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

PART I. FINANCIAL INFORMATION Financial Statements (unaudited) Unaudited condensed consolidated financial statements for Q1 2025 and 2024 provide a snapshot of the company's financial position, performance, and cash movements Balance Sheet Highlights | | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $28,993,918 | $28,847,926 | | Total Liabilities | $14,215,415 | $13,988,564 | | Total Equity | $14,778,503 | $14,859,362 | Income Statement Highlights | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Revenues | $819,997 | $799,539 | | Net Income | $284,925 | $224,074 | | Net Income Attributable to Common Stockholders | $270,875 | $213,112 | | Diluted EPS | $1.28 | $1.01 | Cash Flow Statement Highlights | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $481,404 | $465,556 | | Net Cash Used in Investing Activities | ($342,038) | ($282,071) | | Net Cash Used in Financing Activities | ($159,621) | ($233,182) | Notes to Condensed Consolidated Financial Statements Detailed explanations supporting financial statement figures are provided, covering organization, accounting policies, acquisitions, debt, and segment information Organization Extra Space Storage Inc. is a self-managed REIT operating 4,099 self-storage stores across 43 states and Washington, D.C. - The company is a fully integrated, self-administered and self-managed REIT focused on self-storage properties throughout the United States[30] - As of March 31, 2025, the company had equity interests in 2,424 stores and managed an additional 1,675 stores for third parties, totaling 4,099 stores under its platform[31] Acquisitions and Dispositions In Q1 2025, the company acquired 17 stores for $248.2 million and disposed of 11 stores for $124.9 million, yielding a $35.8 million net gain Store Acquisition Summary | Period | Number of Stores Acquired | Total Real Estate Assets (in thousands) | | :--- | :--- | :--- | | Q1 2025 | 17 | $248,221 | | Q1 2024 | 6 | $35,255 | - In Q1 2025, the company disposed of 11 stores for approximately $124.9 million, recognizing a net gain of $39.5 million, which was offset by $3.8 million in losses on other assets, for a net gain of $35.8 million[50] Debt As of March 31, 2025, total term debt was $11.8 billion, with 78.8% fixed-rate and a 4.4% weighted average interest rate Debt Composition | Debt Component | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Secured notes payable | $1,001,851 | $1,013,661 | | Unsecured term loans | $1,955,000 | $2,200,000 | | Unsecured senior notes | $8,875,000 | $8,025,000 | | Total Term Debt | $11,831,851 | $11,238,661 | - As of March 31, 2025, the company's percentage of fixed-rate debt to total debt was 78.8%, and the combined weighted average interest rate was 4.4%[74] - The company had $580 million in issuances outstanding under its $1 billion commercial paper program as of March 31, 2025[70] Segment Information The company operates Self-Storage Operations and Tenant Reinsurance segments, generating $480.8 million and $67.6 million in Q1 2025 NOI respectively - The company's business is comprised of two reportable segments: (1) self-storage operations and (2) tenant reinsurance. The Chief Operating Decision Maker (CODM) uses Net Operating Income (NOI) to assess segment performance[102] Segment Performance (Q1 2025) | Segment (Q1 2025, in thousands) | Revenues | Net Operating Income (NOI) | | :--- | :--- | :--- | | Self-Storage Operations | $704,380 | $480,798 | | Tenant Reinsurance | $84,712 | $67,596 | | Total Segment | $789,092 | $548,394 | Subsequent Events On April 30, 2025, the company acquired 27 properties from two joint ventures for $153.2 million cash and $258.0 million assumed debt - On April 30, 2025, the company acquired its partners' equity interests in two joint ventures, gaining full ownership of 27 properties for $153.2 million in cash and the assumption of $258.0 million in debt[112] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 results, highlighting a 2.6% revenue increase, 1.2% same-store NOI decrease, and strong liquidity with a BBB+ credit rating Results of Operations Q1 2025 total revenues increased 2.6% to $820.0 million due to acquisitions, with total expenses rising 0.7% to $467.0 million Revenue Performance | Revenue Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Property rental | $704,380 | $688,044 | 2.4% | | Tenant reinsurance | $84,712 | $81,347 | 4.1% | | Total revenues | $819,997 | $799,539 | 2.6% | Expense Performance | Expense Type | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Property operations | $223,582 | $204,518 | 9.3% | | Depreciation and amortization | $180,356 | $196,966 | (8.4)% | | Total expenses | $467,028 | $463,711 | 0.7% | Funds from Operations (FFO) FFO attributable to common stockholders and unit holders increased to $428.1 million in Q1 2025 from $415.6 million in Q1 2024 Funds from Operations Reconciliation | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net income attributable to common stockholders | $270,875 | $213,112 | | Adjustments (Depreciation, Amortization, etc.) | $157,227 | $102,458 | | FFO attributable to common stockholders and unit holders | $428,102 | $415,570 | Same-Store Results Same-store NOI decreased 1.2% in Q1 2025 due to 4.2% higher operating expenses, despite 0.3% revenue growth and 93.4% occupancy Same-Store Performance Metrics | Same-Store Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Rental Revenues | $659,736 | $657,523 | 0.3% | | Total Operating Expenses | $192,427 | $184,637 | 4.2% | | Net Operating Income | $467,309 | $472,886 | (1.2)% | | Square Foot Occupancy (End of Period) | 93.4% | 92.4% | +1.0% | Liquidity and Capital Resources As of March 31, 2025, the company had $119.6 million cash, $12.8 billion total debt (78.8% fixed-rate), and strong BBB+/Baa2 credit ratings - The company holds a BBB+/Stable rating from S&P and a Baa2 rating from Moody's Investors Service[153] Key Liquidity and Debt Metrics | Metric (as of March 31, 2025) | Value | | :--- | :--- | | Total face value of debt | $12,809,851,000 | | % Fixed-rate debt | 78.8% | | Weighted average interest rate | 4.4% | Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate risk, with $2.7 billion in variable-rate debt; a 100 basis point SOFR change impacts annual earnings by $27.1 million - As of March 31, 2025, the company had approximately $12.8 billion in total debt, with about $2.7 billion subject to variable interest rates[160] - A 100 basis point increase or decrease in SOFR would result in an approximate $27.1 million annual change in interest expense, earnings, and cash flows[160] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by the report[164] - No changes occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various ordinary course legal proceedings, with no expected material adverse effect on financial results - The company is subject to various claims and complaints arising in the ordinary course of business, but the outcomes are inherently unpredictable[166] Risk Factors No material changes occurred to risk factors previously disclosed in the company's Annual Report on Form 10-K for December 31, 2024 - No material changes have occurred to the risk factors described in the company's Annual Report on Form 10-K for the year ended December 31, 2024[167] Other Information On February 28, 2025, CEO Joseph D. Margolis adopted a Rule 10b5-1(c) trading plan for the potential sale of up to 30,000 shares - On February 28, 2025, CEO Joseph D. Margolis adopted a trading arrangement under Rule 10b5-1(c) for the sale of up to 30,000 shares of common stock between July 1, 2025, and April 3, 2026[171] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, corporate documents, debt instruments, and certifications