Extra Storage on Acquisition Spree

Extra Space Storage Inc. (EXR - Snapshot Report), a real estate investment trust (REIT), has recently provided an update of its acquisition activities in fourth quarter 2011. The company purchased 28 self-storage properties for approximately $189.9 million during the quarter, bringing its tally for full year 2011 to 55 properties for an aggregate purchase price of $289.6 million.

With limited supply of new construction and growing demand for high-quality properties, REITs like Extra Storage are now heavily dependant on inorganic growth to fuel their expansion drive. The properties acquired by Extra Storage during the quarter are located in diverse markets, namely California, Florida, Illinois, Massachusetts, New Jersey, New York, and Rhode Island. However, the bulk of the property portfolio purchased by the company was located in the high barrier-to-entry market of California.

Headquartered in Salt Lake City, Utah, Extra Storage is the second largest owner and operator of self-storage properties in the U.S. As of December 31, 2011, the company owned and operated 882 self-storage properties spanning 59 million square feet of rentable space in 34 states and Washington, D.C.

Extra Space has been involved in the self-storage industry since its inception in 1977. Over the years, the company has focused on delivering attractive, convenient and secure facilities that are operated by professional managers. The company continuously seeks to change the association of self storage as a temporary holding place for rarely used things, to a desirable and customer-oriented facility that is perfectly suited for maintaining and accessing valued personal and business possessions.

We presently have an ‘Outperform’ recommendation for Extra Space, which currently has a Zacks #2 Rank translating into a short-term ‘Buy’ rating. However, we have a ‘Neutral’ recommendation and a Zacks #3 Rank (short-term ‘Hold’) for Public Storage (PSA - Analyst Report), one of the competitors of Extra Space.

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