11-K 1 q22021form11k2020.htm 11-K Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
20549 WASHINGTON, D.C.
 
 
FORM 11-K
 
 
 
XANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
 
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From              to             

Commission File No. 001-32269
 
 
 
A.Full title of the plan and the address of the plan, if different from that of the issuer named below:
Extra Space Management, Inc. 401(k) Plan

 
B.Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Extra Space Storage, Inc.
2795 East Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84121

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Extra Space Management, Inc. 401(k) Plan
Financial Statements and Supplemental Schedules
Years Ended December 31, 2020 and 2019

Table of Contents


Report of Independent Registered Public Accounting Firm3
Audited Financial Statements
Statements of Net Assets Available for Benefits5
Statement of Changes in Net Assets Available for Benefits6
Notes to Financial Statements7
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)12
Signatures13
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Report of Independent Registered Public Accounting Firm
Plan Administrator and Participants
Extra Space Management, Inc. 401(k) Plan
2795 East Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84121
Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the Extra Space Management, Inc. 401(k) Plan (the “Plan”) as of December 31, 2020 and 2019, the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019, and the changes in net assets available for benefits for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risk of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by the Plan’s management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Supplemental Information

The supplemental information in the accompanying schedule H, line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2020 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but included supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

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WSRP, LLC

We have served as the Plan’s auditor since 2016.

Salt Lake City, Utah

June 28, 2021
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Extra Space Management, Inc. 401(k) Plan
Statements of Net Assets Available for Benefits
December 31,
20202019
Assets
Investments, at fair value:
Money market$4,191,698 $3,736,864 
Mutual funds71,720,775 58,696,366 
Extra Space Storage Inc. common stock4,302,386 3,946,263 
Total investments$80,214,859 $66,379,493 
Receivables:
Notes receivable from participants$2,120,868 $2,127,139 
Receivable from investments pending— 1,747 
Total receivables$2,120,868 $2,128,886 
Total assets available for benefits$82,335,727 $68,508,379 

See accompanying notes to financial statements.
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Extra Space Management, Inc. 401(k) Plan
Statement of Changes in
Net Assets Available for Benefits
For the Year Ended
December 31, 2020
Additions:
Investment Income:
Net appreciation in fair value of investments
$9,183,732 
Interest and dividends$2,858,352 
Contributions:
Participants$7,671,522 
Employer3,925,384 
Rollover556,915 
Total contributions$12,153,821 
Total additions$24,195,905 
Deductions:
Benefits paid to participants$10,161,221 
Administrative expenses207,336 
Total deductions$10,368,557 
Increase in net assets available for benefits$13,827,348 
Net Assets available for benefits:
Beginning of the year$68,508,379 
End of the year$82,335,727 

See accompanying notes to financial statements.
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Extra Space Management, Inc. 401(k) Plan
Notes to Financial Statements

1.DESCRIPTION OF PLAN


The following description of the Extra Space Management, Inc. 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.

General

The Plan is a qualified 401(k) defined contribution plan, covering all employees of Extra Space Management, Inc. (“Sponsor”) who have reached age 21. Employees are eligible after 90 days of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.

Extra Space Storage, Inc. (the “Company”) appoints a committee to administer the Plan. As of December 31, 2020, the Plan Administrative Committee was comprised of three members of management, with Fidelity Management Trust Company (“Fidelity” or “Trustee”) acting as Trustee.

Contributions

Contributions are made to the Plan by both employees and the Sponsor. Employee contributions to the Plan are deferrals of the employee’s compensation made through a direct reduction of compensation in each payroll period. Participating employees may contribute a percentage of their annual compensation up to 60% of eligible compensation, or $19,500. The Plan also provides participants who are age 50 or older by the end of the calendar year, and who are making deferral contributions to the Plan, the option to make catch-up contributions of up to $6,500 per year. The Sponsor matches 100% of the first 3% of the participant’s eligible contribution and 50% of the next 2%. The Plan Sponsor, at its discretion, may make an additional matching contribution, not to exceed 4% of the employee’s compensation. Participants direct the investment of their contributions and the Sponsor’s match into various investment options offered by the Plan.

Participant Accounts

Each participant's account is adjusted for the participant’s contribution, the Sponsor’s matching contribution, expenses, and earnings and losses specifically identified with the participant’s investment account. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.

Vesting

Participants are immediately vested in their contributions and the Sponsor’s matching contributions.

Notes Receivable from Participants

Participants may borrow from their Plan accounts a minimum of $1,000 and up to a maximum of the lesser of $50,000 or 50% of their account balance. These loans are subject to a repayment period of no more than five years, unless the loan is withdrawn for the purchase of a participant’s primary residence, in which case the repayment period may not extend beyond 10 years. The loans are secured by the balance in the participant’s account, and principal and interest payments are paid ratably by the participant through payroll deductions.









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Extra Space Management, Inc. 401(k) Plan
Notes to Financial Statements - Continued

1.    DESCRIPTION OF PLAN - Continued

Plan Termination

Although it has not expressed any intent to do so, the Sponsor has the right under the Plan to terminate the Plan, subject to the provisions of ERISA. In the event the Plan is terminated, all participant accounts would be distributed among the participants in accordance with the terms set forth in the Plan.

Payment of Benefits

Upon termination of service due to death, disability, or retirement, a participant may receive a lump-sum amount equal to the vested benefits in his or her account. Under certain circumstances, including financial hardship, participants may withdraw their contributions prior to the occurrence of these events. The Trustee makes determinations related to hardship withdrawals. Vested accounts for terminated employees which do not exceed $5,000 but are greater than $1,000 are automatically rolled over into an individual retirement account. Accounts which are less than $1,000 are automatically distributed in a lump sum.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investment Options

The Plan’s assets are invested in various investment options offered by the Trustee and in stock of the Company, as directed by Participants. Participants may change their investment options at will.

Basis of Accounting

The accompanying financial statements of the Plan are prepared using the accrual method of accounting in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the plan administrators to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Certain of those key estimates include the fair value of investments.

Investment Valuation and Income Recognition

The Plan’s valuation methodology used to measure the fair values of mutual funds and common stocks was derived from quoted market prices as all of these instruments have active markets. The money market portfolio is stated at cost, which approximates fair value.

Net appreciation in the fair value of investments includes realized and unrealized gains (losses) on investments, and is recognized in income. Net unrealized gains (losses) represent the difference between the book value (which represents the prior year ending fair value, or cost if the investment was purchased during the year) and the fair value of investments held at year-end. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Dividends and interest are reinvested as earned.





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Extra Space Management, Inc. 401(k) Plan
Notes to Financial Statements - Continued

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Administrative Expenses

The Sponsor pays all administrative expenses of the Plan, except for loan processing fees, record keeping fees and the fees associated with additional participant services provided by Global Retirement Partners, LLC (“Advisor”). The fees associated with loan processing, record keeping and additional services by the Advisor are paid by the participant’s account. Total administrative fees paid by the Sponsor were $207,336 for the year ended December 31, 2020.

Payment of Benefits

Benefits are recorded when paid by the Plan.

Notes Receivable from Participants

Notes receivable from participants are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recognized over the terms of the notes at the rate specified in the loan documents. As of December 31, 2020, outstanding loans totaled $2,120,868 with interest rates ranging from 4.25 to 6.5% and maturity dates ranging from January 13, 2021 to October 12, 2030. Fees related to notes receivable from participants are recorded as administrative expenses when incurred. If a participant defaults, the carrying amount of the note receivable from the participant is eliminated and a benefit payment is recorded at the time the participant has a distributable event. Notes receivable from participants are considered delinquent when payments are not made in accordance with the terms of the note and are evaluated to determine if they are in default.

Fair Value Measurements

The Plan reports investments in accordance with established authoritative guidance, which requires a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

The three levels are defined as follows:

Level 1 inputs are unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2 inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market date.

Level 3 inputs are unobservable and significant to the valuation methodology.



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2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Fair Value Measurements – Continued

All investments in the Plan are valued using Level 1 inputs and are summarized below for the end of the year indicated.
December 31,
20202019
Mutual Funds$71,720,775 $58,696,366 
Money market accounts4,191,698 3,736,864 
Extra Space Storage, Inc. Common Stock4,302,386 3,946,263 
Total Investments$80,214,859 $66,379,493 
The Plan’s valuation methodology used to measure the fair values of mutual funds, money market and common stocks were derived from quoted market prices as all of these instruments have active markets.

Subsequent Events

The plan administrator has evaluated subsequent events through June 28, 2021, the date the financial statements were available to be issued. No subsequent events were noted during this evaluation that require recognition or disclosure in these financial statements.


3.    PARTY-IN-INTEREST TRANSACTIONS

As of December 31, 2020, the Plan’s assets consisted of mutual funds issued by the Trustee and participant loans extended to participants. The Trustee is considered a party-in-interest because it manages the Plan’s assets. Participants are also considered parties-in-interest.

Transactions associated with the shares of common stock of the Company are also considered exempt party-in-interest transactions. As of December 31, 2020, the Plan held 37,113 shares of Company common stock. Total outstanding Company common stock as of December 31, 2020, was 131,357,961 shares.

During the year ended December 31, 2020, the Plan had the following transactions involving the Company’s common stock:
2020
Shares purchased9,114 
Shares sold(9,344)
Cost of shares purchased$922,508 
Gain realized on shares sold$(28,841)
Dividend income earned$132,126 





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Extra Space Management, Inc. 401(k) Plan
Notes to Financial Statements – Continued


4.    RISKS AND UNCERTAINTIES

The Plan provides for investment in various investment securities. In general, these securities are exposed to various risks, such as interest rate, market, and credit in addition to changes in economic conditions. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such change could materially affect the amounts reported in the accompanying statements of net assets available for benefits.


5.    INCOME TAX STATUS

The Plan has adopted a non-standardized prototype plan for which the Internal Revenue Service has issued an opinion letter dated March 31, 2008, covering the qualification of the Plan under the appropriate sections of the Internal Revenue Code. The plan administrators believe that the Plan continues to operate in accordance with the requirements to qualify for tax-exempt status. Accordingly, no provision for income taxes is included in the accompanying financial statements.

Management evaluates tax positions taken by the Plan and recognizes a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would be sustained upon examination by taxing authorities. Plan management has concluded that as of December 31, 2020, there are no uncertain tax positions that require either recognition or disclosure in the financial statements. The Plan is subject to routine audits by taxing authorities for tax years for which the applicable statutes of limitations have not expired. To the plan administrator’s knowledge there are currently no audits for any tax periods in progress.




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Extra Space Management, Inc. 401(k) Plan
Schedule H, Line 4i
Schedule of Assets (Held at End of Year)

December 31, 2020
Employer Identification Number: 87-0405300
Plan Number: 001
(a)(b)(c)(e)
Party inDescription
InterestIdentity of Issueof InvestmentsCurrent Value
*EXTRA SPACE STOCKCommon Stock$4,302,386 
AF EUROPAC GROWTH R6Mutual Fund$3,681,232 
ALGER CAP APPREC ZMutual Fund$7,592,948 
CONESTOGA SM CAP ISMutual Fund$2,383,957 
*FID 500 INDEX Mutual Fund$9,830,372 
*FID BALANCEDMutual Fund$2,975,332 
*FID EXT MKT IDX Mutual Fund$464,877 
*FID FDM IDX INC IPR Mutual Fund$144,770 
*FID FDM IDX 2005 IPRMutual Fund$167,865 
*FID FDM IDX 2010 IPRMutual Fund$258,039 
*FID FDM IDX 2015 IPRMutual Fund$509,823 
*FID FDM IDX 2020 IPRMutual Fund$1,035,198 
*FID FDM IDX 2025 IPRMutual Fund$2,255,526 
*FID FDM IDX 2030 IPRMutual Fund$2,794,326 
*FID FDM IDX 2035 IPRMutual Fund$3,132,502 
*FID FDM IDX 2040 IPRMutual Fund$5,155,313 
*FID FDM IDX 2045 IPRMutual Fund$4,798,522 
*FID FDM IDX 2050 IPRMutual Fund$4,314,558 
*FID FDM IDX 2055 IPRMutual Fund$2,955,395 
*FID FDM IDX 2060 IPRMutual Fund$1,224,358 
*FID FDM IDX 2065 IPRMutual Fund$29,853 
*FID GOVT MMKTMoney Market$4,191,698 
*FID INTL INDEXMutual Fund$685,550 
*FID SM CAP IDXMutual Fund$1,961,432 
INVS DEVELOP MKT YMutual Fund$92,310 
J H ENTERPRISE NMutual Fund$4,716,413 
JPM EQUITY INCOME R6Mutual Fund$1,578,870 
PGIM ST CORP BOND R6Mutual Fund$646,577 
PGIM TOTAL RTN BD R6Mutual Fund$4,470,640 
PIM COM REAL RET IMutual Fund$108,933 
UM BEHAVIORAL VAL R6Mutual Fund$294,421 
VICTORY S EST VAL R6Mutual Fund$1,460,863 
Loans to participants, at cost, which approximates fair value, at interest rates of 4.25% to 6.5% and maturities ranging from January 13, 2021 to October 12, 2030.
$2,120,868 
$82,335,727 
* Denotes a party-in-interest as defined by ERISA.
Note: Column (d), cost, has been omitted as all investments are participant directed



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the trustees (or other persons who administer the employee benefit plan) have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Extra Space Management, Inc. 401(k) Plan
Date: June 28, 2021/s/ P. Scott Stubbs
P. Scott Stubbs
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

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