Extra Space Storage Inc. Reports 2024 Third Quarter Results
Extra Space Storage reported its Q3 2024 results with net income of $0.91 per diluted share, down 5.2% year-over-year, primarily due to a $51.8 million loss from Life Storage trade name impairment. Core FFO was $2.07 per diluted share, up 2.5% from 2023. Same-store revenue decreased by 0.3% and NOI declined by 1.0%. The company maintained strong occupancy at 94.3%, acquired 10 operating stores and one C of O store for $163.9 million, and added 63 stores to its third-party management platform. Moody's revised the company's credit outlook to positive, and a quarterly dividend of $1.62 per share was paid.
Extra Space Storage ha riportato i risultati del Q3 2024 con un utile netto di $0.91 per azione diluita, in calo del 5.2% rispetto all'anno precedente, principalmente a causa di una perdita di $51.8 milioni dovuta a un impairment del marchio Life Storage. Il Core FFO è stato di $2.07 per azione diluita, con un aumento del 2.5% rispetto al 2023. I ricavi delle stesse strutture sono diminuiti dello 0.3% e il NOI è calato dell'1.0%. L'azienda ha mantenuto un'occupazione solida al 94.3%, ha acquisito 10 negozi operativi e un negozio C of O per $163.9 milioni, e ha aggiunto 63 negozi alla sua piattaforma di gestione di terzi. Moody's ha rivisto l'outlook di credito dell'azienda a positivo e è stato pagato un dividendo trimestrale di $1.62 per azione.
Extra Space Storage reportó sus resultados del Q3 2024 con un ingreso neto de $0.91 por acción diluida, una disminución del 5.2% interanual, principalmente debido a una pérdida de $51.8 millones por depreciación del nombre comercial Life Storage. El Core FFO fue de $2.07 por acción diluida, un aumento del 2.5% respecto a 2023. Los ingresos de las mismas tiendas disminuyeron en un 0.3% y el NOI cayó en un 1.0%. La empresa mantuvo una alta ocupación del 94.3%, adquirió 10 tiendas operativas y una tienda de C de O por $163.9 millones, y añadió 63 tiendas a su plataforma de gestión de terceros. Moody's revisó la perspectiva crediticia de la empresa a positiva, y se pagó un dividendo trimestral de $1.62 por acción.
엑스트라 스페이스 스토리지는 2024년 3분기 결과를 발표했습니다. 희석 주당 순이익은 $0.91로, 전년 대비 5.2% 감소하였으며, 이는 주로 라이프 스토리지 상호 손상으로 인한 $51.8백만 손실 때문입니다. 핵심 FFO는 희석 주당 $2.07로, 2023년 대비 2.5% 증가했습니다. 동일 점포 수익은 0.3% 감소하고 NOI는 1.0% 감소했습니다. 회사는 94.3%의 높은 점유율을 유지하고 있으며, 10개의 운영 매장과 하나의 C of O 매장을 $163.9백만에 인수하고, 제3자 관리 플랫폼에 63개의 매장을 추가했습니다. 무디스는 회사의 신용 전망을 긍정적으로 조정하였고, 주당 $1.62의 분기 배당금을 지급했습니다.
Extra Space Storage a publié ses résultats du 3ème trimestre 2024 avec un résultat net de 0,91 $ par action diluée, en baisse de 5,2 % par rapport à l'année précédente, principalement en raison d'une perte de 51,8 millions de dollars liée à la dépréciation de la marque Life Storage. Le Core FFO était de 2,07 $ par action diluée, en hausse de 2,5 % par rapport à 2023. Les revenus des mêmes magasins ont diminué de 0,3 % et le NOI a chuté de 1,0 %. L'entreprise a maintenu un taux d'occupation élevé de 94,3 %, acquis 10 magasins en fonctionnement et un magasin C of O pour 163,9 millions de dollars, et ajouté 63 magasins à sa plateforme de gestion tiers. Moody's a révisé les perspectives de crédit de l'entreprise à positives et un dividende trimestriel de 1,62 $ par action a été versé.
Extra Space Storage hat die Ergebnisse für das dritte Quartal 2024 veröffentlicht, mit einem Nettogewinn von $0.91 pro verwässerter Aktie, was einem Rückgang von 5.2% im Vergleich zum Vorjahr entspricht, hauptsächlich aufgrund eines Verlusts von $51.8 Millionen durch die Wertminderung des Handelsnamens Life Storage. Der Core FFO betrug $2.07 pro verwässerter Aktie, was einen Anstieg von 2.5% im Vergleich zu 2023 darstellt. Der Umsatz aus gleichen Geschäften ging um 0.3% zurück und NOI sank um 1.0%. Das Unternehmen hielt eine hohe Belegung von 94.3% aufrecht, erwarb 10 Betriebsgeschäfte und ein C of O Geschäft für $163.9 Millionen und fügte 63 Geschäfte zu seiner Drittanbieter-Managementplattform hinzu. Moody's hat die Kreditprognose des Unternehmens auf positiv angehoben und eine vierteljährliche Dividende von $1.62 pro Aktie ausgezahlt.
- Core FFO increased 2.5% YoY to $2.07 per diluted share
- Strong occupancy maintained at 94.3%, up from 93.7% in 2023
- Moody's revised credit outlook to positive from stable
- Acquired 11 new stores for $163.9 million
- Added 63 stores to third-party management platform
- Net income decreased 5.2% YoY to $0.91 per diluted share
- Same-store revenue decreased 0.3% YoY
- Same-store NOI declined 1.0% YoY
- $51.8 million loss from Life Storage trade name impairment
Insights
Extra Space Storage's Q3 2024 results reveal mixed performance with some concerning trends.
The company maintains strong occupancy at
The acquisition strategy remains active with
Highlights for the three months ended September 30, 2024:
- Achieved net income attributable to common stockholders of
$0.91 5.2% decrease compared to the same period in the prior year primarily due to a$51.8 million - Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of
$1.75 $2.07 2.5% increase compared to the same period in the prior year. - Same-store revenue decreased by (0.3)% and same-store net operating income ("NOI") decreased by (1.0)% compared to the same period in the prior year.
- Reported ending same-store occupancy of
94.3% as of September 30, 2024, compared to93.7% as of September 30, 2023. - The Company acquired 10 operating stores and one store at completion of construction ("Certificate of Occupancy stores" or "C of O stores") for a total cost of approximately
$163.9 million - In conjunction with joint venture partners, acquired five properties and completed two developments for a total cost of approximately
$114.6 million $30.7 million - The Company recognized a gain of
$13.7 million - Originated
$158.4 million $179.0 million - Added 63 stores (38 stores net) to the Company's third-party management platform. As of September 30, 2024, the Company managed 1,461 stores for third parties and 460 stores in unconsolidated joint ventures, for a total of 1,921 managed stores.
- Moody's Ratings revised the Company's credit outlook to positive from stable.
- Paid a quarterly dividend of
$1.62
Highlights for the nine months ended September 30, 2024:
- Achieved net income attributable to common stockholders of
$2.79 26.2% decrease compared to the same period in the prior year, due to a$51.8 million $63.6 million $13.7 million - Achieved FFO of
$5.61 $6.09 0.2% increase compared to the same period in the prior year. - Increased same-store revenue by
0.4% and same-store NOI decreased by (0.9)% compared to the same period in the prior year. - Acquired 17 operating store and three C of O stores for a total cost of approximately
$226.6 million - In conjunction with joint venture partners, acquired five operating stores and completed five developments for a total cost of approximately
$163.7 million $77.7 million - Originated
$755.9 million $190.1 million - Added 237 stores (124 stores net) to the Company's third-party management platform.
Joe Margolis, CEO of Extra Space Storage Inc., commented: "We continue to maintain strong occupancy during a time of year which is typically marked by occupancy declines. This occupancy both optimizes performance in the current market and positions the portfolio for future revenue growth. Our third-party management, bridge loan and insurance businesses continue to outperform projections, and together with incremental G&A savings, produced core FFO per share growth modestly ahead of our projections."
FFO Per Share:
The following table (unaudited) outlines the Company's FFO and Core FFO for the three and nine months ended September 30, 2024 and 2023. 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 September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
(per share)1 | (per share)1 | (per share)1 | (per share)1 | ||||||||||||
Net income attributable to | $ 193,210 | $ 0.91 | $ 188,350 | $ 0.96 | $ 592,194 | $ 2.79 | $ 587,064 | $ 3.78 | |||||||
Impact of the difference in | (0.04) | (0.04) | (0.12) | (0.22) | |||||||||||
Adjustments: | |||||||||||||||
Real estate depreciation | 154,573 | 0.69 | 121,635 | 0.59 | 462,162 | 2.07 | 265,268 | 1.61 | |||||||
Amortization of intangibles | 28,160 | 0.13 | 21,270 | 0.10 | 85,581 | 0.39 | 29,049 | 0.18 | |||||||
Loss on real estate assets held | 8,961 | 0.04 | — | — | 63,620 | 0.29 | — | — | |||||||
Unconsolidated joint venture | 7,922 | 0.04 | 6,698 | 0.03 | 23,771 | 0.11 | 16,359 | 0.10 | |||||||
Unconsolidated joint venture | (13,730) | (0.06) | — | — | (13,730) | (0.06) | — | — | |||||||
Distributions paid on Series A | — | — | — | — | — | — | (159) | — | |||||||
Income allocated to | 9,735 | 0.04 | 10,506 | 0.05 | 30,237 | 0.14 | 35,982 | 0.22 | |||||||
FFO | $ 388,831 | $ 1.75 | $ 348,459 | $ 1.69 | $ 5.61 | $ 933,563 | $ 5.67 | ||||||||
Adjustments: | |||||||||||||||
Life Storage Merger | — | — | 54,174 | 0.26 | — | — | 54,174 | 0.33 | |||||||
Non-cash interest expense | 11,005 | 0.06 | 8,228 | 0.04 | 32,563 | 0.15 | 8,228 | 0.05 | |||||||
Amortization of other | 6,320 | 0.03 | 4,960 | 0.03 | 21,198 | 0.10 | 4,960 | 0.03 | |||||||
Impairment of Life Storage | 51,763 | 0.23 | — | — | 51,763 | 0.23 | — | — | |||||||
CORE FFO | $ 457,919 | $ 2.07 | $ 415,821 | $ 2.02 | $ 6.09 | $ 6.08 | |||||||||
Weighted average number of | 221,684,684 | 205,740,209 | 221,750,047 | 164,505,514 | |||||||||||
(1) | Per share amounts may not recalculate due to rounding. |
(2) | The 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 and nine months ended September 30, 2024, and 2023 (amounts shown in thousands, except store count data)1:
For the Three Months | Percent | For the Nine Months | Percent | ||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | ||||||
Same-store property revenues2 | |||||||||||
Net rental income | $ 407,130 | $ 407,565 | (0.1) % | 0.5 % | |||||||
Other income | 16,907 | 17,697 | (4.5) % | 48,860 | 49,360 | (1.0) % | |||||
Total same-store revenues | $ 424,037 | $ 425,262 | (0.3) % | 0.4 % | |||||||
Same-store operating expenses2 | |||||||||||
Payroll and benefits | $ 23,408 | $ 23,245 | 0.7 % | $ 71,743 | $ 68,118 | 5.3 % | |||||
Marketing | 7,928 | 7,822 | 1.4 % | 25,895 | 22,601 | 14.6 % | |||||
Office expense3 | 12,878 | 13,103 | (1.7) % | 39,172 | 39,025 | 0.4 % | |||||
Property operating expense4 | 9,916 | 9,966 | (0.5) % | 28,446 | 29,833 | (4.6) % | |||||
Repairs and maintenance | 6,966 | 6,431 | 8.3 % | 21,326 | 19,894 | 7.2 % | |||||
Property taxes | 44,020 | 41,750 | 5.4 % | 121,562 | 116,342 | 4.5 % | |||||
Insurance | 4,663 | 5,375 | (13.2) % | 14,950 | 13,587 | 10.0 % | |||||
Total same-store operating expenses | $ 109,779 | $ 107,692 | 1.9 % | $ 323,094 | $ 309,400 | 4.4 % | |||||
Same-store net operating income2 | $ 314,258 | $ 317,570 | (1.0) % | $ 932,798 | $ 940,955 | (0.9) % | |||||
Same-store square foot occupancy as of quarter end | 94.3 % | 93.7 % | 94.3 % | 93.7 % | |||||||
Average same-store square foot occupancy | 94.4 % | 93.9 % | 93.9 % | 93.4 % | |||||||
Properties included in same-store5 | 1,075 | 1,075 | 1,075 | 1,075 | |||||||
(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) | On January 1, 2024, the Company updated the property count of the same-store pool from 913 to 1,078 stores. In the three months ended September 30, 2024, three properties were removed from the pool due to structural damage and redevelopment, reducing the same-store pool to 1,075 stores. |
Details related to the same-store performance of stores by metropolitan statistical area ("MSA") for the three and nine months ended September 30, 2024, and 2023 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).
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 | 17 | $ 192,300 | 3 | $ 29,800 | 3 | 23 | — | $ — | ||||||||||||
C of O and Development Stores1 | 3 | 34,337 | — | — | 1 | 13,200 | 4 | 47,537 | — | — | ||||||||||
EXR Investment in Wholly- | 20 | 226,637 | 3 | 29,800 | 4 | 44,500 | 27 | 300,937 | — | — | ||||||||||
Joint Venture Investment1 | ||||||||||||||||||||
EXR Investment in JV | 5 | 9,200 | — | — | — | — | 5 | 9,200 | — | — | ||||||||||
EXR Investment in JV | 5 | 68,535 | — | — | 4 | 45,125 | 9 | 113,660 | 3 | 44,082 | ||||||||||
EXR Investment in Joint | 10 | 77,735 | — | — | 4 | 45,125 | 14 | 122,860 | 3 | 44,082 | ||||||||||
Total EXR Investment | 30 | $ 304,372 | 3 | $ 29,800 | 8 | 41 | 3 | $ 44,082 | ||||||||||||
(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.
Property Sales:
During the three months ended September 30, 2024, the Company added an additional 11 properties for sale. Of the 11 properties listed, three were adjusted to fair value less selling costs resulting in a loss of
The Company sold its interest in one joint venture, which had nine properties, to its partner. Separately, the Company purchased its partner's interest in three properties, which are now wholly owned, from another joint venture which previously held eight properties. That joint venture sold the remaining five properties to a new joint venture. These two transactions resulted in a net gain of
Bridge Loans:
During the three months ended September 30, 2024, the Company originated
Property Management:
As of September 30, 2024, the Company managed 1,461 stores for third-party owners and 460 stores owned in unconsolidated joint ventures, for a total of 1,921 stores under management. The Company is the largest self-storage management company in
Balance Sheet:
During the three months ended September 30, 2024, the Company did not issue any shares on its ATM program, and as of September 30, 2024, the Company had
During the three months ended September 30, 2024, the Company completed a public bond offering issuing
During the three months ended September 30, 2024, the Company paid off a
As of September 30, 2024, the Company's percentage of fixed-rate debt to total debt was
Dividends:
On September 30, 2024, the Company paid a third quarter common stock dividend of
Outlook:
The following table outlines the Company's current and prior quarter Core FFO estimates and assumptions for the year ending December 31, 20241.
Ranges for 2024 Annual Assumptions | Ranges for 2024 Annual Assumptions | Notes | |||||||
(October 29, 2024) | (July 30, 2024) | ||||||||
Low | High | Low | High | ||||||
Core FFO | |||||||||
Dilution per share from C of O | |||||||||
EXR Same-store revenue growth | (0.25) % | 0.50 % | (1.00) % | 0.50 % | Same-store pool of 1,075 stores | ||||
EXR Same-store expense growth | 4.25 % | 5.25 % | 4.00 % | 5.00 % | Same-store pool of 1,075 stores | ||||
EXR Same-store NOI growth | (2.25) % | (0.50) % | (3.00) % | (0.50) % | Same-store pool of 1,075 stores | ||||
Legacy LSI Same-store revenue | 0.25 % | 1.25 % | 0.50 % | 2.00 % | Same-store pool of 661 stores | ||||
Legacy LSI Same-store expense | 3.50 % | 4.50 % | 4.50 % | 5.50 % | Same-store pool of 661 stores | ||||
Legacy LSI Same-store NOI | (1.50) % | 0.50 % | (1.50) % | 1.00 % | Same-store pool of 661 stores | ||||
Weighted average one-month | 5.10 % | 5.10 % | 5.20 % | 5.20 % | |||||
Net tenant reinsurance income | |||||||||
Management fees and other | |||||||||
Interest income | Includes interest from bridge loans | ||||||||
General and administrative | Includes non-cash compensation | ||||||||
Average monthly cash balance | |||||||||
Equity in earnings of real estate | Includes dividends from SmartStop | ||||||||
Interest expense | Excludes non-cash interest expense | ||||||||
Non-cash interest expense | Amortization of LSI debt mark-to- | ||||||||
Income Tax Expense | Taxes associated with the | ||||||||
Acquisitions | Represents the Company's | ||||||||
Bridge loans outstanding | Represents the Company's average | ||||||||
Weighted average share count | 221,825,000 | 221,825,000 | 221,866,000 | 221,866,000 | Assumes redemption of all OP | ||||
(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, October 30, 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/BIfda1b8eed48a41fc806d31b70fc6c2bf.
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 October 30, 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, 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;
- 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 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, amortization of other intangibles, net of tax benefit, and impairment of Life Storage trade name. 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 1,075 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. | |||
September 30, 2024 | December 31, 2023 | ||
(Unaudited) | |||
Assets: | |||
Real estate assets, net | $ 24,385,492 | $ 24,555,873 | |
Real estate assets - operating lease right-of-use assets | 694,001 | 227,241 | |
Investments in unconsolidated real estate entities | 1,060,213 | 1,071,617 | |
Investments in debt securities and notes receivable | 1,338,619 | 904,769 | |
Cash and cash equivalents | 88,931 | 99,062 | |
Other assets, net | 495,861 | 597,700 | |
Total assets | $ 28,063,117 | $ 27,456,262 | |
Liabilities, Noncontrolling Interests and Equity: | |||
Secured notes payable, net | $ 1,011,705 | $ 1,273,549 | |
Unsecured term loans, net | 2,194,894 | 2,650,581 | |
Unsecured senior notes, net | 7,437,231 | 6,410,618 | |
Revolving lines of credit | 884,000 | 682,000 | |
Operating lease liabilities | 706,491 | 236,515 | |
Cash distributions in unconsolidated real estate ventures | 74,173 | 71,069 | |
Accounts payable and accrued expenses | 388,757 | 334,518 | |
Other liabilities | 407,183 | 383,463 | |
Total liabilities | 13,104,434 | 12,042,313 | |
Commitments and contingencies | |||
Noncontrolling Interests and Equity: | |||
Extra Space Storage Inc. stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 2,120 | 2,113 | |
Additional paid-in capital | 14,823,018 | 14,750,388 | |
Accumulated other comprehensive income | 3,340 | 17,435 | |
Accumulated deficit | (817,865) | (379,015) | |
Total Extra Space Storage Inc. stockholders' equity | 14,010,613 | 14,390,921 | |
Noncontrolling interest represented by Preferred Operating Partnership units, | 191,306 | 222,360 | |
Noncontrolling interests in Operating Partnership, net and other noncontrolling | 756,764 | 800,668 | |
Total noncontrolling interests and equity | 14,958,683 | 15,413,949 | |
Total liabilities, noncontrolling interests and equity | $ 28,063,117 | $ 27,456,262 | |
Consolidated Statement of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 | |||||||
For the Three Months Ended | For the Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues: | |||||||
Property rental | $ 710,874 | $ 650,887 | $ 2,096,018 | $ 1,525,596 | |||
Tenant reinsurance | 84,048 | 69,128 | 249,100 | 165,265 | |||
Management fees and other income | 29,882 | 28,019 | 89,888 | 71,609 | |||
Total revenues | 824,804 | 748,034 | 2,435,006 | 1,762,470 | |||
Expenses: | |||||||
Property operations | 209,035 | 185,194 | 610,455 | 416,997 | |||
Tenant reinsurance | 17,510 | 19,130 | 55,646 | 37,701 | |||
Life Storage Merger transition costs | — | 54,174 | — | 54,174 | |||
General and administrative | 39,750 | 37,406 | 123,373 | 107,011 | |||
Depreciation and amortization | 195,046 | 152,338 | 586,821 | 309,914 | |||
Total expenses | 461,341 | 448,242 | 1,376,295 | 925,797 | |||
Loss on real estate assets held for sale | (8,961) | — | (63,620) | — | |||
Impairment of Life Storage trade name | (51,763) | — | (51,763) | — | |||
Income from operations | 302,739 | 299,792 | 943,328 | 836,673 | |||
Interest expense | (142,855) | (122,899) | (412,875) | (289,370) | |||
Non-cash interest expense related to amortization of discount on Life Storage | (11,005) | (8,228) | (32,563) | (8,228) | |||
Interest income | 34,947 | 22,092 | 89,746 | 62,607 | |||
Income before equity in earnings and dividend income from unconsolidated real | 183,826 | 190,757 | 587,636 | 601,682 | |||
Equity in earnings and dividend income from unconsolidated real estate entities | 16,246 | 15,043 | 48,508 | 38,602 | |||
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate | 13,730 | — | 13,730 | — | |||
Income tax expense | (10,857) | (6,944) | (27,443) | (17,238) | |||
Net income | 202,945 | 198,856 | 622,431 | 623,046 | |||
Net income allocated to Preferred Operating Partnership noncontrolling interests | (1,932) | (2,253) | (6,073) | (6,761) | |||
Net income allocated to Operating Partnership and other noncontrolling interests | (7,803) | (8,253) | (24,164) | (29,221) | |||
Net income attributable to common stockholders | $ 193,210 | $ 188,350 | $ 592,194 | $ 587,064 | |||
Earnings per common share | |||||||
Basic | $ 0.91 | $ 0.96 | $ 2.79 | $ 3.78 | |||
Diluted | $ 0.91 | $ 0.96 | $ 2.79 | $ 3.78 | |||
Weighted average number of shares | |||||||
Basic | 211,698,436 | 195,324,444 | 211,522,578 | 155,112,071 | |||
Diluted | 220,298,870 | 195,328,020 | 220,177,692 | 155,116,149 | |||
Cash dividends paid per common share | $ 1.62 | $ 1.62 | $ 4.86 | $ 4.86 | |||
Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income — for the Three and Nine Months Ended | |||||||
For the Three Months Ended | For the Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net Income | $ 202,945 | $ 198,856 | $ 622,431 | $ 623,046 | |||
Adjusted to exclude: | |||||||
Loss on real estate assets held for sale | 8,961 | — | 63,620 | — | |||
Equity in earnings and dividend income from unconsolidated real | (16,246) | (15,043) | (48,508) | (38,602) | |||
Equity in earnings of unconsolidated real estate ventures - gain on sale | (13,730) | — | (13,730) | — | |||
Interest expense | 142,855 | 131,127 | 412,875 | 289,370 | |||
Non-cash interest expense related to amortization of discount on Life | 11,005 | — | 32,563 | 8,228 | |||
Depreciation and amortization | 195,046 | 152,338 | 586,821 | 309,914 | |||
Impairment of Life Storage trade name | 51,763 | — | 51,763 | — | |||
Income tax expense | 10,857 | 6,944 | 27,443 | 17,238 | |||
Life Storage Merger transition costs | — | 54,174 | — | 54,174 | |||
General and administrative | 39,750 | 37,406 | 123,373 | 107,011 | |||
Management fees, other income and interest income | (64,829) | (50,111) | (179,634) | (134,216) | |||
Net tenant insurance | (66,538) | (49,998) | (193,454) | (127,564) | |||
Non same-store rental revenue | (286,837) | (225,625) | (840,126) | (275,241) | |||
Non same-store operating expense | 99,256 | 77,502 | 287,361 | 107,597 | |||
Total same-store net operating income | $ 314,258 | $ 317,570 | $ 932,798 | $ 940,955 | |||
Same-store rental revenues | 424,037 | 425,262 | 1,255,892 | 1,250,355 | |||
Same-store operating expenses | 109,779 | 107,692 | 323,094 | 309,400 | |||
Same-store net operating income | $ 314,258 | $ 317,570 | $ 932,798 | $ 940,955 | |||
Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per | ||||
For the Year Ending December 31, 2024 | ||||
Low End | High End | |||
Net income attributable to common stockholders per diluted share | $ 3.59 | $ 3.74 | ||
Income allocated to noncontrolling interest - Preferred Operating | 0.19 | 0.19 | ||
Net income attributable to common stockholders for diluted computations | 3.78 | 3.93 | ||
Adjustments: | ||||
Real estate depreciation | 2.78 | 2.78 | ||
Amortization of intangibles | 0.52 | 0.52 | ||
Unconsolidated joint venture real estate depreciation and amortization | 0.14 | 0.14 | ||
Unconsolidated joint venture gain on sale of real estate assets and sale of | (0.06) | (0.06) | ||
Loss on real estate transactions | 0.29 | 0.29 | ||
Funds from operations attributable to common stockholders | 7.45 | 7.60 | ||
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 | 0.12 | 0.12 | ||
Impairment of trade name | 0.23 | 0.23 | ||
Core funds from operations attributable to common stockholders | $ 8.00 | $ 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 | $ 946,125 | $ 974,625 | |
Adjusted to exclude: | |||
Equity in earnings of unconsolidated joint ventures | (64,000) | (65,000) | |
Interest expense | 550,000 | 547,000 | |
Non-cash interest expense related to amortization of discount on Life | 44,000 | 43,000 | |
Depreciation and amortization | 782,500 | 782,500 | |
Income tax expense | 35,000 | 34,000 | |
General and administrative | 170,000 | 168,000 | |
Management fees and other income | (119,000) | (120,000) | |
Interest income | (121,500) | (122,500) | |
Net tenant reinsurance income | (256,000) | (258,000) | |
Non same-store rental revenues | (1,129,000) | (1,129,000) | |
Non same-store operating expenses | 395,375 | 395,375 | |
Total same-store net operating income1 | $ 1,233,500 | $ 1,250,000 | |
Same-store rental revenues1 | 1,666,000 | 1,678,500 | |
Same-store operating expenses1 | 432,500 | 428,500 | |
Total same-store net operating income1 | $ 1,233,500 | $ 1,250,000 | |
(1) | Estimated same-store rental revenues, operating expenses and net operating income are for the Company's 2024 same-store pool of 1,075 stores. |
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SOURCE Extra Space Storage Inc.
FAQ
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