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Extra Space Storage (EXR) Up 21% in 3 Months: Will the Trend Last?
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Shares of Extra Space Storage (EXR - Free Report) have rallied 21.8% in the past three months, outperforming the industry’s growth of 16.2%.
EXR is the largest operator of self-storage properties in the United States. This real estate investment trust (REIT) continues to benefit from its high brand value and strong presence in major cities in the United States.
Late in July, Extra Space Storage reported second-quarter 2024 core funds from operations (FFO) per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The results reflected a rise in occupancy and better-than-anticipated revenues.
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. 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.
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."
Image Source: Zacks Investment Research
Will the EXR Stock Continue to Rise?
Extra Space Storage has significantly expanded its business in recent years, growing its branded store count from 1,029 in 2013 to 3,812 as of Jun 30, 2024 in 42 states and Washington, D.C. 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, with a geographically diversified portfolio and significant scale, the company is poised for long-term growth.
EXR is focusing on growing its business and achieving geographical diversity through accretive acquisitions, mutually beneficial joint venture partnerships and third-party management services. In the second 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.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. 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. As of the same date, its percentage of unencumbered asset value to total asset value was 84.7%. With balance sheet strength, EXR is well-poised to ride the growth curve.
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.
Image: Bigstock
Extra Space Storage (EXR) Up 21% in 3 Months: Will the Trend Last?
Shares of Extra Space Storage (EXR - Free Report) have rallied 21.8% in the past three months, outperforming the industry’s growth of 16.2%.
EXR is the largest operator of self-storage properties in the United States. This real estate investment trust (REIT) continues to benefit from its high brand value and strong presence in major cities in the United States.
Late in July, Extra Space Storage reported second-quarter 2024 core funds from operations (FFO) per share of $2.06, which beat the Zacks Consensus Estimate of $2.00. The results reflected a rise in occupancy and better-than-anticipated revenues.
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. 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.
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."
Image Source: Zacks Investment Research
Will the EXR Stock Continue to Rise?
Extra Space Storage has significantly expanded its business in recent years, growing its branded store count from 1,029 in 2013 to 3,812 as of Jun 30, 2024 in 42 states and Washington, D.C. 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, with a geographically diversified portfolio and significant scale, the company is poised for long-term growth.
EXR is focusing on growing its business and achieving geographical diversity through accretive acquisitions, mutually beneficial joint venture partnerships and third-party management services. In the second 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.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. 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. As of the same date, its percentage of unencumbered asset value to total asset value was 84.7%. With balance sheet strength, EXR is well-poised to ride the growth curve.
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 Cousins Properties (CUZ - Free Report) and Lamar Advertising (LAMR - 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 Cousins Properties’ 2024 FFO per share has been raised marginally over the past month to $2.66.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has moved marginally north in the past month to $8.09.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.