Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to our 2022 outlook and all underlying assumptions, our expected acquisition, disposition, development and redevelopment activity, supply and demand for our self-storage facilities, information relating to operating trends in our markets, expectations regarding operating expenses, including property tax changes, our strategic priorities, expectations with respect to financing activities, rental rates, cap rates and yields, leasing expectations, our credit ratings, and all other statements other than statements of historical fact. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this document, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” and similar expressions.

These forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part 1, Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2022 and in our other filings with the SEC including. These include changes in demand for our facilities, impacts of natural disasters, adverse changes in laws and regulations including governing property tax, evictions, rental rates, minimum wage levels, and insurance, adverse economic effects from the COVID-19 pandemic, international military conflicts, or similar events impacting public health and/or economic activity, increases in the costs of our primary customer acquisition channels, adverse impacts to us and our customers from inflation, unfavorable foreign currency rate fluctuations, changes in federal or state tax laws related to the taxation of REITs, and security breaches, including ransomware, or a failure of our networks, systems or technology.

These forward-looking statements speak only as of the date of this report or as of the dates indicated in the statements. All of our forward-looking statements, including those in this report, are qualified in their entirety by this cautionary statement. We expressly disclaim any obligation to update publicly or otherwise revise any forward-looking statements, whether because of new information, new estimates, or other factors, events or circumstances after the date of these forward-looking statements, except when expressly required by law. Given these risks and uncertainties, you should not rely on any forward-looking statements in this report, or which management may make orally or in writing from time to time, neither as predictions of future events nor guarantees of future performance.

Critical Accounting Estimates

The preparation of consolidated financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) requires us to make judgments, assumptions, and estimates that affect the amounts reported. On an ongoing basis, we evaluate our estimates and assumptions. These estimates and assumptions are based on current facts, historical experience, and various other factors that we believe are reasonable under the circumstances to determine reported amounts of assets, liabilities, revenues, and expenses that are not readily apparent from other sources.

During the six months ended June 30, 2022, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Overview

Our self-storage operations generate most of our net income and our earnings growth is impacted by the levels of growth within our Same Store Facilities (as defined below) as well as within our Acquired Facilities and Newly Developed and Expanded Facilities (both as defined below). Accordingly, a significant portion of management’s time is devoted to maximizing cash flows from our existing self-storage facility portfolio.

During the three and six months ended June 30, 2022, revenues generated by our Same Store Facilities increased by 15.9% ($108.4 million) and 15.9% ($210.5 million), respectively, as compared to the same periods in 2021, while Same Store cost of operations increased by 7.6% ($12.7 million) and 5.5% ($19.2 million), respectively. Demand and operating trends remained strong, leading to increases in our self-storage rental rates while maintaining high levels of occupancy.

In addition to managing our existing facilities for organic growth, we have grown and plan to continue to grow through the acquisition and development of new facilities and expansion of our existing self-storage facilities. Since the beginning of 2020, we acquired a total of 314 facilities with 28.4 million net rentable square feet for $6.2 billion. In our non-same store portfolio, we also have developed and expanded self-storage facilities of 16.9 million net rentable square feet for a total cost of $1.4 billion. During the three and six months ended June 30, 2022, net operating income generated by our Acquired Facilities and Newly Developed and Expanded Facilities increased 121.5% ($59.9 million) and 165.1% ($127.8 million), respectively, as compared to the same periods in 2021.

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

Our strong financial profile continues to enable effective access to capital markets in order to support our growth. During the six months ended June 30, 2022, we raised $250 million in a public offering of our preferred shares.

In order to enhance the competitive position of certain of our facilities relative to local competitors (including newly developed facilities), we have embarked on our multi-year Property of Tomorrow program to (i) rebrand our properties with more pronounced, attractive, and clearly identifiable color schemes and signage, (ii) enhance the energy efficiency of our properties, and (iii) upgrade the configuration and layout of the offices and other customer zones to improve the customer experience. We expect to complete the program by the end of 2025. We expect to spend approximately $180 million over 2022 on this effort.

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

In connection with the sale of our equity investment in PSB, on July 22, 2022, our Board of Trustees declared a special cash dividend of $13.15 per common share. The special dividend is payable on August 4, 2022 to shareholders of record as of August 1, 2022.

Results of Operations

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

For the three months ended June 30, 2022, net income allocable to our common shareholders was $603.4 million or $3.42 per diluted common share, compared to $346.2 million or $1.97 per diluted common share in 2021, representing an increase of $257.2 million or $1.45 per diluted common share. The increase is due primarily to (i) a $160.9 million increase in self-storage net operating income, (ii) a $114.4 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable, (iii) a $21.1 million increase in our equity share of gains on sale of real estate recorded by our unconsolidated real estate entities, and (iv) a $17.0 million decrease in allocations to preferred shareholders with respect to redemption of preferred shares, partially offset by (v) a $46.0 million increase in depreciation and amortization expense and (vi) a $10.9 million increase in interest expense.

The $160.9 million increase in self-storage net operating income in the three months ended June 30, 2022 as compared to the same period in 2021 is a result of a $95.7 million increase attributable to our Same Store Facilities and a $65.2 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased 15.9% or $108.4 million in the three months ended June 30, 2022 as compared to 2021, due primarily to higher realized annual rent per available square foot. Cost of operations for the Same Store Facilities increased by 7.6% or $12.7 million in the three months ended June 30, 2022 as compared to 2021, due primarily to increased property tax expense, on-site property manager payroll expense, marketing expense, other direct property costs, and centralized management costs. The increase in net operating income of $65.2 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and the fill-up of recently developed and expanded facilities.

Operating Results for the Six Months Ended June 30, 2022 and 2021

For the six months ended June 30, 2022, net income allocable to our common shareholders was $1,067.5 million or $6.05 per diluted common share, compared to $732.1 million or $4.18 per diluted common share in 2021, representing an increase of $335.4 million or $1.87 per diluted common share. The increase is due primarily to (i) a $328.2 million increase in self-storage net operating income, (ii) a $104.4 million increase in foreign currency exchange gains primarily associated with our Euro denominated notes payable, (iii) a $44.7 million increase in our equity share of gains on sale of real estate recorded by our unconsolidated real estate entities, and (iv) a $17.0 million decrease in allocations to preferred shareholders with respect to redemption of preferred shares, partially offset by (v) a $121.2 million increase in depreciation and amortization expense and (vi) a $28.8 million increase in interest expense.

The $328.2 million increase in self-storage net operating income in the six months ended June 30, 2022 as compared to the same period in 2021 is a result of a $191.3 million increase attributable to our Same Store Facilities and a $136.9 million increase attributable to our non-same store facilities. Revenues for the Same Store Facilities increased 15.9% or $210.5 million in the six months ended June 30, 2022 as compared to 2021, due primarily to higher realized annual rent per available square foot. Cost of operations for the Same Store Facilities increased by 5.5% or $19.2 million in the six months ended June 30, 2022 as compared to 2021, due primarily to increased property tax expense, on-site property manager payroll expense, other direct property costs, and centralized management costs. The increase in net operating income of $136.9 million for the non-same store facilities is due primarily to the impact of facilities acquired in 2021 and the fill-up of recently developed and expanded facilities.

Funds from Operations and Core Funds from Operations

Funds from Operations (“FFO”) and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts and are considered helpful measures of REIT performance by REITs and many REIT analysts. FFO represents net income before depreciation and amortization, which is excluded because it is based upon historical costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. FFO also excludes gains or losses on sale of real estate assets and real estate impairment charges, which are also based upon historical costs and are impacted by historical depreciation. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes investing and financing activities presented on our consolidated statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful.

For the three months ended June 30, 2022, FFO was $4.58 per diluted common share as compared to $2.99 per diluted common share for the same period in 2021, representing an increase of 53.2%, or $1.59 per diluted common share.

For the six months ended June 30, 2022, FFO was $8.41 per diluted common share as compared to $6.07 per diluted common share for the same period in 2021, representing an increase of 38.6%, or $2.34 per diluted common share.

We also present “Core FFO” and “Core FFO per share,” non-GAAP measures that represent FFO and FFO per share excluding the impact of (i) foreign currency exchange gains and losses, (ii) charges related to the redemption of preferred securities, and (iii) certain other non-cash and/or nonrecurring income or expense items primarily representing, with respect to the periods presented below, unrealized gain on private equity investments and our equity share of merger transaction costs, severance of a senior executive, and casualties from our equity investees. We review Core FFO and Core FFO per share to evaluate our ongoing operating performance and we believe they are used by investors and REIT analysts in a similar manner. However, Core FFO and Core FFO per share are not substitutes for net income and net income per share. Because other REITs may not compute Core FFO or Core FFO per share in the same manner as we do, may not use the same terminology or may not present such measures, Core FFO and Core FFO per share may not be comparable among REITs.

The following table reconciles net income to FFO and Core FFO and reconciles diluted earnings per share to FFO per share and Core FFO per share:

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Percentage Change						2022						2021						Percentage Change
			(Amounts in thousands, except per share data)
Reconciliation of Net Income to FFO and Core FFO:
Net income allocable to common shareholders			$	603,381					$	346,249					74.3		%				$	1,067,505					$	732,059					45.8		%
Eliminate items excluded from FFO:
Depreciation and amortization			217,373						171,738												438,168						317,607
Depreciation from unconsolidated real estate investments			17,566						17,343												34,386						35,276
Depreciation allocated to noncontrolling interests and restricted share unitholders			(1,533)						(1,124)												(3,190)						(2,095)
Gains on sale of real estate investments, including our equity share from investments			(29,306)						(9,197)												(53,184)						(18,584)
FFO allocable to common shares			$	807,481					$	525,009					53.8		%				$	1,483,685					$	1,064,263					39.4		%
Eliminate the impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss			(101,723)						12,707												(137,100)						(32,678)
Preferred share redemption charge			—						16,989												—						16,989
Other items			(1,781)						(2,194)												766						(2,543)
Core FFO allocable to common shares			$	703,977					$	552,511					27.4		%				$	1,347,351					$	1,046,031					28.8		%
Reconciliation of Diluted Earnings per Share to FFO per Share and Core FFO per Share:
Diluted Earnings per share			$	3.42					$	1.97					73.6		%				$	6.05					$	4.18					44.7		%
Eliminate amounts per share excluded from FFO:
Depreciation and amortization			1.32						1.07												2.66						2.00
Gains on sale of real estate investments, including our equity share from investments			(0.16)						(0.05)												(0.30)						(0.11)
FFO per share			$	4.58					$	2.99					53.2		%				$	8.41					$	6.07					38.6		%
Eliminate the per share impact of items excluded from Core FFO, including our equity share from investments:
Foreign currency exchange (gain) loss			(0.58)						0.07												(0.78)						(0.19)
Preferred share redemption charge			—						0.10												—						0.10
Other items			(0.01)						(0.01)												0.01						(0.01)
Core FFO per share			$	3.99					$	3.15					26.7		%				$	7.64					$	5.97					28.0		%
Diluted weighted average common shares			176,312						175,547												176,325						175,194

Analysis of Net Income - Self-Storage Operations

Our self-storage operations are analyzed in four groups: (i) the 2,282 facilities that we have owned and operated on a stabilized basis since January 1, 2020 (the “Same Store Facilities”), (ii) 314 facilities we acquired since January 1, 2020 (the “Acquired Facilities”), (iii) 145 facilities that have been newly developed or expanded, or that will commence expansion by December 31, 2022 (the “Newly Developed and Expanded Facilities”), and (iv) 66 other facilities, which are otherwise not stabilized with respect to occupancies or rental rates since January 1, 2020 (the “Other Non-same Store Facilities”). See Note 13 to our June 30, 2022 consolidated financial statements “Segment Information,” for a reconciliation of the amounts in the tables below to our total net income.

Self-Storage Operations
Summary			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Percentage Change						2022						2021						Percentage Change
			(Dollar amounts and square footage in thousands)
Revenues:
Same Store Facilities			$	788,938					$	680,542					15.9		%				$	1,538,208					$	1,327,742					15.9		%
Acquired Facilities			95,498						32,372						195.0		%				181,869						43,495						318.1		%
Newly Developed and Expanded Facilities			65,899						46,214						42.6		%				125,975						87,691						43.7		%
Other Non-Same Store Facilities			22,951						17,865						28.5		%				44,249						34,412						28.6		%
			973,286						776,993						25.3		%				1,890,301						1,493,340						26.6		%
Cost of operations:
Same Store Facilities			180,331						167,653						7.6		%				368,260						349,072						5.5		%
Acquired Facilities			32,860						11,961						174.7		%				63,891						19,138						233.8		%
Newly Developed and Expanded Facilities			19,304						17,300						11.6		%				38,721						34,635						11.8		%
Other Non-Same Store Facilities			5,494						5,681						(3.3)		%				12,611						11,855						6.4		%
			237,989						202,595						17.5		%				483,483						414,700						16.6		%
Net operating income (a):
Same Store Facilities			608,607						512,889						18.7		%				1,169,948						978,670						19.5		%
Acquired Facilities			62,638						20,411						206.9		%				117,978						24,357						384.4		%
Newly Developed and Expanded Facilities			46,595						28,914						61.2		%				87,254						53,056						64.5		%
Other Non-Same Store Facilities			17,457						12,184						43.3		%				31,638						22,557						40.3		%
Total net operating income			735,297						574,398						28.0		%				1,406,818						1,078,640						30.4		%
Depreciation and amortization expense:
Same Store Facilities			(116,780)						(111,481)						4.8		%				(230,031)						(222,143)						3.6		%
Acquired Facilities			(76,255)						(38,591)						97.6		%				(160,720)						(50,064)						221.0		%
Newly Developed and Expanded Facilities			(14,781)						(13,243)						11.6		%				(29,409)						(28,512)						3.1		%
Other Non-Same Store Facilities			(10,892)						(9,413)						15.7		%				(20,676)						(18,868)						9.6		%
Total depreciation and amortization expense			(218,708)						(172,728)						26.6		%				(440,836)						(319,587)						37.9		%
Net income (loss):
Same Store Facilities			491,827						401,408						22.5		%				939,917						756,527						24.2		%
Acquired Facilities			(13,617)						(18,180)						(25.1)		%				(42,742)						(25,707)						66.3		%
Newly Developed and Expanded Facilities			31,814						15,671						103.0		%				57,845						24,544						135.7		%
Other Non-Same Store Facilities			6,565						2,771						136.9		%				10,962						3,689						197.2		%
Total net income			$	516,589					$	401,670					28.6		%				$	965,982					$	759,053					27.3		%
Number of facilities at period end:
Same Store Facilities																					2,282						2,282						—
Acquired Facilities																					314						161						95.0		%
Newly Developed and Expanded Facilities																					145						140						3.6		%
Other Non-Same Store Facilities																					66						66						—
																					2,807						2,649						6.0		%
Net rentable square footage at period end:
Same Store Facilities																					149,476						149,476						—
Acquired Facilities																					28,400						13,223						114.8		%
Newly Developed and Expanded Facilities																					16,898						15,531						8.8		%
Other Non-Same Store Facilities																					5,309						5,280						0.5		%
																					200,083						183,510						9.0		%

(a)Net operating income or “NOI” is a non-GAAP financial measure that excludes the impact of depreciation and amortization expense, which is based upon historical real estate costs and assumes that building values diminish ratably over time, while we believe that real estate values fluctuate due to market conditions. We utilize NOI in determining current property values, evaluating property performance, and in evaluating property operating trends. We believe that investors and analysts utilize NOI in a similar manner. NOI is not a substitute for net income, operating cash flow, or other related financial measures, in evaluating our operating results. See Note 13 to our June 30, 2022 consolidated financial statements for a reconciliation of NOI to our total net income for all periods presented.

Same Store Facilities

The Same Store Facilities consist of facilities we have owned and operated on a stabilized level of occupancy, revenues, and cost of operations since January 1, 2020. The composition of our Same Store Facilities allows us more effectively to evaluate the ongoing performance of our self-storage portfolio in 2020, 2021, and 2022 and exclude the impact of fill-up of unstabilized facilities, which can significantly affect operating trends. We believe investors and analysts use Same Store information in a similar manner. However, because other REITs may not compute Same Store Facilities in the same manner as we do, may not use the same terminology or may not present such a measure, Same Store Facilities may not be comparable among REITs.

The following table summarizes the historical operating results of these 2,282 facilities (149.5 million net rentable square feet) that represent approximately 75% of the aggregate net rentable square feet of our U.S. consolidated self-storage portfolio at June 30, 2022. It includes various measures and detail that we do not include in the analysis of the developed, acquired, and other non-same store facilities, due to the relative magnitude and importance of the Same Store Facilities relative to our other self-storage facilities.

Selected Operating Data for the Same Store Facilities (2,282 facilities)

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Percentage Change						2022						2021						Percentage Change
			(Dollar amounts in thousands, except for per square foot data)
Revenues (a):
Rental income			$	765,081					$	661,345					15.7%						$	1,490,514					$	1,288,497					15.7%
Late charges and administrative fees			23,857						19,197						24.3%						47,694						39,245						21.5%
Total revenues			788,938						680,542						15.9%						1,538,208						1,327,742						15.9%
Direct cost of operations (a):
Property taxes			71,227						67,484						5.5%						141,231						134,266						5.2%
On-site property manager payroll			29,531						25,650						15.1%						60,231						54,394						10.7%
Repairs and maintenance			13,255						13,107						1.1%						28,745						26,128						10.0%
Utilities			10,143						9,379						8.1%						21,589						20,175						7.0%
Marketing			8,648						6,863						26.0%						19,888						21,473						(7.4)%
Other direct property costs			20,253						18,311						10.6%						40,319						36,675						9.9%
Total direct cost of operations			153,057						140,794						8.7%						312,003						293,111						6.4%
Direct net operating income (b)			635,881						539,748						17.8%						1,226,205						1,034,631						18.5%
Indirect cost of operations (a):
Supervisory payroll			(8,739)						(9,214)						(5.2)%						(18,306)						(19,544)						(6.3)%
Centralized management costs			(14,767)						(13,091)						12.8%						(30,324)						(26,328)						15.2%
Share-based compensation			(3,768)						(4,554)						(17.3)%						(7,627)						(10,089)						(24.4)%
Net operating income			608,607						512,889						18.7%						1,169,948						978,670						19.5%
Depreciation and amortization expense			(116,780)						(111,481)						4.8%						(230,031)						(222,143)						3.6%
Net income			$	491,827					$	401,408					22.5%						$	939,917					$	756,527					24.2%
Gross margin (before indirect costs, depreciation and amortization expense)			80.6%						79.3%						1.6%						79.7%						77.9%						2.3%
Gross margin (before depreciation and amortization expense)			77.1%						75.4%						2.3%						76.1%						73.7%						3.3%
Weighted average for the period:
Square foot occupancy			95.8%						97.0%						(1.2)%						95.7%						96.3%						(0.6)%
Realized annual rental income per (c):
Occupied square foot			$	21.37					$	18.23					17.2%						$	20.83					$	17.89					16.4%
Available square foot			$	20.47					$	17.69					15.7%						$	19.94					$	17.23					15.7%
At June 30:
Square foot occupancy																					94.8%						96.5%						(1.8)%
Annual contract rent per occupied square foot (d)																					$	21.92					$	18.67					17.4%

(a)Revenues and cost of operations do not include tenant reinsurance and merchandise sale revenues and expenses generated at the facilities. See “Ancillary Operations” below for more information.

(b)Direct net operating income (“Direct NOI”), a subtotal within NOI, is a non-GAAP financial measure that excludes the impact of supervisory payroll, centralized management costs and share-based compensation in addition to depreciation and amortization expense. We utilize direct net operating income in evaluating property performance and in evaluating property operating trends as compared to our competitors.

(c)Realized annual rent per occupied square foot is computed by dividing rental income, before late charges and administrative fees, by the weighted average occupied square feet for the period. Realized annual rent per available square foot (“REVPAF”) is computed by dividing rental income, before late charges and administrative fees, by the total available net rentable square feet for the period. These measures exclude late charges and administrative fees in order to provide a better measure of our ongoing level of revenue. Late charges are dependent upon the level of delinquency and administrative fees are dependent upon the level of move-ins. In addition, the rates charged for late charges and administrative fees can vary independently from rental rates. These measures take into consideration promotional discounts, which reduce rental income.

(d)Annual contract rent represents the agreed upon monthly rate that is paid by our tenants in place at the time of measurement. Contract rates are initially set in the lease agreement upon move-in and we adjust them from time to time with notice. Contract rent excludes other fees that are charged on a per-item basis, such as late charges and administrative fees, does not reflect the impact of promotional discounts, and does not reflect the impact of rents that are written off as uncollectible.

Analysis of Same Store Revenue

We believe a balanced occupancy and rate strategy maximizes our revenues over time. We regularly adjust rental rates and promotional discounts offered (generally, “$1.00 rent for the first month”), as well as our marketing efforts to maximize revenue from new tenants to replace tenants that vacate.

We typically increase rental rates to our long-term tenants (generally, those who have been with us for at least a year) every six to twelve months. As a result, the number of long-term tenants we have in our facilities is an important factor in our revenue growth. The level of rate increases to long-term tenants is based upon evaluating the additional revenue from the increase against the negative impact of incremental move-outs, by considering the customer’s in-place rent and prevailing market rents, among other factors.

Revenues generated by our Same Store Facilities increased 15.9% in each of the three and six months ended June 30, 2022, as compared to the same periods in 2021, due primarily to a 17.2% and 16.4% increase in realized annual rent per occupied square foot for the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021.

Our growth in revenues, realized annual rent per occupied square foot, and REVPAF for the three and six months ended June 30, 2022 as compared to the same periods in 2021 was evident in each of our markets. Our weighted average square foot occupancy remained strong across our markets for the three and six months ended June 30, 2022.

The increase of realized annual rent per occupied square foot in the three and six months ended June 30, 2022 as compared to the same periods in 2021 was due to rate increases to existing long-term tenants in substantially all of our markets in 2022 as compared to curtailed increases in certain markets in 2021, combined with a 12.3% and 14.0% increase in average rates per square foot charged to new tenants moving in during the three and six months ended June 30, 2022 as compared to the same periods in 2021, as a result of strong customer demand across all markets. At June 30, 2022, annual contract rent per occupied square foot was 17.4% higher as compared to June 30, 2021.

We experienced high occupancy levels throughout the first six months of 2022, although our average square foot occupancy levels decreased 1.2% and 0.6% on a year over year basis during the three and six months ended June 30, 2022, respectively. Year over year move-out volumes increased 9.4% and 7.2% and year over year move-in volumes increased 2.7% and decreased 1.2% in the three and six months ended June 30, 2022, respectively, leading to a lower square foot occupancy at June 30, 2022 of 94.8% as compared to 96.5% at June 30, 2021. In addition, during the quarter ended June 30, 2022, move-out volumes exceeded move-in volumes resulting in lower occupancy at June 30, 2022 compared to March 31, 2022.

Move-out volumes were partially impacted by rental rates increases to our existing tenants in the three and six months ended June 30, 2022 as compared to the same periods in 2021. However, move-out activity from tenants not receiving increases was also higher in 2022 compared to the same periods in 2021 but remains below pre-2020 levels. Average length of stay of our tenants increased in the three and six months ended June 30, 2022 as compared to the same

periods in 2021, which supports our revenue growth by contributing to the number of tenants eligible for rental rate increases.

In order to attract more new tenants to replace those that vacated in the quarter ended June 30, 2022, we took a number of actions including increasing promotional discounting, moderating the year over year growth of rental rates to new customers and increasing marketing expense.

Demand historically has been higher in the summer months than in the winter months and, as a result, rental rates charged to new tenants have typically been higher in the summer months than in the winter months. Demand fluctuates due to various local and regional factors, including the overall economy. Demand into our system is also impacted by new supply of self-storage space as well as alternatives to self-storage.

We expect continued revenue growth for the remainder of 2022 supported by consistently high customer demand and a stable tenant base leading to increasing realized annual rent per occupied square foot while maintaining a high level of occupancy.

Late Charges and Administrative Fees

Late charges and administrative fees increased 24.3% and 21.5% for the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021, due to (i) higher late charges collected on delinquent accounts driven by more delinquent accounts compared to the same periods in 2021 and to a lesser extent (ii) higher administrative fees charged per move-in.

Selected Key Statistical Data

The following table sets forth average annual contract rent per square foot and total square footage for tenants moving in and moving out during the three and six months ended June 30, 2022 and 2021. It also includes promotional discounts, which vary based upon the move-in contractual rates, move-in volume, and percentage of tenants moving in who receive the discount.

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change						2022						2021						Change
			(Amounts in thousands, except for per square foot amounts)
Tenants moving in during the period:
Average annual contract rent per square foot			$	19.56					$	17.41					12.3%						$	18.37					$	16.12					14.0%
Square footage			23,916						23,288						2.7%						47,283						47,850						(1.2)%
Contract rents gained from move-ins			$	116,949					$	101,361					15.4%						$	434,294					$	385,671					12.6%
Promotional discounts given			$	9,665					$	7,735					25.0%						$	19,004					$	24,312					(21.8)%
Tenants moving out during the period:
Average annual contract rent per square foot			$	20.29					$	16.92					19.9%						$	19.84					$	16.57					19.7%
Square footage			24,324						22,236						9.4%						47,253						44,085						7.2%
Contract rents lost from move-outs			$	123,383					$	94,058					31.2%						$	468,750					$	365,244					28.3%

Analysis of Same Store Cost of Operations

Cost of operations (excluding depreciation and amortization) increased 7.6% and 5.5% in the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021. The increase during the three-month period is due primarily to increased property tax expense, on-site property manager payroll expense, marketing expense, other direct property costs and centralized management costs, while the increase during the six-month period is due primarily to increased property tax expense, on-site property manager payroll expense, other direct property costs and centralized management costs.

Property tax expense increased 5.5% and 5.2% in the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021, as a result of higher recently assessed values.

On-site property manager payroll expense increased 15.1% and 10.7% in the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021. The increase is primarily due to wage increases effective in late 2021 in response to competitive labor conditions experienced in most geographical markets, partially offset by a year-over-year decline in hours worked due to staffing reductions from revisions to other operational processes. We expect on-site property manager payroll expense to increase, to a lesser extent, in the remainder of 2022 as compared to 2021 due in part to continued competitive labor conditions.

Marketing expense includes Internet advertising and the operating costs of our telephone reservation center. Internet advertising expense, comprising keyword search fees assessed on a “per click” basis, varies based upon demand for self-storage space, the quantity of people inquiring about self-storage through online search, occupancy levels, the number and aggressiveness of bidding competitors, and other factors. These factors are volatile; accordingly, Internet advertising can increase or decrease significantly in the short-term. We increased marketing expense by 26.0% in the three months ended June 30, 2022 as compared to the same period in 2021 by a utilizing higher volume of online paid search programs to attract new tenants. Combined with the first quarter of 2022, marketing expense decreased by 7.4% on a year over year basis in the six months ended June 30, 2022.

Other direct property costs include administrative expenses specific to each self-storage facility, such as property insurance, telephone and data communication lines, business license costs, bank charges related to processing the facilities’ cash receipts, tenant mailings, credit card fees, eviction costs, and the cost of operating each property’s rental office. These costs increased 10.6% and 9.9% in the three and six months ended June 30, 2022, respectively, as compared to 2021. The increase was due primarily to an increase in credit card fees as result of a long-term trend of more customers paying with credit cards rather than cash, checks, or other methods of payment with lower transaction costs.

Centralized management costs represents administrative and cash compensation expenses for shared general corporate functions to the extent their efforts are devoted to self-storage operations. Such functions include information technology support, hardware, and software, as well as centralized administration of payroll, benefits, training, facilities management, customer service, pricing and marketing, operational accounting and finance, and legal costs. Centralized management costs increased 12.8% and 15.2% in the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021. The increase was due primarily to an increase in technology and data team costs that support property operations. We expect increases in centralized management costs in the remainder of 2022 due to continued investment in our technology and data platforms that support our property operations.

Analysis of Market Trends

The following tables set forth selected market trends in our Same Store Facilities:

Same Store Facilities Operating Trends by Market

			As of June 30, 2022						Three Months Ended June 30,
			Number of Facilities			Square Feet (millions)			Realized Rent per Occupied Square Foot									Average Occupancy									Realized Rent per Available Square Foot
			2022			2021			Change			2022			2021			Change			2022			2021			Change
Los Angeles			212			15.3			$	31.88		$	26.97		18.2		%	97.2		%	98.3		%	(1.1)		%	$	30.98		$	26.52		16.8		%
San Francisco			128			7.8			31.22			27.74			12.5		%	95.8		%	97.7		%	(1.9)		%	29.91			27.11			10.3		%
New York			90			6.4			29.99			26.91			11.4		%	95.3		%	96.9		%	(1.7)		%	28.59			26.08			9.6		%
Miami			83			5.8			27.54			21.66			27.1		%	96.6		%	97.4		%	(0.8)		%	26.60			21.09			26.1		%
Seattle-Tacoma			86			5.7			24.75			21.54			14.9		%	95.3		%	96.3		%	(1.0)		%	23.59			20.74			13.7		%
Washington DC			90			5.5			25.09			22.16			13.2		%	94.3		%	96.4		%	(2.2)		%	23.67			21.36			10.8		%
Dallas-Ft. Worth			106			7.0			17.02			14.33			18.8		%	95.6		%	96.8		%	(1.2)		%	16.26			13.88			17.1		%
Atlanta			101			6.6			17.10			14.02			22.0		%	95.2		%	96.8		%	(1.7)		%	16.27			13.57			19.9		%
Chicago			129			8.1			18.88			16.15			16.9		%	95.3		%	96.8		%	(1.5)		%	17.98			15.64			15.0		%
Houston			95			6.8			15.58			13.24			17.7		%	94.5		%	95.1		%	(0.6)		%	14.72			12.59			16.9		%
Orlando-Daytona			70			4.5			17.47			14.39			21.4		%	96.8		%	97.0		%	(0.2)		%	16.91			13.95			21.2		%
Philadelphia			56			3.5			20.60			18.06			14.1		%	95.8		%	97.8		%	(2.0)		%	19.72			17.66			11.7		%
West Palm Beach			37			2.6			25.03			20.59			21.6		%	96.6		%	97.2		%	(0.6)		%	24.19			20.02			20.8		%
Tampa			51			3.4			18.53			15.02			23.4		%	95.5		%	96.5		%	(1.0)		%	17.70			14.50			22.1		%
Charlotte			50			3.8			14.72			12.08			21.9		%	95.8		%	96.3		%	(0.5)		%	14.10			11.63			21.2		%
All other markets			898			56.7			17.68			15.13			16.9		%	95.8		%	97.0		%	(1.2)		%	16.94			14.67			15.5		%
Totals			2,282			149.5			$	21.37		$	18.23		17.2		%	95.8		%	97.0		%	(1.2)		%	$	20.47		$	17.69		15.7		%

Same Store Facilities Operating Trends by Market (Continued)

			Three Months Ended June 30,
			Revenues ($000's)									Direct Expenses ($000's)									Indirect Expenses ($000's)									Net Operating Income ($000's)
			2022			2021			Change			2022			2021			Change			2022			2021			Change			2022			2021			Change
Los Angeles			$	120,804		$	103,244		17.0		%	$	15,214		$	13,767		10.5		%	$	2,733		$	2,618		4.4		%	$	102,857		$	86,859		18.4		%
San Francisco			59,564			53,845			10.6		%	8,364			7,847			6.6		%	1,724			1,604			7.5		%	49,476			44,394			11.4		%
New York			47,217			42,970			9.9		%	11,246			10,089			11.5		%	1,339			1,309			2.3		%	34,632			31,572			9.7		%
Miami			39,968			31,745			25.9		%	6,816			6,392			6.6		%	1,005			1,009			(0.4)		%	32,147			24,344			32.1		%
Seattle-Tacoma			34,489			30,235			14.1		%	5,612			5,408			3.8		%	936			986			(5.1)		%	27,941			23,841			17.2		%
Washington DC			33,725			30,361			11.1		%	6,744			6,511			3.6		%	1,037			971			6.8		%	25,944			22,879			13.4		%
Dallas-Ft. Worth			29,424			25,063			17.4		%	6,365			5,825			9.3		%	1,131			1,167			(3.1)		%	21,928			18,071			21.3		%
Atlanta			28,272			23,539			20.1		%	5,608			4,746			18.2		%	1,171			1,245			(5.9)		%	21,493			17,548			22.5		%
Chicago			37,804			32,809			15.2		%	14,004			11,767			19.0		%	1,436			1,432			0.3		%	22,364			19,610			14.0		%
Houston			25,947			22,124			17.3		%	7,262			6,966			4.2		%	1,004			1,100			(8.7)		%	17,681			14,058			25.8		%
Orlando-Daytona			19,544			16,141			21.1		%	3,646			3,321			9.8		%	859			832			3.2		%	15,039			11,988			25.5		%
Philadelphia			18,072			16,121			12.1		%	3,836			3,878			(1.1)		%	675			657			2.7		%	13,561			11,586			17.0		%
West Palm Beach			16,415			13,557			21.1		%	3,167			2,777			14.0		%	474			498			(4.8)		%	12,774			10,282			24.2		%
Tampa			15,527			12,722			22.0		%	3,114			2,788			11.7		%	593			611			(2.9)		%	11,820			9,323			26.8		%
Charlotte			13,978			11,506			21.5		%	2,271			2,071			9.7		%	547			544			0.6		%	11,160			8,891			25.5		%
All other markets			248,188			214,560			15.7		%	49,788			46,641			6.7		%	10,610			10,276			3.3		%	187,790			157,643			19.1		%
Totals			$	788,938		$	680,542		15.9		%	$	153,057		$	140,794		8.7		%	$	27,274		$	26,859		1.5		%	$	608,607		$	512,889		18.7		%

Same Store Facilities Operating Trends by Market (Continued)

			As of June 30, 2022						Six Months Ended June 30,
			Number of Facilities			Square Feet (millions)			Realized Rent per Occupied Square Foot									Average Occupancy									Realized Rent per Available Square Foot
			2022			2021			Change			2022			2021			Change			2022			2021			Change
Los Angeles			212			15.3			$	30.66		$	26.66		15.0		%	97.5		%	98.1		%	(0.6)		%	$	29.88		$	26.15		14.3		%
San Francisco			128			7.8			30.55			27.35			11.7		%	95.9		%	97.6		%	(1.7)		%	29.31			26.70			9.8		%
New York			90			6.4			29.47			26.65			10.6		%	95.4		%	96.4		%	(1.0)		%	28.13			25.70			9.5		%
Miami			83			5.8			26.68			21.06			26.7		%	96.7		%	96.9		%	(0.2)		%	25.81			20.40			26.5		%
Seattle-Tacoma			86			5.7			24.18			21.07			14.8		%	95.1		%	95.6		%	(0.5)		%	23.01			20.14			14.3		%
Washington DC			90			5.5			24.61			21.76			13.1		%	94.2		%	95.8		%	(1.7)		%	23.18			20.84			11.2		%
Dallas-Ft. Worth			106			7.0			16.60			13.96			18.9		%	95.4		%	95.8		%	(0.4)		%	15.84			13.37			18.5		%
Atlanta			101			6.6			16.63			13.68			21.6		%	95.0		%	95.7		%	(0.7)		%	15.80			13.09			20.7		%
Chicago			129			8.1			18.44			15.79			16.8		%	94.9		%	95.8		%	(0.9)		%	17.50			15.13			15.7		%
Houston			95			6.8			15.23			12.96			17.5		%	94.3		%	94.3		%	—		%	14.36			12.22			17.5		%
Orlando-Daytona			70			4.5			16.98			14.06			20.8		%	96.5		%	96.1		%	0.4		%	16.38			13.52			21.2		%
Philadelphia			56			3.5			20.21			17.77			13.7		%	95.9		%	97.3		%	(1.4)		%	19.38			17.29			12.1		%
West Palm Beach			37			2.6			24.34			19.93			22.1		%	96.8		%	96.8		%	—		%	23.56			19.29			22.1		%
Tampa			51			3.4			18.07			14.57			24.0		%	95.6		%	96.1		%	(0.5)		%	17.28			13.99			23.5		%
Charlotte			50			3.8			14.32			11.74			22.0		%	95.7		%	95.6		%	0.1		%	13.70			11.22			22.1		%
All other markets			898			56.7			17.28			14.81			16.7		%	95.6		%	96.2		%	(0.6)		%	16.52			14.24			16.0		%
Totals			2,282			149.5			$	20.83		$	17.89		16.4		%	95.7		%	96.3		%	(0.6)		%	$	19.94		$	17.23		15.7		%

Same Store Facilities Operating Trends by Market (Continued)

			Six Months Ended June 30,
			Revenues ($000's)									Direct Expenses ($000's)									Indirect Expenses ($000's)									Net Operating Income ($000's)
			2022			2021			Change			2022			2021			Change			2022			2021			Change			2022			2021			Change
Los Angeles			$	233,150		$	203,574		14.5		%	$	30,992		$	29,087		6.5		%	$	5,633		$	5,580		0.9		%	$	196,525		$	168,907		16.4		%
San Francisco			116,722			105,932			10.2		%	17,199			16,400			4.9		%	3,434			3,412			0.6		%	96,089			86,120			11.6		%
New York			92,825			84,788			9.5		%	23,440			21,352			9.8		%	2,707			2,773			(2.4)		%	66,678			60,663			9.9		%
Miami			77,559			61,503			26.1		%	13,658			12,863			6.2		%	2,063			2,142			(3.7)		%	61,838			46,498			33.0		%
Seattle-Tacoma			67,296			58,784			14.5		%	11,548			11,329			1.9		%	1,946			2,070			(6.0)		%	53,802			45,385			18.5		%
Washington DC			66,102			59,300			11.5		%	13,960			13,346			4.6		%	2,077			2,068			0.4		%	50,065			43,886			14.1		%
Dallas-Ft. Worth			57,352			48,408			18.5		%	12,750			12,206			4.5		%	2,288			2,369			(3.4)		%	42,314			33,833			25.1		%
Atlanta			55,034			45,531			20.9		%	10,677			9,555			11.7		%	2,430			2,534			(4.1)		%	41,927			33,442			25.4		%
Chicago			73,631			63,560			15.8		%	28,904			24,287			19.0		%	3,023			2,934			3.0		%	41,704			36,339			14.8		%
Houston			50,647			43,023			17.7		%	14,050			13,705			2.5		%	2,120			2,257			(6.1)		%	34,477			27,061			27.4		%
Orlando-Daytona			37,944			31,360			21.0		%	7,338			6,866			6.9		%	1,775			1,685			5.3		%	28,831			22,809			26.4		%
Philadelphia			35,572			31,642			12.4		%	8,019			7,726			3.8		%	1,365			1,381			(1.2)		%	26,188			22,535			16.2		%
West Palm Beach			32,009			26,179			22.3		%	6,306			5,644			11.7		%	963			1,041			(7.5)		%	24,740			19,494			26.9		%
Tampa			30,349			24,616			23.3		%	6,246			5,787			7.9		%	1,217			1,245			(2.2)		%	22,886			17,584			30.2		%
Charlotte			27,180			22,255			22.1		%	4,649			4,386			6.0		%	1,160			1,116			3.9		%	21,371			16,753			27.6		%
All other markets			484,836			417,287			16.2		%	102,267			98,572			3.7		%	22,056			21,354			3.3		%	360,513			297,361			21.2		%
Totals			$	1,538,208		$	1,327,742		15.9		%	$	312,003		$	293,111		6.4		%	$	56,257		$	55,961		0.5		%	$	1,169,948		$	978,670		19.5		%

Acquired Facilities

The Acquired Facilities represent 314 facilities that we acquired in 2020, 2021, and 2022. As a result of the stabilization process and timing of when these facilities were acquired, year-over-year changes can be significant. The following table summarizes operating data with respect to the Acquired Facilities:

ACQUIRED FACILITIES			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change (a)						2022						2021						Change (a)
			($ amounts in thousands, except for per square foot amounts)
Revenues (b):
2020 Acquisitions			$	18,413					$	12,547					$	5,866					$	35,481					$	22,838					$	12,643
2021 Acquisitions			75,350						19,825						55,525						144,175						20,657						123,518
2022 Acquisitions			1,735						—						1,735						2,213						—						2,213
Total revenues			95,498						32,372						63,126						181,869						43,495						138,374
Cost of operations (b):
2020 Acquisitions			6,263						6,251						12						13,077						12,877						200
2021 Acquisitions			25,359						5,710						19,649						49,257						6,261						42,996
2022 Acquisitions			1,238						—						1,238						1,557						—						1,557
Total cost of operations			32,860						11,961						20,899						63,891						19,138						44,753
Net operating income:
2020 Acquisitions			12,150						6,296						5,854						22,404						9,961						12,443
2021 Acquisitions			49,991						14,115						35,876						94,918						14,396						80,522
2022 Acquisitions			497						—						497						656						—						656
Net operating income			62,638						20,411						42,227						117,978						24,357						93,621
Depreciation and amortization expense			(76,255)						(38,591)						(37,664)						(160,720)						(50,064)						(110,656)
Net loss			$	(13,617)					$	(18,180)					$	4,563					$	(42,742)					$	(25,707)					$	(17,035)
At June 30:
Square foot occupancy:
2020 Acquisitions																					91.6%						88.7%						3.3%
2021 Acquisitions																					86.0%						86.2%						(0.2)%
2022 Acquisitions																					68.0%						—						—
																					86.1%						87.1%						(1.1)%
Annual contract rent per occupied square foot:
2020 Acquisitions																					$	16.31					$	12.75					27.9%
2021 Acquisitions																					16.67						17.97						(7.2)%
2022 Acquisitions																					11.74						—						—
																					$	16.41					$	15.94					2.9%
Number of facilities:
2020 Acquisitions																					62						62						—
2021 Acquisitions																					232						99						133
2022 Acquisitions																					20						—						20
																					314						161						153
Net rentable square feet (in thousands) (c):
2020 Acquisitions																					5,075						5,075						—
2021 Acquisitions																					21,830						8,148						13,682
2022 Acquisitions																					1,495						—						1,495
																					28,400						13,223						15,177

ACQUIRED FACILITIES (Continued)

			As of June 30, 2022
Costs to acquire (in thousands):
2020 Acquisitions			$	796,065
2021 Acquisitions			5,115,276
2022 Acquisitions			251,282
			$	6,162,623

(a)Represents the percentage change with respect to square foot occupancy and annual contract rent per occupied square foot, and the absolute nominal change with respect to all other items.

(b)Revenues and cost of operations do not include tenant reinsurance and merchandise sale revenues and expenses generated at the facilities. See “Ancillary Operations” below for more information.

(c)The Acquired Facilities have an aggregate of approximately 28.4 million net rentable square feet, including 11.0 million in Texas, 3.8 million in Maryland, 1.1 million in Virginia, 0.9 million in North Carolina, 0.8 million in Colorado, 0.7 million in Arizona, 0.6 million in each of California, Florida, Georgia, Illinois, Minnesota, Ohio and Oklahoma, 0.5 million in each of Idaho, Michigan, Missouri, Nebraska, Oregon and Pennsylvania, 0.4 million in each of Indiana, South Carolina and Tennessee, and 0.3 million in each of Alabama, Nevada and Washington, and 0.8 million in other states.

We have been active in acquiring facilities in recent years. Since the beginning of 2020, we acquired a total of 314 facilities with 28.4 million net rentable square feet for $6.2 billion. During the three and six months ended June 30, 2022, these facilities contributed net operating income of $62.6 million and $118.0 million, respectively.

During 2021, we acquired the ezStorage portfolio, consisting of 48 properties (4.1 million net rentable square feet) for acquisition cost of $1.8 billion, which includes 47 self-storage facilities and one property that was under construction. Included in the Acquisition results in the table above are ezStorage portfolio revenues of $48.7 million, NOI of $38.3 million (including Direct NOI of $39.7 million), and average square footage occupancy of 89.7% for the six months ended June 30, 2022.

During 2021, we acquired the All Storage portfolio, consisting of 56 properties (7.5 million net rentable square feet) for $1.5 billion, with 55 properties closed in the fourth quarter of 2021 and one property closed in February 2022. Included in the Acquisition results in the table above are All Storage portfolio revenues of $35.2 million, NOI of $21.4 million (including Direct NOI of $22.8 million), and average square footage occupancy of 78.4% for the six months ended June 30, 2022.

We remain active in seeking to acquire additional self-storage facilities through 2022. Subsequent to June 30, 2022, we acquired or were under contract to acquire 24 self-storage facilities across ten states with 1.7 million net rentable square feet, for $257.4 million.

Developed and Expanded Facilities

The developed and expanded facilities include 54 facilities that were developed on new sites since January 1, 2017, and 91 facilities expanded to increase their net rentable square footage. Of these expansions, 51 were completed before 2021, 22 were completed in 2021 or 2022, and 18 are currently in process at June 30, 2022. The following table summarizes operating data with respect to the Developed and Expanded Facilities:

DEVELOPED AND EXPANDED FACILITIES
			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change (a)						2022						2021						Change (a)
			($ amounts in thousands, except for per square foot amounts)
Revenues (b):
Developed in 2017			$	8,599					$	6,661					$	1,938					$	16,541					$	12,704					$	3,837
Developed in 2018			8,990						6,769						2,221						17,283						12,822						4,461
Developed in 2019			3,997						2,819						1,178						7,623						5,157						2,466
Developed in 2020			1,676						662						1,014						3,158						1,031						2,127
Developed in 2021			1,931						144						1,787						3,360						148						3,212
Expansions completed before 2021			23,401						16,424						6,977						44,817						30,695						14,122
Expansions completed in 2021 or 2022			11,055						6,568						4,487						20,856						12,831						8,025
Expansions in process			6,250						6,167						83						12,337						12,303						34
Total revenues			65,899						46,214						19,685						125,975						87,691						38,284
Cost of operations (b):
Developed in 2017			2,696						2,418						278						5,324						4,921						403
Developed in 2018			2,432						2,543						(111)						4,987						5,105						(118)
Developed in 2019			1,504						1,287						217						2,872						2,695						177
Developed in 2020			427						444						(17)						855						843						12
Developed in 2021			832						407						425						1,687						490						1,197
Expansions completed before 2021			7,442						7,292						150						15,043						14,368						675
Expansions completed in 2021 or 2022			2,747						1,642						1,105						5,444						3,531						1,913
Expansions in process			1,224						1,267						(43)						2,509						2,682						(173)
Total cost of operations			19,304						17,300						2,004						38,721						34,635						4,086
Net operating income (loss):
Developed in 2017			5,903						4,243						1,660						11,217						7,783						3,434
Developed in 2018			6,558						4,226						2,332						12,296						7,717						4,579
Developed in 2019			2,493						1,532						961						4,751						2,462						2,289
Developed in 2020			1,249						218						1,031						2,303						188						2,115
Developed in 2021			1,099						(263)						1,362						1,673						(342)						2,015
Expansions completed before 2021			15,959						9,132						6,827						29,774						16,327						13,447
Expansions completed in 2021 or 2022			8,308						4,926						3,382						15,412						9,300						6,112
Expansions in process			5,026						4,900						126						9,828						9,621						207
Net operating income			46,595						28,914						17,681						87,254						53,056						34,198
Depreciation and amortization expense			(14,781)						(13,243)						(1,538)						(29,409)						(28,512)						(897)
Net income			$	31,814					$	15,671					$	16,143					$	57,845					$	24,544					$	33,301

DEVELOPED AND EXPANDED FACILITIES (Continued)
																					As of June 30,
																					2022						2021						Change (a)
																					($ amounts in thousands, except for per square foot amounts)
Square foot occupancy:
Developed in 2017																					93.2%						94.5%						(1.4)%
Developed in 2018																					91.2%						92.2%						(1.1)%
Developed in 2019																					88.9%						91.3%						(2.6)%
Developed in 2020																					92.6%						84.6%						9.5%
Developed in 2021																					80.7%						45.7%						76.6%
Expansions completed before 2021																					89.9%						87.5%						2.7%
Expansions completed in 2021 or 2022																					83.2%						89.8%						(7.3)%
Expansions in process																					85.2%						93.1%						(8.5)%
																					87.8%						88.9%						(1.2)%
Annual contract rent per occupied square foot:
Developed in 2017																					$	18.27					$	14.05					30.0%
Developed in 2018																					19.48						14.91						30.7%
Developed in 2019																					17.45						12.51						39.5%
Developed in 2020																					20.44						13.01						57.1%
Developed in 2021																					16.52						11.48						43.9%
Expansions completed before 2021																					15.39						11.90						29.3%
Expansions completed in 2021 or 2022																					21.24						19.09						11.3%
Expansions in process																					24.66						21.62						14.1%
																					$	18.18					$	14.25					27.6%
Number of facilities:
Developed in 2017																					16						16						—
Developed in 2018																					18						18						—
Developed in 2019																					11						11						—
Developed in 2020																					3						3						—
Developed in 2021																					6						3						3
Expansions completed before 2021																					51						51						—
Expansions completed in 2021 or 2022																					22						20						2
Expansions in process																					18						18						—
																					145						140						5
Net rentable square feet (in thousands) (c):
Developed in 2017																					2,040						2,040						—
Developed in 2018																					2,069						2,069						—
Developed in 2019																					1,057						1,057						—
Developed in 2020																					347						347						—
Developed in 2021																					681						359						322
Expansions completed before 2021																					6,879						6,879						—
Expansions completed in 2021 or 2022																					2,645						1,556						1,089
Expansions in process																					1,180						1,224						(44)
																					16,898						15,531						1,367

			As of June 30, 2022
Costs to develop (in thousands):
Developed in 2017			$	239,871
Developed in 2018			262,187
Developed in 2019			150,387
Developed in 2020			42,063
Developed in 2021			115,632
Expansions completed before 2021 (d)			478,659
Expansions completed in 2021 or 2022 (d)			160,386
			$	1,449,185

(a)Represents the percentage change with respect to square foot occupancy and annual contract rent per occupied square foot, and the absolute nominal change with respect to all other items.

(b)Revenues and cost of operations do not include tenant reinsurance and merchandise sales generated at the facilities. See “Ancillary Operations” below for more information.

(c)The facilities included above have an aggregate of approximately 16.9 million net rentable square feet at June 30, 2022, including 5.0 million in Texas, 2.9 million in Florida, 2.2 million in California, 1.5 million in Colorado, 1.4 million in Minnesota, 0.9 million in North Carolina, 0.6 million in Michigan, 0.4 million in each of Missouri, South Carolina and Washington, 0.3 million in each of New Jersey and Virginia and 0.6 million in other states.

(d)These amounts only include the direct cost incurred to expand and renovate these facilities, and do not include (i) the original cost to develop or acquire the facility or (ii) the lost revenue on space demolished during the construction and fill-up period.

It typically takes at least three to four years for a newly developed or expanded self-storage facility to stabilize with respect to revenues. Physical occupancy can be achieved as early as two to three years following completion of the development or expansion through offering lower rental rates during fill-up. As a result, even after achieving high occupancy, there can still be a period of elevated revenue growth as the tenant base matures and higher rental rates are achieved.

We believe that our development and redevelopment activities generate favorable risk-adjusted returns over the long run. However, in the short run, our earnings are diluted during the construction and stabilization period due to the cost of capital to fund the development cost, as well as the related construction and development overhead expenses included in general and administrative expense.

We typically underwrite new developments to stabilize at approximately an 8.0% NOI yield on cost. Our developed facilities have thus far leased up as expected and are at various stages of their revenue stabilization periods. The actual annualized yields that we may achieve on these facilities upon stabilization will depend on many factors, including local and current market conditions in the vicinity of each property and the level of new and existing supply.

The facilities under “expansions completed” represent those facilities where the expansions have been completed at June 30, 2022. We incurred a total of $639.0 million in direct cost to expand these facilities, demolished a total of 1.1 million net rentable square feet of storage space, and built a total of 6.0 million net rentable square feet of new storage space.

At June 30, 2022, we had 30 additional facilities in development, which will have a total of 2.6 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $480.3 million. We expect these facilities to open over the next 18 to 24 months.

The facilities under "expansion in process" represent those facilities where construction is in process at June 30, 2022, and together with additional future expansion activities primarily related to our Same Store Facilities at June 30, 2022, we expect to add a total of 2.8 million net rentable square feet of storage space by expanding existing self-storage facilities for an aggregate direct development cost of $547.0 million.

Other Non-Same Store Facilities

The “Other Non-Same Store Facilities” represent facilities which, while not newly acquired, developed, or expanded, are not fully stabilized since January 1, 2020, including facilities under fill-up as well as facilities damaged in casualty events such as hurricanes, floods, and fires.

The Other Non-Same Store Facilities have an aggregate of 5.3 million net rentable square feet, including 1.1 million in Texas, 0.6 million in each of Florida and Washington, 0.4 million in each of California and Virginia, 0.3 million in each of Indiana and South Carolina, 0.2 million in each of Georgia, Kentucky, Massachusetts and Tennessee and 0.8 million in other states.

During the three and six months ended June 30, 2022 and 2021, the average occupancy for these facilities totaled 93.1% and 92.4%, respectively, as compared to 93.9% and 92.3% for the same periods in 2021, and the realized rent per occupied square foot totaled $18.02 and $17.47, respectively, as compared to $13.86 and $13.54 for the same periods in 2021.

Depreciation and amortization expense

Depreciation and amortization expense for Self-Storage Operations increased $46.0 million and $121.2 million in the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021, primarily due to newly acquired facilities of $5.1 billion in 2021. We expect continued increases in depreciation expense in the remainder of 2022 as a result of elevated levels of capital expenditures and new facilities that are acquired, developed or expanded in the remainder of 2022.

Ancillary Operations

Ancillary revenues and expenses include amounts associated with the reinsurance of policies against losses to goods stored by tenants in our self-storage facilities, sale of merchandise at our self-storage facilities, and management of property owned by unrelated third parties. The following table sets forth our ancillary operations:

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change						2022						2021						Change
			(Amounts in thousands)
Revenues:
Tenant reinsurance premiums			$	46,687					$	40,816					$	5,871					$	91,882					$	80,497					$	11,385
Merchandise			7,534						7,512						22						14,405						14,548						(143)
Third party property management			4,538						3,994						544						8,902						8,192						710
Total revenues			58,759						52,322						6,437						115,189						103,237						11,952
Cost of operations:
Tenant reinsurance			8,198						7,262						936						15,475						15,086						389
Merchandise			4,527						4,706						(179)						8,431						8,672						(241)
Third party property management			4,485						4,023						462						8,819						8,551						268
Total cost of operations			17,210						15,991						1,219						32,725						32,309						416
Net operating income (loss):
Tenant reinsurance			38,489						33,554						4,935						76,407						65,411						10,996
Merchandise			3,007						2,806						201						5,974						5,876						98
Third party property management			53						(29)						82						83						(359)						442
Total net operating income			$	41,549					$	36,331					$	5,218					$	82,464					$	70,928					$	11,536

Tenant reinsurance operations: Tenant reinsurance premium revenue increased $5.9 million or 14.4% for the three months ended June 30, 2022, and increased $11.4 million or 14.1% for the six months ended June 30, 2022, in each case as compared to the same period in 2021, as a result of an increase in our tenant base with respect to acquired, newly developed, and expanded facilities and the third party properties we manage. Tenant reinsurance premium revenue generated from tenants at our Same-Store Facilities were $34.8 million and $69.2 million for the three and six months ended June 30, 2022, respectively, as compared to $33.3 million and $66.5 million for the same periods in 2021, representing an increase of 4.5% and 4.1%, respectively.

We expect future growth will come primarily from customers of newly acquired and developed facilities, as well as additional tenants at our existing unstabilized self-storage facilities.

Cost of operations primarily includes claims paid as well as claims adjustment expenses. Claims expenses vary based upon the number of insured tenants and the volume of events which drive covered customer losses, such as burglary, as well as catastrophic weather events affecting multiple properties such as hurricanes and floods.

Merchandise sales: Sales of locks, boxes, and packing supplies at our self-storage facilities are primarily impacted by the level of move-ins and other customer traffic at our self-storage facilities. We do not expect any significant changes in revenues or profitability from our merchandise sales in the remainder of 2022.

Third-party property management: At June 30, 2022, we managed 103 facilities for unrelated third parties, and were under contract to manage 63 additional facilities including 57 facilities that are currently under construction. During the six months ended June 30, 2022, we added 27 facilities to the program, acquired three facilities from the program, and had ten properties exit the program due to sales to other buyers. While we expect this business to increase in scope and size, we do not expect any significant changes in overall profitability of this business in the near term as we seek new properties to manage and are in the earlier stages of fill-up for newly managed properties.

Analysis of items not allocated to segments

Equity in earnings of unconsolidated real estate entities

For all periods presented, we have equity investments in PSB and Shurgard, which we account for using the equity method and record our pro-rata share of the net income of these entities. The following table, and the discussion below, sets forth our equity in earnings of unconsolidated real estate entities:

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change						2022						2021						Change
			(Amounts in thousands)
Equity in earnings:
PSB			$	40,124					$	20,908					$	19,216					$	77,010					$	35,384					$	41,626
Shurgard			8,401						8,158						243						14,939						13,138						1,801
Total equity in earnings			$	48,525					$	29,066					$	19,459					$	91,949					$	48,522					$	43,427

Investment in PSB: Included in our equity earnings from PSB for the three and six months ended June 30, 2022 is our equity share of gains on sale of real estate totaling $25.5 million and $49.1 million, respectively, as compared to $8.0 million for each of the three and six months ended June 30, 2021. For the three and six months ended June 30, 2022, our equity share of earnings from PSB contributed $26.6 million and $52.1 million, respectively, to Core FFO, as compared to $25.4 million and $49.6 million for the same periods in 2021.

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

In connection with the sale of our equity investment in PSB, on July 22, 2022, our Board of Trustees declared a special cash dividend of $13.15 per common share. The special dividend is payable on August 4, 2022 to shareholders of record as of August 1, 2022.

As a result of closing the sale of PSB, we will record significantly lower equity in earnings of unconsolidated subsidiaries in future periods than we have in historical periods.

Investment in Shurgard: Included in our equity earnings from Shurgard for each of the three and six months ended June 30, 2022 is our equity share of gains on sale of real estate totaling $3.5 million.

For purposes of recording our equity in earnings from Shurgard, the Euro was translated at exchange rates of approximately 1.045 U.S. Dollars per Euro at June 30, 2022 (1.134 at December 31, 2021), and average exchange rates of 1.065 and 1.205 for the three months ended June 30, 2022 and 2021, respectively, and average exchange rates of 1.093 and 1.205 for the six months ended June 30, 2022 and 2021, respectively.

General and administrative expense: The following table sets forth our general and administrative expense:

			Three Months Ended June 30,																		Six Months Ended June 30,
			2022						2021						Change						2022						2021						Change
			(Amounts in thousands)
Share-based compensation expense			$	12,034					$	12,864					$	(830)					$	20,832					$	20,544					$	288
Development and acquisition costs			3,674						2,888						786						6,514						4,695						1,819
Tax compliance costs and taxes paid			3,381						2,346						1,035						6,115						3,955						2,160
Legal costs			980						1,200						(220)						1,220						2,343						(1,123)
Corporate management costs			4,848						4,738						110						10,694						8,914						1,780
Other costs			3,914						3,704						210						6,525						6,863						(338)
Total			$	28,831					$	27,740					$	1,091					$	51,900					$	47,314					$	4,586

Development and acquisition costs primarily represent internal and external expenses related to our development and acquisition of real estate facilities and varies primarily based upon the level of activities. The amounts in the above table are net of $4.1 million and $8.4 million for the three and six months ended June 30, 2022, respectively, as compared to $3.3 million and $6.5 million for the same periods in 2021, in development costs that were capitalized to newly developed and redeveloped self-storage facilities.

Interest and other income: Interest and other income is comprised of the revenue and cost associated with our commercial operations, interest earned on cash balances, and trademark license fees received from Shurgard, as well as sundry other income items that are received from time to time in varying amounts. For the three and six months ended June 30, 2022, we recognized $10.3 million and $13.7 million interest and other income, respectively, as compared to $3.1 million and $6.0 million for the same periods in 2021. Amounts attributable to commercial operations was $2.2 million in each of the three months ended June 30, 2022 and 2021, and $4.2 million in each of the six months ended June 30, 2022 and 2021. Excluding the aforementioned amounts attributable to our commercial operations, interest and other income increased $7.2 million and $7.7 million from the three and six months ended June 30, 2021 to the same periods in 2022, primarily due to (i) a $4.3 million unrealized gain on private equity investments recognized during the three and six months ended June 30, 2022 and (ii) $2.0 million and $2.1 million increase in interest earned on higher cash balances during the three and six months ended June 30, 2022, respectively, as compared to the same periods in 2021.

Interest expense: For the three and six months ended June 30, 2022, we incurred $34.3 million and $68.6 million, respectively, of interest on our outstanding notes payable, as compared to $22.7 million and $38.9 million for the same periods in 2021. In determining interest expense, these amounts were offset by capitalized interest of $1.4 million and $2.6 million during the three and six months ended June 30, 2022, respectively, associated with our development activities, as compared to $0.7 million and $1.7 million for the same periods in 2021. The increase of interest expense in the three and six months ended June 30, 2022 as compared to the same periods in 2021 is due to our issuances of debt to fund our 2021 acquisition activity. At June 30, 2022, we had $7.3 billion of notes payable outstanding, with a weighted average interest rate of approximately 1.9%.

Foreign Currency Exchange Gain (Loss): For the three and six months ended June 30, 2022, we recorded foreign currency gains of $101.7 million and $137.1 million, respectively, representing primarily the changes in the U.S. Dollar equivalent of our Euro-denominated unsecured notes due to fluctuations in exchange rates. For the three and six months ended June 30, 2021, we recorded foreign currency losses of $12.7 million and gains of $32.7 million, respectively. The Euro was translated at exchange rates of approximately 1.045 U.S. Dollars per Euro at June 30, 2022, 1.134 at December 31, 2021, 1.188 at June 30, 2021 and 1.226 at December 31, 2020. Future gains and losses on foreign currency will be dependent upon changes in the relative value of the Euro to the U.S. Dollar and the level of Euro-denominated notes payable outstanding.

Gain on Sale of Real Estate: In the three and six months ended June 30, 2021, we recorded gains totaling $4.0 million and $13.4 million, respectively, in connection with the partial or complete sale of real estate facilities pursuant to eminent domain proceedings (none in the three and six months ended June 30, 2022).

Liquidity and Capital Resources

Overview

As of June 30, 2022, our expected material cash requirements for the next twelve months and thereafter comprised (i) contractually obligated expenditures, including payments of principal and interest; (ii) other essential expenditures, including property operating expenses, maintenance capital expenditures and dividends paid in accordance with REIT distribution requirements; and (iii) opportunistic expenditures, including acquisitions and developments and repurchases of our securities. We expect to satisfy these cash requirements through operating cash flow and opportunistic debt and equity financing.

Sources of Capital

While operating as a REIT allows us to minimize the payment of U.S. federal corporate income tax expense, we are required to distribute at least 90% of our taxable income to our shareholders. Notwithstanding this requirement, we are nonetheless able to retain operating cash flow to the extent that our tax depreciation exceeds our maintenance capital expenditures. Retained operating cash flow represents our expected cash flow provided by operating activities, less shareholder distributions and capital expenditures. Our annual operating retained cash flow increased from $200 million to $300 million per year in recent years to approximately $700 million in 2021. We anticipate retained operating cash flow over the next twelve months will be similar to 2021.

The REIT distribution requirement limits cash flow from operations that can be retained and reinvested in the business, increasing our reliance upon raising capital to fund growth. Capital needs in excess of retained cash flow are met with: (i) medium and long-term debt, (ii) preferred equity, and (iii) common equity. We select among these sources of capital based upon relative cost, availability, the desire for leverage, and considering potential constraints caused by certain features of capital sources, such as debt covenants. We view our line of credit, as well as any short-term bank loans, as bridge financing.

Because raising capital is important to our growth, we endeavor to maintain a strong financial profile characterized by strong credit metrics, including low leverage relative to our total capitalization and operating cash flows. We are one of the highest rated REITs, as rated by major rating agencies Moody’s and Standard & Poor’s. Our senior notes payable have an “A” credit rating by Standard & Poor’s and “A2” by Moody’s. Our credit ratings on each of our series of preferred shares are “A3” by Moody’s and “BBB+” by Standard & Poor’s. Our credit profile enables us to effectively access both the public and private capital markets to raise capital.

We have a $500.0 million revolving line of credit which we are able to use as temporary “bridge” financing until we are able to raise longer term capital. As of June 30, 2022 and August 4, 2022, there were no borrowings outstanding on the revolving line of credit; however, we do have approximately $18.6 million of outstanding letters of credit which limits our borrowing capacity to $481.4 million as of August 4, 2022. Our line of credit matures on April 19, 2024.

We believe that we have significant financial flexibility to adapt to changing conditions and opportunities and we have significant access to sources of capital including debt and preferred equity. Based upon our substantial current liquidity relative to our capital requirements noted below, we would not expect any potential capital market dislocations to have a material impact upon our expected capital and growth plans over the next 12 months. However, if capital market conditions were to change significantly in the long run, our access to or cost of debt and preferred equity capital could be negatively impacted and potentially affect future investment activities.

We believe that our cash provided by our operating activities will continue to be sufficient to enable us to meet our ongoing cash requirements for interest payments on debt, maintenance capital expenditures and distributions to our shareholders for the foreseeable future.

Our expected capital resources include: (i) $1.0 billion of cash as of June 30, 2022, (ii) approximately $700.0 million of expected retained operating cash flow over the next twelve months and (iii) approximately $400.0 million of cash proceeds we will retain from the sale of our equity investment in PSB after the payment of a $2.3 billion special dividend.

Over the long term, to the extent that our capital needs exceed our capital resources, we believe we have a variety of possibilities to raise additional capital including issuing common or preferred securities, issuing debt, or entering into joint venture arrangements to acquire or develop facilities.

Cash Requirements

The following summarizes our expected material cash requirements which comprise (i) contractually obligated expenditures, (ii) other essential expenditures, and (iii) opportunistic expenditures. We expect our capital needs to increase over the next year as we add projects to our development pipeline and acquire additional properties.

Required Debt Repayments: As of June 30, 2022, the principal outstanding on our debt totaled approximately $7.4 billion, consisting of $22.8 million of secured notes payable, $1.6 billion of Euro-denominated unsecured notes payable and $5.8 billion of U.S. Dollar denominated unsecured notes payable. Approximate principal maturities and interest payments are as follows (amounts in thousands):

Remainder of 2022			$	561,767
2023			135,268
2024			917,052
2025			361,149
2026			1,251,200
Thereafter			4,905,242
			$	8,131,678

On July 26, 2022, the Company called for redemption on August 15, 2022 its 2.370% Senior Notes, with an aggregate outstanding principal amount of $500.0 million, due September 15, 2022.

Capital Expenditure Requirements: Capital expenditures include general maintenance, major repairs or replacements to elements of our facilities to keep our facilities in good operating condition and maintain their visual appeal. Capital expenditures do not include costs relating to the development of new facilities or redevelopment of existing facilities to increase their available rentable square footage.

Capital expenditures totaled $205.6 million in the first six months of 2022 and are expected to approximate $300 million for the year ending December 31, 2022. In addition to standard capital repairs of building elements reaching the end of their useful lives, our capital expenditures in recent years have included incremental expenditures to enhance the competitive position of certain of our facilities relative to local competitors pursuant to a multi-year program. Such investments include development of more pronounced, attractive, and clearly identifiable color schemes and signage, upgrades to the configuration and layout of the offices and other customer zones to improve the customer experience. We spent approximately $105 million in the first six months of 2022 and expect to spend $180 million in 2022 on this effort. In addition, we have made investments in LED lighting and the installation of solar panels, which approximated $24 million for the six months ended June 30, 2022 and we expect to spend $30 million in 2022.

We believe that these incremental investments improve customer satisfaction, the attractiveness and competitiveness of our facilities to new and existing customers and, in the case of LED lighting and solar panels, reduce operating costs.

Requirement to Pay Distributions: For all periods presented herein, we have elected to be treated as a REIT, as defined in the Code. 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. We believe we have met these requirements in all periods presented herein, and we expect to continue to qualify as a REIT.

On July 22, 2022, our Board of Trustees declared a special cash dividend of $13.15 per common share totaling approximately $2.3 billion, in connection with the sale of our equity investment in PSB. The special dividend is payable on August 4, 2022 to shareholders of record as of August 1, 2022.

On August 3, 2022, our Board declared a regular common quarterly dividend of $2.00 per common share totaling approximately $350 million, which will be paid at the end of September 2022. Our consistent, long-term dividend policy has been to distribute our taxable income. Future quarterly distributions with respect to the common shares will continue to be determined based upon our REIT distribution requirements after taking into consideration distributions to the preferred shareholders and will be funded with cash flows from operating activities.

The annual distribution requirement with respect to our Preferred Shares outstanding at June 30, 2022 is approximately $194.7 million per year.

Real Estate Investment Activities: We continue to seek to acquire additional self-storage facilities from third parties. Subsequent to June 30, 2022, we acquired or were under contract to acquire 24 self-storage facilities for a total purchase price of $257.4 million. Additionally, on July 8, 2022, we acquired the commercial interests of PSB at three sites, totaling five properties, jointly occupied with our self-storage facilities located in Maryland and Virginia, for $47.0 million.

We are actively seeking to acquire additional facilities. However, future acquisition volume will depend upon whether additional owners will be motivated to market their facilities, which will in turn depend upon factors such as economic conditions and the level of seller confidence.

As of June 30, 2022, we had development and expansion projects at a total cost of approximately $1.0 billion. Costs incurred through June 30, 2022 were $380.1 million, with the remaining cost to complete of $647.3 million expected to be incurred primarily in the next 18 to 24 months. Some of these projects are subject to contingencies such as entitlement approval. We expect to continue to seek to add projects to maintain and increase our robust pipeline. Our ability to do so continues to be challenged by various constraints such as difficulty in finding projects that meet our risk-adjusted yield expectations, and challenges in obtaining building permits for self-storage facilities in certain municipalities.

Property Operating Expenses: The direct and indirect cost of our operations impose significant cash requirements. Direct operating costs include property taxes, on-site property manager payroll, repairs and maintenance, utilities and marketing. Indirect operating costs include supervisory payroll and centralized management costs. The cash requirements from these operating costs will vary year to year based on, among other things, changes in the size of our portfolio and changes in property tax rates and assessed values, wage rates and marketing costs in our markets.

Redemption of Preferred Securities: Historically, we have taken advantage of refinancing higher coupon preferred securities with lower coupon preferred securities. In the future, we may also elect to finance the redemption of preferred securities with proceeds from the issuance of debt. As of August 4, 2022, we have two series of preferred securities that are eligible for redemption, at our option and with 30 days’ notice; our 5.150% Series F Preferred Shares ($280.0 million) and our 5.050% Series G Preferred Shares ($300.0 million). See Note 9 to our June 30, 2022 consolidated financial statements for the redemption dates of all of our series of preferred shares. Redemption of such preferred shares will depend upon many factors, including the rate at which we could issue replacement preferred securities. None of our preferred securities are redeemable at the option of the holders.

Repurchases of Common Shares: Our Board has authorized management to repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. During the three and six months ended June 30, 2022, we did not repurchase any of our common shares. From the inception of the repurchase program through August 4, 2022, we have repurchased a total of 23,721,916 common shares at an aggregate cost of approximately $679.1 million. Future levels of common share repurchases will be dependent upon our available capital, investment alternatives and the trading price of our common shares.