10-KPeriod: FY2010

Extra Space Storage Inc. Annual Report, Year Ended Dec 31, 2010

Filed February 25, 2011For Securities:EXR

Summary

Extra Space Storage Inc.'s (EXR) 2010 10-K filing highlights a strong operational year for the company, which operates as a self-administered and self-managed real estate investment trust (REIT) specializing in self-storage facilities. As of December 31, 2010, EXR owned or had interests in 660 properties and managed an additional 160, totaling 820 properties across 34 states and Washington D.C., with approximately 59 million square feet of rentable space. The company's business segments include property management, acquisition and development, rental operations, and tenant reinsurance. The report indicates a focus on strategic growth through maximizing property performance, expanding its management business, and selectively acquiring self-storage properties. EXR employs proprietary technology like STORE and RevMan to optimize rental rates and occupancy. Despite a challenging economic environment in the preceding years, the company managed its finances effectively, with total revenues of $281.5 million for 2010 and a debt-to-capitalization ratio of 44.1% at year-end. The company also detailed its financing strategies, including its use of credit lines and joint ventures for growth, and emphasized its commitment to maintaining its REIT status through distributions to stockholders.

Financial Highlights

35 data points
Beta

Net Income

$26.33M

EPS (Diluted)

$0.30

Total Assets

$2.25B

Cash & Equivalents

$46.75M

Free Cash Flow

$104.81M

Financial Statements
Beta
Cost of Revenue$86.17M
Operating Expenses$190.68M
Operating Income$90.81M
Interest Expense$64.12M
Net Income$26.33M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)87.32M
Shares Outstanding (Diluted)92.05M

Key Highlights

  • 1**Portfolio Expansion:** As of December 31, 2010, Extra Space Storage Inc. owned or had interests in 660 operating self-storage properties and managed an additional 160 properties, totaling 820 properties across 34 states and Washington D.C.
  • 2**Revenue Growth:** Total revenues for the year ended December 31, 2010, were $281.5 million, a slight increase from $280.1 million in 2009, driven by growth in management and franchise fees, and tenant reinsurance income.
  • 3**Operational Efficiency:** The company utilizes proprietary technology (STORE and RevMan) for real-time yield management and rental rate adjustments to maximize property performance and revenue.
  • 4**Financial Health:** The company reported net income of $33.4 million for 2010 and maintained a debt-to-total capitalization ratio of 44.1%, demonstrating a stable financial position.
  • 5**Financing Strategy:** EXR utilizes a combination of credit lines, traditional secured mortgage financing, and joint ventures to fund its growth strategies, demonstrating a flexible approach to capital management.
  • 6**REIT Status:** The company operates as a REIT, aiming to distribute at least 90% of its net taxable income to stockholders to maintain its tax-advantaged status.
  • 7**Development Wind-Down:** EXR announced the wind-down of its development activities in June 2009, with six remaining development projects expected to be completed by the end of 2011.

Frequently Asked Questions

Extra Space Storage Inc. operates as a self-administered and self-managed real estate investment trust (REIT). Its core business involves owning, operating, managing, acquiring, developing, and redeveloping professionally managed self-storage facilities. The company generates revenue primarily through rental income from tenants, management fees from properties managed for joint ventures and third parties, and tenant reinsurance programs.

For the fiscal year ended December 31, 2010, EXR reported total revenues of $281.5 million, a slight increase from $280.1 million in 2009. Net income was $33.4 million, compared to $39.1 million in the prior year. The company maintained a solid balance sheet with total assets of $2.25 billion and a debt-to-capitalization ratio of 44.1%. The company's operational efficiency and strategic property management contributed to its financial performance amidst a recovering economic climate.

EXR's primary growth strategies include maximizing the performance of its existing properties through efficient and proactive management, expanding its third-party property management business to increase revenue and geographic reach, and selectively acquiring self-storage properties from strategic partners and third parties. The company also leverages its UPREIT structure for flexibility in deal structuring.

The primary risks highlighted in the filing include adverse changes in general economic conditions and the real estate industry, increased competition from new and existing self-storage facilities, difficulties in acquiring and integrating new properties, potential for uninsured losses, increased operating costs (including taxes and utilities), the impact of regulatory changes, disruptions in credit and financial markets, and the risk of failing to maintain its REIT status. The company also notes the dependency on key personnel and the potential for conflicts of interest due to its organizational structure.