10-KPeriod: FY2014

Extra Space Storage Inc. Annual Report, Year Ended Dec 31, 2014

Filed March 2, 2015For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) is a fully integrated REIT specializing in self-storage properties. As of December 31, 2014, the company owned or had interests in 828 operating stores, managing an additional 260, for a total of 1,088 locations across 35 states, D.C., and Puerto Rico. The company's growth strategy focuses on maximizing store performance through efficient management, strategic acquisitions, and expanding its management business. Financially, EXR is experiencing growth, with revenues increasing due to new acquisitions and higher occupancy/rental rates at stabilized stores. The company maintains significant lines of credit and is actively managing its debt. Key risks identified include adverse economic conditions, competition, lease-up difficulties, operational risks, and regulatory changes. Investors should note the company's commitment to REIT distribution requirements and its exposure to interest rate fluctuations. Overall, the report indicates a company focused on expansion and operational efficiency within the growing self-storage sector, while also being mindful of the inherent risks in real estate investments and capital management.

Financial Highlights

37 data points
Beta

Net Income

$178.35M

EPS (Diluted)

$1.53

Total Assets

$4.38B

Cash & Equivalents

$47.66M

Free Cash Flow

$337.58M

Financial Statements
Beta
Cost of Revenue$172.42M
Operating Expenses$368.69M
Operating Income$278.47M
Interest Expense$81.33M
Net Income$178.35M
EPS (Basic)$1.54
EPS (Diluted)$1.53
Shares Outstanding (Basic)115.71M
Shares Outstanding (Diluted)121.44M

Key Highlights

  • 1Extra Space Storage Inc. operates as a REIT with a substantial portfolio of 1,088 self-storage properties owned and/or managed across 35 states, Washington D.C., and Puerto Rico as of December 31, 2014.
  • 2The company's growth strategy is centered on enhancing existing store performance, pursuing strategic acquisitions, and expanding its third-party property management business.
  • 3Property rental revenues saw a significant increase of 25.3% in 2014 compared to 2013, primarily driven by acquisitions and improved occupancy and rental rates in stabilized stores.
  • 4Total revenues grew by 24.3% in 2014, reflecting the company's expansion and operational improvements.
  • 5As of December 31, 2014, EXR had approximately $2.38 billion in total debt, with a debt-to-total capitalization ratio of 24.8%.
  • 6The company's core operational markets are clustered around major population centers, enabling economies of scale and efficient management.
  • 7Key risks highlighted include adverse economic conditions, competition, operational challenges in leasing and personnel, uninsured losses, and regulatory changes.

Frequently Asked Questions

Extra Space Storage Inc. is a fully integrated, self-administered, and self-managed real estate investment trust (REIT) that owns, operates, manages, acquires, develops, and redevelops self-storage properties. Its primary business strategy is to maximize stockholder value by maximizing cash flow available for distribution and achieving sustainable long-term growth in cash flow per share. This is achieved through strategic, efficient, and proactive management of its stores, acquiring self-storage stores, and expanding its property management business.

Key financial drivers include property rental revenues and management fees. For the year ended December 31, 2014, the company reported total revenues of $647.2 million, a 24.3% increase from the prior year, primarily driven by a 25.3% increase in property rental revenue due to acquisitions and improved occupancy and rental rates. Total expenses also increased by 20.0%, reflecting the growth in operations. Net income attributable to common stockholders was $178.4 million.

The company faces several risks, including adverse economic or other conditions affecting occupancy and rental rates, difficulties in promptly re-letting units or achieving expected rental rates, challenges in hiring and retaining skilled personnel, uninsured losses or losses exceeding insurance coverage, increasing taxes and regulatory compliance costs, environmental liabilities, and costs associated with complying with the Americans with Disabilities Act. Additionally, risks related to competition for store acquisitions, integration of acquired stores, development project risks, and reliance on information technology are also noted. The company's REIT status is also subject to various requirements and potential legislative changes.

Extra Space Storage Inc. finances its growth and operations through a combination of cash flow from operations, borrowings under its credit facilities, traditional secured mortgage financing, joint ventures with third parties, and equity offerings. The company expects to fund its liquidity needs primarily through operating cash flow, cash on hand, and borrowings, and also may seek additional term loans, issue equity or debt, or use Operating Partnership units as currency for acquisitions.