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Extra Space Storage (EXR) Q4 FFO Lags Estimates, Occupancy Falls
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Extra Space Storage Inc. (EXR - Free Report) reported fourth-quarter 2023 core funds from operations (FFO) per share of $2.02, missing the Zacks Consensus Estimate by a penny. The figure declined 3.3% from the prior-year quarter.
The results reflect fall in occupancy despite better-than-anticipated revenues. Higher interest expenses during the quarter were a spoilsport. The company issued a lower-than-expected 2024 core FFO per share outlook.
Quarterly revenues of $797.8 million beat the Zacks Consensus Estimate of $773.6 million. The top line jumped 57.4% year over year.
Per Joe Margolis, CEO of Extra Space Storage, “We maintained healthy in-place rents and strong same-store occupancy in the quarter, averaging 93.4%, which drove positive same-store revenue growth. Turning to 2024, we anticipate stronger revenue growth from the Life Storage assets, which are benefiting from the sophistication of the Extra Space platform. While we expect a headwind from lower new customer rates, we are confident in the durability of self-storage, our highly diversified portfolio and our platform's ability to capture customer volume when sector demand accelerates.”
For the full-year 2023, core FFO per share came in at $8.10, lower than the prior-year tally of $8.44 and also missed the Zacks Consensus Estimate of $8.13. However, revenues grew 33.1% to $2.56 billion.
Quarter in Detail
Same-store revenues increased 10.8% year over year to $391.8 million in the fourth quarter. This uptick resulted from a rise in other operating income, partly muted by lower occupancy.
Same-store operating expenses rose 4% year over year to $93.4 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance, and office expenses.
Consequently, same-store net operating income (NOI) decreased marginally year over year to $298.4 million.
The same-store square-foot occupancy contracted 110 basis points year over year to 93% as of Dec 31, 2023. Our estimate was pegged at 93.2%.
In the fourth quarter, interest expenses flared up to $129.7 million from $72.9 million a year ago.
Portfolio Activity
During the October-December quarter, Extra Space Storage acquired three operating stores and four stores at completion of construction for around $82.7 million.
In association with joint-venture (JV) partners, the company acquired one operating store for approximately $25 million, of which it invested $1 million.
Extra Space Storage added 74 stores (55 stores net) to its third-party management platform. As of Dec 31, 2023, it managed 1,337 stores for third parties and 472 stores in unconsolidated JVs, with total stores under the management of 1,809.
Balance Sheet
Extra Space Storage exited the fourth quarter with $99.1 million of cash and cash equivalents, down from $216.1 million recorded as of Sep 30, 2023.
As of Dec 31, 2023, EXR's percentage of fixed-rate debt to total debt was 73.4%. The combined weighted average interest rate was 4.6%, with a weighted average maturity of around 4.8 years.
During the reported quarter, Extra Space Storage originated $129.2 million in mortgage and mezzanine bridge loans. It also sold $43.9 million in mortgage bridge loans.
In the fourth quarter, the company did not issue any shares under its at-the-market program and presently has $800 million available for issuance. Also, it did not repurchase any shares of common stock and had the authorization to buy up to an additional $500 million under the plan as of Dec 31, 2023.
2024 Guidance
Extra Space Storage provided its initial 2024 outlook.
It expects core FFO per share in the range of $7.85-$8.15. This is lower than the Zacks Consensus Estimate of $8.34.
The full-year guidance is based on the assumption of negative 2% to 0.50% growth in same-store revenues and a 4.00-5.50% increase in same-store expenses. Consequently, same-store NOI is projected in the band of negative 4.25-0.50%.
American Tower Corporation (AMT - Free Report) reported fourth-quarter adjusted funds from operations (AFFO) per share, attributable to AMT common stockholders, of $2.29, beating the Zacks Consensus Estimate of $2.18 but declining 2.1% year over year.
AMT’s results reflect better-than-anticipated revenues, aided by revenue growth across its Property segment. American Tower recorded healthy year-over-year organic tenant billings growth of 6.1% and total tenant billings growth of 7.1%. It has also issued its 2024 outlook.
Public Storage (PSA - Free Report) reported a fourth-quarter 2023 core FFO per share of $4.20, beating the Zacks Consensus Estimate of $4.15. The figure increased 1% year over year.
Results showed a better-than-anticipated top line, aided by an improvement in the realized annual rent per available square foot in the reported quarter. The company also benefited from its expansion efforts through acquisitions, developments and extensions. PSA also issued its 2024 outlook.
Lamar Advertising Company (LAMR - Free Report) reported fourth-quarter 2023 AFFO per share of $2.10, beating the Zacks Consensus Estimate of $1.95. The figure also compared favorably with the prior-year quarter's tally of $1.91.
LAMR’s results reflect year-over-year growth in the top line. However, higher interest expenses during the quarter acted as a dampener.
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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Extra Space Storage (EXR) Q4 FFO Lags Estimates, Occupancy Falls
Extra Space Storage Inc. (EXR - Free Report) reported fourth-quarter 2023 core funds from operations (FFO) per share of $2.02, missing the Zacks Consensus Estimate by a penny. The figure declined 3.3% from the prior-year quarter.
The results reflect fall in occupancy despite better-than-anticipated revenues. Higher interest expenses during the quarter were a spoilsport. The company issued a lower-than-expected 2024 core FFO per share outlook.
Quarterly revenues of $797.8 million beat the Zacks Consensus Estimate of $773.6 million. The top line jumped 57.4% year over year.
Per Joe Margolis, CEO of Extra Space Storage, “We maintained healthy in-place rents and strong same-store occupancy in the quarter, averaging 93.4%, which drove positive same-store revenue growth. Turning to 2024, we anticipate stronger revenue growth from the Life Storage assets, which are benefiting from the sophistication of the Extra Space platform. While we expect a headwind from lower new customer rates, we are confident in the durability of self-storage, our highly diversified portfolio and our platform's ability to capture customer volume when sector demand accelerates.”
For the full-year 2023, core FFO per share came in at $8.10, lower than the prior-year tally of $8.44 and also missed the Zacks Consensus Estimate of $8.13. However, revenues grew 33.1% to $2.56 billion.
Quarter in Detail
Same-store revenues increased 10.8% year over year to $391.8 million in the fourth quarter. This uptick resulted from a rise in other operating income, partly muted by lower occupancy.
Same-store operating expenses rose 4% year over year to $93.4 million, reflecting an increase in marketing, insurance, payroll and benefits, repairs and maintenance, and office expenses.
Consequently, same-store net operating income (NOI) decreased marginally year over year to $298.4 million.
The same-store square-foot occupancy contracted 110 basis points year over year to 93% as of Dec 31, 2023. Our estimate was pegged at 93.2%.
In the fourth quarter, interest expenses flared up to $129.7 million from $72.9 million a year ago.
Portfolio Activity
During the October-December quarter, Extra Space Storage acquired three operating stores and four stores at completion of construction for around $82.7 million.
In association with joint-venture (JV) partners, the company acquired one operating store for approximately $25 million, of which it invested $1 million.
Extra Space Storage added 74 stores (55 stores net) to its third-party management platform. As of Dec 31, 2023, it managed 1,337 stores for third parties and 472 stores in unconsolidated JVs, with total stores under the management of 1,809.
Balance Sheet
Extra Space Storage exited the fourth quarter with $99.1 million of cash and cash equivalents, down from $216.1 million recorded as of Sep 30, 2023.
As of Dec 31, 2023, EXR's percentage of fixed-rate debt to total debt was 73.4%. The combined weighted average interest rate was 4.6%, with a weighted average maturity of around 4.8 years.
During the reported quarter, Extra Space Storage originated $129.2 million in mortgage and mezzanine bridge loans. It also sold $43.9 million in mortgage bridge loans.
In the fourth quarter, the company did not issue any shares under its at-the-market program and presently has $800 million available for issuance. Also, it did not repurchase any shares of common stock and had the authorization to buy up to an additional $500 million under the plan as of Dec 31, 2023.
2024 Guidance
Extra Space Storage provided its initial 2024 outlook.
It expects core FFO per share in the range of $7.85-$8.15. This is lower than the Zacks Consensus Estimate of $8.34.
The full-year guidance is based on the assumption of negative 2% to 0.50% growth in same-store revenues and a 4.00-5.50% increase in same-store expenses. Consequently, same-store NOI is projected in the band of negative 4.25-0.50%.
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.
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
American Tower Corporation (AMT - Free Report) reported fourth-quarter adjusted funds from operations (AFFO) per share, attributable to AMT common stockholders, of $2.29, beating the Zacks Consensus Estimate of $2.18 but declining 2.1% year over year.
AMT’s results reflect better-than-anticipated revenues, aided by revenue growth across its Property segment. American Tower recorded healthy year-over-year organic tenant billings growth of 6.1% and total tenant billings growth of 7.1%. It has also issued its 2024 outlook.
Public Storage (PSA - Free Report) reported a fourth-quarter 2023 core FFO per share of $4.20, beating the Zacks Consensus Estimate of $4.15. The figure increased 1% year over year.
Results showed a better-than-anticipated top line, aided by an improvement in the realized annual rent per available square foot in the reported quarter. The company also benefited from its expansion efforts through acquisitions, developments and extensions. PSA also issued its 2024 outlook.
Lamar Advertising Company (LAMR - Free Report) reported fourth-quarter 2023 AFFO per share of $2.10, beating the Zacks Consensus Estimate of $1.95. The figure also compared favorably with the prior-year quarter's tally of $1.91.
LAMR’s results reflect year-over-year growth in the top line. However, higher interest expenses during the quarter acted as a dampener.
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.