Extra Space Storage Inc. Reports 2023 Fourth Quarter and Year-End Results
- Positive same-store revenue growth and increased FFO.
- Acquisition of new stores, including through the Life Storage Merger.
- Confidence in revenue growth for 2024.
- Strong performance in optimizing recently acquired assets.
- Decrease in net income attributable to common stockholders.
- Transition costs impacting net income.
- Decrease in same-store NOI for the three months ended December 31, 2023.
- Lower new customer rates expected to be a headwind in 2024.
Insights
The reported decrease in net income and FFO for Extra Space Storage Inc. reflects the impact of transition costs and non-cash charges associated with the Life Storage Merger. The 32.9% decrease in quarterly net income and the 26.1% decrease in annual net income are significant figures that may concern investors, as they suggest potential challenges in the integration process or higher costs than anticipated.
Moreover, the slight decrease in Core FFO suggests that, excluding one-time costs, the underlying performance of the company's operations has also faced headwinds. It is important to note that FFO is a key metric in the real estate industry, as it adds back depreciation and amortization to net income, providing a clearer picture of the performance of income-producing assets.
However, the increase in same-store revenue and NOI for the year indicates resilience in the company's core operations. The occupancy rate, a critical indicator of demand for storage units, remained high at 93.0%, although it experienced a slight decline from the previous year. The management's outlook for 2024, which includes expectations of stronger revenue growth from Life Storage assets, suggests optimism for the integration's long-term benefits.
Extra Space Storage Inc.'s expansion through the Life Storage Merger and the addition of 1,200 stores is a strategic move to consolidate market share in the self-storage industry. This acquisition makes the company the largest self-storage management company in the United States, which could lead to economies of scale and increased bargaining power with suppliers and customers.
The self-storage industry is often considered recession-resistant due to the constant demand for storage space regardless of economic conditions. This characteristic may provide a buffer for the company's performance amid economic uncertainties. However, the reported headwind from lower new customer rates indicates possible competitive pressures or a shift in market dynamics.
Investors should also consider the company's debt profile, with a significant portion of fixed-rate debt, which can be advantageous in a rising interest rate environment by providing predictability in debt servicing costs. The management's decision not to issue new shares or repurchase stock during the quarter reflects a cautious approach to capital allocation, possibly prioritizing liquidity and debt management in the current economic climate.
As a REIT, Extra Space Storage Inc. is required to distribute at least 90% of taxable income to shareholders in the form of dividends, which can make it an attractive investment for income-seeking investors. The company's dividend payment of $1.62 per share in Q4 2023 remains a critical aspect of shareholder returns, especially in light of declining net income and FFO.
The company's acquisition and development activities, including the closing of new stores and investments in joint ventures, indicate an ongoing strategy to grow its asset base. These activities, however, require substantial capital and can impact the company's leverage and liquidity. The bridge loan program, with originations and sales, is part of the company's investment strategy to finance these activities and manage risk.
Investors should monitor the integration of the Life Storage assets and the company's ability to realize synergies. The management's confidence in the self-storage sector's durability and the platform's ability to capture customer volume when demand accelerates is a positive signal, but it remains to be seen how these factors will translate into financial performance.
Highlights for the three months ended December 31, 2023:
- Achieved net income attributable to common stockholders of
$1.02 32.9% decrease compared to the same period in the prior year, primarily due to$30.6 million - Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of
$1.89 $2.02 3.3% decrease compared to the same period in the prior year. - Increased same-store revenue by
0.8% and same-store net operating income ("NOI") decreased by (0.1)% compared to the same period in the prior year. - Reported ending same-store occupancy of
93.0% as of December 31, 2023, compared to94.1% as of December 31, 2022. - The Company acquired three operating stores and four stores at completion of construction ("Certificate of Occupancy stores" or "C of O stores") for a total cost of approximately
$82.7 million - In conjunction with a joint venture partner, acquired one operating store for a total cost of approximately
$25.0 million $1.0 million - Originated
$129.2 million $43.9 million - Added 74 stores (55 stores net) to the Company's third-party management platform. As of December 31, 2023, the Company managed 1,337 stores for third parties and 472 stores in unconsolidated joint ventures, for a total of 1,809 managed stores.
- Paid a quarterly dividend of
$1.62
Highlights for the year ended December 31, 2023:
- Achieved net income attributable to common stockholders of
$4.74 26.1% decrease compared to the same period in the prior year, primarily due to$97.9 million - Achieved FFO of
$7.56 $8.10 4.0% decrease compared to the same period in the prior year. - Increased same-store revenue by
3.1% and same-store NOI by2.8% compared to the same period in the prior year. - On July 20, 2023, the Company closed its merger with Life Storage, Inc. ("Life Storage" or "LSI") in an
$11.6 billion - In addition to the stores acquired through the Life Storage Merger, the Company acquired seven operating stores and seven C of O stores for a total cost of approximately
$147.1 million - In conjunction with joint venture partners, acquired eight operating stores and one C of O store for a total cost of approximately
$170.5 million $31.3 million - Originated
$329.6 million $181.0 million - Added 225 stores (189 stores net) to the Company's third-party management platform, in addition to the stores added through the Life Storage Merger.
Joe Margolis, CEO of Extra Space Storage Inc., commented: "We had a solid quarter, focusing on optimizing the performance of the recently added Life Storage assets, while maximizing the performance of the legacy Extra Space Storage locations. We maintained healthy in-place rents and strong same-store occupancy in the quarter, averaging
Turning to 2024, we anticipate stronger revenue growth from the Life Storage assets, which are benefiting from the sophistication of the Extra Space platform. While we expect a headwind from lower new customer rates, we are confident in the durability of self-storage, our highly diversified portfolio and our platform's ability to capture customer volume when sector demand accelerates."
FFO Per Share:
The following table (unaudited) outlines the Company's FFO and Core FFO for the three months and year ended December 31, 2023 and 2022. The table also provides a reconciliation to GAAP net income attributable to common stockholders and earnings per diluted share for each period presented (amounts shown in thousands, except share and per share data):
For the Three Months Ended | For the Year Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(per share)1 | (per share)1 | (per share)1 | (per share)1 | ||||||||||||
Net income attributable to | $ 216,134 | $ 1.02 | $ 204,260 | $ 1.52 | $ 803,198 | $ 4.74 | $ 860,688 | $ 6.41 | |||||||
Impact of the difference in | (0.05) | (0.10) | (0.25) | (0.40) | |||||||||||
Adjustments: | |||||||||||||||
Real estate depreciation | 152,881 | 0.69 | 71,983 | 0.50 | 418,149 | 2.34 | 263,923 | 1.85 | |||||||
Amortization of intangibles | 30,246 | 0.14 | 4,882 | 0.03 | 59,295 | 0.33 | 13,623 | 0.10 | |||||||
Gain on real estate transactions | — | — | — | — | — | — | (14,249) | (0.10) | |||||||
Unconsolidated joint venture real | 8,041 | 0.04 | 4,295 | 0.03 | 24,400 | 0.14 | 16,644 | 0.12 | |||||||
Distributions paid on Series A | — | — | (572) | — | (159) | — | (2,288) | (0.02) | |||||||
Income allocated to Operating | 11,273 | 0.05 | 15,219 | 0.11 | 47,255 | 0.26 | 60,468 | 0.42 | |||||||
FFO | $ 418,575 | $ 1.89 | $ 300,067 | $ 2.09 | $ 7.56 | $ 8.38 | |||||||||
Adjustments: | |||||||||||||||
Life Storage Merger transition | 12,558 | 0.05 | — | — | 66,732 | 0.37 | — | — | |||||||
Non-cash interest expense related | 10,558 | 0.05 | — | — | 18,786 | 0.10 | — | — | |||||||
Amortization of other intangibles | 7,440 | 0.03 | — | — | 12,400 | 0.07 | — | — | |||||||
Transaction costs - Bargold | — | — | 83 | — | — | — | 1,548 | 0.01 | |||||||
Property losses and tenant | — | — | — | — | — | — | 6,200 | 0.05 | |||||||
CORE FFO | $ 449,131 | $ 2.02 | $ 300,150 | $ 2.09 | $ 8.10 | $ 8.44 | |||||||||
Weighted average number of | 221,916,681 | 143,551,135 | 178,969,993 | 143,009,565 | |||||||||||
(1) | Per share amounts may not recalculate due to rounding. |
(2) | Adjustment to account for the difference between the number of shares used to calculate earnings per share and the number of shares used to calculate FFO per share. Earnings per share is calculated using the two-class method, which uses a lower number of shares than the calculation for FFO per share and Core FFO per share, which are calculated assuming full redemption of all OP units as described in note (3). |
(3) | Extra Space Storage LP (the "Operating Partnership") has outstanding preferred and common Operating Partnership units ("OP units"). These OP units can be redeemed for cash or, at the Company's election, shares of the Company's common stock. Redemption of all OP units for common stock has been assumed for purposes of calculating the weighted average number of shares — diluted, as presented above. The computation of weighted average number of shares — diluted, for FFO per share and Core FFO per share also includes the effect of share-based compensation plans. |
Operating Results and Same-Store Performance:
The following table (unaudited) outlines the Company's same-store performance for the three months and year ended December 31, 2023 and 2022 (amounts shown in thousands, except store count data)1:
For the Three Months | Percent | For the Year Ended | Percent | ||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Same-store property revenues2 | |||||||||||
Net rental income | $ 376,862 | $ 374,061 | 0.7 % | 2.9 % | |||||||
Other income | 14,891 | 14,568 | 2.2 % | 58,845 | 53,856 | 9.3 % | |||||
Total same-store revenues | $ 391,753 | $ 388,629 | 0.8 % | 3.1 % | |||||||
Same-store operating expenses2 | |||||||||||
Payroll and benefits | $ 21,910 | $ 21,392 | 2.4 % | $ 85,090 | $ 83,286 | 2.2 % | |||||
Marketing | 7,056 | 5,721 | 23.3 % | 26,885 | 23,191 | 15.9 % | |||||
Office expense3 | 11,928 | 11,166 | 6.8 % | 48,025 | 44,450 | 8.0 % | |||||
Property operating expense4 | 7,829 | 8,472 | (7.6) % | 34,514 | 34,090 | 1.2 % | |||||
Repairs and maintenance | 6,182 | 5,410 | 14.3 % | 24,095 | 24,999 | (3.6) % | |||||
Property taxes | 33,700 | 34,025 | (1.0) % | 140,306 | 138,594 | 1.2 % | |||||
Insurance | 4,794 | 3,653 | 31.2 % | 17,251 | 12,960 | 33.1 % | |||||
Total same-store operating expenses | $ 93,399 | $ 89,839 | 4.0 % | $ 376,166 | $ 361,570 | 4.0 % | |||||
Same-store net operating income2 | $ 298,354 | $ 298,790 | (0.1) % | 2.8 % | |||||||
Same-store square foot occupancy as of quarter end | 93.0 % | 94.1 % | 93.0 % | 94.1 % | |||||||
Average same-store square foot occupancy | 93.4 % | 94.6 % | 93.9 % | 94.8 % | |||||||
Properties included in same-store5 | 913 | 913 | 913 | 913 | |||||||
(1) | A reconciliation of net income to same-store net operating income is provided later in this release, entitled "Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income." |
(2) | Same-store revenues, operating expenses and net operating income do not include tenant reinsurance revenue or expense. |
(3) | Includes general office expenses, computer, bank fees, and credit card merchant fees. |
(4) | Includes utilities and miscellaneous other store expenses. |
(5) | The Company removed one store from the same-store pool due to a fire, reducing the property count of the same-store pool from 914 to 913. |
Details related to the same-store performance of stores by metropolitan statistical area ("MSA") for the three months and years ended December 31, 2023 and 2022 are provided in the supplemental financial information published on the Company's Investor Relations website at https://ir.extraspace.com/.
Investment and Property Management Activity:
The following table (unaudited) outlines the Company's acquisitions and developments that are closed, completed or under agreement (dollars in thousands). Totals in the table do not include the stores or values associated with the Life Storage Merger.
Closed/Completed | Closed/Completed | Scheduled to Still | Total 2024 | To Close/Complete | ||||||||||||||||
Wholly-Owned Investment | Stores | Price | Stores | Price | Stores | Price | Stores | Price | Stores | Price | ||||||||||
Operating Stores | 7 | $ 48,550 | 3 | $ 15,575 | 3 | 6 | $ 33,875 | — | $ — | |||||||||||
C of O and Development | 7 | 98,565 | — | — | 4 | 47,536 | 4 | 47,536 | — | — | ||||||||||
EXR Investment in Wholly- | 14 | 147,115 | 3 | 15,575 | 7 | 65,836 | 10 | 81,411 | — | — | ||||||||||
Joint Venture Investment | ||||||||||||||||||||
EXR Investment in JV | 8 | 24,258 | — | — | — | — | — | — | — | — | ||||||||||
EXR Investment in JV | 1 | 7,015 | 1 | 19,395 | 8 | 92,941 | 9 | 112,336 | 1 | 13,968 | ||||||||||
EXR Investment in Joint | 9 | 31,273 | 1 | 19,395 | 8 | 92,941 | 9 | 112,336 | 1 | 13,968 | ||||||||||
Total EXR Investment | 23 | $ 178,388 | 4 | $ 34,970 | 15 | $ 158,777 | 19 | 1 | $ 13,968 | |||||||||||
(1) | The locations of C of O and development stores and joint venture ownership interest details are included in the supplemental financial information published on the Company's Investor Relations website at https://ir.extraspace.com/. |
The projected developments and acquisitions under agreement described above are subject to customary closing conditions and no assurance can be provided that these developments and acquisitions will be completed on the terms described, or at all.
Bridge Loans:
During the three months ended December 31, 2023, the Company originated
Property Management:
As of December 31, 2023, the Company managed 1,337 stores for third-party owners and 472 stores owned in unconsolidated joint ventures, for a total of 1,809 stores under management. The Company is the largest self-storage management company in
Balance Sheet:
During the three months ended December 31, 2023, the Company completed a public bond offering issuing
During the three months ended December 31, 2023, the Company did not issue any shares on its ATM program, and it currently has
As of December 31, 2023, the Company's percentage of fixed-rate debt to total debt was
Dividends:
On December 29, 2023, the Company paid a fourth quarter common stock dividend of
Outlook:
The following table outlines the Company's Core FFO estimates and annual assumptions for the year ending December 31, 20241.
Ranges for 2024 | Notes | ||||
(February 27, 2024) | |||||
Low | High | ||||
Core FFO | |||||
Dilution per share from C of O and value add acquisitions | |||||
EXR Same-store revenue growth | (2.00) % | 0.50 % | Same-store pool of 1,078 stores | ||
EXR Same-store expense growth | 4.00 % | 5.50 % | Same-store pool of 1,078 stores | ||
EXR Same-store NOI growth | (4.25) % | (0.50) % | Same-store pool of 1,078 stores | ||
Legacy LSI Same-store revenue growth | 2.00 % | 4.50 % | Same-store pool of 664 stores | ||
Legacy LSI Same-store expense growth | 6.25 % | 7.75 % | Same-store pool of 664 stores | ||
Legacy LSI Same-store NOI growth | (0.25) % | 4.00 % | Same-store pool of 664 stores | ||
Weighted average one-month SOFR | 4.75 % | 4.75 % | |||
Net tenant reinsurance income | |||||
Management fees and other income | |||||
Interest income | Includes interest from bridge loans and | ||||
General and administrative expenses | Includes non-cash compensation | ||||
Average monthly cash balance | |||||
Equity in earnings of real estate ventures | Includes dividends from SmartStop | ||||
Interest expense | Excludes non-cash interest expense | ||||
Non-cash interest expense related to amortization of discount | Amortization of LSI debt mark-to- | ||||
Income Tax Expense | Taxes associated with the Company's | ||||
Acquisitions | Represents the Company's investment | ||||
Bridge loans outstanding | Represents the Company's average | ||||
Weighted average share count | 221,800,000 | 221,800,000 | Assumes redemption of all OP units for | ||
(1) A reconciliation of net income outlook to same-store net operating income outlook is provided later in this release entitled "Reconciliation of Estimated GAAP Net Income to Estimated Same-Store Net Operating Income." The reconciliation includes details related to same-store revenue and same-store expense outlooks. A reconciliation of net income per share outlook to funds from operations per share outlook is provided later in this release entitled "Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per Share to Estimated Fully Diluted FFO Per Share." |
FFO estimates for the year are fully diluted for an estimated average number of shares and OP units outstanding during the year. The Company's estimates are forward-looking and based on management's view of current and future market conditions. The Company's actual results may differ materially from these estimates.
Supplemental Financial Information:
Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Under the "Company Info" navigation menu on the home page, click on "Investor Relations," then under the "Financials & Stock Information" navigation menu click on "Quarterly Earnings." This supplemental information provides additional detail on items that include store occupancy and financial performance by portfolio and market, debt maturity schedules and performance of lease-up assets.
Conference Call:
The Company will host a conference call at 1:00 p.m. Eastern Time on Wednesday, February 28, 2024, to discuss its financial results. Telephone participants may avoid any delays in joining the conference call by pre-registering for the call using the following link to receive a special dial-in number and PIN:
https://register.vevent.com/register/BI4f9ef07b182b4586b2cd3b568dcf5801.
A live webcast of the call will also be available on the Company's investor relations website at https://ir.extraspace.com. To listen to the live webcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
A replay of the call will be available for 30 days on the investor relations section of the Company's website beginning at 5:00 p.m. Eastern Time on February 28, 2024.
Forward-Looking Statements:
Certain information set forth in this release contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements include statements concerning the benefits of store acquisitions, developments, favorable market conditions, our outlook and estimates for the year, statements concerning the impact of the Life Storage Merger and other statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, the competitive landscape, plans or intentions relating to acquisitions and developments, estimated hurricane-related insurance claims and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes," "estimates," "expects," "may," "will," "should," "anticipates," or "intends," or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Any forward-looking statements should be considered in light of the risks referenced in the "Risk Factors" section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:
- adverse changes in general economic conditions, the real estate industry and the markets in which we operate;
- failure to realize the expected benefits of the Life Storage Merger;
- the risk that Life Storage's business will not be fully integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, including our ability to retain and hire key personnel;
- the uncertainty of expected future financial performance and results of the combined company following completion of the Life Storage Merger;
- failure to close pending acquisitions and developments on expected terms, or at all;
- the effect of competition from new and existing stores or other storage alternatives, including increased or unanticipated competition for our or Life Storage's properties, which could cause rents and occupancy rates to decline;
- potential liability for uninsured losses and environmental contamination;
- the impact of the regulatory environment as well as national, state and local laws and regulations, including, without limitation, those governing real estate investment trusts ("REITs"), tenant reinsurance and other aspects of our business, which could adversely affect our results;
- our ability to recover losses under our insurance policies;
- disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
- our reliance on information technologies, which are vulnerable to, among other things, attack from computer viruses and malware, hacking, cyberattacks and other unauthorized access or misuse, any of which could adversely affect our business and results;
- changes in global financial markets and increases in interest rates;
- availability of financing and capital, the levels of debt that we maintain and our credit ratings;
- risks associated with acquisitions, dispositions and development of properties, including increased development costs due to additional regulatory requirements related to climate change and other factors;
- reductions in asset valuations and related impairment charges;
- our lack of sole decision-making authority with respect to our joint venture investments;
- the effect of recent or future changes to
U.S. tax laws; - the failure to maintain our REIT status for
U.S. federal income tax purposes; - impacts from any outbreak of highly infectious or contagious diseases, including reduced demand for self-storage space and ancillary products and services such as tenant reinsurance, and potential decreases in occupancy and rental rates and staffing levels, which could adversely affect our results; and
- economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.
All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
Definition of FFO:
FFO provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income and cash flows, for an understanding of the Company's operating results. The Company believes FFO is a meaningful disclosure as a supplement to net income. Net income assumes 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 the Company believes FFO more accurately reflects the value of the Company's real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with
For informational purposes, the Company also presents Core FFO. Core FFO excludes revenues and expenses not core to our operations and transaction costs. It also includes certain costs associated with the Life Storage Merger including transition costs, non-cash interest related to the amortization of discount on unsecured senior notes and amortization of other intangibles, net of tax benefit. Although the Company's calculation of Core FFO differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, the Company believes it provides a meaningful supplemental measure of operating performance. The Company believes that by excluding revenues and expenses not core to our operations and non-cash interest charges, stockholders and potential investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. Core FFO by the Company should not be considered a replacement of the NAREIT definition of FFO. 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 the Company's performance, as an alternative to net cash flow from operating activities as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.
Definition of Same-Store:
The Company's same-store pool for the periods presented consists of 913 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented. The Company considers a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of
About Extra Space Storage Inc.:
Extra Space Storage Inc., headquartered in
Extra Space Storage Inc. | |||
December 31, 2023 | December 31, 2022 | ||
(Unaudited) | |||
Assets: | |||
Real estate assets, net | $ 24,555,873 | $ 9,997,978 | |
Real estate assets - operating lease right-of-use assets | 227,241 | 221,725 | |
Investments in unconsolidated real estate entities | 1,071,617 | 582,412 | |
Investments in debt securities and notes receivable | 904,769 | 858,049 | |
Cash and cash equivalents | 99,062 | 92,868 | |
Other assets, net | 597,700 | 414,426 | |
Total assets | $ 27,456,262 | $ 12,167,458 | |
Liabilities, Noncontrolling Interests and Equity: | |||
Notes payable, net | $ 1,273,549 | $ 1,288,555 | |
Unsecured term loans, net | 2,650,581 | 2,340,116 | |
Unsecured senior notes, net | 6,410,618 | 2,757,791 | |
Revolving lines of credit | 682,000 | 945,000 | |
Operating lease liabilities | 236,515 | 229,035 | |
Cash distributions in unconsolidated real estate ventures | 71,069 | 67,352 | |
Accounts payable and accrued expenses | 334,518 | 171,680 | |
Other liabilities | 383,463 | 289,655 | |
Total liabilities | 12,042,313 | 8,089,184 | |
Commitments and contingencies | |||
Noncontrolling Interests and Equity: | |||
Extra Space Storage Inc. stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 2,113 | 1,339 | |
Additional paid-in capital | 14,750,388 | 3,345,332 | |
Accumulated other comprehensive income | 17,435 | 48,798 | |
Accumulated deficit | (379,015) | (135,872) | |
Total Extra Space Storage Inc. stockholders' equity | 14,390,921 | 3,259,597 | |
Noncontrolling interest represented by Preferred Operating Partnership units, | 222,360 | 261,502 | |
Noncontrolling interests in Operating Partnership, net and other noncontrolling | 800,668 | 557,175 | |
Total noncontrolling interests and equity | 15,413,949 | 4,078,274 | |
Total liabilities, noncontrolling interests and equity | $ 27,456,262 | $ 12,167,458 | |
Consolidated Statement of Operations for the Three Months and Year-Ended December 31, 2023 and 2022 | |||||||
For the Three Months Ended | For the Year Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues: | |||||||
Property rental | $ 696,982 | $ 438,096 | $ 2,222,578 | $ 1,654,735 | |||
Tenant reinsurance | 70,415 | 47,438 | 235,680 | 185,531 | |||
Management fees and other income | 30,377 | 21,184 | 101,986 | 83,904 | |||
Total revenues | 797,774 | 506,718 | 2,560,244 | 1,924,170 | |||
Expenses: | |||||||
Property operations | 195,039 | 112,971 | 612,036 | 435,342 | |||
Tenant reinsurance | 21,173 | 8,211 | 58,874 | 33,560 | |||
Transaction costs | — | 83 | — | 1,548 | |||
Life Storage Merger transition costs | 12,558 | — | 66,732 | — | |||
General and administrative | 39,397 | 35,963 | 146,408 | 129,251 | |||
Depreciation and amortization | 196,139 | 79,920 | 506,053 | 288,316 | |||
Total expenses | 464,306 | 237,148 | 1,390,103 | 888,017 | |||
Gain on real estate transactions | — | — | — | 14,249 | |||
Income from operations | 333,468 | 269,570 | 1,170,141 | 1,050,402 | |||
Interest expense | (129,665) | (72,922) | (419,035) | (219,171) | |||
Non-cash interest expense related to amortization of discount on Life Storage | (10,558) | — | (18,786) | — | |||
Interest income | 22,250 | 17,248 | 84,857 | 69,422 | |||
Income before equity in earnings and dividend income from unconsolidated real estate | 215,495 | 213,896 | 817,177 | 900,653 | |||
Equity in earnings and dividend income from unconsolidated real estate entities | 16,233 | 10,992 | 54,835 | 41,428 | |||
Income tax expense | (4,321) | (5,409) | (21,559) | (20,925) | |||
Net income | 227,407 | 219,479 | 850,453 | 921,156 | |||
Net income allocated to Preferred Operating Partnership noncontrolling interests | (2,250) | (4,345) | (9,011) | (17,623) | |||
Net income allocated to Operating Partnership and other noncontrolling interests | (9,023) | (10,874) | (38,244) | (42,845) | |||
Net income attributable to common stockholders | $ 216,134 | $ 204,260 | $ 803,198 | $ 860,688 | |||
Earnings per common share | |||||||
Basic | $ 1.02 | $ 1.52 | $ 4.74 | $ 6.41 | |||
Diluted | $ 1.02 | $ 1.52 | $ 4.74 | $ 6.41 | |||
Weighted average number of shares | |||||||
Basic | 211,071,794 | 133,921,234 | 169,216,989 | 134,050,815 | |||
Diluted | 219,961,282 | 143,341,111 | 169,220,882 | 141,681,388 | |||
Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income — for the Three Months and Year Ended | |||||||
For the Three Months Ended | For the Year Ended December | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net Income | $ 227,407 | $ 219,479 | $ 850,453 | $ 921,156 | |||
Adjusted to exclude: | |||||||
Gain on real estate transactions | — | — | — | (14,249) | |||
Equity in earnings and dividend income from unconsolidated real | (16,233) | (10,992) | (54,835) | (41,428) | |||
Interest expense | 129,665 | 72,922 | 419,035 | 219,171 | |||
Non-cash interest expense related to amortization of discount on | 10,558 | — | 18,786 | — | |||
Depreciation and amortization | 196,139 | 79,920 | 506,053 | 288,316 | |||
Income tax expense | 4,321 | 5,409 | 21,559 | 20,925 | |||
Transaction costs | — | 83 | — | 1,548 | |||
Life Storage Merger transition costs | 12,558 | — | 66,732 | — | |||
General and administrative | 39,397 | 35,963 | 146,408 | 129,251 | |||
Management fees, other income and interest income | (52,627) | (38,432) | (186,843) | (153,326) | |||
Net tenant insurance | (49,242) | (39,227) | (176,806) | (151,971) | |||
Non same-store rental revenue | (305,229) | (49,467) | (660,292) | (139,370) | |||
Non same-store operating expense | 101,640 | 23,132 | 235,870 | 73,772 | |||
Total same-store net operating income | $ 298,354 | $ 298,790 | $ 1,186,120 | $ 1,153,795 | |||
Same-store rental revenues | 391,753 | 388,629 | 1,562,286 | 1,515,365 | |||
Same-store operating expenses | 93,399 | 89,839 | 376,166 | 361,570 | |||
Same-store net operating income | $ 298,354 | $ 298,790 | $ 1,186,120 | $ 1,153,795 | |||
Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per Share to Estimated Fully Diluted FFO Per | ||||
For the Year Ending December 31, 2024 | ||||
Low End | High End | |||
Net income attributable to common stockholders per diluted share | $ 3.84 | $ 4.14 | ||
Income allocated to noncontrolling interest - Preferred Operating | 0.21 | 0.21 | ||
Net income attributable to common stockholders for diluted computations | 4.05 | 4.35 | ||
Adjustments: | ||||
Real estate depreciation | 2.77 | 2.77 | ||
Amortization of intangibles | 0.55 | 0.55 | ||
Unconsolidated joint venture real estate depreciation and amortization | 0.14 | 0.14 | ||
Funds from operations attributable to common stockholders | 7.51 | 7.81 | ||
Adjustments: | ||||
Non-cash interest expense related to amortization of discount on Life | 0.20 | 0.20 | ||
Amortization of other intangibles related to the Life Storage Merger, net of | 0.14 | 0.14 | ||
Core funds from operations attributable to common stockholders | $ 7.85 | $ 8.15 | ||
Reconciliation of Estimated GAAP Net Income to Estimated Same-Store Net Operating Income — for the Year Ending | |||
For the Year Ending December 31, 2024 | |||
Low | High | ||
Net Income | $ 896,000 | $ 958,000 | |
Adjusted to exclude: | |||
Equity in earnings of unconsolidated joint ventures | (66,000) | (67,000) | |
Interest expense | 525,000 | 521,000 | |
Non-cash interest expense related to amortization of discount on Life | 44,000 | 43,000 | |
Depreciation and amortization | 788,000 | 788,500 | |
Income tax expense | 32,000 | 31,000 | |
General and administrative | 182,500 | 180,500 | |
Management fees and other income | (116,500) | (117,500) | |
Interest income | (95,000) | (96,000) | |
Net tenant reinsurance income | (248,000) | (251,000) | |
Non same-store rental revenues | (1,134,000) | (1,134,000) | |
Non same-store operating expenses | 398,000 | 398,000 | |
Total same-store net operating income1 | $ 1,206,000 | $ 1,254,500 | |
Same-store rental revenues1 | 1,640,500 | 1,683,000 | |
Same-store operating expenses1 | 434,500 | 428,500 | |
Total same-store net operating income1 | $ 1,206,000 | $ 1,254,500 | |
(1) | Estimated same-store rental revenues, operating expenses and net operating income are for the Company's 2024 same-store pool of 1,078 stores. |
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SOURCE Extra Space Storage Inc.
FAQ
What was the net income attributable to common stockholders for the three months ended December 31, 2023?
How did the FFO for the year ended December 31, 2023, compare to the previous year?
What was the same-store occupancy as of December 31, 2023?
How many stores did the Company acquire through the Life Storage Merger?
What was the quarterly dividend paid per share on December 29, 2023?
