Extra Space Storage(EXR) - 2025 Q1 - Quarterly Results

Q1 2025 Performance Overview The company reported strong Q1 2025 performance, exceeding revenue expectations and growing Core FFO, while maintaining guidance Highlights and CEO Commentary Extra Space Storage reported solid Q1 2025 results, exceeding revenue expectations and growing Core FFO per share to $2.00 - CEO Joe Margolis highlighted a solid first quarter, beating same-store revenue expectations and maintaining high occupancy, leading to FFO growth above internal projections, but due to economic uncertainty, the company is maintaining its same-store guidance[4] - The company expanded its portfolio by acquiring 12 operating stores for approximately $153.8 million and added a net of 100 stores to its third-party management platform[5] - A quarterly dividend of $1.62 per share was paid[5] Q1 2025 Key Performance Indicators | Metric | Value | YoY Change | | :--- | :--- | :--- | | Net Income per Diluted Share | $1.28 | +26.7% | | Core FFO per Diluted Share | $2.00 | +2.0% | | Same-Store Revenue | N/A | +0.3% | | Same-Store NOI | N/A | -1.2% | | Ending Same-Store Occupancy | 93.4% | +100 bps | Financial Performance Q1 2025 financial performance saw increased FFO and Core FFO per share, with same-store NOI slightly declining due to higher expenses Funds from Operations (FFO) For Q1 2025, FFO per diluted share increased to $1.93, and Core FFO rose 2.0% to $2.00 per diluted share - The increase in FFO was driven by higher net income, partially offset by a lower gain on real estate assets compared to adjustments in the prior year, with key adjustments including real estate depreciation of $0.72 per share and gain on real estate assets sold of -$0.16 per share[6] FFO and Core FFO Reconciliation (per diluted share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income Attributable to Common Stockholders | $1.28 | $1.01 | | FFO | $1.93 | $1.87 | | Core FFO | $2.00 | $1.96 | Same-Store Performance Q1 2025 same-store revenue increased by 0.3%, but a 4.2% rise in operating expenses led to a 1.2% decrease in Net Operating Income - The 4.2% increase in same-store operating expenses was primarily driven by a 15.8% year-over-year increase in property taxes[7] - Effective January 1, 2025, the company expanded its same-store pool from 1,071 to 1,829 stores[8] Q1 2025 Same-Store Performance vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Same-Store Revenues | $659.7M | $657.5M | 0.3% | | Total Same-Store Operating Expenses | $192.4M | $184.6M | 4.2% | | Same-Store Net Operating Income | $467.3M | $472.9M | (1.2)% | | Quarter-End Occupancy | 93.4% | 92.4% | +1.0% | Business and Investment Activities The company engaged in significant investment and property activities, expanded its management platform, and maintained a strong balance sheet Investment and Property Activity In Q1 2025, the company invested $178.3 million in acquisitions and joint ventures, while selling properties for a net gain of $35.8 million - The company has an additional 32 properties scheduled to close or complete in 2025, representing a total planned investment of $385.5 million[11] - During the quarter, the company sold 11 operating properties and three land parcels, resulting in a net gain of $35.8 million[16] - The company invested $100.0 million in convertible preferred stock of Strategic Storage Growth Trust III, Inc. with an 8.85% dividend rate, and subsequent to the quarter, a $200.0 million preferred stock investment in SmartStop Self Storage REIT was repaid[13][14] Q1 2025 Investment Summary (Closed/Completed) | Investment Type | Stores | EXR Investment | | :--- | :--- | :--- | | Wholly-Owned Operating Stores | 12 | $153.8M | | Joint Venture (Acquisition & Development) | 3 | $24.5M | | Total EXR Investment | 15 | $178.3M | Property Management and Bridge Loans As of March 31, 2025, Extra Space Storage managed 2,114 stores, solidifying its position as the largest self-storage management company in the U.S - As of March 31, 2025, the company managed 1,675 stores for third parties and 439 stores in unconsolidated joint ventures, totaling 2,114 managed stores, making it the largest self-storage management company in the U.S[18] - In Q1 2025, the company originated $53.2 million in bridge loans and sold $27.7 million, with the outstanding balance of bridge loans approximately $1.4 billion at quarter-end[17] Balance Sheet and Capital Markets The company maintained a strong balance sheet with 78.8% of its debt at a fixed rate, issuing $850.0 million in new senior unsecured notes - The company did not issue any shares on its ATM program and did not repurchase any shares during Q1, however, subsequent to quarter end, it repurchased 68,585 shares for $8.6 million[19][20] - In January 2025, the company issued an additional $350.0 million of its 5.50% senior unsecured notes due 2030, and in March 2025, it completed a $500.0 million public bond offering of 5.4% senior unsecured notes due 2035[21] Debt Profile as of March 31, 2025 | Metric | Value | | :--- | :--- | | Fixed-Rate Debt to Total Debt | 78.8% | | Effective Fixed-Rate Debt to Total Debt | 89.5% | | Weighted Average Interest Rate (Combined) | 4.4% | | Weighted Average Maturity | ~4.5 years | Dividends On March 31, 2025, the company paid its first quarter common stock dividend of $1.62 per share - The company paid a first quarter common stock dividend of $1.62 per share on March 31, 2025[24] 2025 Full-Year Outlook The company maintained its full-year 2025 guidance for Core FFO and same-store performance, updating key underlying assumptions Full-Year 2025 Guidance The company maintained its full-year 2025 Core FFO per share guidance between $8.00 and $8.30, with unchanged same-store revenue and NOI growth expectations - The company's guidance for Core FFO, same-store revenue, expenses, and NOI growth remains unchanged from the previous guidance issued on February 25, 2025[25] - Key assumption changes from prior guidance include an increase in planned acquisitions from $325 million to $600 million and a decrease in expected equity in earnings of real estate ventures from $89-90 million to $72-73 million, partly due to JV buyouts[25] Full-Year 2025 Guidance (as of April 29, 2025) | Metric | Low Range | High Range | | :--- | :--- | :--- | | Core FFO per share | $8.00 | $8.30 | | Same-Store Revenue Growth | (0.75)% | 1.25% | | Same-Store Expense Growth | 3.75% | 5.25% | | Same-Store NOI Growth | (3.00)% | 0.25% | Supplemental Information and Definitions This section provides details on the conference call, outlines forward-looking statement disclaimers, and defines key financial metrics Conference Call and Forward-Looking Statements A conference call to discuss Q1 2025 financial results is scheduled for April 30, 2025, with the report containing forward-looking statements subject to various risks - A conference call to discuss Q1 2025 financial results is scheduled for 1:00 p.m. Eastern Time on Wednesday, April 30, 2025[27] - The report includes forward-looking statements that are subject to risks and uncertainties, such as adverse economic changes, competition, and financing risks, with readers advised to consider the 'Risk Factors' in the company's Annual and Quarterly SEC filings[29][33] Definitions of Key Metrics The company defines FFO per NAREIT standards, Core FFO as an adjusted metric, and the same-store pool as 1,829 stabilized properties - FFO is defined per NAREIT standards as net income excluding gains/losses from property sales and real estate depreciation, while Core FFO is a company-specific metric that further adjusts FFO to exclude non-core revenues and expenses, such as certain Life Storage Merger costs[31][32] - The same-store pool for 2025 consists of 1,829 wholly-owned and operated stores that were stabilized by the start of the earliest year presented, with a store considered stabilized after three years of operation or after maintaining 80% average occupancy for one year[34] Appendix: Financial Statements and Reconciliations The appendix presents condensed consolidated balance sheets, statements of operations, and detailed reconciliations of GAAP to non-GAAP metrics Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased slightly to $29.0 billion, with total liabilities rising to $14.2 billion Balance Sheet Summary (in billions) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $29.0 | $28.8 | | Total Liabilities | $14.2 | $14.0 | | Total Stockholders' Equity | $13.9 | $13.9 | Condensed Consolidated Statement of Operations For Q1 2025, total revenues reached $820.0 million, with net income attributable to common stockholders significantly increasing to $270.9 million Statement of Operations Summary (in millions) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $820.0 | $799.5 | | Income from Operations | $388.7 | $335.8 | | Net Income Attributable to Common Stockholders | $270.9 | $213.1 | | Diluted EPS | $1.28 | $1.01 | Financial Reconciliations This section provides detailed reconciliations of GAAP measures to non-GAAP metrics for both the reported quarter and the full-year outlook - Provides a reconciliation of Q1 2025 GAAP Net Income of $284.9 million to Total Same-Store Net Operating Income of $467.3 million[40] - Reconciles the full-year 2025 estimated GAAP EPS range of $4.48 - $4.78 to the estimated Core FFO per share range of $8.00 - $8.30[41] - Reconciles the full-year 2025 estimated GAAP Net Income range of $1.03 billion - $1.11 billion to the estimated Total Same-Store Net Operating Income range of $1.87 billion - $1.94 billion[42]