10-QPeriod: Q3 FY2014

Extra Space Storage Inc. Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 6, 2014For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported strong year-over-year growth in its third quarter ended September 30, 2014. Total revenues increased by 25.7% to $167.4 million, driven by a substantial 27.0% rise in property rental revenue. This growth was fueled by both strategic acquisitions and organic improvements, with occupancy at wholly-owned stabilized properties increasing to 91.1% and rental rates showing a healthy uptick. The company also demonstrated improved operational efficiency, with total expenses growing at a slower rate (16.6%) than revenues. Net income attributable to common stockholders surged by 85.5% to $54.2 million. Funds From Operations (FFO), a key metric for REITs, also saw significant growth, increasing by 62.4% year-over-year for the quarter. This strong financial performance reflects effective property management and strategic expansion.

Financial Highlights

34 data points
Beta

Net Income

$54.23M

EPS (Diluted)

$0.47

Total Assets

$4.23B

Cash & Equivalents

$49.22M

Free Cash Flow

$88.81M

Financial Statements
Beta
Cost of Revenue$43.29M
Operating Expenses$91.57M
Operating Income$77.49M
Interest Expense$20.68M
Net Income$54.23M
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)115.73M
Shares Outstanding (Diluted)121.62M

Key Highlights

  • 1Total revenues for the third quarter of 2014 increased by 25.7% to $167.4 million compared to the prior year.
  • 2Property rental revenue saw a significant increase of 27.0% to $144.7 million, driven by acquisitions and improved occupancy/rental rates.
  • 3Net income attributable to common stockholders rose by 85.5% to $54.2 million for the quarter.
  • 4Funds From Operations (FFO) grew substantially by 62.4% to $88.8 million for the third quarter.
  • 5Occupancy at wholly-owned stabilized properties improved to 91.1% as of September 30, 2014, up from 89.6% a year prior.
  • 6The company completed 32 property acquisitions in the first nine months of 2014, adding to its portfolio.

Frequently Asked Questions

The primary driver of revenue growth is property rental income, which increased by 27.0% in the third quarter of 2014. This growth is attributed to both acquisitions of new properties and organic growth through increased occupancy and higher rental rates at existing properties.

Extra Space Storage managed its expenses effectively, with total expenses growing at 16.6% in the third quarter, a slower rate than the 25.7% revenue growth. This indicates improved operational efficiency and cost management.

The significant increase in FFO (62.4% for the quarter) is a key indicator of the company's operational performance and its ability to generate cash flow from its real estate operations. For REITs like Extra Space Storage, FFO is a critical metric for assessing profitability and is often considered a better measure of performance than net income due to real estate depreciation adjustments.

The company's strategy involves both acquiring new self-storage properties and expanding its management business. In the first nine months of 2014, Extra Space Storage acquired 32 properties, demonstrating an active acquisition pipeline aimed at increasing its market presence and shareholder value.