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Why Is It Apt to Buy Extra Space Storage (EXR) Right Now?
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Extra Space Storage Inc. (EXR - Free Report) has earned a solid recognition in the self-storage industry. The company has been making efforts to grow its business and achieve geographical diversity through accretive acquisitions, mutually beneficial joint-venture partnerships and third-party management services. It enjoys a solid presence in key cities and opts for strategic joint ventures to drive long-term profitability.
Extra Space Storage significantly expanded its business in recent years, growing its branded-store count from 882 in 2011 to 2,096 at the end of 2021 in 41 states and Washington D.C. Also, the total stores managed for third-party owners increased from 185 to 828 during the same period. Along with acquisitions, the company is making strategic investments through other channels in the storage sector, including preferred equity investments and bridge loan programs.
These efforts have helped this Salt Lake City, UT-based self-storage REIT emerge as the second-largest self-storage owner and/or operator and the largest self-storage management company in the United States. With its focus on primary and secondary markets, EXR is well-poised to capitalize on favorable trends.
The self-storage industry continues to benefit from favorable demographic changes. Specifically, the migration and downsizing trend and an increase in the number of people renting homes have escalated the needs of consumers to rent space at a storage facility to park their possessions. Demand for self-storage spaces has shot up amid work from home, study from home, elevated home sales, and remodeling and the in-and-out migration of metropolitan markets.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. This REIT exited 2021 with $71.1 million of cash and cash equivalents. The company currently holds a BBB/Stable rating from Standard and Poor's and a Baa2/Stable rating from Moody's Investors Service, rendering the company favorable access to the debt market. With solid balance sheet strength, the company is well-poised to capitalize on external growth opportunities, which will likely increase.
Extra Space Storage’ Return on Equity is 24.72% compared with the industry’s average of 3.38%. This reflects that the company reinvests more efficiently compared with the industry.
However, Extra Space Storage operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in many markets. This high supply is likely to fuel competition. However, with a solid scale, decent balance sheet strength and technological advantage, EXR remains well-poised to compete for tenants and property acquisitions.
Moreover, solid dividend payouts are arguably the biggest enticements for REIT investors and Extra Space Storage remains committed to increasing shareholders’ wealth. In February 2022, Extra Space Storage announced a first-quarter 2022 dividend of $1.50 per share on the common stock, which marked a 20% increase in the prior-quarter dividend and a 50% hike over the first-quarter 2021 dividend. Its dividend reported a five-year increase of 92.3%. Such shareholder-friendly efforts are encouraging.
Also, shares of Zacks Rank #2 (Buy) EXR have outperformed the industry in the past six months. The company’s shares have rallied 24.7%, while the industry has increased 9.7%.
Image Source: Zacks Investment Research
Other Key Picks
Some other key picks from the REIT sector include Prologis, Inc. (PLD - Free Report) , Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Public Storage (PSA - Free Report) .
The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past week to $5.06.
The Zacks Consensus Estimate for Alexandria Real Estate Equities’ 2022 FFO per share has moved marginally north to $8.41 over the past month.
Currently, Alexandria Real Estate Equities carries a Zacks Rank of 2. ARE's long-term growth rate is projected at 7.70%.
The Zacks Consensus Estimate for Public Storage’s 2022 FFO per share has moved marginally north to $15.51 over the past week.
Currently, Public Storage carries a Zacks Rank of 2. PSA's long-term growth rate is projected at 6.1%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Why Is It Apt to Buy Extra Space Storage (EXR) Right Now?
Extra Space Storage Inc. (EXR - Free Report) has earned a solid recognition in the self-storage industry. The company has been making efforts to grow its business and achieve geographical diversity through accretive acquisitions, mutually beneficial joint-venture partnerships and third-party management services. It enjoys a solid presence in key cities and opts for strategic joint ventures to drive long-term profitability.
Extra Space Storage significantly expanded its business in recent years, growing its branded-store count from 882 in 2011 to 2,096 at the end of 2021 in 41 states and Washington D.C. Also, the total stores managed for third-party owners increased from 185 to 828 during the same period. Along with acquisitions, the company is making strategic investments through other channels in the storage sector, including preferred equity investments and bridge loan programs.
These efforts have helped this Salt Lake City, UT-based self-storage REIT emerge as the second-largest self-storage owner and/or operator and the largest self-storage management company in the United States. With its focus on primary and secondary markets, EXR is well-poised to capitalize on favorable trends.
The self-storage industry continues to benefit from favorable demographic changes. Specifically, the migration and downsizing trend and an increase in the number of people renting homes have escalated the needs of consumers to rent space at a storage facility to park their possessions. Demand for self-storage spaces has shot up amid work from home, study from home, elevated home sales, and remodeling and the in-and-out migration of metropolitan markets.
Extra Space Storage is focused on improving its balance sheet, reducing secured debt and increasing the size of its unencumbered pool. This REIT exited 2021 with $71.1 million of cash and cash equivalents. The company currently holds a BBB/Stable rating from Standard and Poor's and a Baa2/Stable rating from Moody's Investors Service, rendering the company favorable access to the debt market. With solid balance sheet strength, the company is well-poised to capitalize on external growth opportunities, which will likely increase.
Extra Space Storage’ Return on Equity is 24.72% compared with the industry’s average of 3.38%. This reflects that the company reinvests more efficiently compared with the industry.
However, Extra Space Storage operates in a highly fragmented market in the United States, with intense competition from numerous private, regional and local operators. In addition, there is a development boom of self-storage units in many markets. This high supply is likely to fuel competition. However, with a solid scale, decent balance sheet strength and technological advantage, EXR remains well-poised to compete for tenants and property acquisitions.
Moreover, solid dividend payouts are arguably the biggest enticements for REIT investors and Extra Space Storage remains committed to increasing shareholders’ wealth. In February 2022, Extra Space Storage announced a first-quarter 2022 dividend of $1.50 per share on the common stock, which marked a 20% increase in the prior-quarter dividend and a 50% hike over the first-quarter 2021 dividend. Its dividend reported a five-year increase of 92.3%. Such shareholder-friendly efforts are encouraging.
Also, shares of Zacks Rank #2 (Buy) EXR have outperformed the industry in the past six months. The company’s shares have rallied 24.7%, while the industry has increased 9.7%.
Image Source: Zacks Investment Research
Other Key Picks
Some other key picks from the REIT sector include Prologis, Inc. (PLD - Free Report) , Alexandria Real Estate Equities, Inc. (ARE - Free Report) and Public Storage (PSA - Free Report) .
Prologis holds a Zacks Rank of 2 at present. Prologis’ 2022 revenues are expected to increase 8.8% year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past week to $5.06.
The Zacks Consensus Estimate for Alexandria Real Estate Equities’ 2022 FFO per share has moved marginally north to $8.41 over the past month.
Currently, Alexandria Real Estate Equities carries a Zacks Rank of 2. ARE's long-term growth rate is projected at 7.70%.
The Zacks Consensus Estimate for Public Storage’s 2022 FFO per share has moved marginally north to $15.51 over the past week.
Currently, Public Storage carries a Zacks Rank of 2. PSA's long-term growth rate is projected at 6.1%.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.