Extra Space Storage Inc.EXR
Extra Space Storage Inc. Leases Disclosure
LEASES
Lessee Accounting
The Company accounts for leases under ASC 842, “Leases.” Right-of-use assets associated with operating leases are included in real estate assets - operating lease right-of-use assets and operating lease liabilities are included in operating lease liabilities on the Company’s consolidated balance sheets. Right-of-use assets associated with finance leases are included in and finance lease liabilities are included in on the Company’s consolidated balance sheets.
During the year ended December 31, 2025, the Company recorded new finance lease right-of-use assets and finance lease liabilities totaling $934 associated with one store with a land lease.
The Company is lessee under several types of lease agreements. Generally, these leases fall into the following categories:
•Leases of real estate at 84 stores classified as wholly-owned or in consolidated joint ventures. These leases generally have original lease terms between 10-99 years. Under these leases, the Company typically has the option to extend the lease term for additional terms of 5-35 years.
•Leases of its corporate offices and call center. These leases have original lease terms between and 14 years, with the option to extend up to five years.
•Leases of 23 regional offices. These leases have original lease terms between and five years. The Company has the option on certain of these leases to extend the lease term for up to additional years.
•Leases of small district offices. These leases generally have terms of 12 months or less. The Company has made an election to account for these under the short-term lease exception outlined under ASC 842. Therefore, no lease assets or liabilities are recorded related to these leases.
The Company has included lease extension options in the lease term for calculations of its right-of-use assets and liabilities related to the real estate asset leases at its stores when it is reasonably certain that the Company plans to extend the lease terms as the options arise.
Several of the leases of real estate at the Company’s stores include escalation clauses based on an index or rate, such as the Consumer Price Index (CPI). The Company included these lease payments in its calculations of right-of-use assets and liabilities based on the prevailing index or rate as of the adoption date. The Company will recognize changes to these variable lease payments in earnings in the period of change.
One of the real estate leases includes variable lease payments that are based upon a percentage of gross revenues. Certain other leases include additional variable payments relating to a percentage of sales in excess of a specified amount, common area maintenance, property taxes, and similar items. These payments are variable lease payments that do not depend on an index or rate and are excluded from the measurement of the lease liabilities and right-of-use-assets for these leases. The Company will recognize costs from these variable lease payments in the period in which the obligation for those payments is incurred.
As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s unsecured borrowing rates and implied secured spread at the lease commencement date in determining the present value of lease payments. These discount rates vary depending on the term of the specific leases.
The following is information on our total lease costs as of the period indicated:
| For the Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Finance lease cost: | |||||||||||
| Amortization of finance lease right-of-use assets | $ | 3,987 | $ | 4,018 | |||||||
| Interest expense related to finance lease liabilities | 4,471 | 4,722 | |||||||||
| Operating lease cost | 64,345 | 42,560 | |||||||||
| Variable lease cost | 17,717 | 16,005 | |||||||||
| Short-term lease cost | 17 | 24 | |||||||||
| Total lease cost | $ | 90,537 | $ | 67,329 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | |||||||||||
| Operating cash outflows for finance lease payments | $ | 4,451 | $ | 4,440 | |||||||
| Operating cash outflows for operating lease payments | 49,799 | 29,705 | |||||||||
| Total cash flows for lease liability measurement | $ | 54,250 | $ | 34,145 | |||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 5,829 | $ | 486,266 | |||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | — | $ | — | |||||||
| Weighted average remaining lease term - finance leases (years) | 55 | 55 | |||||||||
| Weighted average remaining lease term - operating leases (years) | 23 | 24 | |||||||||
| Weighted average discount rate - finance leases | 3.33 | % | 3.32 | % | |||||||
| Weighted average discount rate - operating leases | 5.75 | % | 5.73 | % | |||||||
The following table presents information about the Company’s undiscounted cash flows on an annual basis for operating and finance leases, including a reconciliation of the undiscounted cash flows to the finance lease and operating lease liabilities recognized in the Company’s consolidated balance sheets:
| Operating | Finance | Total | |||||||||||||||
| 2026 | $ | 52,590 | $ | 6,829 | $ | 59,419 | |||||||||||
| 2027 | 53,011 | 6,959 | 59,970 | ||||||||||||||
| 2028 | 53,357 | 7,075 | 60,432 | ||||||||||||||
| 2029 | 53,973 | 7,217 | 61,190 | ||||||||||||||
| 2030 | 54,596 | 7,346 | 61,942 | ||||||||||||||
| Thereafter | 1,180,618 | 339,930 | 1,520,548 | ||||||||||||||
| Total | $ | 1,448,145 | $ | 375,356 | $ | 1,823,501 | |||||||||||
| Present value adjustments (Less: future interest expense) | (687,039) | (234,821) | (921,860) | ||||||||||||||
| Lease liabilities | $ | 761,106 | $ | 140,535 | $ | 901,641 | |||||||||||
Lessor Accounting
The Company’s property rental revenue is primarily related to rents received from tenants at its operating stores. The Company’s leases with its self-storage tenants are generally on month-to-month terms, include automatic monthly renewals, allow flexibility to increase rental rates over time as market conditions permit, and provide for the collection of contingent fees such as late fees. These leases do not include any terms or conditions that allow the tenants to purchase the leased space. All self-storage leases for which the Company acts as lessor have been classified as operating leases. The real estate assets related to the Company’s stores are included in on the Company’s consolidated balance sheets and are presented at historical cost less accumulated depreciation and impairment, if any. Rental income related to these operating leases is included in property rental revenue on the Company’s consolidated statements of operations and is recognized each month as part of the month-to-month terms at the rental rate in place during each month.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 25, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.