SALT LAKE CITY, May 1, 2018 /PRNewswire/ -- Extra Space Storage Inc. (NYSE: EXR) (the "Company"), a leading owner and operator of self-storage facilities in the United States and a member of the S&P 500, announced operating results for the three months ended March 31, 2018.

Highlights for the three months ended March 31, 2018:

• Achieved net income attributable to common stockholders of $0.70 per diluted share, representing a 9.4% increase compared to the same period in 2017.
• Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of $1.08 per diluted share. FFO, excluding adjustments for non-cash interest, ("Core FFO") was $1.09 per diluted share, representing an 5.8% increase compared to the same period in 2017.
• Increased same-store revenue by 5.2% and same-store net operating income ("NOI") by 4.5% compared to the same period in 2017.
• Reported same-store occupancy of 92.1% as of March 31, 2018, compared to 92.0% as of March 31, 2017.
• Acquired three operating stores, one store at completion of construction (a "Certificate of Occupancy store" or "C of O store") and purchased our joint venture partner's interest in one store for a total investment of approximately $69.9 million.
• Acquired one Certificate of Occupancy store and completed one development with joint venture partners for a total cost of approximately $22.8 million, of which the Company invested $14.9 million.
• Added 41 properties to our third-party management platform, resulting in 456 third-party managed stores, plus an additional 216 stores in joint ventures, for a total of 672 managed stores as of March 31, 2018.
• Paid a quarterly dividend of $0.78 per share.

Joe Margolis, CEO of Extra Space Storage Inc., commented: "We are off to a solid start in 2018, with year-to-date performance progressing as planned.  We continue to have pricing power and maintained very high occupancy through the winter, which positions us well heading into our leasing season.  Our geographically diversified portfolio and best-in-class platform continue to produce consistent same-store revenue growth, which was 5.2% in the quarter.  External growth has also been steady, with the addition of 41 third-party managed stores in the quarter, and $316.5 million invested in acquisitions year to date."

FFO Per Share:

The following table outlines the Company's FFO and Core FFO for the three months ended March 31, 2018 and 2017. The table also provides a reconciliation to GAAP net income attributable to common stockholders and earnings per diluted share for each period presented (amounts shown in thousands, except share and per share data¹ — unaudited):

Operating Results and Same-Store Performance:

The following table outlines the Company's same-store performance for the three months ended March 31, 2018 and 2017 (amounts shown in thousands, except store count data—unaudited)¹:

The same-store pool was updated on January 1, 2018 increasing from 701 to 787 stores.  Same-store revenues for the three months ended March 31, 2018 increased due to higher rental rates for both new and existing customers. Expenses were higher for the three months ended March 31, 2018, primarily due to increases in property taxes, payroll, snow removal and utilities.

Major markets with revenue growth above the Company's portfolio average for the three months ended March 31, 2018 included Atlanta, Indianapolis, Las Vegas, Los Angeles and Sacramento. Major markets performing below the Company's portfolio average included Charleston, Dallas, Houston, Norfolk/Virginia Beach and West Palm Beach/Boca Raton.

Investment and Third-Party Management Activity:

The following table outlines the Company's acquisitions and developments that are closed, completed or under agreement (dollars in thousands – unaudited):

The projected developments and acquisitions under agreement described above are subject to customary closing conditions and no assurance can be provided that these developments and acquisitions will be completed on the terms described, or at all.

Property Management:

As of March 31, 2018, the Company managed 456 stores for third-party owners.  With an additional 216 stores owned and operated in joint ventures, the Company had a total of 672 stores under management.  The Company continues to be the largest self-storage management company in the United States.

Balance Sheet:

During the three months ended March 31, 2018, the Company did not sell any shares of common stock using its "at the market" ("ATM") equity program.  As of March 31, 2018, the Company had $349.4 million available for issuance under the ATM program.

As of March 31, 2018, the Company's percentage of fixed-rate debt to total debt was 74.4%. The weighted average interest rates of the Company's fixed and variable-rate debt were 3.3% and 3.4%, respectively. The combined weighted average interest rate was 3.4% with a weighted average maturity of approximately 4.5 years. 

Dividends:

On March 29, 2018, the Company paid a first quarter common stock dividend of $0.78 per share to stockholders of record at the close of business on March 15, 2018.

Outlook:

The following table outlines the Company's FFO estimates and annual assumptions for the year ending December 31, 2018¹:

FFO estimates for the year are fully diluted for an estimated average number of shares and 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.

Supplemental Financial Information:

Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Under the "Company Info" navigation menu on the home page, click on "Investor Relations," then under the "Financials & Stock Info" navigation menu click on "Quarterly Results." This supplemental information provides additional detail on items that include store occupancy and financial performance by portfolio and market, debt maturity schedules and performance of lease-up assets.

Conference Call:

The Company will host a conference call at 1:00 p.m. Eastern Time on Wednesday, May 2, 2018, to discuss its financial results. To participate in the conference call, please dial 855-791-2026 or 631-485-4899 for international participants; conference ID: 2887645. 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 May 2, 2018, until 4:00 p.m. Eastern Time on May 7, 2018. The replay dial-in numbers are 855-859-2056 or 404-537-3406 for international callers; conference ID: 2887645.

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 the benefits of store acquisitions, developments, favorable market conditions, our outlook and estimates for the year and other statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and 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:

• adverse changes in general economic conditions, the real estate industry and the markets in which we operate;
• failure to close pending acquisitions and developments on expected terms, or at all;
• the effect of competition from new and existing stores or other storage alternatives, which could cause rents and occupancy rates to decline;
• 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 real estate investment trusts ("REITs"), tenant reinsurance and other aspects of our business, which could adversely affect our results;
• 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;
• increases in interest rates;
• reductions in asset valuations and related impairment charges;
• our lack of sole decision-making authority with respect to our joint venture investments;
• the effect of recent changes to U.S. tax laws;
• the failure to maintain our REIT status for U.S. federal income tax purposes; and
• economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.

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.

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 income. Net income assumes 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 U.S. generally accepted accounting principles ("GAAP"), excluding gains or losses on sales of operating stores and impairment write downs of depreciable real estate assets, plus depreciation and amortization related to real estate 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. FFO should not be considered a replacement of net income computed in accordance with GAAP.

For informational purposes, the Company also presents Core FFO, which in previous quarters was referred to as FFO as adjusted.  There have been no definitional changes between FFO as adjusted and Core FFO.  Core FFO excludes revenues and expenses not core to our operations and non-cash interest.  Although the Company's calculation of Core FFO 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 revenues and expenses not core to our operations and non-cash interest charges, stockholders and potential investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. Core FFO by the Company should not be considered a replacement of the NAREIT definition of FFO. The 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:

The Company's same-store pool for the periods presented consists of 787 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented.  The Company considers a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80.0% or more for one calendar year. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to occupancy, rental revenue (growth), operating expenses (growth), net operating income (growth), etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments.  Same-store results should not be used as a basis for future same-store performance or for the performance of the Company's stores as a whole.

About Extra Space Storage Inc.:

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500. As of March 31, 2018, the Company owned and/or operated 1,523 self-storage stores in 39 states, Washington, D.C. and Puerto Rico. The Company's stores comprise approximately 1,050,000 units and approximately 115 million square feet of rentable space. The Company offers customers a wide selection of conveniently located and secure storage units across the country, including boat storage, RV storage and business storage. The Company is the second largest owner and/or operator of self-storage stores in the United States and is the largest self-storage management company in the United States.

 

  

 

 

 

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SOURCE Extra Space Storage Inc.

Jeff Norman, Extra Space Storage Inc., (801) 365-1759