Yahoo Finance Extra Space Storage (EXR) Q1 FFO Tops Estimates, Occupancy Rises
Extra Space Storage Inc. EXR reported first-quarter 2024 core funds from operations (FFO) per share of $1.96, which beat the Zacks Consensus Estimate by a penny. However, the figure declined 3% from the prior-year quarter.
The results reflect a rise in occupancy and better-than-anticipated revenues. However, higher same-store operating expenses and increased interest expenses during the quarter were a spoilsport.
Quarterly revenues of $799.5 million beat the Zacks Consensus Estimate of $786.5 million. The top line jumped 58.9% year over year, reflecting acquisition.
Per Joe Margolis, CEO of Extra Space Storage, "We achieved positive year-over-year occupancy growth in the Extra Space and Life Storage same-store pools. We have also continued to realize G&A savings and to expand our bridge lending and third party management programs. Rental activity has been strong year to date and vacates remain muted, which positions us well to maximize revenue during the 2024 leasing season."
Quarter in Detail
Same-store revenues increased 1.0 % year over year to $414.7 million in the first quarter. Same-store operating expenses rose 5.5% year over year to $107.8 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance, property taxes and office expenses.
Consequently, same-store net operating income (NOI) decreased 0.5% year over year to $306.8 million.
The same-store square-foot occupancy expanded 50 basis points year over year to 93.2% as of Mar 31, 2024. Our estimate was pegged at 92.6%.
In the first quarter, interest expenses flared up to $132.9 million from $80.1 million a year ago. Our estimate was $126.4 million.
Portfolio Activity
During the January-March quarter, Extra Space Storage acquired five operating stores and one store at the completion of construction for a total cost of $35.1 million.
In association with a joint venture partner, the company completed one development for $20.4 million, of which it invested $19.4 million.
Extra Space Storage added 97 stores (72 stores net) to its third-party management platform. As of Mar 31, 2024, it managed 1,409 stores for third parties and 472 stores in unconsolidated JVs, with total stores under the management of 1,881.
Balance Sheet
Extra Space Storage exited the first quarter with $50.8 million of cash and cash equivalents, down from $99.1 million recorded as of Dec 31, 2023.
As of Mar 31, 2024, EXR's percentage of fixed-rate debt to total debt was 77.2%. The combined weighted average interest rate was 4.5%, with a weighted average maturity of around 4.9 years.
During the reported quarter, Extra Space Storage originated $164.3 million in bridge loans and did not sell any bridge loans, leading to an outstanding balance of $752.3 million at quarter end.
In the first quarter, the company did not issue any shares under its at-the-market program, and as of Mar 31, 2024, had $800 million available for issuance. Also, it did not repurchase any shares of common stock and had the authorization to buy up to an additional $500 million under the plan as of Mar 31, 2024.
2024 Guidance
Extra Space Storage has reiterated its core FFO per share outlook in the range of $7.85-$8.15. The Zacks Consensus Estimate of $8.05 lies within this range.
The full-year guidance is based on the assumption of negative 2% to 0.50% growth in same-store revenues and a 4.00-5.50% increase in same-store expenses. Consequently, same-store NOI is projected in the band of negative 4.25-negative 0.50%.
Extra Space Storage currently carries a Zacks Rank #4 (Sell).
Extra Space Storage Inc Price, Consensus and EPS Surprise
Extra Space Storage Inc price-consensus-eps-surprise-chart | Extra Space Storage Inc Quote
Performance of Another Self-Storage REIT
Public Storage PSA reported a first-quarter 2024 core FFO per share of $4.03, which missed the Zacks Consensus Estimate of $4.07. The figure also declined 1.2% year over year. Quarterly revenues of $1.16 billion exceeded the Zacks Consensus Estimate by 0.4%. Moreover, revenues increased 5.8% year over year.
While this self-storage REIT came up with a better-than-anticipated top line, aided by an improvement in the realized annual rent per occupied square foot in the reported quarter, a rise in property tax expenses and marketing expenses, as well as higher interest expenses, acted as spoilsports.
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Digital Realty Trust, Inc. DLR and Federal Realty Investment Trust FRT, both of which are slated to report on May 2.
The Zacks Consensus Estimate for Digital Realty Trust’s first-quarter 2024 FFO per share is pegged at $1.63, which suggests a year-over-year decrease of 1.81%. DLR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s first-quarter 2024 FFO per share is pegged at $1.65, which implies a year-over-year increase of 3.77%. FRT currently carries a Zacks Rank #3.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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