10-KPeriod: FY2016

Extra Space Storage Inc. Annual Report, Year Ended Dec 31, 2016

Filed February 27, 2017For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) filed its 2016 Annual Report on Form 10-K on February 27, 2017. The report details the company's financial performance, operational highlights, and risk factors. EXR operates as a fully integrated, self-administered, and self-managed real estate investment trust (REIT) specializing in self-storage properties. As of December 31, 2016, the company owned or had ownership interests in 1,016 operating stores, managed an additional 411 stores for third parties, totaling 1,427 locations across 38 states, Washington D.C., and Puerto Rico. The company's business segments include rental operations, tenant reinsurance, and property management, acquisition, and development. The report highlights significant growth in property rental revenues, driven by strategic acquisitions and increased rental rates at stabilized stores. EXR also managed its expenses effectively, although property operations and depreciation expenses increased due to portfolio expansion. The company maintained strong occupancy rates in its stabilized stores and reported a substantial increase in "Funds from Operations" (FFO), a key metric for REITs. Key risk factors identified include adverse economic conditions, competition, increased operating costs, and interest rate sensitivity. EXR's financial strategy focuses on maximizing stockholder value through store performance enhancement, strategic acquisitions, and expanding its management business. The company's strong financial position, demonstrated by its growing revenue and FFO, coupled with a disciplined approach to growth and a well-experienced management team, positions it favorably within the self-storage industry.

Financial Highlights

38 data points
Beta

Revenue

$991.88M

74.8% Gross Margin

Net Income

$366.13M

36.9% Net Margin

EPS (Diluted)

$2.91

Total Assets

$7.09B

Cash & Equivalents

$43.86M

Free Cash Flow

$539.26M

Financial Statements
Beta
Revenue$991.88M
Cost of Revenue$250.00M
Gross Profit$741.87M
Operating Expenses$542.04M
Operating Income$458.30M
Interest Expense$133.48M
Net Income$366.13M
EPS (Basic)$2.92
EPS (Diluted)$2.91
Shares Outstanding (Basic)125.09M
Shares Outstanding (Diluted)125.95M

Key Highlights

  • 1As of December 31, 2016, Extra Space Storage Inc. (EXR) operated 1,427 self-storage locations, including 1,016 owned or co-owned stores and 411 managed third-party stores, across 38 states, Washington D.C., and Puerto Rico.
  • 2Total revenues increased by 26.8% to $991.9 million in 2016, primarily driven by a 27.9% increase in property rental revenues due to acquisitions and higher rental rates.
  • 3Property rental revenue benefited from the acquisition of 99 stores in 2016 and 171 stores in 2015, along with an approximate 7.0% increase in rental rates for new tenants on wholly owned properties in 2016.
  • 4Funds From Operations (FFO) attributable to common stockholders and unit holders increased by 49.3% to $494.7 million in 2016, indicating strong operational performance.
  • 5Same-store rental and tenant reinsurance revenues increased by 6.9% for the full year 2016 compared to 2015, driven by higher rental rates for both new and existing customers.
  • 6The company had total assets of $7.1 billion and total debt of $4.4 billion as of December 31, 2016.
  • 7EXR's long-term growth strategy focuses on maximizing store performance, acquiring self-storage stores, and expanding its management business.

Frequently Asked Questions

Extra Space Storage Inc. (EXR) operates as a REIT focused on owning, operating, managing, acquiring, developing, and redeveloping self-storage properties. As of December 31, 2016, the company had a significant operational presence with 1,427 stores across 38 states, Washington D.C., and Puerto Rico, encompassing approximately 107 million square feet of rentable space.

In 2016, EXR demonstrated strong financial growth. Total revenues increased by 26.8% to $991.9 million, largely driven by a 27.9% rise in property rental revenues resulting from acquisitions and increased rental rates. Funds From Operations (FFO) attributable to common stockholders and unit holders saw a substantial increase of 49.3% to $494.7 million, signaling robust operational profitability and efficiency.

EXR's primary business objectives are to maximize cash flow for its stockholders and achieve sustainable long-term growth. Its key strategies include maximizing the performance of its existing stores through efficient management and revenue optimization, strategically acquiring self-storage stores and portfolios to expand its footprint and stockholder value, and expanding its property management business to generate fees and identify future acquisition opportunities.

EXR identified several key risks. These include adverse changes in general economic conditions, the real estate industry, and specific markets, as well as competition from new and existing storage facilities impacting rents and occupancy. The company also highlighted risks related to integrating acquisitions, potential uninsured losses, increased operating costs (like taxes and utilities), interest rate fluctuations, and the importance of maintaining its REIT status. Furthermore, reliance on technology and the potential loss of key personnel were also noted as significant risks.