10-QPeriod: Q1 FY2015

Extra Space Storage Inc. Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 8, 2015For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported solid financial performance for the first quarter ended March 31, 2015. Total revenues grew by 13.5% year-over-year to $173.15 million, driven by a strong 12.8% increase in property rental revenue, reflecting higher occupancy and rental rates, as well as contributions from recent acquisitions. Net income attributable to common stockholders saw a significant increase of 44%, reaching $53.74 million. The company demonstrated effective operational management with a 11.4% increase in same-store net operating income, highlighting the profitability of its existing portfolio. Expansion efforts were also evident, with the acquisition of eight new stores during the quarter and a robust pipeline of 42 additional stores under contract. Despite increased interest expenses due to higher debt levels, the company maintained its REIT status and managed its leverage effectively, with a debt-to-enterprise value ratio of 23.7% at quarter-end.

Financial Highlights

34 data points
Beta

Net Income

$53.74M

EPS (Diluted)

$0.46

Total Assets

$4.46B

Cash & Equivalents

$45.30M

Free Cash Flow

$87.44M

Financial Statements
Beta
Cost of Revenue$47.24M
Operating Expenses$97.72M
Operating Income$75.44M
Interest Expense$21.43M
Net Income$53.74M
EPS (Basic)$0.46
EPS (Diluted)$0.46
Shares Outstanding (Basic)116.12M
Shares Outstanding (Diluted)122.60M

Key Highlights

  • 1Total revenues increased by 13.5% to $173.15 million in Q1 2015 compared to Q1 2014.
  • 2Net income attributable to common stockholders rose by 44% to $53.74 million.
  • 3Same-store net operating income (NOI) grew by 11.4%, indicating strong performance from existing properties.
  • 4Property rental revenue increased by 12.8% due to higher occupancy and rental rates, alongside contributions from acquisitions.
  • 5The company acquired 8 new stores in Q1 2015 and had 42 additional stores under contract.
  • 6Occupancy at wholly-owned stabilized stores increased to 92.2% from 89.4% in the prior year.
  • 7Debt-to-enterprise value ratio was 23.7% as of March 31, 2015.

Frequently Asked Questions

The primary driver of revenue growth was a 12.8% increase in property rental revenue. This was achieved through a combination of higher occupancy rates (up to 92.2% at wholly-owned stabilized stores), increased rental rates for both new and existing customers, and the contribution of newly acquired properties.

Extra Space Storage Inc. finances its growth through a mix of debt and equity. As of March 31, 2015, the company had total debt of $2.44 billion, with a debt-to-enterprise value ratio of 23.7%. The company also utilizes lines of credit and intends to fund future needs through additional borrowings, joint ventures, and potential equity/debt offerings.

The company demonstrated strong performance in its existing portfolio, with same-store net operating income increasing by 11.4%. They also continue to actively expand, having acquired 8 stores in the quarter and having 42 additional stores under contract, indicating a positive outlook for both organic growth and strategic acquisitions.

Yes, the company recognized a gain of $2.86 million related to real estate asset sales and the purchase of joint venture partners' interests during the quarter. This included a gain of $1.23 million from the sale of a store by a joint venture and a non-cash gain of $1.63 million from acquiring a joint venture partner's interest in a previously equity-method investment.