Company: PSA-PH
Filing Date: 2025-10-29
Form Type: 10-Q
Source: 0001628280-25-047163
Chunk: 34

Company: Public Storage
Filing Date: 2025-10-29
Form: 10-Q
Item: Item 2
Chunk 34
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 “Ancillary Operations” below for more information.

(c)We have completed an expansion project on a facility developed in 2023 for $23.8 million, adding 55,000 net rentable square feet of storage space as of September 30, 2025.

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

Our Newly Developed and Expanded Facilities includes a total of 103 self-storage facilities of 12.4 million net rentable square feet. For development and expansions completed by September 30, 2025, we incurred a total cost of $1.5 billion. During the three and nine months ended September 30, 2025, Newly Developed and Expanded Facilities contributed net operating income of $32.0 million and $90.9 million, respectively.

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

We believe that our development and redevelopment activities generate favorable risk-adjusted returns over the long run. However, in the short run, our earnings are diluted during the construction and stabilization period due to the cost of capital to fund the development cost, the related construction and development overhead expenses included in general and administrative expense, and the net operating loss from newly developed facilities undergoing fill-up. 

We typically underwrite new developments to stabilize at approximately an 8% yield on cost (adjusted for impacts from tenant reinsurance and maintenance capital expenditures). Our developed facilities have thus far leased up as expected and are at various stages of their revenue stabilization periods. The actual annualized yields that we may achieve on these facilities upon stabilization will depend on many factors, including local and current market conditions in the vicinity of each property and the level of new and existing supply.

The facilities under “expansions completed” represent those facilities where the expansions have been completed at September 30, 2025. We incurred a total of $796.4 million in direct cost to expand these facilities, demolished a total of 0.6 million net