The S&P 500 has rallied about 25% over the past year. It has risen thanks to a strong economy and moderating inflation, with the latter factor enabling the Federal Reserve to start reducing interest rates. However, not every stock has participated in the broader market's bull run. Several top real estate investment trusts (REITs) are down about 20% from their recent highs, including Realty Income (O -0.77%), Prologis (PLD -1.54%), and Extra Space Storage (EXR -1.01%). That's partly due to the Fed's decision ...

Core Viewpoint - Extra Space Storage Inc. has announced a public offering of $300 million in additional senior notes due 2028, aimed at refinancing existing credit lines and funding potential acquisitions [1][2]. Group 1: Offering Details - The operating partnership, Extra Space Storage LP, priced the offering at 102.857% of the principal amount, with a maturity date of April 1, 2028 [1]. - The new notes will be issued as additional notes under the existing indenture for previously issued $500 million of senior notes due 2028, making them fungible with the initial notes [1]. - The offering is expected to close around December 5, 2024, pending customary closing conditions [1]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to repay outstanding amounts under credit lines and for general corporate purposes, including potential acquisitions [2]. Group 3: Company Overview - Extra Space Storage Inc. is a leading self-storage real estate investment trust (REIT) in the U.S., operating 3,862 properties with approximately 2.7 million units and 296 million square feet of rentable space as of September 30, 2024 [5]. - The company is a member of the S&P 500 and offers a variety of storage solutions, including boat and RV storage [5].

Core Viewpoint - Extra Space Storage Inc. has established an unsecured commercial paper note program allowing its operating partnership to issue notes up to $1 billion for general corporate purposes [1][2]. Group 1: Commercial Paper Note Program - The operating partnership can issue unsecured commercial paper notes with a maximum aggregate amount of $1 billion at any one time [2]. - The notes will rank equally with other unsecured senior debts of the operating partnership and will be fully guaranteed by the Company [2]. - Proceeds from the notes will be utilized for general corporate purposes [2]. Group 2: Financial Strategy - The Company anticipates cost benefits from the commercial paper market compared to its existing $2.0 billion revolving credit facility [3]. - The revolving credit facility will serve as a liquidity backstop for the repayment of the notes issued under the commercial paper program [3]. Group 3: Company Overview - Extra Space Storage Inc. is a fully integrated real estate investment trust and a member of the S&P 500, operating 3,862 self-storage properties as of September 30, 2024 [5]. - The Company manages approximately 2.7 million storage units and 296.0 million square feet of rentable storage space under the Extra Space brand [5]. - It is recognized as the largest operator of self-storage properties in the United States, offering a variety of storage solutions including boat and RV storage [5].

Group 1 - The Company declared a fourth quarter 2024 dividend of $1.62 per share on common stock, payable on December 31, 2024, to stockholders of record as of December 16, 2024 [1] - Extra Space Storage Inc. is a fully integrated, self-administered and self-managed real estate investment trust, and a member of the S&P 500 [2] - As of September 30, 2024, the Company owned and/or operated 3,862 self-storage properties, comprising approximately 2.7 million units and about 296.0 million square feet of rentable storage space [2] Group 2 - The Company offers a wide selection of conveniently located and secure storage units across the United States, including options for boat storage, RV storage, and business storage [2] - Extra Space Storage Inc. is the largest operator of self-storage properties in the United States [2]

Group 1 - Storage REITs are performing closely to the REIT average in 2023, with a total return of 9.18% year-to-date, ranking 9th among 18 REIT sectors [1] - The REIT Equity Index has gained 9.69% year-to-date, indicating a strong overall performance in the REIT market [1]

Group 1 - The article promotes iREIT on Alpha as a source for in-depth research on various income alternatives including REITs, mREITs, Preferreds, BDCs, MLPs, and ETFs, highlighting its positive testimonials [1] - It mentions a free 2-week trial for potential users, emphasizing the lack of risk in trying the service [1] Group 2 - The analyst has disclosed a long position in the shares of EXR and PSA, indicating a personal investment interest in these companies [2] - The article expresses the author's personal opinions and clarifies that no compensation is received from the companies mentioned [2]

Store Operations and Management - As of September 30, 2024, the company owned or had ownership interests in 2,401 operating stores, with 1,934 being wholly-owned[129]. - The company manages an additional 1,461 stores for third parties, bringing the total number of stores owned and/or managed to 3,862[129]. - The company operated 3,862 stores as of September 30, 2024, compared to 3,651 stores as of September 30, 2023[139]. - The company managed 1,921 stores for unconsolidated joint ventures and third parties as of September 30, 2024, up from 1,755 stores in the same period last year[140]. - The company acquired 771 wholly-owned stores in 2023 and an additional 20 wholly-owned stores during the nine months ended September 30, 2024[138]. Revenue and Financial Performance - For the three months ended September 30, 2024, total revenues increased by 10.3% to $824,804,000 compared to $748,034,000 for the same period in 2023[138]. - For the nine months ended September 30, 2024, total revenues increased by 38.2% to $2,435,006,000 compared to $1,762,470,000 for the same period in 2023[138]. - Property rental revenues for the nine months ended September 30, 2024 increased by 37.4% to $2,096,018,000, primarily due to the Life Storage Merger and other acquisitions[138]. - Tenant reinsurance revenues increased by 50.7% to $249,100,000 for the nine months ended September 30, 2024, driven by an increase in the number of stores operated[138][139]. - Management fees and other income rose by 25.5% to $89,888,000 for the nine months ended September 30, 2024, attributed to an increase in the number of stores managed[140]. Rental Rates and Occupancy - Approximately 2,245,000 tenants were leasing storage units at the company's operating stores, primarily on a month-to-month basis[130]. - The average annual rent per square foot for existing customers at stabilized stores was $20.55 for the three months ended September 30, 2024, down from $20.73 for the same period in 2023[131]. - Average annual rent per square foot for new leases was $13.49 for the three months ended September 30, 2024, compared to $15.63 for the same period in 2023[131]. - The average discounts as a percentage of rental revenues at all stabilized properties were 2.2% for the three months ended September 30, 2024, compared to 2.7% for the same period in 2023[131]. - Same-store rental revenues for the three months ended September 30, 2024, were $424,037, a decrease of 0.3% compared to $425,262 for the same period in 2023[162]. Expenses and Financial Metrics - Property operations expenses increased by $23,841 (12.9%) to $209,035 for the three months ended September 30, 2024, compared to $185,194 for the same period in 2023[142]. - General and administrative expenses rose by $2,344 (6.3%) to $39,750 for the three months ended September 30, 2024, compared to $37,406 for the same period in 2023[146]. - Depreciation and amortization expenses increased by $42,708 (28.0%) to $195,046 for the three months ended September 30, 2024, compared to $152,338 for the same period in 2023[147]. - Interest expense increased by $19,956 (16.2%) to $(142,855) for the three months ended September 30, 2024, compared to $(122,899) for the same period in 2023, primarily due to higher outstanding debt[150]. - Funds from operations (FFO) attributable to common stockholders and unit holders was $388,831 for the three months ended September 30, 2024, compared to $348,459 for the same period in 2023[159]. Debt and Financing - The total face value of debt increased to approximately $11.8 billion as of September 30, 2024, from approximately $11.3 billion a year earlier, reflecting additional debt issued in connection with the Life Storage Merger[150]. - The weighted average interest rate of total fixed- and variable-rate debt was 4.5% as of September 30, 2024[170]. - The company has approximately $11.8 billion in total face value of debt, with about $2.6 billion subject to variable interest rates[179]. - A 100 basis point change in SOFR would impact future earnings and cash flows by approximately $25.7 million annually on the variable-rate debt[179]. - The company may issue and sell shares of common stock with an aggregate offering price of up to $800 million under the Equity Distribution Agreement[174]. Seasonal Trends and Market Conditions - The company operates in competitive markets, with seasonal fluctuations in occupancy levels, generally higher in summer months due to increased moving activity[128]. - The self-storage business experiences seasonal fluctuations, with higher revenues and profits typically from May through September[176]. - The highest level of occupancy historically occurs at the end of July, while the lowest is in late February and early March[176]. Strategic Initiatives and Future Outlook - The company has increased its scale in many core markets through acquisitions, enhancing its presence in previously unrepresented markets[129]. - The company is pursuing additional sources of financing based on anticipated funding needs and growth assumptions[171]. - The company evaluates strategic acquisitions and may use Operating Partnership units as currency for funding acquisitions[173]. - The company intends to manage its balance sheet to maintain its credit ratings[172]. - The company expects to generate positive cash flow from operations in 2024, primarily from rents paid by tenants[168]. Cash Flow and Net Income - Cash flows from operating activities increased to $1,479,151 for the nine months ended September 30, 2024, compared to $1,037,959 for the same period in 2023[167]. - The company reported net income of $622,431 for the nine months ended September 30, 2024, slightly down from $623,046 in the same period of 2023[167]. - As of September 30, 2024, the company had $88,931 in cash and cash equivalents, with no loss of access reported during 2024 and 2023[169]. Asset Management - The company holds a BBB+/Stable rating from S&P, upgraded from BBB/Stable in July 2023, and a Baa2 rating from Moody's[172]. - As of September 30, 2024, the company had a total of 1,705 unencumbered stores, with an unencumbered asset value of $29,442,214 and a total asset value of $34,958,852[172]. - The total face value of debt as of September 30, 2024, was $11,827,208, resulting in a debt to total enterprise value ratio of 22.8%[170].

Core Insights - Extra Space Storage Inc. (EXR) reported a third-quarter 2024 core funds from operations (FFO) per share of $2.07, exceeding the Zacks Consensus Estimate of $2.03, marking a 2.5% year-over-year increase [1] - Quarterly revenues reached $824.8 million, surpassing the Zacks Consensus Estimate of $821.4 million, and reflecting a 10.3% year-over-year growth [2] - The company experienced a decline in same-store net operating income (NOI) and increased interest expenses during the quarter, which negatively impacted overall performance [1][3] Financial Performance - Same-store revenues decreased by 0.3% year over year to $424 million in Q3, while same-store square-foot occupancy increased by 60 basis points to 94.3% as of September 30, 2024 [2] - Same-store operating expenses rose by 1.9% year over year to $109.8 million, driven by higher marketing, insurance, payroll, and property taxes [3] - Interest expenses increased by 16.2% to $142.9 million compared to $122.9 million a year ago [3] Portfolio Activity - During the April-June quarter, Extra Space Storage acquired ten operating stores and one newly constructed store for a total cost of $163.9 million [4] - The company, in partnership with a joint venture, acquired five properties and completed two developments for a total cost of $114.6 million, with an investment of $30.7 million [4] - Extra Space Storage added 63 stores to its third-party management platform, managing a total of 1,921 stores as of September 30, 2024 [5] Balance Sheet - As of September 30, 2024, Extra Space Storage had nearly $88.9 million in cash and cash equivalents, an increase from $77 million as of June 30, 2024 [6] - The percentage of fixed-rate debt to total debt was 78.3%, with a combined weighted average interest rate of 4.5% and a weighted average maturity of approximately 4.7 years [6] 2024 Guidance - The company projects its 2024 core FFO per share to be in the range of $8.00-$8.15, compared to the previous outlook of $7.95-$8.15, with the Zacks Consensus Estimate at $8.08 [7] - The full-year guidance assumes a negative growth of 0.25% to 0.50% in same-store revenues and a 4.25%-5.25% increase in same-store expenses, with same-store NOI projected to decline between negative 2.25% and negative 0.50% [7]

Group 1 - Extra Space Storage (EXR) reported revenue of $824.8 million for the quarter ended September 2024, marking a year-over-year increase of 10.3% [1] - The earnings per share (EPS) for the same period was $2.07, compared to $0.96 a year ago, indicating significant growth [1] - The reported revenue exceeded the Zacks Consensus Estimate of $821.37 million by 0.42%, while the EPS surprise was 1.97% above the consensus estimate of $2.03 [1] Group 2 - Key metrics for Extra Space Storage included property rental revenue of $710.87 million, surpassing the estimated $707.21 million, reflecting a 9.2% year-over-year change [3] - Management and franchise fees were reported at $29.88 million, slightly above the estimated $29.82 million, with a year-over-year increase of 6.7% [3] - Tenant insurance revenue reached $84.05 million, exceeding the average estimate of $83.22 million, representing a significant year-over-year increase of 21.6% [3] Group 3 - The diluted net income per common share was reported at $0.91, below the average estimate of $1.12 from six analysts [3] - Over the past month, shares of Extra Space Storage have returned -7.1%, contrasting with the Zacks S&P 500 composite's increase of 1.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Group 1 - Extra Space Storage (EXR) reported quarterly funds from operations (FFO) of $2.07 per share, exceeding the Zacks Consensus Estimate of $2.03 per share, and showing an increase from $2.02 per share a year ago, resulting in an FFO surprise of 1.97% [1] - The company achieved revenues of $824.8 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.42%, and up from $748.03 million in the same quarter last year [2] - Over the last four quarters, Extra Space Storage has exceeded consensus FFO estimates three times and topped consensus revenue estimates four times [2] Group 2 - The stock's immediate price movement will largely depend on management's commentary during the earnings call, as the shares have gained about 4.5% since the beginning of the year, compared to the S&P 500's gain of 22.1% [3] - The current consensus FFO estimate for the upcoming quarter is $2.03 on revenues of $818.79 million, and for the current fiscal year, it is $8.08 on revenues of $3.24 billion [7] - The Zacks Industry Rank places REIT and Equity Trust - Other in the top 24% of over 250 Zacks industries, indicating that the industry outlook can significantly impact stock performance [8]