10-QPeriod: Q2 FY2021

Extra Space Storage Inc. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported strong financial performance for the second quarter and first half of 2021, demonstrating significant revenue growth and improved profitability. Total revenues increased by 15.7% and 11.8% for the three and six-month periods ended June 30, 2021, respectively, driven by robust performance in both self-storage operations and tenant reinsurance segments. The company also saw a substantial increase in Net Income, up 65.0% and 73.1% for the respective periods, indicating effective operational management and favorable market conditions. The balance sheet reflects growth in real estate assets, supported by strategic acquisitions and development. The company managed its debt effectively, with a notable issuance of public bonds in May 2021, strengthening its capital structure. Funds from Operations (FFO) also showed significant year-over-year growth, reinforcing the company's ability to generate shareholder value. Overall, EXR demonstrated a strong operational and financial position, benefiting from increased occupancy and rental rates in the self-storage market.

Financial Highlights

39 data points
Beta

Revenue

$378.63M

76.5% Gross Margin

Net Income

$167.95M

44.4% Net Margin

EPS (Diluted)

$1.25

Total Assets

$9.46B

Cash & Equivalents

$56.01M

Free Cash Flow

$259.81M

Financial Statements
Beta
Revenue$378.63M
Cost of Revenue$89.16M
Gross Profit$289.48M
Operating Expenses$181.80M
Operating Income$196.83M
Interest Expense$40.24M
Net Income$167.95M
EPS (Basic)$1.25
EPS (Diluted)$1.25
Shares Outstanding (Basic)133.76M
Shares Outstanding (Diluted)140.41M

Key Highlights

  • 1Total revenues for the six months ended June 30, 2021, increased by 11.8% to $737.5 million, compared to $659.7 million in the prior year period, driven by higher property rental revenues and tenant reinsurance income.
  • 2Net income attributable to common stockholders surged by 75.8% to $370.9 million for the six months ended June 30, 2021, compared to $211.1 million in the same period of 2020.
  • 3Funds from Operations (FFO) attributable to common stockholders and unit holders grew by 30.8% to $442.4 million for the six months ended June 30, 2021.
  • 4The company acquired 24 wholly-owned stores during the first six months of 2021, contributing to a 15.1% increase in property rental revenues for the second quarter.
  • 5Same-store net operating income (NOI) saw a significant increase of 20.2% for the three months ended June 30, 2021, driven by higher occupancy (97.0% vs. 94.2%) and rental rates.
  • 6The company issued $450 million in 2.550% Senior Notes due 2031 in May 2021, enhancing its liquidity and extending its debt maturity profile.
  • 7As of June 30, 2021, the company had $56.0 million in cash and cash equivalents, and its debt to total enterprise value ratio was 18.9%.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in property rental revenues, stemming from higher occupancy and increased rental rates at stabilized stores. Additionally, acquisitions of new stores and growth in the tenant reinsurance segment also contributed to the overall revenue increase.

The company issued $450 million in Senior Notes in May 2021, strengthening its capital structure and extending debt maturities. As of June 30, 2021, the total face value of debt was approximately $5.4 billion, resulting in a debt-to-total enterprise value ratio of 18.9%. The weighted average interest rate on its total debt was 2.8%.

The company believes its operating cash flow, existing cash reserves, and access to credit markets are sufficient to meet its liquidity needs for the next 12 months, including operating expenses, debt service, capital expenditures, and distributions/dividends necessary for REIT qualification. They are also exploring additional financing sources and potential strategic acquisitions.

Acquisitions played a significant role in the company's growth. During the first six months of 2021, 24 wholly-owned stores were acquired, contributing to increased property rental revenues and higher depreciation and amortization expenses. The total number of stores owned or managed also increased.