10-QPeriod: Q1 FY2011

Extra Space Storage Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported solid revenue growth for the first quarter of 2011, with total revenues increasing by 10.2% year-over-year to $74.5 million. This growth was driven by a 9.5% increase in property rental revenue, supported by rising occupancy and rental rates, as well as expansion through acquisitions. The company's management and franchise fee revenue also saw a healthy increase of 7.5%, reflecting the growth in its managed property portfolio. Net income attributable to common stockholders significantly improved, rising from $3.6 million in Q1 2010 to $8.3 million in Q1 2011, leading to a basic and diluted EPS of $0.09 for the quarter, up from $0.04 in the prior year period. Operationally, EXR continued to expand its property footprint, owning or having interests in 662 operating self-storage properties by the end of the quarter, with plans to complete two remaining development projects by the end of 2011. The company's balance sheet shows total assets of approximately $2.25 billion. While the company maintains a significant level of debt, approximately $1.25 billion, its debt to total capitalization ratio was 39.6% as of March 31, 2011, indicating a manageable leverage position. The company's focus remains on maximizing property performance, strategic acquisitions, and expanding its management business to drive future shareholder value.

Financial Highlights

33 data points
Beta

Net Income

$8.30M

EPS (Diluted)

$0.09

Total Assets

$2.25B

Cash & Equivalents

$42.55M

Free Cash Flow

$30.00M

Financial Statements
Beta
Cost of Revenue$23.34M
Operating Expenses$50.45M
Operating Income$24.03M
Interest Expense$16.41M
Net Income$8.30M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)88.05M
Shares Outstanding (Diluted)92.81M

Key Highlights

  • 1Total revenues increased by 10.2% to $74.5 million in Q1 2011 compared to Q1 2010.
  • 2Property rental revenues grew by 9.5%, driven by increased occupancy and rental rates at stabilized properties and contributions from recent acquisitions.
  • 3Net income attributable to common stockholders more than doubled, reaching $8.3 million in Q1 2011, resulting in basic and diluted EPS of $0.09.
  • 4The company's portfolio expanded to 662 operating self-storage properties, with management also overseeing an additional 167 properties.
  • 5Funds From Operations (FFO) saw a significant increase of 35.4% to $23.5 million in Q1 2011, indicating strong operational performance.
  • 6Same-store net operating income (NOI) grew by 5.8%, reflecting improved property-level profitability.
  • 7The company maintained a manageable debt-to-capitalization ratio of 39.6% as of March 31, 2011.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in property rental revenues (up 9.5%) due to higher occupancy and rental rates at stabilized properties, along with contributions from recent acquisitions. Additionally, management and franchise fees increased by 7.5%, reflecting the expansion of the company's property management services for third parties and joint ventures.

Profitability saw a substantial improvement. Net income attributable to common stockholders increased from $3.6 million in the first quarter of 2010 to $8.3 million in the first quarter of 2011. This translated to basic and diluted earnings per share (EPS) of $0.09, up from $0.04 in the prior year period. Funds From Operations (FFO) also showed strong growth, increasing by 35.4% to $23.5 million.

As of March 31, 2011, Extra Space Storage owned or had interests in 662 operating self-storage properties across 34 states and Washington, D.C. Additionally, the company managed 167 properties for franchisees and third parties, bringing the total number of operating properties owned and/or managed to 829. The company was also in the process of completing two remaining development projects.

As of March 31, 2011, Extra Space Storage had total debt of approximately $1.25 billion, resulting in a debt-to-total capitalization ratio of 39.6%. The company aims to fund its short-term liquidity needs through operating cash flow, cash on hand, and credit lines, while longer-term needs and strategic initiatives like acquisitions may be funded through additional borrowings, joint ventures, or equity/debt offerings. The company was in compliance with all financial covenants related to its outstanding debt.