Extra Space Storage Inc. EXR reported third-quarter 2024 core funds from operations (FFO) per share of $2.07, which beat the Zacks Consensus Estimate of $2.03. The figure increased by 2.5% year over year.

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The results reflected a rise in occupancy and better-than-anticipated revenues. However, lower same-store net operating income (NOI) and increased interest expenses during the quarter were a spoilsport.

Quarterly revenues of $824.8 million beat the Zacks Consensus Estimate of $821.4 million. The figure increased by 10.3% year over year.

Per Joe Margolis, the CEO of Extra Space Storage, "We continue to maintain strong occupancy during a time of year which is typically marked by occupancy declines. This occupancy both optimizes performance in the current market and positions the portfolio for future revenue growth."

Extra Space Storage Inc Price, Consensus and EPS Surprise

Extra Space Storage Inc price-consensus-eps-surprise-chart | Extra Space Storage Inc Quote

Extra Storage’s Q3 in Detail

Same-store revenues decreased 0.3% year over year to $424 million in the third quarter. The same-store square-foot occupancy expanded 60 basis points year over year to 94.3% as of Sept. 30, 2024. Our estimate for the same was 94.5%.

Same-store operating expenses rose 1.9% year over year to $109.8 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance and property taxes. Same-store net operating income (NOI) decreased by 1% year over year to $314.3 million.

In the third quarter, interest expenses increased by 16.2% to $142.9 million from $122.9 million a year ago. Our estimate was $137.1 million.

EXR’s Portfolio Activity

During the April-June quarter, Extra Space Storage acquired ten operating stores and one store at the completion of construction for a total cost of $163.9 million.

In association with a joint venture partner, the company acquired five properties and completed two developments for a total cost of $114.6 million, of which it invested $30.7 million.

Extra Space Storage added 63 stores (38 stores net) to its third-party management platform. As of Sept. 30, 2024, it managed 1,461 stores for third parties and 460 stores in unconsolidated JVs, with total stores under the management of 1,921.

EXR’s Balance Sheet

Extra Space Storage exited the third quarter with nearly $88.9 million of cash and cash equivalents, up from $77 million recorded as of June 30, 2024.

As of Sept. 30, 2024, EXR's percentage of fixed-rate debt to total debt was 78.3%. The combined weighted average interest rate was 4.5%, with a weighted average maturity of around 4.7 years.

2024 Guidance by Extra Storage

Extra Space Storage now projects its 2024 core FFO per share in the range of $8.00-$8.15 compared with the prior outlook of $7.95-$8.15. The Zacks Consensus Estimate of $8.08 lies within this range.

The full-year guidance is based on the assumption of negative 0.25% to 0.50% growth in same-store revenues and a 4.25%-5.25% increase in same-store expenses. Same-store NOI is projected in the band of negative 2.25%-negative 0.50%.

Extra Space Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Earnings Releases

We now look forward to the earnings releases of other REITs, such as AvalonBay Communities AVB and $Vornado Realty Trust(VNO-N)$ VNO, both of which are slated to report on Nov. 4.

The Zacks Consensus Estimate for AvalonBay’s third-quarter 2024 FFO per share stands at $2.71, indicating a 1.9% increase year over year. AVB currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Vornado Realty Trust’s third-quarter 2024 FFO per share is pegged at 51 cents, implying a 22.7% year-over-year decline. VNO currently carries a Zacks Rank #3.

Note: Anything related to earningspresented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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