Extra Space Storage(US:EXR)2023-05-03 20:17Financial Data and Key Metrics Changes - The company reported same-store revenue growth of 7.4% in Q1 2023, with same-store NOI growth at 8.7%, slightly ahead of internal projections [4][28] - Property net operating income was modestly ahead of expectations, contributing to a beat in internal FFO projections by $0.04 [13][28] - The company completed a $500 million bond offering with a coupon of 5.7%, reducing revolver balances to less than $100 million and leaving over $1 billion in revolving capacity [13] Business Line Data and Key Metrics Changes - The company added 44 stores to its third-party management platform and acquired six stores primarily through joint ventures [9] - The company originated $53 million in bridge loans, although bridge loan volumes were slower than expected in Q1 [9][64] Market Data and Key Metrics Changes - Occupancy at the end of April increased to 93.8%, showing strong rental activity moving into the leasing season [33] - Year-over-year rates improved from negative 14% in January to negative 3% in March, but dropped to negative 7% in April, contributing to higher rental volumes [28][78] Company Strategy and Development Direction - The company is focused on external growth, including a strategic merger with Life Storage, expected to generate at least $100 million in annual run-rate synergies [9][26] - The merger is anticipated to enhance the company's scale and operational efficiencies, with a focus on leveraging data for improved property performance [10][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the storage asset class, expecting healthy, albeit moderating, year-over-year growth [31] - The company acknowledged headwinds from investments in non-stabilized properties and higher interest rates but believes these will lead to stronger long-term growth rates [15] Other Important Information - The company reported lower than expected same-store expenses due to normalizing payroll growth and savings from repairs and maintenance [4] - Management noted that property taxes were a benefit in the quarter due to successful appeals from prior periods [42][90] Q&A Session Summary Question: What is the current occupancy rate and rental demand? - Occupancy at the end of April was 93.8%, with good rental activity observed during the month [33] Question: What are the expected occupancy peaks during the rental season? - Guidance assumes a slight negative delta in occupancy compared to last year, with expectations of occupancy peaking in June and July [34] Question: Can you elaborate on the bridge lending program and its recent performance? - The bridge lending program experienced slower volumes due to seasonality and some deals falling through, but the company expects to pick up in the second half of the year [64][69] Question: How is the company managing expense pressures? - Payroll expenses were at 3.9% growth in Q1, expected to moderate throughout the year, while property and casualty insurance costs are anticipated to see a significant increase [59][61] Question: What are the long-term customer retention rates? - Customers with over two years of tenure are now at approximately 47%, while those between 12 to 18 months have decreased slightly [92]