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Extra Space Storage (EXR) Q2 FFO Tops Estimates, Occupancy Rises
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Extra Space Storage Inc. (EXR - Free Report) reported second-quarter 2024 core funds from operations (FFO) per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The figure also remained flat year over year.
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 $810.7 million beat the Zacks Consensus Estimate of $796.1 million. The top line jumped 58.5% year over year, reflecting acquisition.
Per Joe Margolis, the CEO of Extra Space Storage, "We've maintained strong occupancy levels in the Extra Space and Life Storage same-store pools despite a challenging demand and new customer rate environment. The occupancy gains drove positive revenue growth in both pools. In addition, we continue to realize G&A savings and stronger than expected tenant insurance income, supporting solid FFO per share performance ahead of our projections."
Quarter in Detail
Same-store revenues increased 0.6% year over year to $419.2 million in the second quarter. The same-store square-foot occupancy expanded 30 basis points year over year to 94.3% as of Jun 30, 2024. It also came ahead of our estimate of 94%.
Same-store operating expenses rose 6.0% year over year to $105.9 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance and property taxes. Consequently, same-store net operating income (NOI) decreased 1.1% year over year to $313.3 million.
In the second quarter, interest expenses flared up to $137.1 million from $86.4 million a year ago. Our estimate was $131.4 million.
Portfolio Activity
During the April-June quarter, Extra Space Storage acquired two operating stores and one store at the completion of construction for a total cost of $27.6 million.
In association with a joint venture partner, the company completed two developments for a total cost of $28.7 million, of which it invested $27.7 million.
Extra Space Storage added 77 stores (14 stores net) to its third-party management platform. As of Jun 30, 2024, it managed 1,423 stores for third parties and 472 stores in unconsolidated JVs, with total stores under the management of 1,895.
Balance Sheet
Extra Space Storage exited the second quarter with nearly $77 million of cash and cash equivalents, down from $99.1 million recorded as of Dec 31, 2023.
As of Jun 30, 2024, EXR's percentage of fixed-rate debt to total debt was 75%. The combined weighted average interest rate was 4.6%, with a weighted average maturity of around 4.7 years.
During the reported quarter, Extra Space Storage originated $433.2 million in bridge loans and sold one bridge loan totaling $11.1 million, leading to an outstanding balance of $1.1 billion at quarter end.
In the second quarter, the company did not issue any shares under its at-the-market program, and as of Jun 30, 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 Jun 30, 2024.
2024 Guidance
Extra Space Storage now projects its 2024 core FFO per share in the range of $7.95-$8.15 compared with the prior outlook of $7.85-$8.15. The Zacks Consensus Estimate of $8.04 lies within this range.
The full-year guidance is based on the assumption of negative 1% to 0.50% growth in same-store revenues and a 4-5% increase in same-store expenses. Consequently, same-store NOI is projected in the band of negative 3%-negative 0.50%.
Extra Space Storage currently carries a Zacks Rank #3 (Hold).
Extra Space Storage Inc Price, Consensus and EPS Surprise
Public Storage (PSA - Free Report) reported a second-quarter 2024 core FFO per share of $4.23, which surpassed the Zacks Consensus Estimate of $4.20. However, the figure declined 1.2% year over year. Quarterly revenues of $1.17 billion increased 4.8% year over year but narrowly missed the Zacks Consensus Estimate of $1.18 billion.
Public Storage experienced lower realized annual rent per occupied square foot and a decline in occupancy, as well as a rise in property tax expenses and interest expenses, in the quarter. Management noted that customer move-in rents were impacted by industry-wide competition and adjusted PSA’s outlook for 2024 to reflect market move-in rent dynamics.
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Ventas Inc. (VTR - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , both of which are slated to report on Aug 1.
The Zacks Consensus Estimate for Federal Realty’s second-quarter 2024 FFO per share is pegged at $1.68, which implies a year-over-year increase of 0.6%. 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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Extra Space Storage (EXR) Q2 FFO Tops Estimates, Occupancy Rises
Extra Space Storage Inc. (EXR - Free Report) reported second-quarter 2024 core funds from operations (FFO) per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The figure also remained flat year over year.
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 $810.7 million beat the Zacks Consensus Estimate of $796.1 million. The top line jumped 58.5% year over year, reflecting acquisition.
Per Joe Margolis, the CEO of Extra Space Storage, "We've maintained strong occupancy levels in the Extra Space and Life Storage same-store pools despite a challenging demand and new customer rate environment. The occupancy gains drove positive revenue growth in both pools. In addition, we continue to realize G&A savings and stronger than expected tenant insurance income, supporting solid FFO per share performance ahead of our projections."
Quarter in Detail
Same-store revenues increased 0.6% year over year to $419.2 million in the second quarter. The same-store square-foot occupancy expanded 30 basis points year over year to 94.3% as of Jun 30, 2024. It also came ahead of our estimate of 94%.
Same-store operating expenses rose 6.0% year over year to $105.9 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance and property taxes. Consequently, same-store net operating income (NOI) decreased 1.1% year over year to $313.3 million.
In the second quarter, interest expenses flared up to $137.1 million from $86.4 million a year ago. Our estimate was $131.4 million.
Portfolio Activity
During the April-June quarter, Extra Space Storage acquired two operating stores and one store at the completion of construction for a total cost of $27.6 million.
In association with a joint venture partner, the company completed two developments for a total cost of $28.7 million, of which it invested $27.7 million.
Extra Space Storage added 77 stores (14 stores net) to its third-party management platform. As of Jun 30, 2024, it managed 1,423 stores for third parties and 472 stores in unconsolidated JVs, with total stores under the management of 1,895.
Balance Sheet
Extra Space Storage exited the second quarter with nearly $77 million of cash and cash equivalents, down from $99.1 million recorded as of Dec 31, 2023.
As of Jun 30, 2024, EXR's percentage of fixed-rate debt to total debt was 75%. The combined weighted average interest rate was 4.6%, with a weighted average maturity of around 4.7 years.
During the reported quarter, Extra Space Storage originated $433.2 million in bridge loans and sold one bridge loan totaling $11.1 million, leading to an outstanding balance of $1.1 billion at quarter end.
In the second quarter, the company did not issue any shares under its at-the-market program, and as of Jun 30, 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 Jun 30, 2024.
2024 Guidance
Extra Space Storage now projects its 2024 core FFO per share in the range of $7.95-$8.15 compared with the prior outlook of $7.85-$8.15. The Zacks Consensus Estimate of $8.04 lies within this range.
The full-year guidance is based on the assumption of negative 1% to 0.50% growth in same-store revenues and a 4-5% increase in same-store expenses. Consequently, same-store NOI is projected in the band of negative 3%-negative 0.50%.
Extra Space Storage currently carries a Zacks Rank #3 (Hold).
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 - Free Report) reported a second-quarter 2024 core FFO per share of $4.23, which surpassed the Zacks Consensus Estimate of $4.20. However, the figure declined 1.2% year over year. Quarterly revenues of $1.17 billion increased 4.8% year over year but narrowly missed the Zacks Consensus Estimate of $1.18 billion.
Public Storage experienced lower realized annual rent per occupied square foot and a decline in occupancy, as well as a rise in property tax expenses and interest expenses, in the quarter. Management noted that customer move-in rents were impacted by industry-wide competition and adjusted PSA’s outlook for 2024 to reflect market move-in rent dynamics.
Upcoming Earnings Releases
We now look forward to the earnings releases of other REITs like Ventas Inc. (VTR - Free Report) and Federal Realty Investment Trust (FRT - Free Report) , both of which are slated to report on Aug 1.
The Zacks Consensus Estimate for Ventas’ second-quarter 2024 FFO per share is pegged at 79 cents, which suggests a year-over-year increase of 5.3%. VTR currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Federal Realty’s second-quarter 2024 FFO per share is pegged at $1.68, which implies a year-over-year increase of 0.6%. 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.