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Extra Space Storage (EXR) Rises 13% in 3 Months: Here's How
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Shares of Extra Space Storage (EXR - Free Report) have gained 13% in the past three months compared with the industry’s growth of 4.6%.
This real estate investment trust (REIT) continues to benefit from its high brand value and strong presence in major cities in the United States. Strategic acquisitions, opportunistic investments and a third-party management platform bode well for the company’s long-term growth. However, lower new customer rates, a development boom in many markets and high interest rates pose key near-term concerns.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
Extra Space Storage, carrying a Zacks Rank #3 (Hold) at present, is the largest operator of self-storage properties in the United States. The company has significantly expanded its business in recent years, growing its branded store count from 1,029 in 2013 to 3,793 as of Mar 31, 2024, in 42 states and Washington, DC.
The majority of its stores are close to large population centers. Apart from having an above-average population, these markets enjoy favorable income demographics for stores. Therefore, the company is well-poised for long-term growth with a geographically diversified portfolio and significant scale. We expect a year-over-year rise of 25.5% in the company’s total revenues in 2024.
With accretive acquisitions, mutually beneficial joint venture partnerships and third-party management services, EXR is focusing on growing its business and achieving geographical diversity. In July 2023, it concluded the buyout of Life Storage, Inc. in an all-stock transaction, making the combined entity the largest self-storage operator in the United States (based on the number of self-storage locations).
In the first quarter of 2024, the company acquired five operating stores and one store at completion of construction (Certificate of Occupancy stores) for a total cost of around $35.1 million. In association with the JV partner, it completed one development for a total cost of $20.4 million, of which the company invested $19.4 million.
In addition to the buyouts, the company is making strategic investments through other channels in the storage sector, including preferred equity investments and a bridge loan program.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. This REIT exited the first quarter of 2024 with $50.8 million of cash and cash equivalents. As of Mar 31, 2024, the company's percentage of fixed-rate debt to total debt was 77.2% and the net debt to EBITDA was 4.9X. The combined weighted average interest rate was 4.5%, with a weighted average maturity of around 4.9 years. As of the same date, its percentage of unencumbered asset value to total asset value was 84.6%. With solid balance sheet strength, EXR is well-poised to capitalize on external growth opportunities.
Solid dividend payouts are arguably the biggest enticement for REIT investors, and Extra Space Storage remains committed to boosting shareholders’ wealth. In the past five years, the company has increased its dividend six times, and the five-year annualized dividend growth rate is 13.56%. Such shareholder-friendly efforts are encouraging. Check Extra Space Storage’s dividend history here.
The Zacks Consensus Estimate for IRM’s 2024 FFO per share stands at $4.45, indicating an increase of 8% from the year-ago reported figure.
The Zacks Consensus Estimate for STAG’s 2024 FFO per share is pinned at $2.38, suggesting year-over-year growth of 3.9%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Extra Space Storage (EXR) Rises 13% in 3 Months: Here's How
Shares of Extra Space Storage (EXR - Free Report) have gained 13% in the past three months compared with the industry’s growth of 4.6%.
This real estate investment trust (REIT) continues to benefit from its high brand value and strong presence in major cities in the United States. Strategic acquisitions, opportunistic investments and a third-party management platform bode well for the company’s long-term growth. However, lower new customer rates, a development boom in many markets and high interest rates pose key near-term concerns.
Image Source: Zacks Investment Research
Let’s find out the factors behind the surge in the stock price.
Extra Space Storage, carrying a Zacks Rank #3 (Hold) at present, is the largest operator of self-storage properties in the United States. The company has significantly expanded its business in recent years, growing its branded store count from 1,029 in 2013 to 3,793 as of Mar 31, 2024, in 42 states and Washington, DC.
The majority of its stores are close to large population centers. Apart from having an above-average population, these markets enjoy favorable income demographics for stores. Therefore, the company is well-poised for long-term growth with a geographically diversified portfolio and significant scale. We expect a year-over-year rise of 25.5% in the company’s total revenues in 2024.
With accretive acquisitions, mutually beneficial joint venture partnerships and third-party management services, EXR is focusing on growing its business and achieving geographical diversity. In July 2023, it concluded the buyout of Life Storage, Inc. in an all-stock transaction, making the combined entity the largest self-storage operator in the United States (based on the number of self-storage locations).
In the first quarter of 2024, the company acquired five operating stores and one store at completion of construction (Certificate of Occupancy stores) for a total cost of around $35.1 million. In association with the JV partner, it completed one development for a total cost of $20.4 million, of which the company invested $19.4 million.
In addition to the buyouts, the company is making strategic investments through other channels in the storage sector, including preferred equity investments and a bridge loan program.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. This REIT exited the first quarter of 2024 with $50.8 million of cash and cash equivalents. As of Mar 31, 2024, the company's percentage of fixed-rate debt to total debt was 77.2% and the net debt to EBITDA was 4.9X. The combined weighted average interest rate was 4.5%, with a weighted average maturity of around 4.9 years. As of the same date, its percentage of unencumbered asset value to total asset value was 84.6%. With solid balance sheet strength, EXR is well-poised to capitalize on external growth opportunities.
Solid dividend payouts are arguably the biggest enticement for REIT investors, and Extra Space Storage remains committed to boosting shareholders’ wealth. In the past five years, the company has increased its dividend six times, and the five-year annualized dividend growth rate is 13.56%. Such shareholder-friendly efforts are encouraging. Check Extra Space Storage’s dividend history here.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Iron Mountain (IRM - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for IRM’s 2024 FFO per share stands at $4.45, indicating an increase of 8% from the year-ago reported figure.
The Zacks Consensus Estimate for STAG’s 2024 FFO per share is pinned at $2.38, suggesting year-over-year growth of 3.9%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.