategic goals.

Failure to implement succession plan for other key employees may leave us vulnerable to retirements and turnover.

We may fail to adequately protect our trademarks.

Our trademark and trade dress could be deemed generic and indistinct and lose protection.

capital available to us may be adversely affected.

‎

At December 31, 2019, B.

‎

We are increasingly dependent upon Google to source our customers.

From time to time, proposals have been made to reduce the beneficial impact of Proposition 13, particularly with respect to commercial and industrial (non-residential) real estate, which would include self-storage facilities.

In late 2018, an initiative qualified for California’s November 2020 statewide ballot that would create a “split roll,” generally making Proposition 13’s protections only applicable to residential real estate.

The sponsors of the original initiative are attempting to qualify a revised proposal that has a similar impact in terms of property taxes, but may have a higher change of passage.

If the revised initiative is qualified, it will replace the first initiative on the November 2020 ballot.

We cannot predict whether (i) the revised initiative will qualify to replace the first qualified initiative, (ii) the initiative that ends up on the November 2020 ballot will pass or (iii) other changes to Proposition 13 may be proposed or adopted in the future.

We are subject to California’s new privacy law which will require us to incur compliance costs and may subject us to litigation that may affect our operating results and financial condition.

The CCPA requires, among other things, companies that collect personal information about California residents to make new disclosures to those residents about their data collection, use and sharing practices, allows residents to opt out of certain data sharing with third parties, and provides a new cause of action for data breaches.

However, regulations from the California Attorney General have not been finalized, and it is expected that additional amendments to the CCPA will be introduced in 2020.

The notes to our December 31, [removed: 2019] [added: 2020] financial statements, primarily Note 2, summarize our significant accounting policies.

Income Tax Expense: We have elected to be treated as a REIT, as defined in the [removed: Internal Revenue Code of 1986, as amended (the “Code”).][added: Code.]

Accordingly, we have recorded no [added: U.S.] federal [added: corporate] income tax expense related to our REIT taxable income.

In addition, certain of our consolidated corporate subsidiaries have elected to be treated as [removed: “taxable REIT subsidiaries”] [added: TRSs] for [added: U.S.] federal [added: corporate] income tax purposes, which are taxable as regular corporations and subject to certain limitations on intercompany transactions.

If tax authorities determine that amounts paid by our [removed: taxable REIT subsidiaries] [added: TRSs] to us are not reasonable compared to similar arrangements among unrelated parties, we could be subject to a 100% penalty tax on the excess payments.

We estimate the fair value of acquired land by considering the most directly comparable recently transacted land sales (“Land Comps”) and adjusting the [added: transacted values for differentials to the acquired land such as location quality, parcel size, and date of sale, in order to derive the estimated value of the underlying acquired land.]

[removed: This increase] [added: We attribute some of this softness to local economic conditions and,] in [removed: supply has been] [added: some markets] most [removed: notable in] [added: notably] Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Miami, [added: Minneapolis,] New [removed: York,] [added: York] and [removed: Portland.][added: Portland, increased supply of newly constructed self-storage facilities.]

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed “fifth generation” facilities), we have [removed: commenced] [added: embarked on] a [removed: comprehensive] [added: multi-year] program to rebrand our properties, in order to develop more pronounced, attractive, and clearly identifiable color schemes and signage, as well as to upgrade the configuration and layout of the offices and other customer zones to improve the customer experience.

In addition to managing our existing facilities for organic growth, we [added: have grown and] plan [removed: on growing] [added: to continue to grow] through the acquisition and development of new facilities and expanding our existing self-storage facilities.

[removed: Since] [added: In] the [removed: beginning of 2013 through] [added: three years ended] December 31, [removed: 2019,] [added: 2020,] we acquired a total of [removed: 340] [added: 131] facilities with [removed: 23.8] [added: 9.9] million net rentable square feet from third parties for approximately [removed: $3.1] [added: $1.4] billion, and we opened newly developed and expanded self-storage space for a total cost of [removed: $1.6 billion,] [added: $866.1 million,] adding approximately [removed: 15.1] [added: 7.9] million net rentable square feet.

Subsequent to December 31, [removed: 2019,] [added: 2020,] we acquired or were under contract to acquire [removed: (subject to customary closing conditions) 14] [added: 40] self-storage [removed: facilities,] [added: facilities across 18 states] with [removed: approximately 1.1] [added: 3.5] million net rentable square feet, for [removed: $245.3] [added: $580.1] million.

At December 31, [removed: 2019,] [added: 2020,] we had a [removed: development] pipeline to develop [removed: 12] [added: 15] new self-storage facilities and expand [removed: 35] [added: 23] existing self-storage facilities, which will add approximately [removed: 4.4] [added: 3.6] million net rentable square feet at a cost of [removed: $619.2] [added: $561.4] million.

[removed: may be limited due] [added: Our ability] to [added: do so continues to be challenged by] various constraints such as difficulty in finding [removed: available sites] [added: projects] that meet our risk-adjusted yield expectations, [removed: as well as] [added: and] challenges in obtaining building permits for self-storage [removed: activities] [added: facilities] in certain municipalities.

We believe the level of dilution incurred in 2019 [added: and 2020] will continue at similar levels in [removed: 2020.][added: 2021.]

As of December 31, [removed: 2019,] [added: 2020,] we expect capital resources over the next year of approximately [removed: $1.7] [added: $1.5] billion, which exceeds our currently identified capital needs of approximately [removed: $722.6 million.][added: $1.3 billion.]

Our expected capital resources include: (i) [removed: $409.7] [added: $257.6] million of cash as of December 31, [removed: 2019,] [added: 2020,] (ii) [removed: $484.1] [added: $475.7] million of available borrowing capacity on our revolving line of credit, (iii) [removed: $545.2] [added: $496.2] million in net proceeds from the public issuance of [removed: senior Euro-denominated notes] [added: Senior Note due 2026 on January 14, 2021,] and (iv) approximately [removed: $200] [added: $250] million to [removed: $250] [added: $300] million of expected retained operating cash flow in [removed: the next year.][added: 2021.]

Retained operating cash flow represents our expected cash flow provided by operating activities, less shareholder distributions and capital [removed: expenditures to maintain our real estate facilities.][added: expenditures.]

Our currently identified capital needs consist primarily of [removed: $245.3] [added: (i) $580.1] million in property acquisitions currently under [removed: contract and $477.3] [added: contract, (ii) $373.3] million of remaining spending on our current development pipeline, which will be incurred primarily in the next 18 [removed: months.][added: to 24 months and (iii) $300 million for the redemption of our Series B Preferred Shares.]

Additional potential capital needs could result from various activities including the redemption of outstanding preferred securities, repurchases of common stock, or mergers and acquisition [removed: activities such as a potential acquisition of National Storage REIT described in Note 15, “Subsequent Events” to our December 31, 2019 financial statements;] [added: activities;] however, there can be no assurance of any such activities transpiring in the near or longer term.

See [removed: *Liquidity] [added: “Liquidity] and Capital [removed: Resources*] [added: Resources”] for further information regarding our capital requirements and anticipated sources of capital to fund such requirements.

These impacts were offset partially by a [removed: $30.1] [added: $34.3] million increase in self-storage net operating income (described below) and a reduction in general and administrative expense attributable to $30.7 million in incremental share-based compensation expense in 2018 for the planned retirement of our former CEO and CFO.

The [removed: $30.1] [added: $34.3] million increase in self-storage net operating income is a result of a [removed: $2.6] [added: $9.9] million increase in our Same Store Facilities and [removed: $27.5] [added: $24.4] million increase in our non-Same Store Facilities.

[removed: Revenues] [added: | Selected Operating Data] for the Same Store [added: Facilities (2,221 facilities) | | | | | | | | | | | | | | | | |]

[added: Revenues for the Same Store] Facilities increased [removed: 1.4%] [added: 1.5%] or [removed: $33.3] [added: $36.7] million in 2019 as compared to 2018, due primarily to higher realized annual rent per occupied square foot.

Cost of operations for the Same Store Facilities increased by [removed: 5.0%] [added: 4.2%] or [removed: $30.6] [added: $26.9] million in 2019 as compared to 2018, due primarily to [removed: 47.2% ($15.3] [added: a 47.1% ($15.7] million) increase in marketing expenses and increased property taxes.

The increase in net operating income of [removed: $27.5] [added: $24.4] million for the non-Same Store Facilities is due primarily to the impact of facilities acquired in [removed: 2018 and] 2019 and [added: 2018 and] the fill-up of recently developed and expanded facilities.

Operating results for [removed: 2018] [added: 2020] and [removed: 2017][added: 2019]

In [removed: 2018,] [added: 2020,] net income allocable to our common shareholders was [removed: $1,488.9] [added: $1,098.3] million or [removed: $8.54] [added: $6.29] per diluted common share, compared to [removed: $1,171.6] [added: $1,272.8] million or [removed: $6.73] [added: $7.29] per diluted common share in [removed: 2017] [added: 2019] representing [removed: an increase] [added: a decrease] of [removed: $317.3] [added: $174.4] million or [removed: $1.81] [added: $1.00] per diluted common share.

The [removed: $47.1] [added: $8.0] million [removed: increase] [added: decrease] in self-storage net operating income is a result of a [removed: $14.8] [added: $41.7] million [removed: increase] [added: decrease] in our Same Store Facilities [removed: and $32.3] [added: (as defined below), offset partially by a $33.7] million increase in our non-Same Store [removed: Facilities.][added: Facilities (as defined below).]

The increase in net operating income of [removed: $32.3] [added: $33.7] million for the non-Same Store Facilities is due primarily to the impact of facilities acquired in [removed: 2018] [added: 2020] and [removed: 2017] [added: 2019] and the fill-up of recently developed and expanded facilities.

FFO represents [removed: GAAP] net income before depreciation and amortization, which is excluded because it is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions.

FFO is not a substitute for [removed: GAAP] net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financing [removed: activities presented on our statements of cash flows.]

For the year ended December 31, [removed: 2019,] [added: 2020,] FFO was [removed: $10.58] [added: $9.75] per diluted common share, as compared to [removed: $10.45] [added: $10.58] and [removed: $9.70] [added: $10.45] per diluted common share for the years ended December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively, representing [removed: an increase] [added: a decrease] in [removed: 2019] [added: 2020] of [removed: 1.2%,] [added: 7.8%,] or [removed: $0.13] [added: $0.83] per diluted common share, as compared to [removed: 2018.][added: 2019.]

| | [added: |] Year Ended December 31, | | | | | | | |

| | [removed: 2019] | [added: 2020] | | [removed: 2018] | [added: 2019] | | [removed: 2017] | [added: 2018] | [added: |]

| | [added: |] (Amounts in thousands, except per share data) | | | | | | | |

| Reconciliation of Diluted Earnings per Share to | | | | | | | | | [added: |]

| FFO per Share: | | | | | | | | | [added: |]

| Diluted Earnings per Share | [added: |] $ | [removed: 7.29] [added: 6.29] | | $ | [removed: 8.54] [added: 7.29] | | $ | [removed: 6.73] [added: 8.54] |

| Eliminate amounts per share excluded from FFO: | | | | | | | | | [added: |]

For each taxable year in which we qualify for taxation as a REIT, we will not be subject to U.S. federal corporate income tax on our “REIT taxable income” (generally, taxable income subject to specified adjustments, including a deduction for dividends paid and excluding our net capital gain) that is distributed to our shareholders.

During a significant portion of 2020, the COVID Pandemic has resulted in cessation, severe curtailment, or impairment of business activities in most sectors of the economy in virtually all markets we operate in, due to governmental “stay at home” orders, risk mitigation procedures, closure of businesses not considered to be “essential,” as well as other direct and indirect impacts, including a rapid and dramatic increase in unemployment in the U.S. While in certain markets, initial government restrictions were eased in response to reductions in the rate of new infections, there have been increases in the rate of infection in certain markets from time to time and re-imposition of certain restrictions.

These restrictions as well as public concerns about the COVID Pandemic continue to have an ongoing negative impact the economy, with unemployment continuing to be at high levels.

Our self-storage facilities have been classified as “essential” businesses under all applicable business closure orders and thus remained open to all customer activity.

We consider the safety of our employees and customers as our first priority, and have accordingly taken significant steps to ensure safety while keeping our services available to the public.

These steps include initiating our touchless eRental® leasing platform, touchless mobile app allowing customer access to our properties, enforcing social distancing requirements in our property offices and grounds, and providing protective equipment, including face coverings, gloves, and plastic barriers.

Our corporate offices as well as our call centers migrated to a “work from home” environment during the COVID Pandemic.

We expect our corporate employees to return to the corporate office assuming the risk of the COVID Pandemic continues to recede.

However, we expect that our call centers will remain in a “work from home”

environment due to certain favorable aspects of a distributed call center team.

We believe these changes have not resulted in any significant negative impacts to our operations or decision making.

It is possible that stricter government restrictions, including stay at home orders, could be instituted or reinstituted in response to increases in infections, the aggregate effect of the COVID Pandemic and seasonal influenza infections, or if additional pandemics occur.

We cannot estimate the extent of the COVID Pandemic’s future negative impacts.

The negative impacts of the COVID Pandemic are described more fully below, as well as throughout our MD&A which follows.

Our self-storage operations generate most of our net income.

Our earnings growth is most impacted by the level of organic growth in our Same Store Facilities’ revenues.

During the years ended December 31, 2020 and 2019, revenues generated by our Same Store Facilities decreased by 1.0% and increased by 1.5%, respectively, as compared to the previous year.

Revenue growth in each year was impacted by increased competition from newly developed facilities.

The decrease in revenue in the year ended December 31, 2020 included the negative impact caused by the COVID Pandemic including restrictions on rate increases to tenants imposed by local government due to “States of Emergency.” Our trends in revenue have improved in the last half of 2020, with revenues from our Same Store Facilities increasing 0.8% during the three months ended December 31, 2020 as compared to the three months ended December 31, 2019.

At December 31, 2020, as compared to December 31, 2019, occupancies for our Same Store Facilities was 2.7% higher, while the contract rent per occupied foot was essentially flat, suggesting continued revenue growth into early 2021.

See “Self-storage Operations – Same Store Operations” for further information with respect to our same-store operations, including potential downside risks to our expectations.

The timing and scope of the program will evolve as the work is executed and we evaluate its impact.

The cost of this program is included in “capital expenditures to maintain our real estate facilities” on our statements of cash flow, and the program is discussed more fully in “Liquidity and Capital Resources – Capital Expenditure Requirements” below.

The decrease is due primarily to (i) a $105.8 million decrease due to the impact of foreign currency exchange gains and losses associated with our Euro denominated debt, (ii) a $40.3 million increase in depreciation and amortization expense, (iii) a $21.1 million increase in general and administrative expense, (iv) a $15.6 million decrease due to the impact of allocations to preferred shareholders with respect to redemption of preferred shares, and (v) a $8.0 million decrease in self-storage net operating income.

Revenues for the Same Store Facilities decreased 1.0% or $23.7 million in 2020 as compared to 2019, due primarily to reduced late charges and administrative fees.

Cost of operations for the Same Store Facilities increased by 2.7% or $18.1 million in 2020 as compared to 2019, due primarily to a 22.5% ($11.0 million) increase in marketing expenses, a 3.1% ($7.4 million) increase in property tax expense, and a 2.5% ($3.1 million) increase in on-site property manager payroll expense.

activities presented on our statements of cash flows.

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| Same Store facilities | $ | 2,436,546 | | $ | 2,460,229 | | (1.0)% | | $ | 2,460,229 | | $ | 2,423,485 | | 1.5% |

| Acquired facilities | | 59,818 | | | 28,733 | | 108.2% | | | 28,733 | | | 5,167 | | 456.1% |

| Newly developed and expanded facilities | | 180,764 | | | 151,043 | | 19.7% | | | 151,043 | | | 122,602 | | 23.2% |

| Other non-same store facilities | | 44,502 | | | 44,547 | | (0.1)% | | | 44,547 | | | 46,353 | | (3.9)% |

| Same Store facilities | | 687,828 | | | 669,763 | | 2.7% | | | 669,763 | | | 642,870 | | 4.2% |

| Acquired facilities | | 27,627 | | | 12,456 | | 121.8% | | | 12,456 | | | 2,197 | | 467.0% |

As a REIT, we do not incur federal income tax on our REIT taxable income that is fully distributed each year (for this purpose, certain distributions paid in a subsequent year may be considered), and if we meet certain organizational and operational rules.

transacted values for differentials to the acquired land such as location quality, parcel size, and date of sale, in order to derive the estimated value of the underlying acquired land.

Our self-storage operations generate most of our net income, and we believe that our earnings growth is most impacted by the level of organic growth in our existing self-storage portfolio.

Most of our facilities compete with other well-managed and well-located competitors within the local trade area, which is generally a three to five mile radius.

In addition to local competition, we are subject to general economic conditions, particularly those that affect the spending habits of consumers and moving trends.

We believe that our centralized information networks, national telephone and online reservation system, the brand name “Public Storage,” and our economies of scale enable us to meet such challenges effectively.

In the last three years, there has been a marked increase in development of new self-storage facilities in many of the markets where we operate, due to the favorable economics of developing new properties.

These newly developed facilities compete with many of the facilities we own, negatively impacting our occupancies, rental rates, and rental growth.

The quality of the new supply may also allow these new facilities to compete more effectively with existing self-storage assets.

Much of this new supply, including our own, represents “fifth generation” facilities which often have a more fresh and vibrant appearance, more amenities such as climate control, more attractive office configurations, newer elements, and a more imposing and attractive retail presence as compared to the existing stock of self-storage facilities which were built over the last 50 years.

This program has initially been concentrated in properties located in a limited number of markets.

The extent to which we continue this program in additional markets, and the relative scope of work, will depend in part upon the results of the initial implementation of the program.

We will continue to seek to acquire properties; however, there is significant competition to acquire existing facilities and there can be no assurance as to the level of facilities we may acquire.

We expect to continue to seek additional development projects; however, the level of such activity

On October 15, 2018, Shurgard Self Storage SA (“Shurgard”) completed an initial global offering (the “Offering”) of its common shares, and its shares commenced trading on Euronext Brussels under the “SHUR” symbol.

In the Offering, Shurgard issued 25.0 million of its common shares to third parties at a price of €23 per share, for €575 million in gross proceeds.

The gross proceeds were used to repay short-term borrowings, invest in real estate assets, and for other corporate purposes.

Our equity interest, comprised of a direct and indirect pro-rata ownership interest in 31.3 million shares, decreased from 49% to approximately 35% as a result of the Offering.

See “Investment in Shurgard” below for more information.

We have no substantial principal payments on debt until 2022.

We expect our capital needs to increase over the next year as we add projects to our development pipeline and acquire additional properties.

The increase is due primarily to (i) $183.1 million in aggregate gains due to Shurgard’s initial public offering and the sale of our facility in West London to Shurgard, (ii) a $47.1 million increase in self-storage net operating income (described below), (iii) our $37.7 million equity share of gains recorded by PS Business Parks in 2018, (iv) a $68.2 million increase due to the impact of foreign currency exchange gains and losses associated with our euro denominated debt, (v) a $29.3 million allocation to preferred shareholders associated with preferred share redemptions in 2017 and (vi) a $7.8 million casualty loss and $5.2 million in incremental tenant reinsurance losses related to Hurricanes Harvey and Irma in 2017.

These impacts were offset partially by a $36.1 million increase in general and administrative expense due to the acceleration of share-based compensation expense accruals for our former CEO and CFO in 2018 as a result of their retirement on December 31, 2018 and the reversal of share-based compensation accruals forfeited by retiring senior executive officers in 2017.

Revenues for the Same Store Facilities increased 1.4% or $32.5 million in 2018 as compared to 2017, due primarily to higher realized annual rent per occupied square foot.

Cost of operations for the Same Store Facilities increased by 3.0% or $17.6 million in 2018 as compared to 2017, due primarily to increased property taxes.

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| Casualty losses and tenant claims | | | | | | | | | | | | | | | | | | | | |

| due to hurricanes | | | | | | | \- | | | \- | | | | | \- | | | 0.07 | | |

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| Same Store facilities | $ | 2,394,572 | | $ | 2,361,298 | | 1.4% | | $ | 2,361,298 | | $ | 2,328,833 | | 1.4% |

Our debt is our only market-risk sensitive portion of our capital structure, which totals approximately [removed: $1.9] [added: $2.5] billion and represents [removed: 21.0%] [added: 29.7%] of the book value of our equity at December 31, [removed: 2019.][added: 2020.]

We have foreign currency exposure at December 31, [removed: 2019] [added: 2020] related to (i) our investment in Shurgard, with a book value of [removed: $339.9 million] [added: $341.1 million,] and [added: a fair value of $1.4 billion based upon the closing price of Shurgard’s stock on December 31, 2020, and] (ii) [removed: €342.0] [added: €842.0] million [removed: ($383.6 million)] [added: ($1.0 billion)] of Euro-denominated unsecured notes payable.

The fair value of our fixed rate debt at December 31, [removed: 2019] [added: 2020] is approximately [removed: $2.0] [added: $2.8] billion.

The table below summarizes the annual maturities of our fixed rate debt, which had a weighted average effective rate of [removed: 2.9%] [added: 2.4%] at December 31, [removed: 2019.][added: 2020.]

See Note 6 to our December 31, [removed: 2019] [added: 2020] financial statements for further information regarding our fixed rate debt (amounts in thousands).

| | | [removed: 2020 | | | |] 2021 | | | [added: |] 2022 | | | 2023 | | | 2024 | | | [added: 2025 | | |] Thereafter | | | Total |

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| Fixed rate debt | | $ | 1,851 | | $ | 502,574 | | $ | 19,219 | | $ | 122,770 | | $ | 296,952 | | $ | 1,614,563 | | $ | 2,557,929 |

| Fixed rate debt | | $ | 2,015 | | $ | 1,871 | | $ | 502,584 | | $ | 19,219 | | $ | 112,280 | | $ | 1,272,895 | | $ | 1,910,864 |

Factors and risks that may impact future results and performance include, but are not limited to, those described in Part 1, Item 1A, "Risk Factors" and in our other filings with the Securities and Exchange Commission (the [removed: “SEC”) including:][added: “SEC”).]

[removed: (i)Self-storage Operations:] We acquire, develop, own and operate self-storage facilities, which offer storage spaces for lease on a month-to-month basis, for personal and business use.

[removed: We are the largest owner and operator of self-storage facilities in the U.S.] At December 31, [removed: 2019,] [added: 2020,] we [removed: have direct and indirect equity] [added: held] interests in [removed: 2,483] [added: and consolidated 2,548] self-storage facilities [removed: that we consolidate] (an aggregate of [removed: 169] [added: 175] million net rentable square feet of space) [removed: located in 38 states within the U.S.] operating under the “Public Storage” brand name.

[removed: (ii)Ancillary Operations: We reinsure policies against losses to goods stored by customers in our self-storage facilities and] [added: In addition, we] sell merchandise, primarily locks and cardboard [removed: boxes,] [added: boxes] at our self-storage facilities.

[removed: (iii)Investment in PS Business Parks: We have a 42% equity interest in PS Business Parks, Inc. (“PSB”),] [added: PSB is] a publicly held REIT that owns, operates, acquires and develops commercial properties, primarily multi-tenant flex, office, and industrial parks.

At December 31, [removed: 2019,] [added: 2020,] PSB [removed: owns] [added: owned] and [removed: operates 27.6] [added: operated 27.7] million rentable square feet of commercial space.

[removed: (iv)Investment in Shurgard: We have a 35% equity interest in] Shurgard [removed: Self Storage SA (“Shurgard”),] [added: is] a public company traded on Euronext Brussels under the “SHUR” [removed: symbol, which] [added: symbol and] owns [removed: 234] [added: 241] self-storage facilities [removed: (13] [added: (13.2] million net rentable square feet) located in seven countries in Western Europe operated under the “Shurgard” brand name.

We believe Shurgard is the largest [removed: owner and operator of] self-storage [removed: facilities] [added: company] in Western Europe.

We believe we met these requirements in all periods presented herein and we expect to continue to [removed: elect and] qualify as a REIT.

Our facilities compete with nearby self-storage facilities owned by other operators using marketing [removed: channels similar to ours,] [added: channels,] including Internet advertising, signage, and banners and [removed: offer] [added: offering] services similar to ours.

[removed: These newly] [added: Newly] developed facilities compete with many of the facilities we own, negatively impacting our occupancies, rental rates, and rental [removed: growth.][added: growth, particularly as newly developed facilities fill up.]

[removed: This increase in supply has been most notable] [added: Currently, we are affected by newly developed facilities] in [added: markets such as] Atlanta, Austin, Charlotte, Chicago, Dallas, Denver, Houston, Miami, [added: Minneapolis,] New [removed: York,] [added: York] and Portland.

However, we believe that the economies of scale inherent in this business result in our being able to operate self-storage facilities at a materially higher level [added: of cash flow per square foot than other operators without our scale.]

Recently, larger national operators (including ourselves) are offering to manage facilities owned by third parties on their platform for a [removed: fee (“Third Party Management”),] [added: fee,] and Google is offering a more convenient platform for small operators to compete with larger operators in paid search bidding campaigns to drive web traffic and increase reservations.

[removed: These] [added: Depending upon how many smaller operators avail themselves of these management services and Google’s platform, these] two developments [removed: have the potential to] [added: may potentially] diminish the competitive advantage we have versus smaller owner/operators.

We believe that we have [removed: significant] market share and concentration in major metropolitan centers, with approximately 70% of our [removed: 2019] [added: 2020] same-store revenues generated in the 20 Metropolitan Statistical Areas (each, an “MSA”, as defined by the U.S. Census Bureau) with the highest population levels.

Approximately [removed: 75%] [added: 76%] of our move-ins in [removed: 2019] [added: 2020] were sourced through our website and we believe that many of our other customers who reserved directly through our call center or arrived at a facility and moved in without a reservation, have reviewed our pricing and availability online through our websites.

Property managers access the same information that is available on our website and to our call center agents, and can inform [added: the customer of available space at that site or our other nearby storage facilities.]

[removed: Managerial economies of scale:] The size and scope of our operations have enabled us to achieve high operating margins and a low level of administrative costs relative to revenues through the centralization of many functions, such as facility maintenance, employee compensation and benefits programs, revenue management, as well as the development and documentation of standardized operating procedures.

Our ongoing growth strategies consist of: (i) improving the operating performance of our existing self-storage facilities, (ii) acquiring [removed: more] [added: and developing] facilities, (iii) [removed: developing new facilities] [added: growing ancillary business activities including tenant reinsurance] and [removed: adding more self-storage space to our existing facilities,] [added: third-party management services, and] (iv) [removed: participating in] [added: leveraging] the growth of our investment in [removed: PSB,] [added: PSB] and [removed: (v) participating in the growth of our investment in] Shurgard.

Improve the operating performance of existing facilities: We [removed: seek] [added: regularly update and enhance our strategies] to increase the net cash flow of our existing self-storage facilities through maximizing revenues and controlling operating costs.

We [removed: seek to] maximize revenues through striking the appropriate balance between occupancy and rates to new and existing tenants, by regularly adjusting (i) our promotional and other discounts, (ii) the rental rates we charge to new and existing customers, and (iii) our marketing spending and intensity.

Acquire [added: existing] properties [removed: owned by others] in the U.S.: We seek to capitalize on the fragmentation of the self-storage business through acquiring attractively priced, well-located existing self-storage facilities.

Our aggressiveness in bidding for particular marketed facilities depends upon many factors including the potential for future growth, the quality of construction and location, the cash flow we expect from the facility when operated on our platform, how well the facility fits into [added: our current geographic footprint, as well as our return on capital expectations.]

Develop new self-storage facilities and expand existing facilities: The development of new self-storage locations and the expansion of existing facilities has been an important source of [added: our] growth.

[removed: Participate in the growth of PS Business Parks, Inc.:] Our investment in PSB provides diversification into another asset type.

From January 1, [removed: 2014] [added: 2018] through December 31, [removed: 2019,] [added: 2020,] Shurgard acquired [removed: 39] [added: 17] facilities from third parties for approximately [removed: $398.1] [added: $187.7] million, and has opened [removed: 10] [added: six] development properties at a total cost of approximately [removed: $122.9] [added: $66.9] million.

We reinsure all risks in this program, but purchase insurance [added: from an independent third party insurer] to cover this exposure for a limit of $15.0 million for losses in excess of $5.0 million per occurrence.

At December 31, [removed: 2019,] [added: 2020,] there were approximately [removed: 935,000] [added: 990,000] certificates held by our self-storage customers, representing aggregate coverage of approximately [removed: $3.2] [added: $3.9] billion.

These include general risks associated with the ownership and operation of real estate, including changes in demand, risk related to development, expansion and acquisition of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning; risks associated with economic downturns in the national and local markets in which we operate; risks associated with the COVID-19 pandemic (the “COVID Pandemic”) or similar events, including negative economic impacts which could reduce the demand for our facilities or increase tenant delinquencies and regulatory actions to close or limit access to our facilities, limit our ability to set rents or limit our ability to collect rent or evict delinquent tenants; the risk that there could be an out-migration of population from our markets which would reduce demand for our facilities; risks related to increased reliance on Google as a customer acquisition channel; risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations and changes in tax laws; the impact of the legal and regulatory environment, as well as national, state and local laws and regulations including, without limitation, those governing environmental issues, taxes, our tenant reinsurance business, and labor; risks due to ballot initiatives or other actions that could remove the protections of Proposition 13 with respect to our real estate and result in substantial increases in our assessed values and property tax bills in California; changes in United States federal or state tax laws related to the taxation of real estate investment trusts (“REITs”) and other corporations; security breaches or a failure of our networks, systems or technology could adversely impact our operations or our business, customer and employee relationships or result in fraudulent payments; risks associated with the self-insurance of certain business risks; and delays and cost overruns on our projects to develop new facilities or expand our existing facilities.

General Discussion of our Business

Our principal business activities include the ownership and operation of self-storage facilities and other related operations including tenant reinsurance and third-party self-storage management.

We are the industry leading owner and operator of self-storage properties with a recognizable brand, including the ubiquitous orange color, which is one of the most recognizable within the industry.

Self-storage Operations:

We are the largest owner and operator of self-storage facilities in the U.S. with physical presence in most major markets and 38 states.

We believe our scale, brand name and technology platform afford us competitive advantages.

We own all of the economic interest in these facilities, except for 21 of these facilities held with other noncontrolling interests.

Ancillary and Other Operations:

We reinsure policies held by tenants against losses to goods stored at the self-storage facilities we own, as well as those we manage for third parties.

These policies cover claims for losses related to specified events up to a maximum limit of $5,000 per storage unit.

At December 31, 2020, we managed 92 facilities for third parties, and are under contract to manage 25 additional facilities including 24 facilities that are currently under construction.

We hold a 42% equity interest in PS Business Parks, Inc. (“PSB”) and a 35% interest in Shurgard Self Storage SA (“Shurgard”).

For each taxable year in which we qualify for taxation as a REIT, we will not be subject to U.S. federal corporate income tax on our “REIT taxable income” (generally, taxable income subject to specified adjustments, including a deduction for dividends paid and excluding our net capital gain) that is distributed to our shareholders.

The level of new construction varies in each market over time, depending upon many factors such as the cost and availability of land, construction costs, zoning limitations, and the availability of capital, as well as local demand and economic conditions.

We expect development of new self-storage facilities to continue to impact our results for the foreseeable future.

Technology

We believe technology enables revenue optimization and cost efficiencies.

Over the past few years we have invested in technologies that we believe have enabled us to operate and compete more effectively.

To further enhance the move-in experience, in 2020 we initiated our “eRental®” process whereby prospective tenants (including those who initially reserved a space) expedite the move-in process by executing a lease agreement from their smartphone or computer and then going directly to their space on the move-in date.

Approximately half of customers elected this “eRental®” process during the fourth quarter of 2020.

In addition, in 2020 we have implemented technology solutions in the area of labor scheduling, an integrated customer smartphone application, automated and centralized property access systems, and website customer chat functions.

Our operating experience in major markets and experience in stabilizing new properties provides us advantages in developing new facilities.

We plan to increase our development activity given attractive risk adjusted return profile with yields above those of acquisitions.

However, our level of development is dependent upon many factors, including the cost and availability of land, the cost and availability of construction materials and labor, zoning and permitting limitations, our cost of capital, the cost of acquiring facilities relative to developing new facilities, as well as local demand and economic conditions.

Grow ancillary business activities: We pursue growth initiatives providing attractive insurance offerings for tenants who choose to protect their stored items against loss and desire to maximize their storage experience.

As we grow our self-storage portfolio we have the opportunity to increase the growth profile of our tenant reinsurance business.

Our third party management business enables us to generate revenues through management fees, expand our presence, increase our economies of scale, promote our brand and enhance our ability to acquire additional facilities over the medium and long-term as a result of strategic relationships forged with third-party owners.

Participate in the growth of PS Business Parks, Inc.: We hold a 42% equity interest in PSB.

As of December 31, 2020, PSB owned and operated approximately 27.7 million rentable square feet of commercial space.

Participate in the growth of Shurgard: We hold a 35% interest in Shurgard.

At December 31, 2020, Shurgard had ten properties in their development pipeline.

Compliance with Government Regulations

We are subject to various laws, ordinances and regulations, including various federal, state and local regulations that apply generally to the ownership of real property and the operation of self-storage properties.

These include various laws and government regulations concerning environmental matters, labor matters and employee safety and health matters.

Further, our insurance activities are subject to state insurance laws and regulations as determined by the particular insurance commissioner for each state in accordance with certain federal regulations.

We are not aware of any government regulations that have resulted or that we expect will result in compliance costs that had or will have a material effect on our capital expenditures, earnings or competitive position.

See “We have significant exposure to real estate risk.” and “We are subject to new and changing legislation and regulations, including the California’s Consumer Privacy Act” in Item 1A.

“Risk Factors” for further information regarding our risks related to government regulations.

In addition, during public health crises, such as the COVID Pandemic, or in response to natural disasters, such as wildfires in California in recent years, our properties and our tenants have been subject to emergency government regulations that have impacted our operations and our business.

general risks associated with the ownership and operation of real estate, including changes in demand, risk related to development, acquisition, and expansion of self-storage facilities, potential liability for environmental contamination, natural disasters and adverse changes in laws and regulations governing property tax, real estate and zoning;

risks associated with downturns in the national and local economies in the markets in which we operate, including risks related to current economic conditions and the economic health of our customers;

the impact of competition from new and existing self-storage and commercial facilities and other storage alternatives;

the risk that our existing self-storage facilities may be at a disadvantage in competing with newly developed facilities with more visual and customer appeal;

difficulties in our ability to successfully evaluate, finance, integrate into our existing operations, and manage properties that we acquire directly or through the acquisition of entities that own and operate self-storage facilities;

increased reliance on Google as a customer acquisition channel;

risks associated with international operations including, but not limited to, unfavorable foreign currency rate fluctuations, changes in tax laws, and local and global economic uncertainty that could adversely affect our earnings and cash flows;

risks related to our participation in joint ventures;

the impact of the legal and regulatory environment, including changes in federal, state, and local laws and regulations governing environmental issues, taxes, our tenant reinsurance business, pricing of our self-storage space, and labor;

risks of increased tax expense associated either with a possible failure by us to qualify as a real estate investment trust (“REIT”), or with challenges to the determination of taxable income for our taxable REIT subsidiaries;

risks due to a potential November 2020 California ballot initiative (or other equivalent actions) that could remove the property tax protections of Proposition 13 with respect to our California real estate and result in substantial increases in our California property tax expense;

changes in United States (“U.S.”) federal or state tax laws related to the taxation of REITs and other corporations;

security breaches or a failure of our networks, systems or technology could adversely impact our operations or our business, customer, and employee relationships or result in fraudulent payments;

risks associated with the self-insurance of certain business risks, including property and casualty insurance, employee health insurance and workers compensation liabilities;

difficulties in raising capital at a reasonable cost;

delays and cost overruns on our projects to develop or expand our facilities;

ongoing litigation and other legal and regulatory actions that may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business; and

economic uncertainty due to the impact of war or terrorism.

General

At December 31, 2019, our principal business activities were as follows:

We also manage 55 self-storage facilities for third parties as of December 31, 2019.

In order to further increase our economies of scale and leverage our brand, in 2018 we began an effort to expand the number of facilities we manage, through a dedicated internal sales, administration, and implementation team.

During the year ended December 31, 2019, we added 22 facilities to our third party management platform.

At December 31, 2019, we are under contract to manage 27 additional facilities, currently under construction, following their completion.

It is uncertain how many third party managed facilities we will add to our platform over time.

We also own 0.9 million net rentable square feet of commercial space which is managed primarily by PSB.

As a REIT, we do not incur U.S. federal income tax if we distribute 100% of our “REIT taxable income” (generally, net rents and gains from real property, dividends, and interest) each year (for this purpose, certain distributions paid in a subsequent year may be considered), and if we meet certain organizational and operational rules.

We believe that our customers generally store their goods within a three to five mile radius of their home or business.

In the last three years, there has been a marked increase in development of new self-storage facilities in many of the markets where we operate, due to the favorable economics of developing new properties.

of cash flow per square foot than other operators without our scale.

See “Business Attributes” below for further discussion of these economies of scale.

While this fragmentation offers us opportunities to acquire additional facilities over time, and our scale allows us to extract more cash flow from the properties we acquire, we compete for facilities that are marketed for sale with a wide variety of institutions and other investors who also view self-storage facilities as attractive investments.

The amount of capital available for real estate investments greatly influences the competition for ownership interests in facilities and, by extension, the yields that we can achieve on newly acquired investments.

The extent to which this trend becomes impactful is dependent on (i) how many smaller operators will choose to avail themselves of Third Party Management, (ii) the extent to which large national operators seek to increase the number of properties under Third Party Management and (iii) the extent to which smaller operators are attracted to Google’s marketing platform and are able to improve the efficacy of their marketing.

Business Attributes

We believe that we possess several primary business attributes that permit us to compete effectively:

the customer of available space at that site or our other nearby storage facilities.

We also believe that our major market concentration provides managerial efficiencies stemming from having a large percentage of our facilities in close proximity to each other.

Marketing economies of scale: Our major-market concentration relative to the fragmented ownership and operation of the rest of the industry, combined with our well-recognized brand name, improves our prominence in unpaid online search results for self-storage and reduces our average cost per “click” for multiple-keyword advertising.

Such concentration and the resulting volume enables us to efficiently leverage systematic bidding strategies to maximize our return on investment across multiple keywords.

For a description of the Company’s legal proceedings, see “Note 13.

Commitments and Contingencies” to our consolidated financial statements included in this Annual Report on Form 10-K.

We are subject to contingent losses as a result of being a party to various claims, complaints, and legal proceedings.

However, we believe that there is a remote likelihood that the resolution of these contingencies will result in a material loss or have a material adverse affect on our financial condition, results of operations or liquidity.

For the fiscal year ended December 31, [removed: 2019.][added: 2020.]

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.375%] [added: 4.625%] Cum Pref Share, Series [removed: V,] [added: L,] $0.01 par value | | [removed: PSAPrV] [added: PSAPrL] | | New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.200%] [added: 4.125%] Cum Pref Share, Series [removed: W,] [added: M,] $0.01 par value | | [removed: PSAPrW] [added: PSAPrM] | | New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.200%] [added: 3.875%] Cum Pref Share, Series [removed: X,] [added: N,] $0.01 par value | | [removed: PSAPrX] [added: PSAPrN] | | New York Stock Exchange |

| Depositary Shares Each Representing 1/1,000 of a [removed: 5.400%] [added: 3.900%] Cum Pref Share, Series [removed: B,] [added: O,] $0.01 par value | | [removed: PSAPrB] [added: PSAPrO] | | New York Stock Exchange |

Securities registered pursuant to Section 12(g) of the Act: None [removed: *(Title of class)*]

The aggregate market value of the voting and non-voting common shares held by non-affiliates of the Registrant as of June 30, [removed: 2019:][added: 2020:]

Common Shares, $0.10 Par Value Per Share – [removed: $35,489,494,000] [added: $29,116,505,000] (computed on the basis of [removed: $238.17] [added: $191.89] per share, which was the reported closing sale price of the Company's Common Shares on the New York Stock Exchange (the “NYSE”) on June 30, [removed: 2019).][added: 2020).]

As of February [removed: 21, 2020,] [added: 19, 2021,] there were [removed: 174,758,632] [added: 174,912,175] outstanding Common Shares, $.10 par value per share.

Portions of the definitive proxy statement to be filed in connection with the Annual Meeting of Shareholders to be held in [removed: 2020] [added: 2021] are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent described therein.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

\[X\]

At December 31, [removed: 2019,] [added: 2020,] we had controlling ownership interests in [removed: 2,483] [added: 2,548] self-storage facilities located in 38 states within the U.S.:

| North Carolina | 93 | | [removed: 6,824] [added: 6,833] |

| New York | [removed: 67] [added: 69] | | [removed: 4,650] [added: 4,817] |

| South Carolina | 63 | | [removed: 3,654] [added: 3,668] |

(a)See Schedule III: Real Estate and Accumulated Depreciation in the Company’s [removed: 2019] [added: 2020] financials, for a summary of land, building, accumulated depreciation, square footage, and number of properties by market.

At December 31, [removed: 2019,] [added: 2020,] 27 of our facilities with a net book value of [removed: $106] [added: $102] million were encumbered by an aggregate of [removed: $27] [added: $25] million in mortgage notes payable.

The most prevalent recently constructed facilities have higher density footprints with large, multi-story buildings with climate control and [removed: generally up to] 1,000 [added: or more] self-storage spaces, a more imposing and visible retail presence, and a prominent and large rental office designed to appeal to customers as an attractive and retail-focused “store.” Our self-storage portfolio includes facilities with characteristics of the oldest facilities, characteristics of the most recently constructed facilities, and those with characteristics of both older and recently [removed: constructed facilities.]

| | At December 31, 2020 | | |

| Southern | 253 | | 18,661 |

| Texas | 315 | | 24,115 |

| Florida | 301 | | 21,006 |

| Illinois | 130 | | 8,361 |

| Georgia | 116 | | 7,820 |

| Washington | 101 | | 7,042 |

| Colorado | 78 | | 5,739 |

| Minnesota | 61 | | 4,721 |

| Maryland | 63 | | 3,878 |

| Ohio | 55 | | 3,692 |

| Michigan | 50 | | 3,496 |

| Arizona | 49 | | 3,311 |

| Missouri | 41 | | 2,752 |

| Indiana | 40 | | 2,570 |

| Pennsylvania | 33 | | 2,415 |

| Tennessee | 37 | | 2,363 |

| Oregon | 40 | | 2,127 |

| Massachusetts | 28 | | 1,976 |

| Nevada | 28 | | 1,915 |

| Oklahoma | 23 | | 1,644 |

| Other states (12 states) | 119 | | 7,272 |

| Total (a) | 2,548 | | 175,051 |

constructed facilities.

| | At December 31, 2019 | | |

| Southern | 250 | | 18,356 |

| Texas | 311 | | 23,761 |

| Florida | 295 | | 20,312 |

| Illinois | 126 | | 7,952 |

| Georgia | 113 | | 7,625 |

| Washington | 100 | | 6,960 |

| Colorado | 75 | | 5,532 |

| Minnesota | 57 | | 4,249 |

| Maryland | 62 | | 3,761 |

| Ohio | 49 | | 3,199 |

| Arizona | 47 | | 3,103 |

| Michigan | 45 | | 3,094 |

| Indiana | 39 | | 2,451 |

| Missouri | 38 | | 2,236 |

| Tennessee | 35 | | 2,228 |

| Oregon | 39 | | 2,040 |

| Pennsylvania | 28 | | 1,957 |

| Massachusetts | 27 | | 1,875 |

| Nevada | 27 | | 1,818 |

| Oklahoma | 22 | | 1,533 |

| Other states (12 states) | 113 | | 6,881 |

| Total (a) | 2,483 | | 168,908 |

We seek to maximize our facilities’ cash flow through the regular review and adjustment of rents charged and promotions granted to our existing and new incoming customers, and controlling expenses.

For the year ended December 31, 2019, the weighted average occupancy level and the average realized rent per occupied square foot for our self-storage facilities were approximately 90.9% and $17.02, respectively.

We have no specific policy as to the maximum size of any one particular self-storage facility.

However, no individual facility involves, or is expected to involve, 1% or more of our total assets, gross revenues or net income.

Description of Self-Storage Facilities: Self-storage facilities, which comprise the majority of our investments, offer accessible storage space for personal and business use at a relatively low cost.

A user rents a fully enclosed space, securing the space with their lock, which is for the user's exclusive use and to which only the user has access.

Property managers operate the facility and are supervised by district managers.

Some self-storage facilities also include rentable uncovered parking areas for vehicle storage.

Space is rented on a month-to-month basis and rental rates vary according to the location of the property, the size of the storage space and other characteristics that affect the relative attractiveness of each particular space, such as whether the space has “drive-up” access, its proximity to elevators, or if the space is climate controlled.

All of our self-storage facilities are operated under the "Public Storage" brand name.

Users include individuals from virtually all demographic groups, as well as businesses.

Individuals usually store furniture, household appliances, personal belongings, motor vehicles, boats, campers, motorcycles and other household goods.

Businesses normally store excess inventory, business records, seasonal goods, equipment and fixtures.

We experience minor seasonal fluctuations in the occupancy levels of self-storage facilities with occupancies generally higher in the summer months than in the winter months.

We believe that these fluctuations result in part from increased demand from moving activity during the summer months and incremental demand from college students.

Our self-storage facilities are geographically diversified and are located primarily in or near major metropolitan markets in 38 states in the U.S. Generally our self-storage facilities are located in heavily populated areas and close to concentrations of apartment complexes, single family residences and commercial developments.

Competition from other self-storage facilities is significant and affects the occupancy levels, rental rates, rental income and operating expenses of our facilities.

As of February [removed: 21, 2020,] [added: 19, 2021,] there were approximately [removed: 11,573] [added: 11,158] holders of record of our Common Shares.

Our Board [removed: of Trustees] has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions.

From the inception of the repurchase program through February [removed: 25, 2020,] [added: 24, 2021,] we have repurchased a total of 23,721,916 common shares (all purchased prior to 2010) at an aggregate cost of approximately $679.1 million.

Our common share repurchase program does not have an expiration date and there are 11,278,084 common shares that may yet be repurchased under our repurchase program as of December 31, [removed: 2019.][added: 2020.]

‎

Not applicable

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | For the year ended December 31, | | | | | | | | | | | | | |

| | 2019 | | | 2018 | | | 2017 | | | 2016 | | | 2015 | |

| | | (Amounts in thousands, except share and per share data) | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| Revenues | $ | 2,846,823 | | $ | 2,754,280 | | $ | 2,668,528 | | $ | 2,560,549 | | $ | 2,381,696 |

| | | | | | | | | | | | | | | |

| Expenses: | | | | | | | | | | | | | | |

| Cost of operations | | 796,783 | | | 739,722 | | | 707,978 | | | 669,083 | | | 635,502 |

| Depreciation and amortization | | 512,918 | | | 483,646 | | | 454,526 | | | 433,314 | | | 426,008 |

| General and administrative | | 71,983 | | | 118,720 | | | 82,882 | | | 83,656 | | | 88,177 |

| Interest expense | | 45,641 | | | 32,542 | | | 12,690 | | | 4,210 | | | 610 |

| | | 1,427,325 | | | 1,374,630 | | | 1,258,076 | | | 1,190,263 | | | 1,150,297 |

| | | | | | | | | | | | | | | |

| Other increase (decrease) to net income: | | | | | | | | | | | | | | |

| Interest and other income | | 28,436 | | | 26,442 | | | 18,771 | | | 15,138 | | | 16,544 |

| Equity in earnings of unconsolidated real | | | | | | | | | | | | | | |

| estate entities | | 69,547 | | | 103,495 | | | 75,655 | | | 56,756 | | | 50,937 |

| Foreign currency exchange gain (loss) | | 7,829 | | | 18,117 | | | (50,045) | | | 17,570 | | | 306 |

| Casualty loss | | \- | | | \- | | | (7,789) | | | \- | | | \- |

| Gain on sale of real estate | | 341 | | | 37,903 | | | 1,421 | | | 689 | | | 18,503 |

| Gain due to Shurgard public offering | | \- | | | 151,616 | | | \- | | | \- | | | \- |

| Net income | | 1,525,651 | | | 1,717,223 | | | 1,448,465 | | | 1,460,439 | | | 1,317,689 |

| Net income allocated to noncontrolling | | | | | | | | | | | | | | |

| equity interests | | (5,117) | | | (6,192) | | | (6,248) | | | (6,863) | | | (6,445) |

| Net income allocable to Public Storage | | | | | | | | | | | | | | |

| shareholders | $ | 1,520,534 | | $ | 1,711,031 | | $ | 1,442,217 | | $ | 1,453,576 | | $ | 1,311,244 |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| Per Common Share: | | | | | | | | | | | | | | |

| Distributions | $ | 8.00 | | $ | 8.00 | | $ | 8.00 | | $ | 7.30 | | $ | 6.50 |

| Net income – Basic | $ | 7.30 | | $ | 8.56 | | $ | 6.75 | | $ | 6.84 | | $ | 6.10 |

| Net income – Diluted | $ | 7.29 | | $ | 8.54 | | $ | 6.73 | | $ | 6.81 | | $ | 6.07 |

| | | | | | | | | | | | | | | |

| Weighted average common shares: | | | | | | | | | | | | | | |

| Basic | | 174,287 | | | 173,969 | | | 173,613 | | | 173,091 | | | 172,699 |

| Diluted | | 174,530 | | | 174,297 | | | 174,151 | | | 173,878 | | | 173,510 |

| | | | | | | | | | | | | | | |

| Balance Sheet Data: | | | | | | | | | | | | | | |

As of December 31, [removed: 2019,] [added: 2020,] we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, [removed: 2019,] [added: 2020,] at a reasonable assurance level.

Based on our evaluation under the framework in *Internal Control-Integrated Framework*, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2019.][added: 2020.]

The effectiveness of internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] has been audited by Ernst & Young LLP, an independent registered public accounting firm.

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of [removed: 2019] [added: 2020] to which this report relates that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

| We have audited Public Storage’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Public Storage (the Company) maintained, in all material aspects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on the COSO criteria. |

| We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2019] [added: 2020] and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February [removed: 25, 2020] [added: 24, 2021] expressed an unqualified opinion thereon. |

February 24, 2021

February 25, 2020

Russell, Jr., age [removed: 60,] [added: 61,] has served as Chief Executive Officer since January 1, 2019, and as President since July 2016.

Thomas Boyle, age [removed: 37,] [added: 38,] has served as Chief Financial Officer since January 1, 2019, and was previously Vice President and Chief Financial Officer, Operations since joining the Company in November 2016.

Vitan, age [removed: 46,] [added: 47,] has served as Senior Vice President, Chief Legal Officer and Corporate Secretary since April 20, 2019, and was Vice President and Chief Counsel–Litigation and Operations since joining the Company in June 2016.

[removed: Natalia Johnson, age 42, has] [added: Previously, Ms. Johnson] served as Senior Vice President, Chief Human Resources Officer [removed: since] [added: from] April 25, 2018 [added: to August 4, 2020] and [removed: was previously] Senior Vice President of Human Resources [removed: since joining the Company in] [added: from] July [removed: 2016.][added: 2016 to April 2018.]

Other information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

Natalia Johnson, age 43, has served as the Chief Administrative Officer since August 4, 2020.

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

The following table sets forth information as of December 31, [removed: 2019] [added: 2020] on the Company’s equity compensation plans:

a)The Company’s stock option and stock incentive plans are described more fully in Note 10 to the December 31, [removed: 2019] [added: 2020] financial statements.

b)Includes [removed: 619,150] [added: 552,788] restricted share units that, if and when vested, will be settled in common shares of the Company on a one for one basis.

c)There are no securities available for future issuance or currently outstanding under plans not approved by the Company’s shareholders as of December 31, [removed: 2019.][added: 2020.]

d)Represents the average exercise price of [removed: 2,339,667] [added: 2,961,167] stock options outstanding at December 31, [removed: 2019.][added: 2020.]

We also have [removed: 619,150] [added: 552,788] restricted share units outstanding at December 31, [removed: 2019] [added: 2020] that vest for no consideration.

Other information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

| Equity compensation plans approved by security holders (a) | 3,513,955 (b) | $210.59 (d) | 343,648 |

| Equity compensation plans approved by security holders (a) | 2,958,817 (b) | $204.53 (d) | 1,110,375 |

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act.

The information required by this item is hereby incorporated by reference to the material appearing in the Notice and Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A under the Exchange Act of 1934.

| 3.3 | [Articles Supplementary for Public Storage [removed: 5.375%] [added: 5.400%] Cumulative Preferred Shares, Series [removed: V.] [added: B.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: September 11, 2012] [added: January 12, 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312512389775/d411237dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516428828/d224807dex31.htm)] |

| 3.4 | [Articles Supplementary for Public Storage [removed: 5.20%] [added: 5.125%] Cumulative Preferred Shares, Series [removed: W.] [added: C.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: January 7, 2013] [added: May 10, 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513007041/d464078dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516587149/d153660dex31.htm)] |

| 3.5 | [Articles Supplementary for Public Storage [removed: 5.20%] [added: 4.950%] Cumulative Preferred Shares, Series [removed: X.] [added: D.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: March 4, 2013] [added: July 13, 2016] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312513091511/d496477dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516648284/d220245dex31.htm)] |

| 3.6 | [Articles Supplementary for Public Storage [removed: 5.400%] [added: 4.900%] Cumulative Preferred Shares, Series [removed: B.] [added: E.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: January 12,] [added: October 6,] 2016 and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516428828/d224807dex31.htm)] [added: herein](http://www.sec.gov/Archives/edgar/data/1393311/000119312516733812/d146398dex31.htm).] |

| 3.7 | [Articles Supplementary for Public Storage [removed: 5.125%] [added: 5.150%] Cumulative Preferred Shares, Series [removed: C.] [added: F.] Filed with the Registrant’s Current Report on Form 8-K dated May [removed: 10, 2016] [added: 23, 2017] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516587149/d153660dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517181653/d403845dex31.htm)] |

| 3.8 | [Articles Supplementary for Public Storage [removed: 4.950%] [added: 5.050%] Cumulative Preferred Shares, Series [removed: D.] [added: G.] Filed with the Registrant’s Current Report on Form 8-K dated July [removed: 13, 2016] [added: 31, 2017] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516648284/d220245dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517244616/d431375dex31.htm)] |

| 3.9 | [Articles Supplementary for Public Storage [removed: 4.900%] [added: 5.600%] Cumulative Preferred Shares, Series [removed: E.] [added: H.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: October 6, 2016] [added: February 28, 2019] and incorporated by reference [removed: herein](http://www.sec.gov/Archives/edgar/data/1393311/000119312516733812/d146398dex31.htm).] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519060872/d707503dex31.htm)] |

| 3.10 | [Articles Supplementary for Public Storage [removed: 5.150%] [added: 4.875%] Cumulative Preferred Shares, Series [removed: F.] [added: I.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: May 23, 2017] [added: September 5, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517181653/d403845dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519240029/d95914dex31.htm)] |

| 3.11 | [Articles Supplementary for Public Storage [removed: 5.050%] [added: 4.700%] Cumulative Preferred Shares, Series [removed: G.] [added: J.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: July 31, 2017] [added: November 5, 2019] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517244616/d431375dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519286081/d820234dex31.htm)] |

| 3.12 | [Articles Supplementary for Public Storage [removed: 5.600%] [added: 4.750%] Cumulative Preferred Shares, Series [removed: H.] [added: K.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: February 28,] [added: December 11,] 2019 and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519060872/d707503dex31.htm)] [added: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519312789/d847836dex31.htm)] |

| 3.13 | [Articles Supplementary for Public Storage [removed: 4.875%] [added: 4.625%] Cumulative Preferred Shares, Series [removed: I.] [added: L.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: September 5, 2019] [added: June 8, 2020] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519240029/d95914dex31.htm)] [added: herein.](https://www.sec.gov/Archives/edgar/data/1393311/000119312520165668/d941759dex31.htm)] |

| 3.14 | [Articles Supplementary for Public Storage [removed: 4.700%] [added: 4.125 %] Cumulative Preferred Shares, Series [removed: J.] [added: M.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: November 5, 2019] [added: August 11, 2020] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519286081/d820234dex31.htm)] [added: herein.](https://www.sec.gov/Archives/edgar/data/1393311/000119312520219127/d43890dex31.htm)] |

| 3.15 | [Articles Supplementary for Public Storage [removed: 4.750%] [added: 3.875%] Cumulative Preferred Shares, Series [removed: K.] [added: N.] Filed with the Registrant’s Current Report on Form 8-K dated [removed: December 11, 2019] [added: September 29, 2020] and incorporated by reference [removed: herein.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519312789/d847836dex31.htm)] [added: herein.](https://www.sec.gov/Archives/edgar/data/1393311/000119312520259620/d824439dex31.htm)] |

| 4.2 | [Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex4_2.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex4_2.htm)] |

| 10.8* | [Form of 2016 Plan Restricted Stock Unit [removed: Agreement.] [added: Agreement – deferral of receipt of shares.] Filed as Exhibit [removed: 10.15] [added: 10.16] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_15.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_16.htm)] |

| [removed: 10.9*] [added: 10.21*] | [Form of 2016 Plan Restricted Stock Unit Agreement – deferral of receipt of [removed: shares.] [added: shares (2018).] Filed as Exhibit [removed: 10.16] [added: 10.26] to the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2016] [added: 2018] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_16.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_26.htm)] |

| [removed: 10.10*] [added: 10.9*] | [Form of 2016 Plan [added: Trustee] Non-Qualified Stock Option Agreement. Filed as Exhibit [removed: 10.17] [added: 10.18] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_17.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_18.htm)] |

| [removed: 10.11*] [added: 10.10] | [Form of [removed: 2016 Plan] Trustee [removed: Non-Qualified Stock Option] [added: and Officer Indemnification] Agreement. Filed as Exhibit [removed: 10.18] [added: 10.19] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_18.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_19.htm)] |

| [removed: 10.12] [added: 10.22*] | [Form of [added: 2016 Plan] Trustee [removed: and Officer Indemnification Agreement.] [added: Deferred Stock Unit Agreement (2018).] Filed as Exhibit [removed: 10.19] [added: 10.29] to the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2016] [added: 2018] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331117000008/psa-20161231xex10_19.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_29.htm)] |

| 10.13 | [removed: [Term Loan] [added: [Note Purchase] Agreement, [added: dated as of November 3, 2015,] by and among Public [removed: Storage, Wells Fargo Securities, LLC as Lead Arranger] [added: Storage] and [removed: Wells Fargo National Bank N.A. as Administrative Agent, dated as of December 2, 2013.] [added: the signatories thereto.] Filed with Registrant’s Current Report on Form 8-K dated [removed: December 2, 2013] [added: November 3, 2015] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331113000043/ps_ex101.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331115000031/psa-20151104ex101c7717b.htm)] |

| [removed: 10.14*] [added: 10.11*] | [Public Storage 2007 Equity and Performance-Based Incentive Compensation Plan, as Amended. Filed with Registrant’s Current Report on Form 8-K dated May 1, 2014 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331114000011/psa-20140501ex101aec3ff.htm) |

| [removed: 10.15*] [added: 10.12*] | [Public Storage 2016 Equity and Performance-Based Incentive Compensation Plan. Filed as Appendix A to the Company’s 2016 Proxy Statement dated March 16, 2016 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312516506122/d126315ddef14a.htm) |

| [removed: 10.16] [added: 10.14] | [Note Purchase Agreement, dated as of [removed: November 3, 2015,] [added: April 12, 2016,] by and among Public Storage and the signatories thereto. Filed with Registrant’s Current Report on Form 8-K dated [removed: November 3, 2015] [added: April 12, 2016] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331115000031/psa-20151104ex101c7717b.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000038/psa-20160413xex10_1.htm)] |

| [removed: 10.18] [added: 10.15] | [Indenture, dated as of September 18, 2017, between Public Storage and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated September 18, 2017 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517287377/d443739dex41.htm) |

| [removed: 10.19] [added: 10.16] | [First Supplemental Indenture, dated as of September 18, 2017, between Public Storage and Wells Fargo Bank, National Association, as trustee, including the form of Global Note representing the 2022 Notes and the form of Global Note representing the 2027 Notes. Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated September 18, 2017 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312517287377/d443739dex42.htm) |

| [removed: 10.20] [added: 10.17] | [Second Supplemental Indenture, dated as of April 12, 2019, between Public Storage and Wells Fargo Bank, National Association, as trustee, including the form of Global Note representing the 2029 Notes. Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated April 12, 2019 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312519105162/d735473dex42.htm) |

| [removed: 10.21] [added: 10.18] | [Third Supplemental Indenture, dated as of January 24, 2020, between Public Storage and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated January 24, 2020 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312520014211/d877682dex42.htm) |

| [removed: 10.22] [added: 10.20] | [Amendment to Amended Agreement of Limited Partnership of PS Business Parks, L.P. to Authorize Special Allocations, dated as of January 1, 2017. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (SEC File No. 001-33519) and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331118000009/psa-20180331xex10_1.htm) |

| 10.23* | [Form of 2016 Plan [added: Executive] Restricted Stock Unit Agreement (2018). Filed as Exhibit [removed: 10.25] [added: 10.30] to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_25.htm)] [added: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_30.htm)] |

| 10.24* | [Form of 2016 [removed: Plan Restricted] [added: Employee] Stock Unit Agreement [removed: – deferral of receipt of shares (2018).] [added: (2020).] Filed as Exhibit [removed: 10.26] [added: 10.2] to the Company’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] for the [removed: year] [added: quarter] ended [removed: December] [added: March] 31, [removed: 2018] [added: 2020] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_26.htm)] [added: reference.](https://www.sec.gov/Archives/edgar/data/1393311/000156276220000160/psa-20200331xex10_2.htm)] |

| 10.25* | [Form of 2016 Plan [added: Employee] Non-Qualified Stock Option Agreement [removed: (2018).] [added: (2020).] Filed as Exhibit [removed: 10.27] [added: 10.4] to the Company’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] for the [removed: year] [added: quarter] ended [removed: December] [added: March] 31, [removed: 2018] [added: 2020] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_27.htm)] [added: reference.](https://www.sec.gov/Archives/edgar/data/1393311/000156276220000160/psa-20200331xex10_4.htm)] |

| 10.26* | [Form of 2016 Plan [removed: Trustee] [added: Performance-Based] Non-Qualified Stock Option Agreement [removed: (2018).] [added: (2020).] Filed as Exhibit [removed: 10.28] [added: 10.5] to the Company’s [removed: Annual] [added: Quarterly] Report on Form [removed: 10-K] [added: 10-Q] for the [removed: year] [added: quarter] ended [removed: December] [added: March] 31, [removed: 2018] [added: 2020] and incorporated herein by [removed: reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_28.htm)] [added: reference.](https://www.sec.gov/Archives/edgar/data/1393311/000156276220000160/psa-20200331xex10_5.htm)] |

| 21 | [Listing of Subsidiaries. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex21.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex21.htm)] |

| 23.1 | [Consent of Ernst & Young LLP. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex23_1.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex23_1.htm)] |

| 31.1 | [Rule 13a – 14(a) Certification. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex31_1.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex31_1.htm)] |

| 31.2 | [Rule 13a – 14(a) Certification. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex31_2.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex31_2.htm)] |

| 32 | [Section 1350 Certifications. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000139331120000008/psa-20191231xex32.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/1393311/000156276221000058/psa-20201231xex32.htm)] |

| Date: February [removed: 25, 2020] [added: 24, 2021] | By:/s/ Joseph D. Russell, Jr. |

| /s/ Joseph D. Russell, Jr. | Chief Executive Officer, President and Trustee (principal executive officer) | February [removed: 25, 2020] [added: 24, 2021] |

| /s/ H. Thomas Boyle | Chief Financial Officer (principal financial officer) | February [removed: 25, 2020] [added: 24, 2021] |

| 3.16 | [Articles Supplementary for Public Storage 3.900% Cumulative Preferred Shares, Series O. Filed with the Registrant’s Current Report on Form 8-K dated November 9, 2020 and incorporated by reference herein.](https://www.sec.gov/Archives/edgar/data/1393311/000119312520293004/d24818dex31.htm) |

| 10.19 | [Fourth Supplemental Indenture, dated as of January 19, 2021, between Public Storage and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated January 14, 2021 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000119312520014211/d877682dex42.htm) |

| /s/ Michelle Millstone-Shroff | Trustee | February 24, 2021 |

| Michelle Millstone-Shroff | | |

| /s/ Shankh S. Mitra | Trustee | February 24, 2021 |

| Shankh S. Mitra | | |

| /s/ David J. Neithercut | Trustee | February 24, 2021 |

| David J. Neithercut | | |

| /s/ Rebecca Owen | Trustee | February 24, 2021 |

| Rebecca Owen | | |

| /s/ Kristy M. Pipes | Trustee | February 24, 2021 |

| Kristy M. Pipes | | |

| | | |

| | | |

| /s/ Paul S. Williams | Trustee | February 24, 2021 |

| Paul S. Williams | | |

February 24, 2021

| Cash and equivalents | $ | 257,560 | | $ | 409,743 |

| | | 17,372,627 | | | 16,289,146 |

| | | 10,220,492 | | | 9,665,671 |

| | | 10,408,571 | | | 9,807,605 |

| Preferred shares called for redemption (Note 8) | | 300,000 | | | \- |

| Ancillary operations | | 193,438 | | | 170,556 | | | 161,916 |

| | | 2,915,068 | | | 2,855,108 | | | 2,759,523 |

| Self-storage cost of operations | | 807,543 | | | 762,416 | | | 709,739 |

| Ancillary cost of operations | | 59,919 | | | 50,736 | | | 47,344 |

| General and administrative | | 83,199 | | | 62,146 | | | 104,712 |

| | | 1,560,201 | | | 1,433,857 | | | 1,377,983 |

| investment in Shurgard | | 21,489 | | | (830) | | | (16,203) |

| Redemption and shares called for redemption of 60,800 preferred shares (Note 8) | | (1,520,000) | | | \- | | | \- | | | \- | | | \- | | | (1,520,000) | | | \- | | | (1,520,000) |

| share-based compensation (163,127 shares) (Note 10) | | \- | | | 16 | | | 12,648 | | | \- | | | \- | | | 12,664 | | | \- | | | 12,664 |

| Net income | | \- | | | \- | | | \- | | | 1,361,227 | | | \- | | | 1,361,227 | | | \- | | | 1,361,227 |

| Distributions to: | | | | | | | | | | | | | | | | | | | | | | | |

| Preferred shareholders (Note 8) | | \- | | | \- | | | \- | | | (207,068) | | | \- | | | (207,068) | | | \- | | | (207,068) |

| Balances at December 31, 2020 | $ | 3,792,500 | | $ | 17,458 | | $ | 5,707,101 | | $ | (914,791) | | $ | (43,401) | | $ | 8,558,867 | | $ | 18,032 | | $ | 8,576,899 |

| Other | | 6,994 | | | 7,690 | | | (5,782) |

| Total adjustments | | 681,675 | | | 541,983 | | | 346,423 |

| Repayment of note receivable | | 7,509 | | | \- | | | \- |

| Net effect of foreign exchange impact on cash and equivalents, including | | | | | | | | |

| restricted cash | | (426) | | | (13) | | | (171) |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| 10.17 | [Note Purchase Agreement, dated as of April 12, 2016, by and among Public Storage and the signatories thereto. Filed with Registrant’s Current Report on Form 8-K dated April 12, 2016 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331116000038/psa-20160413xex10_1.htm) |

| 10.27* | [Form of 2016 Plan Trustee Deferred Stock Unit Agreement (2018). Filed as Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_29.htm) |

| 10.28* | [Form of 2016 Plan Executive Restricted Stock Unit Agreement (2018). Filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and incorporated herein by reference.](http://www.sec.gov/Archives/edgar/data/1393311/000139331119000004/psa-20181231xex10_30.htm) |

| /s/ Uri P. Harkham | Trustee | February 25, 2020 |

| Uri P. Harkham | | |

| /s/ B. Wayne Hughes, Jr. | Trustee | February 25, 2020 |

| B. Wayne Hughes, Jr. | | |

| /s/ Gary E. Pruitt | Trustee | February 25, 2020 |

| Gary E. Pruitt | | |

| /s/ Daniel C. Staton | Trustee | February 25, 2020 |

| Daniel C. Staton | | |

February 25, 2020

| | | 9,665,671 | | | 9,156,772 |

| | | 9,807,605 | | | 9,442,111 |

| December 31, 2018) | | 17,442 | | | 17,413 |

| | | | | | | | | |

| Ancillary operations | | 162,271 | | | 156,673 | | | 156,095 |

| | | 2,846,823 | | | 2,754,280 | | | 2,668,528 |

| Self-storage cost of operations | | 752,579 | | | 695,731 | | | 657,633 |

| Ancillary cost of operations | | 44,204 | | | 43,991 | | | 50,345 |

| General and administrative | | 71,983 | | | 118,720 | | | 82,882 |

| | | 1,427,325 | | | 1,374,630 | | | 1,258,076 |

| Casualty loss | | \- | | | \- | | | (7,789) |

| Adjust for aggregate foreign currency exchange | | | | | | | | |

| (gain) loss included in net income | | (7,829) | | | (18,117) | | | 50,045 |

| Other comprehensive (loss) income | | (830) | | | 11,004 | | | 20,042 |

| | | | | | | | | | | | | | | | | | | | | | | | |

| Balances at December 31, 2016 | $ | 4,367,500 | | $ | 17,329 | | $ | 5,609,768 | | $ | (487,581) | | $ | (95,106) | | $ | 9,411,910 | | $ | 29,744 | | $ | 9,441,654 |

| Issuance of 23,200 preferred shares (Note 8) | | 580,000 | | | \- | | | (18,823) | | | \- | | | \- | | | 561,177 | | | \- | | | 561,177 |

| share-based compensation (564,583 shares) (Note 10) | | \- | | | 56 | | | 42,444 | | | \- | | | \- | | | 42,500 | | | \- | | | 42,500 |

| Net income | | \- | | | \- | | | \- | | | 1,448,465 | | | \- | | | 1,448,465 | | | \- | | | 1,448,465 |

| Distributions to equity holders: | | | | | | | | | | | | | | | | | | | | | | | |