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Extra Space Storage Inc. Reports First Quarter 2011 Results
Achieves $0.25 FFO per Share; Same-Store NOI Increases 5.8%; Announces $171.4 Million in Acquisitions Purchased or Under Contract; Raises 2011 FFO Guidance

SALT LAKE CITY, UT, Apr 27, 2011 (MARKETWIRE via COMTEX) --

Extra Space Storage Inc. (NYSE: EXR), a leading owner and operator of self-storage properties in the United States, announced operating results for the three months ended March 31, 2011.

Highlights for the Three Months Ended March 31, 2011:

--  Achieved funds from operations ("FFO") of $0.25 per diluted share
    including development dilution of $0.02 per share resulting in 31.6%
    year-over-year growth for the quarter.


--  Grew same-store occupancy by 290 basis points to 85.4%, compared to
    82.5% during the same period in 2010.


--  Increased same-store revenue and net operating income ("NOI") by 4.2%
    and 5.8%, respectively, as compared to the same period in 2010.
    Same-store revenue and NOI include tenant reinsurance income and
    expenses.


--  Completed four development properties for a total cost of $34.4
    million.


--  Added seven properties to the Company's third-party management
    platform.


--  Paid a quarterly dividend of $0.14 per share.

Spencer F. Kirk, Chairman and CEO of Extra Space Storage Inc., commented: "We are encouraged by another solid quarter of performance as we exceeded our guidance estimates and forecast for same-store growth. Stable rental activity, combined with lower customer vacates, has given our same-store properties their highest seasonal occupancy level since 2008. Extra Space has a multi-faceted growth platform for driving earnings growth through strong same-store performance, significant acquisition activities, a legacy development pipeline, an expanding third-party management business and a significant tenant insurance business. These components will combine to give us double-digit earnings growth in 2011."

FFO Per Share:

The following table outlines the Company's FFO and FFO as adjusted for the three months ended March 31, 2011 and 2010. The table also provides a reconciliation to GAAP net income per diluted share for each period presented (amounts shown in thousands, except share data - unaudited):

                               For the Three Months Ended March 31,
                        --------------------------------------------------
                                  2011                      2010
                        ------------------------  ------------------------
                                     (per share)               (per share)
Net income attributable
 to common stockholders $     8,301         0.09  $     3,568         0.04
Adjustments:
  Real estate
   depreciation              12,365         0.13       11,659         0.12
  Amortization of
   intangibles                  308            -          183            -
  Joint venture real
   estate depreciation
   and amortization           2,075         0.02        1,754         0.02
  Joint venture loss on
   sale of properties            36            -            -            -
  Distributions paid on
   Preferred Operating
   Partnership units         (1,438)       (0.01)      (1,438)       (0.01)
  Income allocated to
   Operating Partnership
   noncontrolling
   interests                  1,844         0.02        1,628         0.02
                        -----------  -----------  -----------  -----------
Funds from operations   $    23,491  $      0.25  $    17,354  $      0.19
                        ===========  ===========  ===========  ===========
Adjustments:
  Non-cash interest
   expense related to
   amortization of
   discount on
   exchangeable senior
   notes                        428         0.01          404            -
  Unrecovered
   development and
   acquisition costs            249            -           70            -
                        -----------  -----------  -----------  -----------
Funds from operations -
 adjusted               $    24,168  $      0.26  $    17,828  $      0.19
                        ===========  ===========  ===========  ===========
Weighted average number
 of shares - diluted     92,812,067                91,666,076

FFO and FFO as adjusted include the dilutive impact from lease-up development properties of $0.02 per diluted share for the three months ended March 31, 2011 compared to $0.03 for the same period in 2010.

Operating Results and Same-Store Property Performance:

The Company's major markets with revenue growth above the portfolio average for the three months ended March 31, 2011, were Boston, New York / New Jersey, Philadelphia and Washington, D.C. Markets performing below the Company's portfolio average included Atlanta, Las Vegas and San Bernardino / Riverside.

For the three months ended March 31, 2011, revenue at the Company's 253 same-store properties increased by 4.2% compared to the three months ended March 31, 2010. Same-store expenses increased by 1.2%, resulting in a 5.8% improvement in same-store NOI compared to the three months ended March 31, 2010. The Company realized a 290 basis point improvement in same-store occupancy finishing the quarter at 85.4% compared to 82.5% as of March 31, 2010.

Balance Sheet:

During the quarter, the Company obtained an $82.2 million, ten-year CMBS loan from Bank of America at a fixed-rate of 5.8%. The Company also executed a term sheet for a $50.0 million line of credit to be secured by 13 unencumbered assets. The Company anticipates closing the line of credit during the second quarter of 2011. Once completed, the Company expects to have five separate lines of credit with a total capacity of $285.0 million. This line of credit is subject to the negotiation and execution of definitive loan documents and other customary conditions, and no assurance can be provided that it will be completed on the terms described, or at all. The Company will have 31 unencumbered properties remaining on which to place debt after the completion of the latest line of credit.

The Company's percentage of fixed-rate debt to total debt was 72.4% as of March 31, 2011. The weighted average interest rate on the Company's debt was 5.5% for fixed-rate debt and 3.2% for variable-rate debt. The combined weighted average interest rate was 4.9% with a weighted average maturity of approximately six years.

Acquisition and Third-Party Management Activity:

Subsequent to the end of the quarter, the Company purchased four properties for a total of $18.0 million. These properties are located in California, Tennessee, Texas and Utah. The Company has also placed under contract 26 additional properties located in California, Colorado, Maryland, New Jersey and Virginia for approximately $153.4 million. These transactions are subject to due diligence and other customary closing conditions and are currently expected to close by the end of the third quarter of 2011. No assurance can be provided that any of these acquisitions will be completed on the terms described, or at all.

During the quarter, seven properties were added to the Company's third-party management program. As of March 31, 2011, there are a total of 167 properties under management. The Company is the largest self-storage management company in the United States.

Development Projects:

During the three months ended March 31, 2011, four development projects were completed in Arizona, California, Florida and Maryland for a total cost of $34.4 million. Two projects remain in the Company's development pipeline, with an estimated $5.1 million of funding required for completion. The Company expects to complete these development projects by the end of the year.

Dividends:

The Company paid a first quarter dividend of $0.14 per share on the common stock of the Company on March 31, 2011 to stockholders of record at the close of business on March 15, 2011.

Outlook:

The Company currently estimates that FFO per diluted share for the year ending December 31, 2011, will be between $1.06 and $1.11 as compared to the prior guidance range of $1.01 to $1.07. For the second quarter 2011, the Company estimates that FFO per diluted share will be between $0.25 and $0.26. FFO estimates for the year are fully diluted for an estimated average number of shares and Operating Partnership units ("OP units") outstanding during the year. The Company's estimates are forward-looking and based on management's view of current and future market conditions.

The Company's actual results may differ materially from these estimates, which include the following annual assumptions:

--  Same-store property revenue growth including tenant reinsurance
    between 2.5% and 3.5%.


--  Same-store property expense increase including tenant reinsurance
    between 1.0% and 2.5%.


--  Same-store property NOI growth including tenant reinsurance between
    2.5% and 5.0%.


--  Net tenant reinsurance income between $21.5 million and $22.5 million.



--  General and administrative expenses between $48.0 million and $50.0
    million, including non-cash compensation expense of approximately $5.0
    million.


--  Average monthly cash balance of approximately $20.0 million.


--  Equity in earnings of real estate ventures between $7.5 million and
    $8.5 million.


--  Acquisition activity of approximately $200.0 million.


--  Interest expense between $68.0 million and $70.0 million.


--  Weighted average LIBOR of 0.5%.


--  Weighted average number of outstanding shares, including OP units, of
    approximately 93.3 million.


--  Dilution associated with the Company's development program between
    $7.5 million and $8.0 million.


--  Taxes associated with the Company's taxable Real Estate Investment
    Trust ("REIT") subsidiary between $0.5 million and $1.5 million,
    inclusive of solar tax credits.


--  Unrecovered development and acquisition costs between $1.5 million to
    $2.0 million


--  Non-cash interest charges associated with exchangeable senior notes of
    approximately $1.8 million.

Supplemental Financial Information:

Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Click on the "Investor Relations" link at the bottom of the home page, then on "SEC Filings," then on "Documents" on the left of the page and the document entitled "Financial Supplement." This supplemental information provides additional detail on items that include property occupancy and financial performance by portfolio and market, debt maturity schedules and performance and progress of property development.

Conference Call:

The Company will host a conference call at 12:00 p.m. Eastern Time on Thursday, April 28, 2011 to discuss its financial results. To participate in the conference call, please dial 866-383-8119 or 617-597-5344 for international participants, Conference ID: 22612075. The conference call will also be available on the Company's website at www.extraspace.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will be available for 30 days on the Company's website in the Investor Relations section.

A replay of the call will also be available by telephone, from 4:00 p.m. Eastern Time on April 28, 2011, until midnight Eastern Time on May 28, 2011. The replay dial-in numbers are 888-286-8010 or 617-801-6888 for international callers, Conference ID: 37871029.

Forward-Looking Statements:

Certain information set forth in this release contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, developments and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes," "estimates," "expects," "may," "will," "should," "anticipates," or "intends," or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Any forward-looking statements should be considered in light of the risks referenced in the "Risk Factors" section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:

--  changes in general economic conditions and in the markets in which we
    operate;


--  the effect of competition from new and existing self-storage
    facilities or other storage alternatives, which could cause rents and
    occupancy rates to decline;


--  difficulties in our ability to evaluate, finance, complete and
    integrate acquisitions and developments successfully and to lease up
    those properties, which could adversely affect our profitability;


--  potential liability for uninsured losses and environmental
    contamination;


--  the impact of the regulatory environment as well as national, state,
    and local laws and regulations including, without limitation, those
    governing REITs, which could increase our expenses and reduce our cash
    available for distribution;


--  disruptions in credit and financial markets and resulting difficulties
    in raising capital or obtaining credit at reasonable rates or at all,
    which could impede our ability to grow;


--  delays in the development and construction process, which could
    adversely affect our profitability;


--  economic uncertainty due to the impact of war or terrorism, which
    could adversely affect our business plan; and


--  our ability to attract and retain qualified personnel and management
    members.

All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

Notes to Financial Information:

The Company operates as a self-managed and self-administered REIT. Readers are encouraged to find further detail regarding Extra Space Storage's organizational structure in its most recent Annual Report on Form 10-K as filed with the SEC.

Definition of FFO:

FFO provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income and cash flows, for an understanding of the Company's operating results. The Company believes FFO is a meaningful disclosure as a supplement to net earnings. Net earnings assume that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and the Company believes FFO more accurately reflects the value of the Company's real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with accounting principles generally accepted in the United States ("GAAP"), excluding gains or losses on sales of operating properties, plus depreciation and amortization and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. The Company believes that to further understand the Company's performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements.

For informational purposes, the Company provides FFO as adjusted for the exclusion of gains from early extinguishment of debt, non-recurring write-downs, unrecovered acquisition and development costs and non-cash interest charges related to ASC 470-20 (formerly FASB Staff Position No. APB 14-1). Although the Company's calculation of FFO as adjusted differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, the Company believes it provides a meaningful supplemental measure of operating performance. The Company believes that by excluding gains from early extinguishment of debt, non-recurring write-downs, the costs related to acquiring properties and non-cash charges related to ASC 470-20 (formerly FASB Staff Position No. APB 14-1), stockholders and potential investors are presented with an indicator of its operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. FFO as adjusted by the Company should not be considered a replacement of the NAREIT definition of FFO or used as an alternative to net income as an indication of the Company's performance, as an alternative to net cash flow from operating activities, as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.

The Company's computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of the Company's performance, as an alternative to net cash flow from operating activities, as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.

Definition of Same-Store Properties:

The Company's same-store properties for the three months ended March 31, 2011 consisted of 253 properties that were wholly-owned and operated and that were stabilized by the first day of each period. The Company considers a property to be stabilized once it has been open three years or has sustained average square foot occupancy of 80.0% or more for one calendar year. Same-store results provide information relating to property operations without the effects of acquisitions or completed developments and should not be used as a basis for future same-store performance or for the performance of the Company's properties as a whole.

About Extra Space Storage Inc.:

Extra Space Storage, headquartered in Salt Lake City, Utah, is a fully integrated, self-administered and self-managed REIT that owns and/or operates 829 self-storage properties in 34 states and Washington, D.C. The Company's properties comprise approximately 550,000 units and approximately 60 million square feet of rentable space, offering customers a wide selection of conveniently located and secure storage solutions across the country, including boat storage, RV storage and business storage. The Company is the second largest owner and/or operator of self-storage properties in the United States and is the largest self-storage management company in the United States.

Same-Store Property Performance for the Three Months Ended March 31, 2011 -- Unaudited

(In thousands, except occupancy and property counts.)

                                         For the Three Months
                                            Ended March 31,
                                        ----------------------    Percent
                                           2011        2010       Change
                                        ----------  ----------  ----------
Same-store rental and tenant
 reinsurance revenues                   $   58,168  $   55,843         4.2%
Same-store operating and tenant
 reinsurance expenses                       20,517      20,267         1.2%
                                        ----------  ----------  ----------
Same-store net operating income         $   37,651  $   35,576         5.8%
Non same-store rental and tenant
 reinsurance revenues                   $   10,346  $    6,192        67.1%
Non same-store operating and tenant
 reinsurance expenses                   $    4,442  $    2,912        52.5%
Total rental and tenant reinsurance
 revenues                               $   68,514  $   62,035        10.4%
Total operating and tenant reinsurance
 expenses                               $   24,959  $   23,179         7.7%
Same-store square foot occupancy as of
 quarter end                                  85.4%       82.5%
Properties included in same-store              253         253

Reconciliation of the Range of Estimated Fully Diluted Net Income per Share to Estimated Fully Diluted FFO and Fully Diluted FFO per Share -- Adjusted

                                       For the Three       For the Year
                                       Months Ending          Ending
                                       June 30, 2011     December 31, 2011
                                    ------------------  ------------------
                                     Low End  High End   Low End  High End
                                    --------  --------  --------  --------
Net income attributable to common
 stockholders per diluted share     $   0.10  $   0.11  $   0.40  $   0.45
  Income allocated to
   noncontrolling interest -
   Preferred Operating
   Partnership and Operating
   Partnership                          0.02      0.02      0.09      0.09
  Fixed component of income
   allocated to non-controlling
   interest - Preferred Operating
   Partnership                         (0.02)    (0.02)    (0.06)    (0.06)
                                    --------  --------  --------  --------
Net income for diluted computations     0.10      0.11      0.43      0.48
Adjustments:
  Real estate depreciation              0.13      0.13      0.53      0.53
  Amortization of intangibles              -         -      0.01      0.01
  Joint venture real estate
   depreciation and amortization        0.02      0.02      0.09      0.09
  Joint venture loss on sale of
   properties                              -         -         -         -
                                    --------  --------  --------  --------
Diluted funds from operations per
 share                              $   0.25  $   0.26  $   1.06  $   1.11
                                    ========  ========  ========  ========

Extra Space Storage Inc.
Consolidated Balance Sheets
(In thousands, except share data)
                                                March 31,    December 31,
                                                  2011           2010
                                              -------------  -------------
                                               (Unaudited)
Assets:
Real estate assets:
  Net operating real estate assets            $   1,958,245  $   1,935,319
  Real estate under development                      13,168         37,083
                                              -------------  -------------
    Net real estate assets                        1,971,413      1,972,402
Investments in real estate ventures                 141,525        140,560
Cash and cash equivalents                            42,555         46,750
Restricted cash                                      40,527         30,498
Receivables from related parties and
 affiliated real estate joint ventures                9,334         10,061
Other assets, net                                    47,763         48,197
                                              -------------  -------------
      Total assets                            $   2,253,117  $   2,248,468
                                              =============  =============
Liabilities, Noncontrolling Interests
 and Equity:
Notes payable                                 $     915,533  $     871,403
Notes payable to trusts                             119,590        119,590
Exchangeable senior notes                            87,663         87,663
Discount on exchangeable senior notes                (1,777)        (2,205)
Lines of credit                                     125,000        170,467
Accounts payable and accrued expenses                34,333         34,210
Other liabilities                                    25,632         28,269
                                              -------------  -------------
      Total liabilities                           1,305,974      1,309,397
                                              -------------  -------------
Commitments and contingencies
Equity:
  Extra Space Storage Inc. stockholders'
   equity:
  Preferred stock, $0.01 par value, 50,000,000
   shares authorized, no shares issued or
   outstanding                                            -              -
  Common stock, $0.01 par value, 300,000,000
   shares authorized, 88,546,913 and
   87,587,322 shares issued and outstanding at
   March 31, 2011 and December 31, 2010,
   respectively                                         885            876
  Paid-in capital                                 1,161,184      1,148,820
  Accumulated other comprehensive deficit            (4,678)        (5,787)
  Accumulated deficit                              (266,588)      (262,508)
                                              -------------  -------------
    Total Extra Space Storage Inc.
     stockholders' equity                           890,803        881,401
  Noncontrolling interest represented by
   Preferred Operating Partnership units, net
   of $100,000 note receivable                       29,701         29,733
  Noncontrolling interests in Operating
   Partnership                                       25,510         26,803
  Other noncontrolling interests                      1,129          1,134
                                              -------------  -------------
      Total noncontrolling interests and equity     947,143        939,071
                                              -------------  -------------
Total liabilities, noncontrolling
       interests and equity                   $   2,253,117  $   2,248,468
                                              =============  =============

Consolidated Statement of Operations for the Three Months Ended March 31, 2011 and 2010 -- Unaudited

(In thousands, except share and per share data)

                                               For the Three Months Ended
                                                        March 31,
                                              ----------------------------
                                                  2011           2010
                                              -------------  -------------
Revenues:
  Property rental                             $      61,490  $      56,143
  Management and franchise fees                       5,967          5,552
  Tenant reinsurance                                  7,024          5,892
                                              -------------  -------------
    Total revenues                                   74,481         67,587
                                              -------------  -------------
Expenses:
  Property operations                                23,344         21,956
  Tenant reinsurance                                  1,615          1,223
  Unrecovered development and acquisition
   costs                                                249             70
  General and administrative                         11,658         11,056
  Depreciation and amortization                      13,585         12,419
                                              -------------  -------------
    Total expenses                                   50,451         46,724
                                              -------------  -------------
Income from operations                               24,030         20,863
Interest expense                                    (16,414)       (17,274)
Non-cash interest expense related to
 amortization of discount on exchangeable
 senior notes                                          (428)          (404)
Interest income                                         182            325
Interest income on note receivable from
 Preferred Operating Partnership unit holder          1,213          1,213
                                              -------------  -------------
Income before equity in earnings of real
 estate ventures and income tax expense               8,583          4,723
Equity in earnings of real estate ventures            1,811          1,501
Income tax expense                                     (254)        (1,045)
                                              -------------  -------------
Net income                                           10,140          5,179
Net income allocated to Preferred Operating
 Partnership noncontrolling interests                (1,532)        (1,479)
Net income allocated to Operating Partnership
 and other noncontrolling interests                    (307)          (132)
                                              -------------  -------------
Net income attributable to common
 stockholders                                 $       8,301  $       3,568
                                              =============  =============
Net income per common share
  Basic                                       $        0.09  $        0.04
  Diluted                                     $        0.09  $        0.04
Weighted average number of shares
  Basic                                          88,045,951     86,873,472
  Diluted                                        92,812,067     91,666,076
Cash dividends paid per common share          $        0.14  $        0.10

For Information:

Clint Halverson
Extra Space Storage Inc.
(801) 365-4597


SOURCE: Extra Space Storage Inc.