Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024

or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to ____________.

Commission File Number: 001-33519

Public Storage

(Exact name of registrant as specified in its charter)

Maryland						93-2834996
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)
701 Western Avenue, Glendale, California						91201-2349
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (818) 244-8080.

Former name, former address and former fiscal, if changed since last report: N/A

Securities registered pursuant to Section 12b of the Act:

Title of Class						Trading Symbol						Name of each exchange on which registered
Common Shares, $0.10 par value						PSA						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.150% Cum Pref Share, Series F, $0.01 par value						PSAPrF						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.050% Cum Pref Share, Series G, $0.01 par value						PSAPrG						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 5.600% Cum Pref Share, Series H, $0.01 par value						PSAPrH						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.875% Cum Pref Share, Series I, $0.01 par value						PSAPrI						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.700% Cum Pref Share, Series J, $0.01 par value						PSAPrJ						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.750% Cum Pref Share, Series K, $0.01 par value						PSAPrK						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.625% Cum Pref Share, Series L, $0.01 par value						PSAPrL						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.125% Cum Pref Share, Series M, $0.01 par value						PSAPrM						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.875% Cum Pref Share, Series N, $0.01 par value						PSAPrN						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.900% Cum Pref Share, Series O, $0.01 par value						PSAPrO						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series P, $0.01 par value						PSAPrP						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 3.950% Cum Pref Share, Series Q, $0.01 par value						PSAPrQ						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.000% Cum Pref Share, Series R, $0.01 par value						PSAPrR						New York Stock Exchange
Depositary Shares Each Representing 1/1,000 of a 4.100% Cum Pref Share, Series S, $0.01 par value						PSAPrS						New York Stock Exchange
Guarantee of 0.875% Senior Notes due 2032 issued by Public Storage Operating Company						PSA/32						New York Stock Exchange
Guarantee of 0.500% Senior Notes due 2030 issued by Public Storage Operating Company						PSA/30						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

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

Large accelerated filer			Accelerated filer			Non-accelerated filer			Smaller reporting company			Emerging growth company
☒			☐			☐			☐			☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

Indicate the number of the registrant’s outstanding common shares of beneficial interest, as of October 23, 2024:

Common Shares of beneficial interest, $0.10 par value per share – 175,108,651 shares

PUBLIC STORAGE

INDEX

PART I			FINANCIAL INFORMATION			Pages
Item 1.			Consolidated Financial Statements (Unaudited)
			Consolidated Balance Sheets			1
			Consolidated Statements of Income			2
			Consolidated Statements of Comprehensive Income			3
			Consolidated Statements of Equity			4
			Consolidated Statements of Cash Flows			8
			Condensed Notes to Consolidated Financial Statements			10
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			51
Item 4.			Controls and Procedures			51
PART II			OTHER INFORMATION (Items 3 and 4 are not applicable)
Item 1.			Legal Proceedings			52
Item 1A.			Risk Factors			52
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 5.			Other Information			52
Item 6.			Exhibits			52

PUBLIC STORAGE

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

			September 30, 2024						December 31, 2023
			(Unaudited)
ASSETS
Cash and equivalents			$	599,004					$	370,002
Real estate facilities, at cost:
Land			5,652,960						5,628,488
Buildings			22,441,100						21,836,750
			28,094,060						27,465,238
Accumulated depreciation			(10,172,372)						(9,423,974)
			17,921,688						18,041,264
Construction in process			310,514						345,453
			18,232,202						18,386,717
Investment in unconsolidated real estate entity			397,482						390,180
Goodwill and other intangible assets, net			294,546						387,267
Other assets			279,985						275,050
Total assets			$	19,803,219					$	19,809,216
LIABILITIES AND EQUITY
Notes payable			$	9,473,778					$	9,103,277
Accrued and other liabilities			619,416						598,993
Total liabilities			10,093,194						9,702,270
Commitments and contingencies (Note 14)
Equity:
Public Storage shareholders’ equity:
Preferred Shares, $0.01 par value, 100,000,000 shares authorized, 174,000 shares issued (in series) and outstanding, (174,000 shares at December 31, 2023) at liquidation preference			4,350,000						4,350,000
Common Shares, $0.10 par value, 650,000,000 shares authorized, 175,108,335 shares issued (175,670,727 shares at December 31, 2023)			17,511						17,567
Paid-in capital			6,032,686						5,980,760
Accumulated deficit			(737,450)						(267,910)
Accumulated other comprehensive loss			(52,684)						(67,239)
Total Public Storage shareholders’ equity			9,610,063						10,013,178
Noncontrolling interests			99,962						93,768
Total equity			9,710,025						10,106,946
Total liabilities and equity			$	19,803,219					$	19,809,216

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share amounts)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Revenues:
Self-storage facilities			$	1,110,115					$	1,078,721					$	3,295,896					$	3,167,025
Ancillary operations			77,643						65,099						222,293						190,797
			1,187,758						1,143,820						3,518,189						3,357,822
Expenses:
Self-storage cost of operations			287,435						267,785						858,350						794,078
Ancillary cost of operations			34,265						21,159						88,877						63,037
Depreciation and amortization			280,330						238,748						848,875						682,531
Real estate acquisition and development expense			2,530						5,059						9,154						13,687
General and administrative			26,214						20,732						74,130						57,459
Interest expense			74,252						58,350						215,266						132,530
			705,026						611,833						2,094,652						1,743,322
Other increases (decreases) to net income:
Interest and other income			20,029						32,295						52,248						69,381
Equity in earnings of unconsolidated real estate entity			2,888						7,227						15,458						22,787
Foreign currency exchange (loss) gain			(70,572)						47,880						(20,580)						19,924
Gain on sale of real estate			554						88						1,428						88
Income before income tax expense			435,631						619,477						1,472,091						1,726,680
Income tax expense			(2,488)						(2,834)						(6,042)						(8,457)
Net income			433,143						616,643						1,466,049						1,718,223
Allocation to noncontrolling interests			(2,814)						(3,345)						(8,645)						(9,188)
Net income allocable to Public Storage shareholders			430,329						613,298						1,457,404						1,709,035
Allocation of net income to:
Preferred shareholders			(48,678)						(48,678)						(146,029)						(146,029)
Restricted share units and unvested LTIP units			(939)						(1,383)						(3,088)						(3,922)
Net income allocable to common shareholders			$	380,712					$	563,237					$	1,308,287					$	1,559,084
Net income per common share:
Basic			$	2.17					$	3.21					$	7.46					$	8.89
Diluted			$	2.16					$	3.20					$	7.43					$	8.85
Basic weighted average common shares outstanding			175,043						175,499						175,403						175,451
Diluted weighted average common shares outstanding			175,866						176,150						176,074						176,170

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Net income			$	433,143					$	616,643					$	1,466,049					$	1,718,223
Foreign currency translation gain (loss) on investment in Shurgard			21,380						(5,958)						14,567						(787)
Total comprehensive income			454,523						610,685						1,480,616						1,717,436
Allocation to noncontrolling interests			(2,827)						(3,345)						(8,657)						(9,188)
Comprehensive income allocable to Public Storage shareholders			$	451,696					$	607,340					$	1,471,959					$	1,708,248

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended September 30, 2024

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			Cumulative Preferred Shares						Common Shares						Paid-in Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss												Total Public Storage Shareholders' Equity						Noncontrolling Interests						Total Equity
Balances at June 30, 2024			$	4,350,000					$	17,501					$	6,006,460					$	(592,665)					$	(74,051)											$	9,707,245					$	96,403					$	9,803,648
Issuance of common shares in connection with share-based compensation (97,448 shares)			—						10						20,576						—						—												20,586						—						20,586
Taxes withheld upon net share settlement of restricted share units			—						—						(679)						—						—												(679)						—						(679)
Share-based compensation expense			—						—						11,939						—						—												11,939						—						11,939
Acquisition of noncontrolling interests			—						—						(1,193)						—						—												(1,193)						7						(1,186)
Contributions by noncontrolling interests			—						—						—						—						—												—						567						567
Net income			—						—						—						433,143						—												433,143						—						433,143
Net income allocated to noncontrolling interests			—						—						—						(2,814)						—												(2,814)						2,814						—
Reallocation of equity			—						—						(4,417)						—						—												(4,417)						4,417						—
Distributions to:
Preferred shareholders (Note 9)			—						—						—						(48,678)						—												(48,678)						—						(48,678)
Noncontrolling interests			—						—						—						—						—												—						(4,259)						(4,259)
Common shareholders, restricted share unitholders and unvested LTIP unitholders ($3.00 per share) (Note 9)			—						—						—						(526,436)						—												(526,436)						—						(526,436)
Other comprehensive gain			—						—						—						—						21,367												21,367						13						21,380
Balances at September 30, 2024			$	4,350,000					$	17,511					$	6,032,686					$	(737,450)					$	(52,684)											$	9,610,063					$	99,962					$	9,710,025

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended September 30, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			Cumulative Preferred Shares						Common Shares						Paid-in Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Total Public Storage Shareholders' Equity						Noncontrolling Interests						Total Equity
Balances at June 30, 2023			$	4,350,000					$	17,549					$	5,940,945					$	(167,404)					$	(75,146)					$	10,065,944					$	92,627					$	10,158,571
Issuance of common shares in connection with share-based compensation (8,429 shares)			—						1						1,105						—						—						1,106						—						1,106
Taxes withheld upon net share settlement of restricted share units			—						—						(644)						—						—						(644)						—						(644)
Share-based compensation expense			—						—						10,388						—						—						10,388						—						10,388
Contributions by noncontrolling interests			—						—						—						—						—						—						1,908						1,908
Net income			—						—						—						616,643						—						616,643						—						616,643
Net income allocated to noncontrolling interests			—						—						—						(3,345)						—						(3,345)						3,345						—
Distributions to:
Preferred shareholders			—						—						—						(48,678)						—						(48,678)						—						(48,678)
Noncontrolling interests			—						—						—						—						—						—						(3,648)						(3,648)
Common shareholders and restricted share unitholders ($3.00 per share)			—						—						—						(527,797)						—						(527,797)						—						(527,797)
Other comprehensive loss			—						—						—						—						(5,958)						(5,958)						—						(5,958)
Balances at September 30, 2023			$	4,350,000					$	17,550					$	5,951,794					$	(130,581)					$	(81,104)					$	10,107,659					$	94,232					$	10,201,891

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Nine Months Ended September 30, 2024

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			Cumulative Preferred Shares						Common Shares						Paid-in Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss												Total Public Storage Shareholders' Equity						Noncontrolling Interests						Total Equity
Balances at December 31, 2023			$	4,350,000					$	17,567					$	5,980,760					$	(267,910)					$	(67,239)											$	10,013,178					$	93,768					$	10,106,946
Issuance of common shares in connection with share-based compensation (164,473 shares) (Note 11)			—						17						30,999						—						—												31,016						—						31,016
Taxes withheld upon net share settlement of restricted share units (Note 11)			—						—						(6,295)						—						—												(6,295)						—						(6,295)
Share-based compensation cost (Note 11)			—						—						35,696						—						—												35,696						—						35,696
Repurchase of common shares (726,865 shares) (Note 9)			—						(73)						—						(199,927)						—												(200,000)						—						(200,000)
Acquisition of noncontrolling interests			—						—						(1,193)						—						—												(1,193)						7						(1,186)
Contributions by noncontrolling interests			—						—						—						—						—												—						1,985						1,985
Net income			—						—						—						1,466,049						—												1,466,049						—						1,466,049
Net income allocated to noncontrolling interests			—						—						—						(8,645)						—												(8,645)						8,645						—
Reallocation of equity			—						—						(7,281)						—						—												(7,281)						7,281						—
Distributions to:
Preferred shareholders (Note 9)			—						—						—						(146,029)						—												(146,029)						—						(146,029)
Noncontrolling interests			—						—						—						—						—												—						(11,736)						(11,736)
Common shareholders, restricted share unitholders and unvested LTIP unitholders ($9.00 per share/unit) (Note 9)			—						—						—						(1,580,988)						—												(1,580,988)						—						(1,580,988)
Other comprehensive gain			—						—						—						—						14,555												14,555						12						14,567
Balances at September 30, 2024			$	4,350,000					$	17,511					$	6,032,686					$	(737,450)					$	(52,684)											$	9,610,063					$	99,962					$	9,710,025

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF EQUITY

Nine Months Ended September 30, 2023

(Amounts in thousands, except share and per share amounts)

(Unaudited)

			Cumulative Preferred Shares						Common Shares						Paid-in Capital						Accumulated Deficit						Accumulated Other Comprehensive Loss						Total Public Storage Shareholders' Equity						Noncontrolling Interests						Total Equity
Balances at December 31, 2022			$	4,350,000					$	17,527					$	5,896,423					$	(110,231)					$	(80,317)					$	10,073,402					$	93,399					$	10,166,801
Issuance of common shares in connection with share-based compensation (235,647 shares)			—						23						31,267						—						—						31,290						—						31,290
Taxes withheld upon net settlement of restricted share units			—						—						(10,040)						—						—						(10,040)						—						(10,040)
Share-based compensation cost			—						—						34,144						—						—						34,144						—						34,144
Contributions by noncontrolling interests			—						—						—						—						—						—						2,641						2,641
Net income			—						—						—						1,718,223						—						1,718,223						—						1,718,223
Net income allocated to noncontrolling interests			—						—						—						(9,188)						—						(9,188)						9,188						—
Distributions to:
Preferred shareholders			—						—						—						(146,029)						—						(146,029)						—						(146,029)
Noncontrolling interests			—						—						—						—						—						—						(10,996)						(10,996)
Common shareholders and restricted share unitholders ($9.00 per share)			—						—						—						(1,583,356)						—						(1,583,356)						—						(1,583,356)
Other comprehensive loss			—						—						—						—						(787)						(787)						—						(787)
Balances at September 30, 2023			$	4,350,000					$	17,550					$	5,951,794					$	(130,581)					$	(81,104)					$	10,107,659					$	94,232					$	10,201,891

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

			For the Nine Months Ended September 30,
			2024						2023
Cash flows from operating activities:
Net income			$	1,466,049					$	1,718,223
Adjustments to reconcile net income to net cash flows from operating activities:
Gain on sale of real estate			(1,428)						(88)
Depreciation and amortization			848,875						682,531
Equity in earnings of unconsolidated real estate entity			(15,458)						(22,787)
Distributions from cumulative equity in earnings of unconsolidated real estate entity			10,664						17,663
Unrealized foreign currency exchange loss (gain)			20,725						(19,937)
Share-based compensation expense			32,101						31,309
Other non-cash adjustments			7,992						10,205
Changes in operating assets and liabilities, excluding the impact of acquisitions:
Other assets			(45,241)						(40,719)
Accrued and other liabilities			35,356						78,564
Net cash flows from operating activities			2,359,635						2,454,964
Cash flows from investing activities:
Capital expenditures to maintain real estate facilities			(174,896)						(157,967)
Capital expenditures for property enhancements			(106,172)						(119,360)
Capital expenditures for energy efficiencies (LED lighting, solar)			(35,784)						(45,772)
Development and expansion of real estate facilities			(247,161)						(248,977)
Acquisition of real estate facilities and intangible assets			(46,280)						(301,324)
Acquisition of BREIT Simply Storage LLC, net of cash acquired			—						(2,178,151)
Distributions in excess of cumulative equity in earnings from unconsolidated real estate entity			13,285						3,165
Proceeds from sale of real estate investments			6,014						101
Net cash flows used in investing activities			(590,994)						(3,048,285)
Cash flows from financing activities:
Issuance costs on amendment of credit facility			—						(8,377)
Repayments of notes payable			(808,473)						(8,229)
Issuance of notes payable, net of issuance costs			1,151,022						2,181,273
Issuance of common shares in connection with share-based compensation			30,917						31,099
Taxes paid upon net share settlement of restricted share units			(6,295)						(10,040)
Repurchase of common shares			(200,000)						—
Acquisition of noncontrolling interests			(1,186)						—
Contributions by noncontrolling interests			1,985						2,641
Distributions paid to preferred shareholders, common shareholders, restricted share unitholders and unvested LTIP unitholders			(1,726,246)						(1,728,852)
Distributions paid to noncontrolling interests			(11,736)						(10,996)
Net cash flows (used in) from financing activities			(1,570,012)						448,519
Net increase (decrease) in cash and equivalents, including restricted cash			$	198,629					$	(144,802)

See accompanying notes.

PUBLIC STORAGE

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

			For the Nine Months Ended September 30,
			2024						2023
Cash and equivalents, including restricted cash at beginning of the period:
Cash and equivalents			$	370,002					$	775,253
Restricted cash included in other assets			30,373						29,904
			$	400,375					$	805,157
Cash and equivalents, including restricted cash at end of the period:
Cash and equivalents			$	599,004					$	629,773
Restricted cash included in other assets			—						30,582
			$	599,004					$	660,355
Supplemental schedule of non-cash investing and financing activities:
Costs incurred during the period remaining unpaid at period end for:
Capital expenditures to maintain real estate facilities			$	(11,206)					$	(10,405)
Capital expenditures for property enhancements			(4,668)						(4,637)
Capital expenditures for energy efficiencies (LED lighting, solar)			(3,865)						(574)
Construction or expansion of real estate facilities			(43,075)						(66,788)
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized			$	210,652					$	90,487
Cash paid for income taxes, net of refunds			6,577						10,840

See accompanying notes.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

1.Description of the Business

Public Storage is a Maryland real estate investment trust (“REIT”) engaged in the ownership and operation of self-storage facilities that offer storage spaces for lease, generally on a month-to-month basis, for personal and business use, ancillary activities such as tenant reinsurance, merchandise sales, and third party management, as well as the acquisition and development of additional self-storage space.

Effective August 14, 2023, we are structured as an umbrella partnership REIT, or UPREIT, under which substantially all of our business is conducted through Public Storage OP, L.P. (“PSA OP”), an operating partnership, and its subsidiaries, including Public Storage Operating Company (“PSOC”). The primary assets of the parent entity, Public Storage, are general partner and limited partner interests in PSA OP, which holds all of the Company’s assets through its ownership of all of the equity interests in PSOC. As a limited partnership, PSA OP is a variable interest entity and is consolidated by Public Storage as its primary beneficiary. As of September 30, 2024, Public Storage owned all of the general partner interests and approximately 99.87% of the limited partnership interests of PSA OP, with the remaining 0.13% of limited partnership interests owned by certain trustees and officers of the Company.

Unless stated otherwise or the context otherwise requires, references to “Public Storage” mean the parent entity, Public Storage, and references to “the Company,” “we,” “us,” and “our” mean collectively Public Storage, PSA OP, PSOC, and those entities/subsidiaries owned or controlled by Public Storage, PSA OP, and PSOC.

At September 30, 2024, we owned interests in 3,053 self-storage facilities (with approximately 219.5 million net rentable square feet) located in 40 states in the United States (“U.S.”) operating under the Public Storage® name, and 1.1 million net rentable square feet of commercial and retail space. In addition, we managed 280 facilities (with approximately 21.0 million net rentable square feet) for third parties at September 30, 2024.

At September 30, 2024, we owned an approximate 35% common equity interest in Shurgard Self Storage Limited (“Shurgard”), a public company traded on the Euronext Brussels under the “SHUR” symbol, which owned 315 self-storage facilities (with approximately 17 million net rentable square feet) located in seven Western European countries, all operating under the Shurgard® name.

2.Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

We have prepared the accompanying interim consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Accounting Standards Codification of the Financial Accounting Standards Board, and in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, primarily of a normal recurring nature, that are necessary to present fairly the interim consolidated financial statements. Because they do not include all of the disclosures required by GAAP for complete annual financial statements, these interim consolidated financial statements should be read together with the audited Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Certain amounts previously reported in our September 30, 2023 Consolidated Statements of Income have been reclassified to conform to the September 30, 2024 presentation, with respect to the separate presentation of real estate acquisition and development expense in the amount of $5.1 million and $13.7 million for the three and nine months ended September 30, 2023, respectively, previously included in general and administrative expense. The reclassification had no impact on our net income.

Disclosures of the number and square footage of facilities, as well as the number and coverage of tenant reinsurance policies (Note 14) are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (U.S.).

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Summary of Significant Accounting Policies

There have been no significant changes to the Company's significant accounting policies described in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements included in Item 8 of Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

3.Real Estate Facilities

Activity in real estate facilities during the nine months ended September 30, 2024 is as follows:

			Nine Months Ended September 30, 2024
			(Amounts in thousands)
Operating facilities, at cost:
Beginning balance			$	27,465,238
Capital expenditures to maintain real estate facilities			173,684
Capital expenditures for property enhancements			109,320
Capital expenditures for energy efficiencies (LED lighting, solar)			39,291
Acquisitions			45,579
Dispositions and other			(1,569)
Developed or expanded facilities opened for operation			262,517
Ending balance			28,094,060
Accumulated depreciation:
Beginning balance			(9,423,974)
Depreciation expense			(748,398)
Ending balance			(10,172,372)
Construction in process:
Beginning balance			345,453
Costs incurred to develop and expand real estate facilities			228,311
Write-off of cancelled projects			(733)
Developed or expanded facilities opened for operation			(262,517)
Ending balance			310,514
Total real estate facilities at September 30, 2024			$	18,232,202

During the nine months ended September 30, 2024, we acquired five self-storage facilities (0.3 million net rentable square feet of storage space), for a total cost of $46.3 million in cash. Approximately $0.7 million of the total cost was allocated to intangible assets. During the nine months ended September 30, 2024, we completed development and redevelopment activities costing $262.5 million, adding 1.1 million net rentable square feet of self-storage space. Construction in process at September 30, 2024 consisted of projects to develop new self-storage facilities and expand existing self-storage facilities.

In the nine months ended September 30, 2024, we sold portions of real estate facilities pursuant to eminent domain proceedings and land parcels for a total of $6.0 million in cash and recorded gains on sale of real estate of $1.4 million.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

4.Investment in Unconsolidated Real Estate Entity

Throughout all periods presented, we had an approximately 35% equity interest in Shurgard. On November 14, 2023, Shurgard issued 8,163,265 new common shares to institutional investors. We participated on a pro-rata basis in the offering and acquired 2,863,674 common shares for a cost of $112.6 million. On September 26, 2024, Shurgard issued 1,114,194 new common shares to its shareholders who opted to exchange the cash dividend rights declared on August 13, 2024 for additional shares. We received 487,600 new common shares in exchange for all of our dividend rights. At September 30, 2024, we effectively owned 34,619,733 common shares of Shurgard. Based upon the closing price at September 30, 2024 (€42.10 per share of Shurgard common stock, at 1.116 exchange rate of U.S. Dollars to the Euro), the shares we owned had a market value of approximately $1.6 billion.

Our equity in earnings of Shurgard comprised our equity share of Shurgard’s net income, less amortization of the Shurgard Basis Differential (defined below). During the nine months ended September 30, 2024 and 2023, we received $3.2 million and $2.8 million of trademark license fees that Shurgard pays to us for the use of the Shurgard® trademark, respectively. We eliminated $1.1 million and $1.0 million of intra-entity profits and losses for the nine months ended September 30, 2024 and 2023, respectively, representing our equity share of the trademark license fees. We classify the remaining license fees we receive from Shurgard as interest and other income on our Consolidated Statements of Income.

During the nine months ended September 30, 2024 and 2023, we received cash dividend distributions from Shurgard totaling $22.8 million and $19.8 million, respectively. Approximately $13.3 million and $3.2 million of total cash distributions from Shurgard during the nine months ended September 30, 2024 and 2023, respectively, represented distributions in excess of cumulative equity in earnings from Shurgard, which was classified within cash flows from investing activities in the Consolidated Statements of Cash Flows.

At September 30, 2024, our investment in Shurgard’s real estate assets exceeded our pro-rata share of the underlying amounts on Shurgard’s balance sheet by $59.3 million ($63.7 million at December 31, 2023). This differential (the “Shurgard Basis Differential”) includes our basis adjustments in Shurgard’s real estate assets net of related deferred income taxes. The Shurgard Basis Difference increased by $3.4 million during the nine months ended September 30, 2024, due to an increase of our ownership interest in Shurgard from the exchange of our cash dividend rights for additional common shares of Shurgard. The Shurgard Basis Differential is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entity. Such amortization totaled approximately $7.8 million and $4.6 million during the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and 2023, we translated the book value of our investment in Shurgard from Euro to U.S. Dollars and recorded $14.6 million other comprehensive gain and $0.8 million other comprehensive loss during the nine months ended September 30, 2024 and 2023, respectively.

5.Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (amounts in thousands):

			At September 30, 2024																		At December 31, 2023
			Gross Book Value						Accumulated Amortization						Net Book Value						Gross Book Value						Accumulated Amortization						Net Book Value
Goodwill			$	165,843					$	—					$	165,843					$	165,843					$	—					$	165,843
Shurgard® Trade Name			18,824						—						18,824						18,824						—						18,824
Finite-lived intangible assets, subject to amortization			996,279						(886,400)						109,879						995,578						(792,978)						202,600
Total goodwill and other intangible assets			$	1,180,946					$	(886,400)					$	294,546					$	1,180,245					$	(792,978)					$	387,267

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

Finite-lived intangible assets consist primarily of acquired customers in place. Amortization expense related to intangible assets subject to amortization was $26.6 million and $93.4 million for the three and nine months ended September 30, 2024, respectively, and $16.0 million and $41.4 million for the same periods in 2023. During the nine months ended September 30, 2024, intangibles increased $0.7 million, in connection with the acquisition of real estate facilities (Note 3).

The estimated future amortization expense for our finite-lived intangible assets at September 30, 2024 is as follows (amounts in thousands):

Year						Amount
Remainder of 2024						$	23,451
2025						60,632
2026						19,129
2027						2,797
2028						382
Thereafter						3,488
Total						$	109,879

6.Credit Facility

On June 12, 2023, PSOC entered into an amended revolving credit agreement (the “Credit Facility”), which increased our borrowing limit from $500 million to $1.5 billion and extended the maturity date from April 19, 2024 to June 12, 2027. We have the option to further extend the maturity date by up to one additional year with additional extension fees up to 0.125% of the extended commitment amount. Amounts drawn on the Credit Facility bear annual interest at rates ranging from SOFR plus 0.65% to SOFR plus 1.40% depending upon our credit rating (SOFR plus 0.70% at September 30, 2024). We are also required to pay a quarterly facility fee ranging from 0.10% per annum to 0.30% per annum depending upon our credit rating (0.10% per annum at September 30, 2024). At September 30, 2024 and October 30, 2024, we had no outstanding borrowings under this Credit Facility. We had undrawn standby letters of credit, which reduce our borrowing capacity, totaling $14.4 million at September 30, 2024 ($14.6 million at December 31, 2023). The Credit Facility has various customary restrictive covenants with which we were in compliance at September 30, 2024.

Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under the Credit Facility.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

7.Notes Payable

Our notes payable (all of which were issued by PSOC), are reflected net of issuance costs (including original issue discounts), which are amortized as interest expense on the effective interest method over the term of each respective note. Our notes payable at September 30, 2024 and December 31, 2023 are set forth in the tables below:

															Amounts at September 30, 2024																								Amounts at December 31, 2023
			Coupon Rate						Effective Rate						Principal						Unamortized Costs						Book Value						Fair Value						Book Value						Fair Value
															($ amounts in thousands)
U.S. Dollar Denominated Unsecured Debt
Notes due April 23, 2024			SOFR+0.47%						5.818%						$	—					$	—					$	—					$	—					$	699,779					$	700,031
Notes due July 25, 2025			SOFR+0.60%						5.789%						400,000						(667)						399,333						401,358						398,722						400,295
Notes due February 15, 2026			0.875%						1.030%						500,000						(1,026)						498,974						478,521						498,419						462,362
Notes due November 9, 2026			1.500%						1.640%						650,000						(1,834)						648,166						617,195						647,513						597,131
Notes due April 16, 2027			SOFR+0.70%						5.954%						700,000						(2,717)						697,283						708,988						—						—
Notes due September 15, 2027			3.094%						3.218%						500,000						(1,568)						498,432						487,882						498,036						476,394
Notes due May 1, 2028			1.850%						1.962%						650,000						(2,414)						647,586						602,292						647,078						584,520
Notes due November 9, 2028			1.950%						2.044%						550,000						(1,976)						548,024						506,089						547,663						490,758
Notes due January 15, 2029			5.125%						5.260%						500,000						(2,507)						497,493						522,552						497,053						516,899
Notes due May 1, 2029			3.385%						3.459%						500,000						(1,404)						498,596						486,198						498,363						477,692
Notes due May 1, 2031			2.300%						2.419%						650,000						(4,498)						645,502						577,837						644,988						562,240
Notes due November 9, 2031			2.250%						2.322%						550,000						(2,517)						547,483						478,168						547,218						469,845
Notes due August 1, 2033			5.100%						5.207%						700,000						(5,117)						694,883						727,196						694,448						725,753
Notes due August 1, 2053			5.350%						5.474%						900,000						(15,913)						884,087						930,953						592,017						628,413
															7,750,000						(44,158)						7,705,842						7,525,229						7,411,297						7,092,333
Euro Denominated Unsecured Debt
Notes due April 12, 2024			1.540%						1.540%						—						—						—						—						110,372						109,380
Notes due November 3, 2025			2.175%						2.175%						270,110						—						270,110						267,303						267,116						261,083
Notes due September 9, 2030			0.500%						0.640%						781,267						(6,650)						774,617						667,856						765,119						638,177
Notes due January 24, 2032			0.875%						0.978%						558,048						(3,920)						554,128						495,753						547,540						455,895
Notes due April 11, 2039			4.080%						4.080%						167,415						(74)						167,341						182,390						—						—
															1,776,840						(10,644)						1,766,196						1,613,302						1,690,147						1,464,535
Mortgage Debt, secured by 2 real estate facilities with a net book value of $11.3 million			4.347%						4.347%						1,740						—						1,740						1,681						1,833						1,733
															$	9,528,580					$	(54,802)					$	9,473,778					$	9,140,212					$	9,103,277					$	8,558,601

Public Storage has provided a full and unconditional guarantee of PSOC’s obligations under each series of unsecured notes.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

U.S. Dollar Denominated Unsecured Notes

On April 16, 2024, PSOC completed a public offering of $1.0 billion aggregate principal amount of senior notes, including $700 million aggregate principal amount of floating rate senior notes bearing interest at a rate of Compounded SOFR + 0.70% (reset quarterly) maturing on April 16, 2027 and $300 million aggregate principal amount of senior notes bearing interest at a fixed annual rate of 5.350% maturing on August 1, 2053. The 2053 notes issued at a discount of $5.3 million constitute a further issuance of, and form a single series with, our outstanding 5.350% senior notes due 2053 issued on July 26, 2023 in the aggregate principal amount of $600 million. Interest on the floating rate senior notes is payable quarterly, commencing on July 16, 2024. Interest on the 2053 notes is payable semi-annually, commencing on August 1, 2024. In connection with the offering, we received $988.5 million in net proceeds from the offering.

On April 23, 2024, we repaid PSOC’s outstanding $700 million aggregate principal amount of SOFR + 0.47% floating rate senior notes at maturity.

The U.S. Dollar denominated unsecured notes (the “U.S. Dollar Denominated Unsecured Notes”) have various financial covenants with which we were in compliance at September 30, 2024. Included in these covenants are (a) a maximum Debt to Total Assets of 65% (approximately 18% at September 30, 2024) and (b) a minimum ratio of Adjusted EBITDA to Interest Expense of 1.5x (approximately 12x for the twelve months ended September 30, 2024) as well as covenants limiting the amount we can encumber our properties with mortgage debt.

Euro Denominated Unsecured Notes

At September 30, 2024, our Euro denominated unsecured notes (the “Euro Notes”) consisted of four tranches: (i) €242.0 million issued to institutional investors on November 3, 2015, (ii) €500.0 million issued in a public offering on January 24, 2020, (iii) €700.0 million issued in a public offering on September 9, 2021, and (iv) €150.0 million issued to institutional investors on April 11, 2024. The Euro Notes have financial covenants similar to those of the U.S. Dollar Denominated Unsecured Notes.

The €150.0 million notes issued to institutional investors on April 11, 2024 bear interest at a fixed rate of 4.080% and mature on April 11, 2039. Interest is payable semi-annually. We received $162.5 million in net proceeds upon converting the Euros to U.S. Dollars. On April 11, 2024, we repaid PSOC’s outstanding €100.0 million aggregate principal amount 1.540% senior notes due April 12, 2024 to the same institutional investors for $108.4 million.

We reflect changes in the U.S. Dollar equivalent of the amount payable including the associated interest, as a result of changes in foreign exchange rates as “Foreign currency exchange (loss) gain” on our income statement (losses of $71.1 million and $20.7 million for the three and nine months ended September 30, 2024, respectively, as compared to gains of $48.2 million and $20.1 million for the three and nine months ended September 30, 2023, respectively).

Mortgage Notes

We assumed our non-recourse mortgage debt in connection with property acquisitions, and we recorded such debt at fair value with any premium or discount to the stated note balance amortized using the effective interest method.

At September 30, 2024, the related contractual interest rates of our mortgage notes are fixed, ranging between 3.9% and 7.1%, and mature between September 1, 2028 and July 1, 2030.

At September 30, 2024, approximate principal maturities of our Notes Payable are as follows (amounts in thousands):

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

			Unsecured Debt						Mortgage Debt						Total
Remainder of 2024			$	—					$	31					$	31
2025			670,110						131						670,241
2026			1,150,000						138						1,150,138
2027			1,200,000						146						1,200,146
2028			1,200,000						129						1,200,129
Thereafter			5,306,730						1,165						5,307,895
			$	9,526,840					$	1,740					$	9,528,580
Weighted average effective rate			3.2%						4.3%						3.2%

Interest capitalized as real estate totaled $8.2 million and $6.8 million for the nine months ended September 30, 2024 and 2023, respectively.

8.Noncontrolling Interests

There are noncontrolling interests related to several subsidiaries of PSOC we consolidate of which we do not own 100% of the equity. At September 30, 2024, certain of these subsidiaries have issued 499,966 partnership units to third-parties that are redeemable by the holders on a one-for-one basis for common shares of the Company or cash at our option. The holders of these partnership units are entitled to receive the same per-unit cash distributions equal to the dividends paid on our common shares.

Noncontrolling interests also include the partnership interests of PSA OP not owned by the Company, including common units (“OP Units”) and vested LTIP units from equity awards we issue to certain officers and trustees of the Company (see Note 11 Share-based Compensation). Vested LTIP units (subject to certain conditions) may be converted into the same number of OP Units of PSA OP, which are redeemable by the holders on a one-for-one basis for common shares of the Company or cash at our option. The holders of OP Units and vested LTIP units are entitled to receive per-unit cash distributions equal to the per-share dividends received by our common shareholders. At September 30, 2024, approximately 0.13% of the partnership interests of PSA OP, representing 226,587 vested LTIP units, were not owned by the Company. There were no outstanding OP Units not owned by the Company at September 30, 2024. We adjust the balance of noncontrolling interests of PSA OP to reflect their proportionate share of the net assets of PSA OP as of the end of each period.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

9.Shareholders’ Equity

Preferred Shares

At September 30, 2024 and December 31, 2023, we had the following series of Cumulative Preferred Shares (“Preferred Shares”) outstanding:

																		At September 30, 2024												At December 31, 2023
Series						Earliest Redemption Date						Dividend Rate						Shares Outstanding						Liquidation Preference						Shares Outstanding						Liquidation Preference
																		(Dollar amounts in thousands)
Series F						6/2/2022						5.150		%				11,200						$	280,000					11,200						$	280,000
Series G						8/9/2022						5.050		%				12,000						300,000						12,000						300,000
Series H						3/11/2024						5.600		%				11,400						285,000						11,400						285,000
Series I						9/12/2024						4.875		%				12,650						316,250						12,650						316,250
Series J						11/15/2024						4.700		%				10,350						258,750						10,350						258,750
Series K						12/20/2024						4.750		%				9,200						230,000						9,200						230,000
Series L						6/17/2025						4.625		%				22,600						565,000						22,600						565,000
Series M						8/14/2025						4.125		%				9,200						230,000						9,200						230,000
Series N						10/6/2025						3.875		%				11,300						282,500						11,300						282,500
Series O						11/17/2025						3.900		%				6,800						170,000						6,800						170,000
Series P						6/16/2026						4.000		%				24,150						603,750						24,150						603,750
Series Q						8/17/2026						3.950		%				5,750						143,750						5,750						143,750
Series R						11/19/2026						4.000		%				17,400						435,000						17,400						435,000
Series S						1/13/2027						4.100		%				10,000						250,000						10,000						250,000
Total Preferred Shares																		174,000						$	4,350,000					174,000						$	4,350,000

The holders of our Preferred Shares have general preference rights with respect to liquidation, quarterly distributions, and any accumulated unpaid distributions. Except as noted below, holders of the Preferred Shares do not have voting rights. In the event of a cumulative arrearage equal to six quarterly dividends, holders of all outstanding series of preferred shares (voting as a single class without regard to series) will have the right to elect two additional members to serve on our Board of Trustees (our “Board”) until the arrearage has been cured. At September 30, 2024, there were no dividends in arrears. The affirmative vote of at least 66.67% of the outstanding shares of a series of Preferred Shares is required for any material and adverse amendment to the terms of such series. The affirmative vote of at least 66.67% of the outstanding shares of all of our Preferred Shares, voting as a single class, is required to issue shares ranking senior to our Preferred Shares.

Except under certain conditions relating to the Company’s qualification as a REIT, the Preferred Shares are not redeemable prior to the dates indicated on the table above. On or after the respective dates, each of the series of Preferred Shares is redeemable at our option, in whole or in part, at $25.00 per depositary share, plus accrued and unpaid dividends. Holders of the Preferred Shares cannot require us to redeem such shares.

Upon issuance of our Preferred Shares, we classify the liquidation value as preferred equity on our consolidated balance sheet with any issuance costs recorded as a reduction to Paid-in capital.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

Common Share Repurchases

Our Board has authorized a share repurchase program pursuant to which management may repurchase up to 35,000,000 of our common shares on the open market or in privately negotiated transactions. During the nine months ended September 30, 2024, we repurchased 726,865 of our common shares under the repurchase program on the open market for a total cost of $200.0 million. The repurchased shares are constructively retired and returned to an authorized and unissued status. There are 10,551,219 common shares that may yet be repurchased under our repurchase program as of September 30, 2024.

Dividends and Distributions

Dividends and distributions paid to our common shareholders, restricted share unitholders, deferred share unitholders, and unvested LTIP unitholders, totaled $526.2 million ($3.00 per share) and $527.6 million ($3.00 per share) for the three months ended September 30, 2024 and 2023, respectively, and $1.6 billion ($9.00 per share) for each of the nine months ended September 30, 2024 and 2023. In addition, we accrued $0.3 million and $0.2 million of dividends and distributions to holders of unearned performance-based restricted share units and LTIP units for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively.

Preferred share dividends paid totaled $48.7 million for each of the three months ended September 30, 2024 and 2023, and $146.0 million for each of the nine months ended September 30, 2024 and 2023.

10.Related Party Transactions

At September 30, 2024, Tamara Hughes Gustavson, a current member of our Board, held less than a 0.1% equity interest in, and is a manager of, a limited liability company that owns 66 self-storage facilities in Canada. Two of Ms. Gustavson’s adult children own the remaining equity interest in the limited liability company. These facilities operate under the Public Storage® tradename, which we license to the owners of these facilities for use in Canada on a royalty-free, non-exclusive basis. We have no ownership interest in these facilities, and we do not own or operate any facilities in Canada. If we chose to acquire or develop our own facilities in Canada, we would have to share the use of the Public Storage® name in Canada. We have a right of first refusal, subject to limitations, to acquire the stock or assets of the corporation engaged in the operation of these facilities if their owners agree to sell them. Our subsidiaries reinsure risks relating to loss of goods stored by customers in these facilities, and have received premium payments of approximately $1.6 million for each of the nine months ended September 30, 2024 and 2023.

11.Share-Based Compensation

Under various share-based compensation plans and under terms established or modified by our Board or a committee thereof, we grant equity awards to trustees, officers, and key employees, including non-qualified options to purchase the Company’s common shares, restricted share units (“RSUs”), deferred share units (“DSUs”), and unrestricted common shares issued in lieu of trustee compensation.

In February 2024, we amended our 2021 Equity and Performance-Based Incentive Plan to further provide for the grant of awards to certain officers and trustees of the Company in the form of LTIP units and appreciation-only LTIP units (“AO LTIP units”) of PSA OP. LTIP units are structured as “profit interests” for U.S. federal income tax purposes. During the nine months ended September 30, 2024, we issued LTIP units and AO LTIP units in substitution for 156,632 RSUs and 2,238,874 stock options, respectively. The LTIP units and AO LTIP units issued have the same vesting conditions as the original awards and remain classified as equity awards. The fair value of the LTIP units and AO LTIP units issued is materially the same as the original awards immediately before the substitution. As a result, we did not adjust the share-based compensation costs associated with these substituted awards.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

We recorded share-based compensation expense associated with our equity awards in the various expense categories in the Consolidated Statements of Income as set forth in the following table. In addition, $0.7 million and $2.5 million of share-based compensation cost was capitalized as real estate facilities for the three and nine months ended September 30, 2024, respectively, as compared to $0.5 million and $1.8 million for the same periods of 2023, respectively.

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
			(Amounts in thousands)
Self-storage cost of operations			$	2,927					$	2,964					$	9,237					$	10,316
Ancillary cost of operations			248						320						874						960
Real estate acquisition and development expense			635						302						2,063						884
General and administrative			7,117						5,929						19,927						19,149
Total			$	10,927					$	9,515					$	32,101					$	31,309

As of September 30, 2024, there was $69.4 million of total unrecognized compensation cost related to share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of three years.

Restricted Share Units and LTIP Units

We have service-based and performance-based RSUs and LTIP units outstanding, which generally vest over 5 to 8 years from the grant date. Performance-based RSUs and LTIP units outstanding vest upon meeting certain performance conditions or market conditions. Upon vesting, the grantee of RSUs receives new common shares equal to the number of vested RSUs, less common shares withheld to satisfy the grantee’s statutory tax liabilities arising from the vesting. Vested LTIP units represent noncontrolling interests of PSA OP and may be converted, subject to the satisfaction of all applicable vesting conditions, on a one-for-one basis into common units of PSA OP, which are exchangeable by the holders for cash, or at the Company’s election, on a one-for-one basis into common shares of the Company. Holders of RSUs and LTIP units are entitled to receive per-unit cash distributions equal to the per-share dividends received by our common shareholders, except that holders of performance-based awards are not entitled to receive the full distributions until expiration of the applicable performance period, at which time holders of any earned performance-based awards are entitled to receive a catch-up distribution for the periods prior to such time.

Below is a summary of award activity issued in the form of RSUs and LTIP units for the nine months ended September 30, 2024.

			Service-Based						Performance-Based (a)						Total
Unvested awards outstanding January 1, 2024			322,648						94,013						416,661
Granted (b)			4,470						38,320						42,790
Vested (c)			(63,816)						(9,250)						(73,066)
Forfeited			(13,815)						—						(13,815)
Unvested awards outstanding September 30, 2024			249,487						123,083						372,570

(a)Number of performance-based awards are presented based on the target performance pursuant to the terms of each applicable award when granted and adjusted to the actual number of awards earned based on the actual performance.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

(b)During the nine months ended September 30, 2024, 34,550 performance-based LTIP unit awards (at target) and 3,770 performance-based RSUs were granted to certain executive officers and key employees. The vesting of performance-based LTIP unit awards is dependent upon meeting certain market conditions over a three-year period from March 5, 2024 through March 4, 2027, with continued service-based vesting through the first quarter of 2029. These LTIP unit awards require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning from zero to a maximum of 69,100 LTIP units. The vesting of performance-based RSUs is dependent upon meeting certain operational performance targets in 2024 and continued service through 2028.

(c)22,319 common shares were issued from the vesting of RSUs.

For the three and nine months ended September 30, 2024, we incurred share-based compensation cost for RSUs and LTIP units of $8.0 million and $24.0 million, respectively, as compared to $6.3 million and $21.1 million for the same periods in 2023.

Stock Options and AO LTIP Units

We have service-based and performance-based stock options and AO LTIP units outstanding. Performance-based stock options and AO LTIP units vest upon meeting certain performance conditions or market conditions. Stock options and AO LTIP units generally vest over 1 to 5 years, expire 10 years after the grant date, and have an exercise or conversion price equal to the closing trading price of our common shares on the grant date. Common shares of the Company are issued for options exercised and vested LTIP units are issued for AO LTIP units converted. Employees cannot require the Company to settle their awards in cash.

Below is a summary of award activity issued in the form of stock options and AO LTIP units for the nine months ended September 30, 2024.

			Service-Based						Performance-Based (a)						Total
Awards outstanding January 1, 2024			1,629,742						1,421,479						3,051,221
Granted (b)			110,084						63,717						173,801
Exercised or converted (c)			(372,195)						(237,117)						(609,312)
Cancelled			(10,110)						—						(10,110)
Awards outstanding September 30, 2024			1,357,521						1,248,079						2,605,600
Awards exercisable or convertible at September 30, 2024			1,196,887						676,493						1,873,380

(a)Number of performance-based awards are presented based on the target performance pursuant to the terms of each applicable award when granted and adjusted to the actual number of awards earned based on the actual performance.

(b)During the nine months ended September 30, 2024, 106,484 of service-based AO LTIP unit awards, 63,717 of performance-based AO LTIP unit awards (at target), and 3,600 service-based options were granted to certain executive officers and trustees. The vesting of the performance-based AO LTIP unit awards is dependent upon meeting certain market conditions over a three-year period from March 5, 2024 through March 4, 2027, with continued service-based vesting through the first quarter of 2029. These performance-based AO LTIP unit awards require relative achievement of the Company’s total shareholder return as compared to the weighted average total shareholder return of specified peer groups and can result in grantees earning from zero to a maximum of 127,434 AO LTIP units.

(c)140,960 common shares were issued upon the exercise of stock options. 186,944 vested LTIP units were issued upon conversion of 468,352 AO LTIP units in the nine months ended September 30, 2024.

For the three and nine months ended September 30, 2024, we incurred share-based compensation cost for stock options and AO LTIP units of $3.4 million and $10.0 million, respectively, as compared to $3.6 million and $11.3 million for the same periods in 2023.

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

Trustee Deferral Program

Non-management trustees may elect to receive all or a portion of their cash retainers in cash, unrestricted common shares, or fully-vested DSUs to be settled at a specified future date. Unrestricted common shares and/or DSUs will be granted to the non-management trustee on the last day of each calendar quarter based on the cash retainer earned for that quarter and converted into a number of shares or units based on the applicable closing price of our common shares on such date. During the nine months ended September 30, 2024, we granted 1,401 DSUs and 323 unrestricted common shares. During the nine months ended September 30, 2024, 871 previously granted DSUs were settled in common shares. A total of 11,299 DSUs were outstanding at September 30, 2024 (10,769 at December 31, 2023).

12.Net Income per Common Share

We allocate net income to (i) noncontrolling interests based upon their contractual rights in the respective subsidiaries or for participating noncontrolling interests based upon their participation in both distributed and undistributed earnings of the Company, (ii) preferred shareholders, for distributions paid or payable, (iii) preferred shareholders, to the extent redemption cost exceeds the related original net issuance proceeds (a “preferred share redemption charge”), and (iv) RSUs and unvested LTIP units, for non-forfeitable dividends and distributions paid and adjusted for participation rights in undistributed earnings of the Company.

We calculate basic and diluted net income per common share based upon net income allocable to common shareholders, divided by (i) weighted average common shares for basic net income per common share, and (ii) weighted average common shares adjusted for the impact of dilutive stock options and AO LTIP units outstanding for diluted net income per common share. Stock options and AO LTIP units representing 220,475 common shares were excluded from the computation of diluted earnings per share for the three and nine months ended September 30, 2024, as compared to 317,062 common shares for the same periods in 2023, because their effect would have been antidilutive.

The following table reconciles the numerators and denominators of the basic and diluted net income per common shares computation for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands, except per share amounts):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Numerator for basic and dilutive net income per common share – net income allocable to common shareholders			$	380,712					$	563,237					$	1,308,287					$	1,559,084
Denominator for basic net income per share - weighted average common shares outstanding			175,043						175,499						175,403						175,451
Net effect of dilutive stock options and AO LTIP units - based on treasury stock method			823						651						671						719
Denominator for dilutive net income per share - weighted average common shares outstanding			175,866						176,150						176,074						176,170
Net income per common share:
Basic			$	2.17					$	3.21					$	7.46					$	8.89
Dilutive			$	2.16					$	3.20					$	7.43					$	8.85

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

13.Segment Information

Our operating segments reflect the significant components of our operations where discrete financial information is evaluated separately by our chief operating decision maker.

Self-Storage Operations

The Self-Storage Operations reportable segment reflects the aggregated rental operations from the self-storage facilities we own through the following operating segments: (i) Same Store Facilities, (ii) Acquired Facilities, (iii) Newly Developed and Expanded Facilities, and (iv) Other Non-Same Store Facilities. The presentation in the table below sets forth the Net Operating Income (“NOI”) of this reportable segment, as well as the related depreciation expense. For all periods presented, substantially all of our real estate facilities, goodwill and other intangible assets, other assets, and accrued and other liabilities are associated with the Self-Storage Operations reportable segment.

Ancillary Operations

The Ancillary Operations reflects the combined operations of our tenant reinsurance, merchandise sales, and third party property management operating segments.

Presentation of Segment Information

The following table reconciles NOI and net income attributable to our reportable segment to our consolidated net income:

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
			(amounts in thousands)
Self-Storage Operations Reportable Segment
Revenue			$	1,110,115					$	1,078,721					$	3,295,896					$	3,167,025
Cost of operations			(287,435)						(267,785)						(858,350)						(794,078)
Net operating income			822,680						810,936						2,437,546						2,372,947
Depreciation and amortization			(280,330)						(238,748)						(848,875)						(682,531)
Net income			542,350						572,188						1,588,671						1,690,416
Ancillary Operations
Revenue			77,643						65,099						222,293						190,797
Cost of operations			(34,265)						(21,159)						(88,877)						(63,037)
Net operating income			43,378						43,940						133,416						127,760
Total net income allocated to segments			585,728						616,128						1,722,087						1,818,176
Other items not allocated to segments:
Real estate acquisition and development expense			(2,530)						(5,059)						(9,154)						(13,687)
General and administrative			(26,214)						(20,732)						(74,130)						(57,459)
Interest and other income			20,029						32,295						52,248						69,381
Interest expense			(74,252)						(58,350)						(215,266)						(132,530)
Equity in earnings of unconsolidated real estate entity			2,888						7,227						15,458						22,787
Foreign currency exchange (loss) gain			(70,572)						47,880						(20,580)						19,924
Gain on sale of real estate			554						88						1,428						88
Income tax expense			(2,488)						(2,834)						(6,042)						(8,457)
Net income			$	433,143					$	616,643					$	1,466,049					$	1,718,223

PUBLIC STORAGE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

14.Commitments and Contingencies

Contingent Losses

We are a party to various legal proceedings and subject to various claims and complaints; however, we believe that the likelihood of these contingencies resulting in a material loss to the Company, either individually or in the aggregate, is remote.

Insurance and Loss Exposure

We carry property, earthquake, general liability, employee medical insurance, and workers compensation coverage through internationally recognized insurance carriers, subject to deductibles. Our deductible for general liability is $2.0 million per occurrence. Our annual deductible for property loss is $25.0 million per occurrence. This deductible decreases to $5.0 million once we reach $35.0 million in aggregate losses for occurrences that exceed $5.0 million. Insurance carriers’ aggregate limits on these policies of $75.0 million for property losses and $102.0 million for general liability losses are higher than estimates of maximum probable losses that could occur from individual catastrophic events determined in recent engineering and actuarial studies; however, in case of multiple catastrophic events, these limits could be exceeded.

We reinsure a program that provides insurance to our customers from an independent third-party insurer. This program covers customer claims for losses to goods stored at our facilities as a result of specific named perils (earthquakes are not covered by this program), up to a maximum limit of $5,000 per storage unit. We reinsure all risks in this program, but purchase insurance to cover this exposure for a limit of $15.0 million for losses in excess of $10.0 million per occurrence. We are subject to licensing requirements and regulations in all states. Customers participate in the program at their option. At September 30, 2024, there were approximately 1.4 million certificates held by self-storage customers under the program, representing aggregate coverage of approximately $6.8 billion.

Commitments

We have construction commitments representing future expected payments for construction under contract totaling $164.6 million at September 30, 2024. We expect to pay approximately $27.2 million in the remainder of 2024, $128.2 million in 2025, and $9.2 million in 2026 for these construction commitments.

We have future contractual payments on land, equipment and office space under various lease commitments totaling $62.4 million at September 30, 2024. We expect to pay approximately $0.9 million in the remainder of 2024, $4.1 million in 2025, $4.0 million in 2026, $2.6 million in 2027, $2.5 million in 2028, and $48.3 million thereafter for these commitments.

15.Subsequent Events

Subsequent to September 30, 2024, we acquired or were under contract to acquire 14 self-storage facilities across nine states with 1.2 million net rentable square feet, for $181.2 million.

In late September and early October 2024, Hurricane Helene and Hurricane Milton struck in the southeastern region of the U.S. Including amounts accrued at September 30, 2024, we expect to incur a total estimated cost of approximately $7 million for repairs and capital expenditures as well as tenant reinsurance claims resulting from the impact of the hurricanes. We do not expect to recover any of these costs through the insurance or reinsurance policies we carry.