Company: PSA-PH
Filing Date: 2025-07-30
Form Type: 10-Q
Source: 0001393311-25-000120
Chunk: 34

Company: Public Storage
Filing Date: 2025-07-30
Form: 10-Q
Item: Item 2
Chunk 34
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102 self-storage facilities of 12.0 million net rentable square feet. For development and expansions completed by June 30, 2025, we incurred a total cost of $1.5 billion. During the three and six months ended June 30, 2025, Newly Developed and Expanded Facilities contributed net operating income of $30.6 million and $58.8 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 June 30, 2025. We incurred a total of $759.9 million in direct cost to expand these facilities, demolished a total of 0.5 million net rentable square feet of storage space, and built a total of 4.5 million net rentable square feet of new storage space. 

At June 30, 2025, we had 27 additional facilities in development, which will have a total of 2.6 million net rentable square feet of storage space and have an aggregate development cost totaling approximately $487.9 million. We expect these facilities to open over the next 18 to 24 months. 

The facilities under “expansion in process” represent those facilities where construction is in process at June