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Extra Space Storage's (EXR) Q1 FFO Beats, Occupancy Falls

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Extra Space Storage Inc. (EXR - Free Report) reported first-quarter 2022 core funds from operations (FFO) per share of $2.01, beating the Zacks Consensus Estimate of $1.86. The figure also came in 34% higher than the prior-year quarter’s $1.50.

The results reflect strong top-line growth backed by higher average rates for new and existing customers and higher late fees, partly muted by lower occupancy. The company also raised its 2022 guidance.

Quarterly revenues were $443.6 million, up 23.6% year over year. The top line also exceeded the Zacks Consensus Estimate of $432 million.

Quarter in Detail

Same-store rental revenues increased 21.7% year over year to $341.9 million in the first quarter. This uptick resulted from higher average rates for new and existing customers and higher late fees partly muted by lower occupancy.

The same-store square-foot occupancy contracted 80 basis points (bps) year over year to 94.5% as of Mar 31, 2022.

Same-store expenses flared up 6.8% year over year to $84.9 million, reflecting an increase in payroll, credit card processing fees, repairs and maintenance (snow removal) and insurance, partially offset by lower marketing expenses.   

Consequently, same-store net operating income (NOI) increased 27.6% year over year to $257 million.

Portfolio Activity

During the January-March period, Extra Space Storage acquired 11 operating stores and three stores at the completion of construction for a total cost of roughly $225 million. In association with joint-venture (JV) partners, EXR acquired two operating stores for a total cost of $42.5 million, of which the company invested $4.3 million.

Extra Space Storage added 37 stores (gross) to its third-party management platform. As of Mar 31, 2022, it managed 847 stores for third parties and 288 stores in JVs, with total stores under the management of 1,135.

The company did not dispose of any properties during the first quarter. It has two stores under agreement for sale for approximately $41 million.

Balance Sheet

Extra Space Storage exited first-quarter 2022 with nearly $66 million of cash and cash equivalents, down from $71.1 million recorded on Dec 31, 2021. As of Mar 31, 2022, EXR's percentage of fixed-rate debt to total debt was 80.4%. The combined weighted average interest rate was 2.8%, with a weighted average maturity of around 5.6 years.

During the reported quarter, Extra Space Storage originated $137.7 million in mortgage and mezzanine bridge loans and sold $41 million in mortgage bridge loans.

During the first quarter, the company issued 0.2 million shares of common stock in a private placement at $219.34 per share, resulting in net proceeds of $41 million, together with the acquisition of two stores. For the same period, it did not issue any shares on its ATM program and currently has $800 million available for issuance.

Guidance

Extra Space Storage raised its 2022 outlook.

It now expects core FFO per share in the range of $8.05-$8.30, up from $7.70-$ 7.95 projected earlier. The Zacks Consensus Estimate for the same is currently pegged at $7.92.

Management revised estimates for same-store revenue growth, expecting it to lie within 13-15% from the earlier range of 10.5-12.5%. Same-store NOI growth is projected in the band of 15-18%, up from 11.5-14.5% estimated earlier and acquisitions of $800 million, up from the previous estimate of $500 million.

Extra Space Storage currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Extra Space Storage Inc Price, Consensus and EPS Surprise Extra Space Storage Inc Price, Consensus and EPS Surprise

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

Performance of Other REITs

Boston Properties, Inc.’s (BXP - Free Report) first-quarter 2022 FFO per share of $1.82 beat the Zacks Consensus Estimate of $1.74. The figure also compared favorably with the year-ago quarter’s $1.56.

BXP’s quarterly results reflect decent growth in lease revenues. Also, it experienced strong leasing activity during the quarter.

Quarterly revenues of Boston Properties from lease came in at $718.1 million, up 4.7% from $685.8 million in the year-ago quarter. Moreover, the figure surpassed the consensus mark of $700.6 million.

Mid-America Apartment Communities, Inc. (MAA - Free Report) , commonly referred to as MAA, reported first-quarter 2022 core FFO per share of $1.97, surpassing the Zacks Consensus Estimate of $1.92. The reported number increased 20.1% year over year.

MAA’s quarterly results were driven by an increase in the average effective rent per unit for the same-store portfolio. The average physical occupancy for the same-store portfolio also increased year over year.

The rental and other property revenues came in at $476.1 million, outpacing the Zacks Consensus Estimate of $474.20 million. The reported figure was 12% higher than the previous-year quarter’s $425 million.

AvalonBay Communities, Inc.’s (AVB - Free Report) first-quarter 2022 core FFO per share of $2.26 matched the Zacks Consensus Estimate.

However, total revenues of $613.9 million lagged the consensus estimate of $615.4 million.

On a year-over-year basis, AVB’s core FFO per share increased 15.9% and total revenues grew 11.4%.

The first-quarter results reflected a year-over-year increase in same-store residential revenues, partially offset by rising operating expenses.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.