The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-K entitled "Statements Regarding Forward-Looking Information." Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in this Form 10-K entitled "Risk Factors." Dollar amounts in thousands, except share and per share data, unless otherwise stated.
OVERVIEW
We are a fully integrated, self-administered and self-managed real estate
investment trust ("REIT"), formed to own, operate, manage, acquire, develop and
redevelop self-storage properties ("stores"). We derive substantially all of our
revenues from our two segments: storage operations and tenant reinsurance.
Primary sources of revenue for our storage operations segment include rents
received from tenants under leases at each of our wholly-owned stores. Our
operating results depend materially on our ability to lease available
self-storage units, to actively manage unit rental rates, and on the ability of
our tenants to make required rental payments. Consequently, management spends a
significant portion of their time maximizing cash flows from our diverse
portfolio of stores. Revenue from our tenant reinsurance segment consists of
insurance revenues from the reinsurance of risks relating to the loss of goods
stored by tenants in our stores.
Our stores are generally situated in highly visible locations clustered around
large population centers. The clustering of our assets around these population
centers enables us to reduce our operating costs through economies of scale. To
maximize the performance of our stores, we employ industry-leading revenue
management systems. Developed by our management team, these systems enable us to
analyze, set and adjust rental rates in real time across our portfolio in order
to respond to changing market conditions. We believe our systems and processes
allow us to more pro-actively manage revenues.
We operate in competitive markets, often where consumers have multiple stores
from which to choose. Competition has impacted, and will continue to impact, our
store results. We experience seasonal fluctuations in occupancy levels, with
occupancy levels generally higher in the summer months due to increased moving
activity. We believe that we are able to respond quickly and effectively to
changes in local, regional and national economic conditions by adjusting rental
rates through the combination of our revenue management team and our
industry-leading technology systems. We consider a store to be in the lease-up
stage after it has been issued a certificate of occupancy, but before it has
achieved stabilization. We consider a store to be stabilized once it has
achieved either an 80% occupancy rate for a full year measured as of January 1
of the current year, or has been open for three years prior to January 1 of the
current year.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements have been prepared in accordance withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those that impact our most critical accounting policies. We base our estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. A summary of significant accounting policies is also provided in the notes to our consolidated financial statements (see Note 2 to our consolidated financial statements). Actual results may differ from these estimates. We believe the following are our most critical accounting policies and estimates: CONSOLIDATION: Arrangements that are not controlled through voting or similar rights are accounted for as variable interest entities ("VIEs"). An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE. Under certain circumstances when we enter into arrangements for the formation of joint ventures, a VIE may be created. The primary factors that require the most judgment in determining whether the joint venture is a VIE are whether the decisions that most significantly impact the entity's economic performance were controlled by the equity holders as a group, and whether the joint venture has sufficient equity to finance its activities without additional subordinated support. If the joint venture is determined to be a VIE, we perform a qualitative analysis, including considering which party, if any, has the power to direct the activities most significant to the economic performance of each VIE and whether that party has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If we are determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated within 18 --------------------------------------------------------------------------------
our financial statements. Otherwise, our investment is generally accounted for
under the equity method. Our ability to correctly assess the influence or
control over an entity affects the presentation of the investment in our
consolidated financial statements.
REAL ESTATE ASSETS: We account for the acquisition of stores, including by merger and other acquisitions of real estate, in accordance with ASC 805-10, "Business Combinations." We use our judgment to determine if assets acquired meet the definition of a business or if the acquisition should be considered an asset acquisition. We must make significant assumptions and estimates in determining the fair value of the tangible and intangible assets and liabilities acquired and consideration transferred. These fair value estimates are sensitive to: price of land per square foot and current replacement cost estimates, including adjustments for the age, class, height, square footage, condition, location, and turnkey factor. These assumptions and estimates require judgment, and therefore others could come to materially different conclusions as to the estimated fair values, which could result in differences in depreciation and amortization expense, gains and losses on the sale of real estate assets, and real estate and intangible asset values. EVALUATION OF ASSET IMPAIRMENT: Long lived assets held for use are evaluated for impairment when events or circumstances indicate that there may be impairment. We review each store at least annually to determine if any such events or circumstances have occurred or exist. We focus on stores where occupancy and/or rental income have decreased by a significant amount. For these stores, we determine whether the decrease is temporary or permanent and whether the store will likely recover the lost occupancy and/or revenue in the short term. In addition, we review stores in the lease-up stage and compare actual operating results to original projections. We may not have identified all material facts and circumstances that affect impairment of our stores. No material impairments were recorded in the year endedDecember 31, 2022 . We evaluate goodwill for impairment at least annually and whenever events, circumstances, and other related factors indicate that fair value of the related reporting unit may be less than the carrying value. If the fair value of the reporting unit is determined to exceed the aggregate carrying amount, no impairment charge is recorded. Otherwise, an impairment charge is recorded to the extent the carrying amount of the goodwill exceeds the amount that would be allocated to goodwill if the reporting unit were acquired for estimated fair value. No impairments were recorded in our evaluations for any period presented herein. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: We hold a number of derivative instruments which we use to hedge our exposure to variability in expected future cash flows, mainly related to our interest rates on variable interest debt. We do not use derivatives for trading or speculative purposes. We assess our derivatives both at inception, and on an ongoing quarterly basis, for whether the derivatives used in hedging transactions are effective. The rules and interpretations relating to the accounting for derivatives are complex. Failure to apply this guidance correctly may require us to recognize all changes in fair value of the hedged derivative in earnings, which may materially impact our results. INCOME TAXES: We have elected to be treated as a REIT under Sections 856 through 860 of the Internal Revenue Code. In order to maintain our qualification as a REIT, among other requirements, we are required to distribute at least 90% of our REIT taxable income to our stockholders and meet certain tests regarding the nature of our income and assets. As a REIT, we are not subject toU.S. federal income tax with respect to that portion of our income which meets certain criteria and is distributed annually to our stockholders. We plan to continue to operate so that we meet the requirements for taxation as a REIT. Many of these requirements, however, are highly technical and complex. For any taxable year that we fail to qualify as a REIT and for which applicable statutory relief provisions did not apply, we would be subject toU.S. federal corporate income tax on all of our taxable income for at least that year and the ensuing four years. We could also be subject to penalties and interest, and our net income may be materially different from the amounts reported in our financial statements. We have elected to treat certain corporate subsidiaries, includingExtra Space Management, Inc. , as a TRS. In general, a TRS may perform additional services for tenants and generally may engage in any real estate or non-real estate related business. A TRS is subject toU.S. federal corporate income tax and may also be subject to state and local income taxes. Interest and penalties relating to uncertain tax positions will be recognized in income tax expense when incurred. If tax authorities determine that amounts paid by any of our TRSs to us are not reasonable compared to similar arrangements among unrelated parties, we could be subject to a penalty tax on the excess payments.
RECENT ACCOUNTING PRONOUNCEMENTS
For a discussion of recent accounting pronouncements affecting our business, see
Item 8, "Financial Statements and Supplementary Data-Recently Issued Accounting
Standards."
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RESULTS OF OPERATIONS
Comparison of the Year Ended
2021
Overview Results for the year endedDecember 31, 2022 included the operations of 1,451 stores (1,132 wholly-owned, one in a consolidated joint venture, and 318 in joint ventures accounted for using the equity method) compared to the results for the year endedDecember 31, 2021 , which included the operations of 1,268 stores (981 wholly-owned, four in a consolidated joint venture, and 283 in joint ventures accounted for using the equity method). Material or unusual changes in the results of our operations are discussed below.
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Revenues
The following table presents information on revenues earned for the years
indicated:
For the Year Ended December 31,
2022 2021 $ Change % Change
Property rental $ 1,654,735 $ 1,340,990 $ 313,745 23.4 %
Tenant reinsurance 185,531 170,108 15,423 9.1 %
Management fees and other income 83,904 66,264 17,640 26.6 %
Total revenues $ 1,924,170 $ 1,577,362 $ 346,808 22.0 %
Property Rental-The increase in property rental revenues for the year ended
December 31, 2022 was primarily the result of an increase of $220,629 at our
stabilized stores related to high occupancy and increased rents to existing
customers. Property rental revenue also increased by $100,601 associated with
acquisitions completed in 2022 and 2021. We acquired 153 stores during the year
ended December 31, 2022 and we acquired 74 stores during the year ended December
31, 2021 . Property rental revenue also increased by $5,431 during the year ended
December 31, 2022 as a result of increases in occupancy at our lease-up stores.
These increases were offset by approximately $15,460 related to the sale of 16
stores into a new joint venture and 16 stores to a third party during 2021.
Tenant Reinsurance-The increase in tenant reinsurance revenues was due primarily
to an increase in the number of stores operated and the higher average occupancy
across the portfolio. We operated 2,338 stores at December 31, 2022 , compared to
2,096 stores at December 31, 2021 .
Management Fees and Other Income-Management fees and other income represent the
fees collected for our management of stores owned by third parties and
unconsolidated joint ventures and other transaction fee income. The increase for
the year ended December 31, 2022 was primarily due to an increase in the number
of stores managed. As of December 31, 2022 , we managed 1,206 stores for third
parties and joint ventures compared to 1,115 stores as of December 31, 2021 .
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Expenses
The following table presents information on expenses for the years indicated:
For the Year Ended December 31,
2022 2021 $ Change % Change
Property operations $ 435,342 $ 368,608 $ 66,734 18.1 %
Tenant reinsurance 33,560 29,488 4,072 13.8 %
Transaction related costs 1,548 - 1,548 -
General and administrative 129,251 102,194 27,057 26.5 %
Depreciation and amortization 288,316 241,879 46,437 19.2 %
Total expenses $ 888,017 $ 742,169 $ 145,848 19.7 %
Property Operations-The increase in property operations expense consists
primarily of an increase of $32,242 at stabilized stores due to increased
payroll, credit card processing fees, utilities, property taxes and insurance.
The increase was also attributed to $34,547 related to acquisitions completed in
2022 and 2021. We acquired 153 stores during the year ended December 31, 2022
and acquired 74 stores during the year ended December 31, 2021 . The increase was
partially offset by a decrease in expense of $6,934 related to property sales.
Tenant Reinsurance-Tenant reinsurance expense represents the costs that are
incurred to provide tenant reinsurance. The increase in tenant reinsurance
expense for the year ended December 31, 2022 was due primarily to the increase
in total number of stores operated compared to the prior year and major storm
events that occurred causing an increase in claim payouts. Tenant reinsurance
expense included a $3,000 charge for tenant reinsurance claims related to
damages incurred from Hurricane Ian. We operated 2,338 stores at December 31,
2022 , compared to 2,096 stores at December 31, 2021 .
Transaction Related Costs-This represents the costs that were incurred as part
of the acquisition of
General and Administrative-General and administrative expenses primarily include all expenses not directly related to our stores, including corporate payroll, travel and professional fees. These expenses are recognized as incurred. Our overall expense has increased due to acquisitions, business combinations and growth through our joint venture partners and managed portfolio. During 2021, we experienced higher than average turnover and extended times to fill. We experienced wage pressure which led to increases in wages of approximately 10% nationwide. During 2022, we continued to see these trends but to a lesser extent and as such we do not expect these trends to continue in 2023. No other material trends in specific travel or other expenses were observed. Depreciation and Amortization-Depreciation and amortization expense increased as a result of the acquisition of new stores. We acquired 153 stores during the year endedDecember 31, 2022 , and acquired 74 stores during the year endedDecember 31, 2021 . 21 --------------------------------------------------------------------------------
Other Income and Expenses
The following table presents information on other revenues and expenses for the
years indicated:
For the Year Ended December 31,
2022 2021 $ Change % Change
Gain on real estate transactions $ 14,249 $ 140,760 $ (126,511) (89.9) %
Interest expense (219,171) (166,183) (52,988) 31.9 %
Interest income 69,422 49,703 19,719 39.7 %
Equity in earnings and dividend income from
unconsolidated real estate entities 41,428 32,358 9,070 28.0 %
Equity in earnings of unconsolidated real estate
ventures - gain on sale of real estate assets - 6,251 (6,251) 100.0 %
Income tax expense (20,925) (20,324) (601) 3.0 %
Total other expense, net $ (114,997) $ 42,565 $ (157,562) (370.2) %
Gain on Real Estate Transactions - During the year ended December 31, 2022 we
sold two stores. We recognized a total gain of $14,249 related to the sale of
these assets. During the first quarter of 2021, we sold 16 stores to a newly
established unconsolidated joint venture for a total sales price of $168,885
resulting in a gain of $63,477 . Additionally, we sold 16 stores during the
fourth quarter of 2021 to a third party for a total sales price of $204,500
resulting in a gain of $73,854 .
Interest Expense-The increase in interest expense during the year ended
December 31, 2022 was the result of higher overall debt and a higher average
interest rate when compared to the same period in the prior year. Information on
the total face value of debt and the average interest rate for the years ended
December 31, 2022 and December 31, 2021 is set forth in the following table:
For the Year Ended December 31,
2022 2021
Total face value of debt $ 7,364,424 $
5,984,113
Average interest rate 4.1 %
2.6 %
Interest Income-Interest income represents interest earned on bridge loans and debt securities, income earned on notes receivable from common and preferredOperating Partnership unit holders and amounts earned on cash and cash equivalents deposited with financial institutions. The total principal balance of bridge loans receivable as ofDecember 31, 2022 was$491,879 , compared to$279,042 as ofDecember 31, 2021 . The increase in interest income during the year endedDecember 31, 2022 was primarily the result of the higher bridge loan balances along with higher interest rates. Equity in Earnings and Dividend Income fromUnconsolidated Real Estate Entities-Equity in earnings of unconsolidated real estate ventures represents the income earned through our ownership interests in unconsolidated real estate ventures. In joint ventures, we and our joint venture partners generally receive a preferred return on our invested capital. To the extent that cash or profits in excess of these preferred returns are generated, we receive a higher percentage of the excess cash or profits, as applicable. We added a total of 37 stores to new and existing joint ventures for the year endedDecember 31, 2022 resulting in higher earnings when compared to the prior year. Dividend income represents dividends from our$200,000 investment in preferred stock of SmartStop. Equity in Earnings of Unconsolidated Real Estate Ventures-Gain on Sale of Real Estate Assets and Purchase of Joint Venture Partner's Interest-InJune 2021 , we sold our interest in two unconsolidated single store joint ventures to our joint ventures partner. We received proceeds of$1,888 in cash and recorded a gain of$525 . Also, as ofJune 2021 , theWICNN JV LLC andGFN JV LLC joint ventures sold all 17 of the stores owned by the joint ventures to a third party. Subsequent to the sales, these joint ventures were dissolved. As a result of these transactions, we recorded a gain of$5,739 .
Income Tax Expense-For the year ended
tax expense was the result of an increase in income earned by our TRS when
compared to the same period in the prior year.
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Comparison of the Year Ended
2020
The results of operations for the years endedDecember 31, 2021 compared toDecember 31, 2020 was included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 on page 21, under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," which was filed with theSEC onFebruary 28, 2022 .
FUNDS FROM OPERATIONS
Funds from operations ("FFO") provides relevant and meaningful information about
our operating performance that is necessary, along with net income and cash
flows, for an understanding of our operating results. We believe FFO is a
meaningful disclosure as a supplement to net earnings. Net earnings assume that
the values of real estate assets diminish predictably over time as reflected
through depreciation and amortization expenses. The values of real estate assets
fluctuate due to market conditions and we believe FFO more accurately reflects
the value of our real estate assets. FFO is defined by the National Association
of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in
accordance with U.S. generally accepted accounting principles ("GAAP"),
excluding gains or losses on sales of operating stores and impairment
write-downs of depreciable real estate assets, plus real estate related
depreciation and amortization and after adjustments to record unconsolidated
partnerships and joint ventures on the same basis. We believe that to further
understand our performance, FFO should be considered along with the reported net
income and cash flows in accordance with GAAP, as presented in the consolidated
financial statements. FFO should not be considered a replacement of net income
computed in accordance with GAAP.
The computation of FFO may not be comparable to FFO reported by other REITs or
real estate companies that do not define the term in accordance with the current
NAREIT definition or that interpret the current NAREIT definition differently.
FFO does not represent cash generated from operating activities determined in
accordance with GAAP, and should not be considered as an alternative to net
income as an indication of our performance, as an alternative to net cash flow
from operating activities as a measure of our liquidity, or as an indicator of
our ability to make cash distributions.
The following table presents the calculation of FFO for the periods indicated:
For the Year Ended
2022 2021 2020 Net income attributable to common stockholders$ 860,688 $ 827,649 $ 481,779 Adjustments: Real estate depreciation 263,923 229,133 214,345 Amortization of intangibles 13,623 4,420 1,900 Gain on real estate transactions (14,249) (140,760) (18,075)
Unconsolidated joint venture real estate depreciation and
amortization
16,644 11,954 9,021
Unconsolidated joint venture gain on sale of real estate
assets and purchase of partner's interest
- (6,251) -
Distributions paid on
Partnership
(2,288) (2,288) (2,288)
Income allocated to
interests
60,468 50,109 35,803 Funds from operations attributable to common stockholders and unit holders$ 1,198,809 $ 973,966 $ 722,485 23
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SAME-STORE RESULTS
Comparison of the Year Ended
2021
Our same-store pool for the periods presented consists of 867 stores that are
wholly-owned and operated and that were stabilized by the first day of the
earliest calendar year presented. We consider a store to be stabilized once it
has been open for three years or has sustained average square foot occupancy of
80% or more for one calendar year. We believe that by providing same-store
results from a stabilized pool of stores, with accompanying operating metrics
including, but not limited to: occupancy, rental revenue growth, operating
expense growth, net operating income growth, etc., stockholders and potential
investors are able to evaluate operating performance without the effects of
non-stabilized occupancy levels, rent levels, expense levels, acquisitions or
completed developments. Same-store results should not be used as a basis for
future same-store performance or for the performance of our stores as a whole.
The following table presents operating data for our same-store portfolio:
For the Year Ended December 31, Percent
2022 2021 Change
Same-store rental revenues $ 1,443,327 $ 1,229,688 17.4%
Same-store operating expenses $ 339,195 $ 311,718 8.8%
Same-store net operating income $
1,104,132
Same-store square foot occupancy as of year end 94.2
% 95.3 %
Properties included in same-store 867
867
Same-store revenues for the year endedDecember 31, 2022 increased compared to the same periods in 2021 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy. Same-store expenses increased for the three months and year endedDecember 31, 2022 compared to the same periods in 2021 due to increases in payroll, credit card processing fees, utilities, property taxes and insurance. The same-store expense growth rate for the year endedDecember 31, 2022 is amplified by negative expense growth in the 2021 comparable period. 24 --------------------------------------------------------------------------------
The following table presents a reconciliation of same-store net operating income
to net income as presented on our condensed consolidated statements of
operations for the periods indicated:
For the Year Ended
December 31,
2022 2021
Net Income $ 921,156 $ 877,758
Adjusted to exclude:
Gain on real estate transactions (14,249) (140,760)
Equity in earnings and dividend income from unconsolidated real estate
entities
(41,428) (32,358) Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets - (6,251) Interest expense 219,171 166,183 Depreciation and amortization 288,316 241,879 Income tax expense 20,925 20,324 Transaction related costs 1,548 - General and administrative 129,251 102,194 Management fees, other income and interest income (153,326) (115,967) Net tenant insurance (151,971) (140,620) Non same-store rental revenue (211,408) (111,302) Non same-store operating expense 96,147 56,890 Total same-store net operating income
Comparison of the Year Ended
2020
The same-store results for the years endedDecember 31, 2021 compared toDecember 31, 2020 was included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 on page 21, under Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," which was filed with theSEC onFebruary 28, 2022 . 25 --------------------------------------------------------------------------------
CASH FLOWS
Cash flows from operating activities increased as expected due to our continued
growth in revenues and through the increase in the number of properties we own
and operate. Cash flows used in investing activities relate primarily to our
acquisitions and development of new stores, sales of stores, investments in
unconsolidated real estate entities and notes receivable from bridge loans, and
fluctuate depending on our actions in those areas. Cash flows from financing
activities depend primarily on our debt and equity financing activities. A
summary of cash flows along with significant components are as follows:
For
the Year Ended
2022 2021 2020 Net cash provided by operating activities$ 1,238,139 $ 952,436 $ 771,232 Net cash used in investing activities$ (1,648,459) $ (837,540) $ (955,427) Net cash provided by (used in) financing activities$ 431,861
Significant components of net cash flow included: Net income$ 921,156 $ 877,758 $ 517,582 Depreciation and amortization$ 288,316 $ 241,879 $ 224,444 Acquisition, development and redevelopment of stores$ (1,353,510) $ (1,289,524) $ (387,448) Cash paid for business combination$ (157,302) $ - $ - Gain on real estate transactions$ (14,249) $ (140,760) $ (18,075) Investment in unconsolidated real estate entities$ (118,963) $ (54,602) $ (64,792) Issuance and purchase of notes receivable$ (529,245) $ (317,482) $ (313,355) Investment in debt securities $ - $ -$ (300,000) Proceeds from sale of notes receivable$ 210,048 $ 172,002 $ 62,764 Principal payments received from notes receivable$ 283,636
Proceeds from the sale of common stock, net of offering
costs
$ -$ 273,189 $ 103,468 Proceeds from sale of real estate assets and investments in real estate ventures$ 39,367
Net proceeds from our debt financing and repayment
activities
$ 1,376,411 $ 206,691 $ 691,270 Repurchase of common stock$ (63,008) $ -$ (67,873) Proceeds from issuance of public bonds, net$ 396,100 $ 1,040,349 $ - Dividends paid on common stock$ (805,311)
We believe that cash flows generated by operations, along with our existing cash
and cash equivalents, the availability of funds under our existing lines of
credit, and our access to capital markets will be sufficient to meet all of our
reasonably anticipated cash needs during the next twelve months. These cash
needs include operating expenses, monthly debt service payments, recurring
capital expenditures, acquisitions, funding for the bridge loan program,
building redevelopments and expansions, distributions to unit holders and
dividends to stockholders necessary to maintain our REIT qualification.
We expect to generate positive cash flow from operations and we consider
projected cash flows in our sources and uses of cash. These cash flows are
principally derived from rents paid by our tenants. A significant deterioration
in projected cash flows from operations could cause us to increase our reliance
on available funds under our existing lines of credit, curtail planned capital
expenditures, or seek other additional sources of financing.
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LIQUIDITY AND CAPITAL RESOURCES
Financing Strategy
We will continue to employ leverage in our capital structure in amounts reviewed from time to time by our board of directors. Although our board of directors has not adopted a policy which limits the total amount of indebtedness that we may incur, we will consider a number of factors in evaluating our level of indebtedness from time to time, as well as the amount of such indebtedness that will be either fixed or variable rate. In making financing decisions, we will consider factors including but not limited to: •the interest rate of the proposed financing; •the extent to which the financing impacts flexibility in managing our stores; •prepayment penalties and restrictions on refinancing; •the purchase price of stores acquired with debt financing; •long-term objectives with respect to the financing; •target investment returns; •the ability of particular stores, and our company as a whole, to generate cash flow sufficient to cover expected debt service payments; •overall level of consolidated indebtedness; •timing of debt maturities; •provisions that require recourse and cross-collateralization; and •corporate credit ratios including fixed charge coverage ratio and max secured/unsecured indebtedness. Our indebtedness may be recourse, non-recourse, cross-collateralized, cross-defaulted, secured or unsecured. In addition, we may invest in stores subject to existing loans collateralized by mortgages or similar liens, or may refinance stores acquired on a leveraged basis. We may use the proceeds from any borrowings to refinance existing indebtedness, to refinance investments, including the redevelopment of existing stores, for general working capital or to purchase additional interests in partnerships or joint ventures or for other purposes when we believe it is advisable. As ofDecember 31, 2022 , we had$92,868 available in cash and cash equivalents. Our cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. During 2022 and 2021, we experienced no loss or lack of access to our cash or cash equivalents; however, there can be no assurance that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets. As ofDecember 31, 2022 , we had$7,364,424 face value of debt, resulting in a debt to total enterprise value ratio of 25.8%. As ofDecember 31, 2021 , we had$5,984,113 face value of debt, resulting in a debt to total enterprise value ratio of 15.6%. As ofDecember 31, 2022 , the ratio of total fixed-rate debt and other instruments to total debt was 64.7% (including$1,837,714 on which we have interest rate swaps that have been included as fixed-rate debt). As ofDecember 31, 2021 , the ratio of total fixed-rate debt and other instruments to total debt was 75.3% (including$1,983,145 on which we have interest rate swaps that have been included as fixed-rate debt). The weighted average interest rate of total debt atDecember 31, 2022 and 2021 was 4.1% and 2.6%, respectively. As ofDecember 31, 2022 , the weighted average interest rate for all fixed rate debt was 3.4%, and the weighted average interest rate on all variable rate debt was 5.5%. As ofDecember 31, 2021 , the weighted average interest rate for all fixed rate debt was 3.1%, and the weighted average interest rate on all variable rate debt was 1.3%. InJanuary 2021 , we received a Baa2 rating from Moody's Investors Service and inJuly 2019 , we obtained a BBB/Stable rating from S&P. We intend to manage our balance sheet to preserve such ratings. Certain of our real estate assets are pledged as collateral for our debt. We have a total of 908 unencumbered stores as defined by our public bonds. Our unencumbered asset value is calculated as$17,142,473 and our total asset value is calculated as$22,155,942 according to the calculations as defined by our public bonds. We are subject to certain restrictive covenants relating to our outstanding debt. We were in compliance with all financial covenants atDecember 31, 2022 . We expect to fund our short-term and long-term liquidity requirements, including operating expenses, recurring capital expenditures, dividends to stockholders, distributions to holders ofOperating Partnership units and interest on our outstanding indebtedness, out of our operating cash flow, cash on hand and borrowings under our revolving lines of credit. In addition, we are pursuing additional sources of financing based on anticipated funding needs. Our liquidity needs consist primarily of operating expenses, monthly debt service payments, recurring capital expenditures, distributions to unit holders and dividends to stockholders necessary to maintain our REIT qualification. We may from time to time seek to repurchase our outstanding debt, shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market 27 -------------------------------------------------------------------------------- conditions, our liquidity requirements, contractual restrictions and other factors. In addition, we evaluate, on an ongoing basis, the merits of strategic acquisitions and other relationships, which may require us to raise additional funds. We may also useOperating Partnership units as currency to fund acquisitions from self-storage owners who desire tax-deferral in their exiting transactions. CONTRACTUAL OBLIGATIONS
For more information on our contractual obligations related to real estate
acquisitions, refer to our commitments and contingencies footnote in the notes
to the consolidated financial statements in Item 8 of this Form 10-K.
SEASONALITY
The self-storage business has been subject to seasonal fluctuations. A greater portion of revenues and profits is typically realized from May through September. Historically, our highest level of occupancy has been at the end of July, while our lowest level of occupancy has been in late February and early March. Results for any quarter may not be indicative of the results that may be achieved for the full fiscal year.
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