SALT LAKE CITY -- Extra Space Storage Inc. (NYSE: EXR) (the "Company"), a leading owner and operator of self-storage facilities in the United States and a member of the S&P 500, announced operating results for the three and nine months ended September 30, 2020.
Highlights for the three months ended September 30, 2020:
- Achieved net income attributable to common stockholders of $0.88 per diluted share, representing a 6.0% increase compared to the same period in 2019.
- Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of $1.30 per diluted share. FFO, excluding acceleration of share-based compensation expense due to retirement of an executive officer and adjustments for non-cash interest ("Core FFO"), was $1.31 per diluted share, representing a 5.6% increase compared to the same period in 2019.
- Experienced decreases in same-store revenue of (1.5)% and same-store net operating income ("NOI") of (2.7)% compared to the same period in 2019.
- Reported same-store occupancy of 95.9% as of September 30, 2020, compared to 93.8% as of September 30, 2019.
- Acquired eight operating stores for a total cost of approximately $87.4 million.
- In conjunction with joint venture partners, acquired two stores at completion of construction (a "Certificate of Occupancy store" or "C of O store") for a total cost of approximately $19.6 million, of which the Company invested $9.8 million.
- Purchased a senior mezzanine note at 98.0% of the $103.0 million principal balance.
- Added 42 stores (gross) to the Company's third-party management platform. As of September 30, 2020, the Company managed 718 stores for third parties and 253 stores in joint ventures, for a total of 971 managed stores.
- Paid a quarterly dividend of $0.90 per share.
Highlights for the nine months ended September 30, 2020:
- Achieved net income attributable to common stockholders of $2.50 per diluted share, representing a 5.5% increase compared to the same period in 2019.
- Achieved FFO of $3.74 per diluted share. Core FFO was $3.78 per diluted share, representing a 5.0% increase compared to the same period in 2019.
- Experienced decreases in same-store revenue of (0.9)% and same-store NOI of (2.1)% compared to the same period in 2019.
- Acquired nine operating stores and one C of O store for a total cost of approximately $106.8 million.
- In conjunction with joint venture partners, acquired one operating store, five C of O stores and completed one development for a total cost of approximately $85.6 million, of which the Company invested $33.9 million.
- Added 121 stores (gross) to the Company's third-party management platform.
Updates Subsequent to September 30, 2020:
- Achieved same-store occupancy of 95.9% as of October 31, 2020, compared to 93.3% as of October 31, 2019. Same-store occupancy as of October 31, 2020, includes less than 0.2% of inflated occupancy due to delayed auctions of delinquent units as a result of COVID-19.
- The Company continues to hold auctions except where prohibited by local restrictions, which impact fewer than 1.5% of wholly-owned stores.
- As of October 31, 2020, accounts receivable and collections less than 60 days have returned to historical levels.
- Invested an additional $50.0 million in convertible preferred stock of Smart Stop Self Storage REIT, Inc. ("SmartStop"), bringing the Company's total investment to $200.0 million.
- Due to the continuing uncertainty related to the impacts of the COVID-19 pandemic, including the potential for future stay-at-home orders, the uncertain economic climate, and the resulting impact on customer behavior, the Company has elected to not reinstate 2020 annual guidance.
Joe Margolis, CEO of Extra Space Storage Inc., commented: "The storage sector experienced a number of tailwinds in the third quarter that benefited our earnings. Demand was healthy and vacates remained muted, resulting in strong occupancy and increased rental rates to new customers, offset by lower late fees and higher bad debt. These improved trends resulted in better than expected same-store performance, which together with contributions from our various external growth and balance sheet initiatives, resulted in solid third quarter FFO growth of 5.6%. We recognize that future risks and uncertainties related to the pandemic and general macro-economic conditions may still impact future results, however, to date the impact has been less significant than previously anticipated."
FFO Per Share:
The following table outlines the Company's FFO and Core FFO for the three and nine months ended September 30, 2020 and 2019. The table also provides a reconciliation to GAAP net income attributable to common stockholders and earnings per diluted share for each period presented (amounts shown in thousands, except share and per share data — unaudited):
|
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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|
2020 |
2019 |
2020 |
2019 |
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|
(per share)1 |
(per share)1 |
(per share)1 |
(per share)1 |
||||||||||||||||||||||||||||
|
Net income attributable to |
$ |
114,633 |
$ |
0.88 |
$ |
108,087 |
$ |
0.83 |
$ |
325,723 |
$ |
2.50 |
$ |
307,685 |
$ |
2.37 |
|||||||||||||||
|
Impact of the difference in |
(0.05) |
(0.05) |
(0.15) |
(0.14) |
|||||||||||||||||||||||||||
|
Adjustments: |
|||||||||||||||||||||||||||||||
|
Real estate depreciation |
53,909 |
0.38 |
51,828 |
0.36 |
160,202 |
1.16 |
153,745 |
1.12 |
|||||||||||||||||||||||
|
Amortization of intangibles |
247 |
— |
1,184 |
0.01 |
1,402 |
0.01 |
5,281 |
0.04 |
|||||||||||||||||||||||
|
Gain on real estate |
— |
— |
— |
— |
— |
— |
(1,205) |
(0.01) |
|||||||||||||||||||||||
|
Unconsolidated joint |
2,279 |
0.02 |
2,160 |
0.02 |
6,667 |
0.05 |
5,944 |
0.04 |
|||||||||||||||||||||||
|
Distributions paid on Series |
(572) |
— |
(572) |
— |
(1,716) |
(0.01) |
(1,716) |
(0.01) |
|||||||||||||||||||||||
|
Income allocated to |
9,221 |
0.07 |
7,908 |
0.06 |
25,550 |
0.18 |
23,159 |
0.17 |
|||||||||||||||||||||||
|
FFO |
$ |
179,717 |
$ |
1.30 |
$ |
170,595 |
$ |
1.23 |
$ |
517,828 |
$ |
3.74 |
$ |
492,893 |
$ |
3.58 |
|||||||||||||||
|
Adjustments: |
|||||||||||||||||||||||||||||||
|
Acceleration of share-based |
— |
— |
— |
— |
1,823 |
0.01 |
— |
— |
|||||||||||||||||||||||
|
Non-cash interest expense |
1,233 |
0.01 |
1,186 |
0.01 |
3,675 |
0.03 |
3,533 |
0.02 |
|||||||||||||||||||||||
|
CORE FFO |
$ |
180,950 |
$ |
1.31 |
$ |
171,781 |
$ |
1.24 |
$ |
523,326 |
$ |
3.78 |
$ |
496,426 |
$ |
3.60 |
|||||||||||||||
|
Weighted average number |
138,098,629 |
138,719,395 |
138,415,939 |
137,848,978 |
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|
(1) |
Per share amounts may not recalculate due to rounding. |
|
(2) |
Adjustment to account for the difference between the number of shares used to calculate earnings per share and the number of shares used to calculate FFO per share. Earnings per share is calculated using the two-class method, which uses a lower number of shares than the calculation for FFO per share and Core FFO per share, which are calculated assuming full redemption of all OP units as described in note (3). |
|
(3) |
Extra Space Storage LP (the "Operating Partnership") has outstanding preferred and common Operating Partnership units ("OP units"). These OP units can be redeemed for cash or, at the Company's election, shares of the Company's common stock. Redemption of all OP units for common stock has been assumed for purposes of calculating the weighted average number of shares — diluted as presented above. The computation of weighted average number of shares — diluted for FFO per share and Core FFO per share also includes the effect of share-based compensation plans and our exchangeable senior notes using the treasury stock method. |
