Yahoo Finance Extra Space (EXR) Tops Q4 FFO, Guides '23 Below Expectation
Extra Space Storage Inc. EXR reported fourth-quarter 2022 core funds from operations (FFO) per share of $2.09, beating the Zacks Consensus Estimate of $2.08. The figure was also 9.4% higher than the prior-year quarter’s $1.91.
The results reflect better-than-anticipated top-line growth. The company experienced higher average rates for existing customers and a rise in other operating income, partly offset by lower occupancy. However, EXR’s full-year 2023 core FFO per share projection was lower than expected.
Quarterly revenues were $506.7 million, up 18.6% year over year. The top line also exceeded the Zacks Consensus Estimate of $495.4 million.
For the full-year 2022, the core FFO per share came in at $8.44, higher than the prior-year tally of $6.91 and also surpassed the Zacks Consensus Estimate of $8.42. This was backed by 22.0% growth in revenues to $1.92 billion.
Quarter in Detail
Same-store rental revenues increased 11.8% year over year to $369.6 million in the fourth quarter. This uptick resulted from higher average rates to existing customers and a rise in other operating income, partly muted by lower occupancy.
Same-store expenses flared up 6.7% year over year to $84.1 million, reflecting an increase in payroll, credit card processing fees, utilities, property taxes and insurance.
Consequently, same-store net operating income (NOI) increased 13.4% year over year to $285.5 million.
The same-store square-foot occupancy contracted 110 basis points (bps) year over year to 94.2% as of Dec 31, 2022.
Portfolio Activity
During the December quarter, Extra Space Storage acquired six operating stores for a total cost of around $146.9 million. In association with joint-venture (JV) partners, EXR acquired four operating stores and completed one development for a total cost of $82.1 million, of which it invested $22.9 million.
Extra Space Storage added 46 stores (one store net) to its third-party management platform. As of Dec 31, 2022, it managed 887 stores for third parties and 318 stores in unconsolidated JVs, resulting in total stores under the management of 1,205.
Balance Sheet
Extra Space Storage exited 2022 with $92.87 million of cash and cash equivalents, up from the $71.1 million recorded as of Dec 31, 2021.
As of Dec 31, 2022, EXR's percentage of fixed-rate debt to total debt was 64.7%. The combined weighted average interest rate was 4.1%, with a weighted average maturity of around 5.1 years.
During the reported quarter, Extra Space Storage originated $252.2 million in mortgage and mezzanine bridge loans. It also sold $17.3 million in mortgage bridge loans.
In the fourth quarter, EXR did not issue any shares under its at-the-market program and presently has $800 million available for issuance. Also, it did not repurchase any shares of common stock and had the authorization to buy up to an additional $337 million under the plan as of Dec 31, 2022.
2023 Guidance
Extra Space Storage provided its initial 2023 outlook. It expects core FFO per share in the range of $8.30-$8.60. This is lower than the Zacks Consensus Estimate of $8.74.
For the full year, management estimates same-store revenue growth of 3.75-5.25%, same-store expenses to flare up 5.0-6.0% and same-store NOI growth in the band of 3.0-5.5%.
Extra Space Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Extra Space Storage Inc Price, Consensus and EPS Surprise
Extra Space Storage Inc price-consensus-eps-surprise-chart | Extra Space Storage Inc Quote
Performance of Other REITs
Public Storage PSA reported a fourth-quarter 2022 core FFO per share of $4.16, increasing 17.5% year over year. The figure beat the Zacks Consensus Estimate of $3.99. Results reflected better-than-anticipated top-line growth, aided by an improvement in the realized annual rent per occupied square foot. PSA also benefited from its expansion efforts through acquisitions, developments and extensions.
Prologis, Inc. PLD reported a fourth-quarter 2022 core FFO per share of $1.24, beating the Zacks Consensus Estimate of $1.21. The figure climbed 10.7% from the year-ago quarter. Prologis’ quarterly results reflected better-than-anticipated revenues, driven by healthy leasing activity and solid rent growth.
Alexandria Real Estate Equities, Inc. ARE reported a fourth-quarter 2022 adjusted FFO per share of $2.14, surpassing the Zacks Consensus Estimate by a cent. The reported figure also compared favorably with the year-ago quarter’s $1.97. Alexandria Real Estate Equities' results reflected decent leasing activity and rental rate growth during the quarter.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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