Extra Space Storage Inc. Reports 2024 Third Quarter Results
SALT LAKE CITY, Oct. 29, 2024 /PRNewswire/ -- Extra Space Storage Inc. (NYSE:EXR) (the "Company"), a leading owner and operator of self-storage facilities in the United States and a constituent of the S&P 500, announced operating results for the three and nine months ended September 30, 2024.
Highlights for the three months ended September 30, 2024:
Achieved net income attributable to common stockholders of $0.91 per diluted share, representing a 5.2% decrease compared to the same period in the prior year primarily due to a $51.8 million loss related to the impairment of the Life Storage Inc. ("Life Storage" or "LSI") trade name based on the Company's decision to operate under a single brand.
Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of $1.75 per diluted share. FFO, excluding adjustments ("Core FFO"), was $2.07 per diluted share, representing a 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 to 93.7% 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, of which the Company invested $30.7 million.
The Company recognized a gain of $13.7 million upon the dissolution of two joint ventures which owned 17 properties.
Originated $158.4 million in mortgage and mezzanine bridge loans and sold $179.0 million mortgage bridge loans.
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 per share.
Highlights for the nine months ended September 30, 2024:
Achieved net income attributable to common stockholders of $2.79 per diluted share, representing a 26.2% decrease compared to the same period in the prior year, due to a $51.8 million loss related to the impairment of the Life Storage trade name and a $63.6 million loss on assets held for sale, offset by a $13.7 million gain related to the dissolution of two joint ventures.
Achieved FFO of $5.61 per diluted share, and Core FFO of $6.09 per diluted share, representing a 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, of which the Company invested $77.7 million.
Originated $755.9 million in mortgage and mezzanine bridge loans and sold $190.1 million in mortgage bridge loans.
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 common stockholders
$ 193,210
$ 0.91
$ 188,350
$ 0.96
$ 592,194
$ 2.79
$ 587,064
$ 3.78
Impact of the difference in weighted average number ofshares, diluted2
(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 heldfor sale
8,961
0.04
—
—
63,620
0.29
—
—
Unconsolidated joint venturereal estate depreciation andamortization
7,922
0.04
6,698
0.03
23,771
0.11
16,359
0.10
Unconsolidated joint venture gain on sale of real estate assets and sale of a joint venture interest
(13,730)
(0.06)
—
—
(13,730)
(0.06)
—
—
Distributions paid on Series A Preferred Operating Partnership units
—
—
—
—
—
—
(159)
—
Income allocated to Operating Partnership andother noncontrolling interests
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
$ 1,243,835
$ 5.61
$ 933,563
$ 5.67
Adjustments:
Life Storage Mergertransition costs
—
—
54,174
0.26
—
—
54,174
0.33
Non-cash interest expense related to amortization of discount on Life Storageunsecured senior notes
11,005
0.06
8,228
0.04
32,563
0.15
8,228
0.05
Amortization of otherintangibles related to the LifeStorage Merger, net of taxbenefit
6,320
0.03
4,960
0.03
21,198
0.10
4,960
0.03
Impairment of Life Storage trade name
51,763
0.23
—
—
51,763
0.23
—
—
CORE FFO
$ 457,919
$ 2.07
$ 415,821
$ 2.02
$ 1,349,359
$ 6.09
$ 1,000,925
$ 6.08
Weighted average number ofshares, diluted3
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 Ended September 30,
Percent
For the Nine Months Ended September 30,
Percent
2024
2023
Change
2024
2023
Change
Same-store property revenues2
Net rental income
$ 407,130
$ 407,565
(0.1) %
$ 1,207,032
$ 1,200,995
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) %
$ 1,255,892
$ 1,250,355
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 %
