Extra Space Storage(EXR) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights In the second quarter of 2025, Extra Space Storage reported a 34.1% increase in net income per diluted share to $1.18, but a 0.5% decrease in Core FFO per diluted share to $2.05. Same-store revenue was flat while NOI decreased by 3.1%. The company was active in acquisitions, buying out JV partners for $326.4 million, originating $157.8 million in loans, and expanding its third-party management platform Q2 2025 Key Performance Indicators (vs. Q2 2024) | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Net Income per Diluted Share | $1.18 | 34.1% | | Core FFO per Diluted Share | $2.05 | (0.5%) | | Same-Store Revenue | Flat | 0.0% | | Same-Store NOI | Decrease | (3.1%) | | Ending Same-Store Occupancy | 94.6% | +60 bps | - Acquired the interest of joint venture partners in two partnerships for $326.4 million, gaining full ownership of 27 properties[5] - Originated $157.8 million in mortgage and mezzanine bridge loans[5] - Expanded the third-party management platform by a net of 74 stores, reaching a total of 2,163 managed stores[5] - Paid a quarterly dividend of $1.62 per share[5] H1 2025 Financial Highlights For the first six months of 2025, net income per diluted share rose 30.3% to $2.45, and Core FFO per diluted share increased slightly by 0.7% to $4.05. Same-store revenue grew 0.1%, while NOI declined by 2.2%. The company acquired 13 operating stores for $165.9 million and originated $211.0 million in loans during this period H1 2025 Key Performance Indicators (vs. H1 2024) | Metric | Value | Change vs. Prior Year | | :--- | :--- | :--- | | Net Income per Diluted Share | $2.45 | 30.3% | | Core FFO per Diluted Share | $4.05 | 0.7% | | Same-Store Revenue | Increase | 0.1% | | Same-Store NOI | Decrease | (2.2%) | - Acquired 13 operating stores for a total cost of $165.9 million[7] - Originated $211.0 million in mortgage and mezzanine bridge loans and sold $34.7 million[7] - Added a net of 174 stores to the third-party management platform[7] CEO Commentary CEO Joe Margolis highlighted solid second-quarter results, attributing them to historically high occupancy, stable existing customer behavior, and improving new customer rates. He noted significant activity in third-party management, bridge loans, and JV partner buyouts. The company maintained its full-year FFO and same-store guidance, citing gradually improving storage fundamentals - Performance was driven by historically high occupancy, steady existing customer behavior, and gradually improving new customer rates[6] - The company has maintained its annual FFO and same-store guidance at the midpoints[6] Operating and Financial Review This section provides a detailed review of the company's financial performance, including FFO, same-store results, investment activities, and capital structure Funds From Operations (FFO) For Q2 2025, FFO per share was $1.98, flat compared to Q2 2024. Core FFO per share was $2.05, a slight decrease from $2.06 in the prior-year period. For the six-month period, FFO per share increased to $3.91 from $3.85, and Core FFO per share rose to $4.05 from $4.02 year-over-year FFO and Core FFO Reconciliation (per diluted share) | Period | Net Income | FFO | Core FFO | | :--- | :--- | :--- | :--- | | Q2 2025 | $1.18 | $1.98 | $2.05 | | Q2 2024 | $0.88 | $1.98 | $2.06 | | H1 2025 | $2.45 | $3.91 | $4.05 | | H1 2024 | $1.88 | $3.85 | $4.02 | Same-Store Performance In Q2 2025, same-store NOI decreased by 3.1% year-over-year, driven by an 8.6% increase in operating expenses, primarily a 19.2% rise in property taxes. Same-store revenue remained flat. Quarter-end occupancy for the 1,829-store pool increased to 94.6% from 94.0% in the prior year Q2 2025 Same-Store Performance vs. Q2 2024 | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $665.6 | $665.8 | 0.0% | | Operating Expenses | $191.4 | $176.3 | 8.6% | | Net Operating Income | $474.2 | $489.5 | (3.1%) | - Property taxes for the same-store pool increased 19.2% in Q2 and 17.5% in H1 2025, mainly due to reassessments in California, Georgia, Illinois, and Texas following the Life Storage merger[11][13] - The same-store pool was updated on January 1, 2025, to include 1,829 stores, up from 1,071[12] Investment and Management Activity Through June 30, 2025, the company's total investment reached $533.7 million, including acquiring 40 wholly-owned stores for $492.3 million (which includes a $326.4 million JV buyout) and investing $41.4 million in 5 JV properties. The company originated $157.8 million in bridge loans in Q2, with an outstanding balance of $1.5 billion. As the largest US self-storage manager, it oversees 2,163 properties Investment Activity through June 30, 2025 | Investment Type | Stores | EXR Investment (million USD) | | :--- | :--- | :--- | | Wholly-Owned (Acquisitions & JV Buyouts) | 40 | $492.3 | | Joint Venture | 5 | $41.4 | | Total EXR Investment | 45 | $533.7 | - In April 2025, the company was repaid its $200.0 million convertible preferred stock investment in SmartStop Self Storage REIT, Inc[18] - Outstanding bridge loan balance was approximately $1.5 billion at quarter-end[20] - As of June 30, 2025, the company managed 1,749 third-party stores and 414 JV stores, totaling 2,163 managed properties[21] Balance Sheet and Capital Structure As of June 30, 2025, the company had $800.0 million available under its ATM program and repurchased $8.6 million of common stock in Q2. Total debt had a combined weighted average interest rate of 4.4% with a maturity of 4.3 years. The company maintained a strong fixed-rate debt profile, with 77.6% of total debt fixed (89.0% net of variable rate receivables) - During Q2 2025, the company repurchased 68,585 shares for $8.6 million at an average price of $125.60 per share[23] - The company had $700.0 million in outstanding issuances under its $1.0 billion commercial paper program[23] Debt Profile as of June 30, 2025 | Metric | Value | | :--- | :--- | | Fixed-Rate Debt to Total Debt | 77.6% | | Effective Fixed-Rate Debt to Total Debt | 89.0% | | Weighted Average Interest Rate (Combined) | 4.4% | | Weighted Average Maturity | 4.3 years | Dividends The company announced and paid a second quarter common stock dividend of $1.62 per share on June 30, 2025, to stockholders of record as of June 16, 2025 - A Q2 2025 dividend of $1.62 per common share was paid on June 30, 2025[25] 2025 Full-Year Outlook This section outlines the company's financial projections for the full year 2025, including guidance for Core FFO per share, same-store revenue, and NOI growth 2025 Guidance The company maintained its full-year 2025 guidance midpoints. The Core FFO per share range is projected to be $8.05 to $8.25. Same-store revenue growth is expected to be between -0.50% and 1.00%, with same-store NOI growth forecasted between -2.75% and 0.00%. The guidance reflects updated assumptions for interest income and expense, and equity in earnings from real estate ventures Full-Year 2025 Guidance (as of July 30, 2025) | Metric | Low | High | | :--- | :--- | :--- | | Core FFO per share | $8.05 | $8.25 | | Same-store revenue growth | (0.50)% | 1.00% | | Same-store expense growth | 4.00% | 5.00% | | Same-store NOI growth | (2.75)% | 0.00% | | Acquisitions | $600.0M | $600.0M | | Bridge loans outstanding (avg) | $1.475B | $1.475B | - The guidance for Core FFO was slightly narrowed to $8.05-$8.25 from the previous $8.00-$8.30, keeping the midpoint stable[26] - Guidance for Equity in earnings of real estate ventures was adjusted downward to $70.5 million-$71.5 million, reflecting the impact of JV buyouts[26] Appendix This section provides supplementary information, including detailed financial statements, definitions of key non-GAAP metrics, forward-looking statements, and conference call details Financial Statements This section contains the unaudited condensed consolidated financial statements for the periods ended June 30, 2025, including the Balance Sheets, Statement of Operations, and various reconciliations of GAAP metrics to non-GAAP measures like FFO and Same-Store NOI Condensed Consolidated Balance Sheets As of June 30, 2025, the company reported total assets of $29.37 billion, an increase from $28.85 billion at year-end 2024. Total liabilities increased to $14.69 billion from $13.99 billion over the same period, primarily due to a rise in unsecured senior notes Balance Sheet Summary (in billions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $29.37 | $28.85 | | Total Liabilities | $14.69 | $13.99 | | Total Stockholders' Equity | $13.79 | $13.95 | Consolidated Statement of Operations For the three months ended June 30, 2025, total revenues were $841.6 million, up from $810.7 million in the prior-year period. Net income attributable to common stockholders increased to $249.7 million ($1.18 per share) from $185.9 million ($0.88 per share) in Q2 2024 Statement of Operations Summary - Three Months Ended June 30 | Account (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $841.6 | $810.7 | | Income from Operations | $374.0 | $304.8 | | Net Income Attributable to Common Stockholders | $249.7 | $185.9 | Reconciliations This sub-section provides detailed reconciliations of GAAP Net Income to non-GAAP measures. It includes the reconciliation to Same-Store Net Operating Income for historical periods and for the full-year 2025 estimate, as well as the reconciliation of estimated GAAP EPS to estimated Core FFO per share for the full year - Provides a reconciliation of GAAP Net Income to Total Same-Store Net Operating Income for Q2 and H1 2025[40] - Includes a reconciliation of the estimated range for GAAP EPS to the estimated range for FFO and Core FFO per share for the full year 2025[41] - Details the reconciliation of estimated GAAP Net Income to estimated Same-Store NOI for the full year 2025[42] Definitions This section defines key non-GAAP metrics used throughout the report. It explains the calculation and significance of Funds from Operations (FFO) and Core FFO, as well as the criteria for the company's Same-Store pool Definition of FFO FFO is defined according to NAREIT standards as net income excluding gains/losses on property sales and real estate depreciation. The company also presents Core FFO, which further adjusts for non-core items and certain costs from the Life Storage Merger, to provide what management believes is a clearer indicator of operating performance - FFO is defined per NAREIT standards, excluding gains/losses on sales of operating stores and real estate-related depreciation and amortization[32] - Core FFO is a company-specific metric that further excludes non-core revenues/expenses and certain non-cash costs related to the Life Storage Merger[33] Definition of Same-Store The same-store pool consists of 1,829 wholly-owned and operated stores that were stabilized by the beginning of the earliest year presented. A store is considered stabilized after being open for three years or maintaining at least 80% average occupancy for one year. This metric is intended to show performance without the effects of acquisitions or non-stabilized assets - The same-store pool includes 1,829 stores that have been stabilized for at least three years or have held over 80% occupancy for a year[35] - No assets acquired from Life Storage have been included in the same-store pool[35] Forward-Looking Statements This section contains a standard safe harbor statement, warning that the report includes forward-looking statements regarding outlook, acquisitions, and future performance. It cautions that actual results may differ materially due to various risks and uncertainties, such as economic conditions, competition, and interest rate changes, as detailed in the company's Form 10-K and 10-Q filings - The report contains forward-looking statements concerning plans, outlook, and future performance, which are not guarantees of future results[30] - Key risks include adverse economic changes, competition, failure to close pending acquisitions, interest rate fluctuations, and reliance on information technologies[30][34] Conference Call Information The company will host a conference call to discuss these financial results on Thursday, July 31, 2025, at 1:00 p.m. Eastern Time. Details for pre-registering and accessing the live webcast are provided - A conference call is scheduled for 1:00 p.m. ET on July 31, 2025, to discuss the results[28]