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Extra Space Storage Inc. Stock Price: Quote, Forecast, Splits & News (EXR)

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Company Profile

New

Extra Space Storage Inc. Price & Performance (EXR)

Stock Performance

Updated Mar 20, 8:00 PM UTC

EXR:NYSE

$145.87USD

0.63% · $0.92

Open

$146.97

High

$147.99

Low

$145.50

Market Cap

$30.92B

P/E Ratio

36.3

Volume

922.22K

Year High

$184.87

Year Low

$131.02

Dividend Yield

4.44%

News & Market Insights

Extra Space Storage Faces Revenue Challenges Despite Strong EPS
Feb 26, 2025
Extra Space Storage Inc. reported Q4 2024 earnings that beat EPS expectations at $1.24 per share, surpassing forecasts by $0.17. However, revenue fell short at $821.89 million, missing projections by $3.36 million. Despite maintaining high occupancy rates, the stock dropped 4.87% in after-hours trading, reflecting investor concerns over revenue and guidance.12
Insider Confidence Grows as Extra Space Storage CEO Invests Millions
Mar 10, 2025
CEO Joseph Margolis of Extra Space Storage showcased confidence in the company by purchasing $4.23 million worth of shares. This insider move follows the company’s recent earnings report, which highlighted resilient performance despite a challenging market. The investment signals long-term optimism in the company’s growth potential.34
Extra Space Storage Strengthens Liquidity with $500 Million Notes Offering
today
Extra Space Storage completed a $500 million senior notes offering, priced at 5.400% interest due in 2035. The move aims to optimize the company's capital structure and enhance liquidity, providing flexibility for future growth. The notes come with semi-annual interest payments and are part of a broader financial strategy.56

What's Happening

Peers

Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

2.63%

Report Period

Q4 2024

EPS Estimate

—

Implied Move 1d

—

Transcript

11m 10s

Thank you, Jared, and thank you everyone for joining today's call. To begin the call, I would first like to address the impact the recent California wildfires have had on our people and properties. I'm happy to report that all of our teammates are safe and that none of our properties suffered physical damage from these fires.

11m 33s

I recognize that some of our peers in the industry were directly and personally impacted by the fires. And everyone at Extra Space wishes them Turning to the fourth quarter. Results were slightly ahead of our internal expectations. Core FFO in the quarter was $2.03 per share, and full year core FFO was $8.12 per share. Operationally, demand was steady allowing us to maintain near record occupancy and to compress the year over year rate gap to new customers from negative 9% in the third quarter to negative 6% at year end.

12m 19s

While we are still experiencing a headwind from lower new customer rates, we are seeing an improvement on a year over year basis a trend that has continued into the first quarter. The net effect of occupancy growth less the headwind from lower rates resulted in a same store revenue decrease of 0.4% in the quarter. Which was in line with our expectations. Expenses exceeded our expectations driven by higher than estimated property taxes, resulting in same store NOI of negative 3.5%. Revenues for the LSI same store pool finished the year slightly above the midpoint of our guidance. And light the extra space same store pool benefited from strong occupancy growth partially offset by lower rates. As previously announced, we have concluded our dual brand test and have moved all of our stores to the Extra Space brand. We are starting to see the positive and still developing benefits of this move. Including savings in marketing, and increased rental activity. We expect the former Life Storage stores to continue to outperform the legacy Extra Space properties in 2025. Turning to external growth, our diverse growth strategies and channels are firing on all cylinders. In 2024, we invested $950,000,000 in various joint venture, structured and wholly owned investments, [indiscernible] With more than $610,000,000 occurring in the fourth quarter.

14m 16s

Nearly all these investments were generated off market through our existing industry relationships. We also originated $224,000,000 in bridge loans in the fourth quarter. Bringing total bridge loan origination to $980,000,000 for the year. [indiscernible] Our industry leading third party management program grew by 114 net new stores in the fourth quarter. Bringing total net new managed stores for the year to two thirty eight. Our best third party growth year ever excluding managed store gains from the Life Storage merger.

14m 59s

Overall, it was another solid year for Extra Space Storage. And I would summarize our performance in 2024 as follows. We were able to maintain industry leading occupancy and generate modest same store revenue growth despite an environment marked by new customer price sensitivity. Outsize non controllable expenses particularly real estate taxes, were a headwind leading to leading to modestly negative same store NOI. Yet we were able to offset this through strong growth in our other storage focused business lines of tenant insurance, bridge lending and third party management. Allowing us to generate positive year over year FFO growth.

15m 53s

This reinforces our strategy of growing diverse ancillary revenue streams as well as prudent expense control and capital allocation to supplement investors' returns during all cycles in the market. We expect these additional revenue streams to continue to supplement property returns in the future as the market recovers. We are confident that our higher portfolio occupancy positions us well to capitalize on the demand that is in the market and we are looking forward to improving core business fundamentals as we progress through 2025. We will continue to leverage our scale to find efficiencies in other areas of the business to drive outsized FFO growth relative to our sector. I will now turn the time over to Scott.

16m 48s

Thanks, Joe, and hello, everyone.

16m 51s

Our fourth quarter results were slightly ahead of our expectations with one uncontrollable exception. We had outsized increases in property taxes in Illinois Georgia and Indiana, causing extra space same store expenses to come in at 9.5% for the quarter. These increases were partially offset by lower G and A higher tenant insurance and interest income. We completed a $300,000,000 reopening of an existing bond in the fourth quarter and another $350,000,000 reopening in the first quarter of twenty twenty five. We have used the proceeds from these offerings to repay maturing loans We also initiated a $1,000,000,000 commercial paper program in the fourth quarter which enables us to borrow at interest rates that are 30 to 50 basis points less than our lines of credit. In last night's earnings release, we provided our 2025 outlook for the extra space same store pool.

18m 3s

The pool is now eighteen twenty nine properties and includes the life storage same store properties from 2024 plus additional properties that now meet our same store definition. Our same store revenue guidance assumes a 50 basis point benefit from the change in pool. Our guidance does not assume a material improvement in the housing market during the summer leasing season, and includes a 20 basis point headwind due to state of emergency restrictions in Los Angeles County. We are encouraged by our strong occupancy levels and the potential benefits of moderating new supply. We are confident that we can hold occupancy but we believe it would be difficult to drive a meaningful reacceleration on revenue growth Until we regain pricing power with new customers, We are seeing some positive signs with new customer rates that indicate we are getting closer but we are still we still have not seen enough progress to date to feel confident that a forthcoming inflection point will have a significant impact on the 2025 leasing season Therefore, we have not included a meaningful acceleration in pricing the same store pool, our revenue guidance is negative 0.75% to a positive 1.25%, our expense growth range is negative is positive 3.75 to 5.25% driven by expected increases in property taxes and property insurance increases expected in the latter half of the year resulting in an NOI range of negative 3% to positive 0.25%.

19m 53s

Our core FFO range for 2025 is $8 to $8.3 per share which implies a 2% growth rate at the top end and a 0.4% growth at the midpoint. We continue to find ways to expand our other lines of business and grow FFO per share. With our occupancy levels at near record highs, we are confident that we are very well positioned to push rates quickly when pricing power returns. Let's open it up for questions.

20m 28s

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Ki Bin Kim from Turis. Please go ahead.

21m 3s

Thank you. Good morning. Just going back to your comments, around guidance and not assuming much pricing power acceleration. Maybe you can just flush that out for us a little bit more. For example, like what were the rates year to date so far [indiscernible] what are you assuming for the rest of the year Yes. So maybe just to give you a little more color on that. Our rates in the third quarter of last year were down about 9% average for the and we ended the year closer to being down about 6%. And as of today, our rates are essentially flat. So we have seen a sequential improvement In terms of assumptions for the remainder of the year, we would assume that rates continue to improve moderately as we move through the year. And we would assume a slight benefit from occupancy through the year. But again, we don't assume a big improvement from the housing market or big recovery there. So kind of just more of the slow growth as we move through the year. Okay, great. And on the LA wildfire impact on guidance, can you just provide some more details around how you got to that 20 basis points headwind?

22m 17s

Sure, Kevin. So we have 73 stores in our same store pool in L. A. County. It accounts for about 7% of our new pool same store revenue. So that's less than the old pool. [indiscernible] we believe we're modeling about a 20 basis point decrease in the same store pool revenue from the state of emergencies, which we are assuming are in place for the entire year.

22m 47s

Okay. And is that I know it's not your job to look at other people's other companies' conference calls, but it's different than your other peer of Just curious like what the the difference was besides just market exposure?

23m 2s

Yes. It's hard for me to comment on others [indiscernible] I'm not sure I can give you an answer for that.

23m 11s

Okay. Thank you. And your next question comes from the line of Jeff Spector from BofA.

23m 20s

Please go ahead.

23m 22s

Great. Thank you. Joe, I thought it was interesting, I think in your opening remarks, you talked about you said you still expect LSI to outperform EXR in 2025. And again, tell me if I'm wrong, when I think about the LSI portfolio, I think of maybe weaker demographics than the EXR portfolio, And we are starting to see some continued weakness let's say, on the lower demographics, So it's interesting your comment. What are you seeing? What gives you confidence that the LSI will continue to outperform? Maybe what lessons are you learning there? Thank you.

24m 4s

So A store in a primary, secondary tertiary market, weaker, stronger demographics, Improvement is relative. Right? So we're not saying that the LSI stores in a $15 market are going to get to $30 We're just going to say they are going to improve in the market. So when we look at those markets and look at the performance of the LSI stores and the Extra space stores in those markets, we We still have some some gap that we feel we can close.

24m 43s

Okay, that's fair. And then I guess just to summarize, listening to both you and Scott's comments, it sounds like 25 right now the setup into peak leasing is very similar to last year.

24m 59s

Is it fair to say laser focus still on housing as a key driver of demand Anything you would add to that or Is that incorrect summary? Thank you.

25m 13s

So I would say we're laser focused on a lot of things. Housing is certainly an important component Our customers who tell us they're in the process of moving which is all moves, not just housing moves, department moves, move back home. At around 48% That peaked out at 63% in the third quarter of twenty twenty one. So there certainly is some decline in housing demand but our systems are able to capture more than our share of the demand as evidenced by our very high occupancy industry leading occupancy at very similar rates to our competitors. We're not capturing that demand by undercutting rates. We're doing it through our customer acquisition and pricing system. So housing is important, supply certainly something we're keeping an eye on. We're continuing to see a reduction in new deliveries, not to zero, but continuing year over year reduction And we're also laser focused on the consumer. And we see that the existing customer remains very strong, increasing lengths of stay, acceptance of rate increases, very low default rates, and we see price sensitivity in the new customer, but as Scott mentioned in our trends of year over year rates, that seems to be improving somewhat too.

26m 48s

Sorry for the long answer.

26m 50s

Thank you.

26m 54s

Thank you. And your next question comes from the line of Michael Goldsmith from UBS. Please go ahead.

27m 1s

Good afternoon. Thanks a lot for taking my question. First question is on the dual brand dual to the single brand strategy. Can you talk a little bit about sort of like the uplift that you're seeing from stores that have been converted is that tracking in line with your expectations? And And is that kind of on track for the expected results as you head into the peak leasing season? Yes. So the first result we saw was a reduction in paid search spending. We had a reduction of $2,000,000 in the fourth quarter. In paid search spending for the LSI stores. That should continue throughout 2025. We're seeing an increase in conversions in those stores, better SEO rankings, somewhat better local rankings, not as good as the SEO, but also improving. And all of that is leading to a 5.5% increase in rentals in the LSI stores that are in the same markets as the Extra space stores. So we've We have not included in our in our forecast, in our guidance any additional improvement other than what we've experienced to date. And hopefully, if these trends can continue, we'll have some upside.

28m 31s

Thanks for that, Joe. And as a follow-up, I'd like to talk about the bridge loan book. It's gotten a little bit larger and you're guiding for that to continue to increase. So can you just talk a little bit about how you envision how big you're going to envision that getting and maybe the interplay between bridge loans and acquisitions [indiscernible] how that can support your earnings growth algorithm this year and in the future? Thanks. Yes. Thank you for that question. And Rick, recognizing that the bridge loan program has interplay with both the acquisitions and the management business, right? We manage all of these stores that we make loans on. So it helps increase that business We bought almost $600,000,000 worth of deals out of the bridge loans. And frankly, this is a little Softer benefit, but just the relationships, industry relationships we form with these new parties helps us do more business. Right? The more people you've done successful business with, the more future business you get. So that being said, the bridge loan business is a capital allocation play. And in 2024, frankly, up until the fourth quarter, Given our cost of capital and what we saw in the market, we thought a good place to put our capital was into the bridge loan.

30m

Program And we did increase our balances. We've given guidance that we're going to continue to increase our balance in 2025. But that's somewhat subject to properties being sold. And we may buy them or get a prepayment penalty. It's also subject to we have the flexibility to sell A notes. So we can control amount of capital we have allocated to this program and if we have other or better uses of capital, we can certainly shift directions.

30m 38s

Thank you very much. Sure.

30m 42s

Thank you. And your next question comes from the line of Brandon Lynch from Barclays. Please go ahead.

30m 48s

Great. Thanks for taking my questions. It looks like vacates were down about 4.4% year over year. Maybe you could talk a little bit about what you're doing differently to improve that retention?

31m

So it's it's mainly about trying to identify customer, the type of customer, not the individual who is more likely to be a long term customer [indiscernible] make efforts to attract those customers and get them in the door. So our pricing and customer acquisition strategies are focused on attracting those customers even if we have to sacrifice a little revenue upfront to do so? Because over the long term that will produce higher customer value, higher long term revenue.

31m 41s

Maybe related to that, we look at the ECRI opportunity for the coming year, perhaps you have some fertile ground just because of the [indiscernible] Can you talk about the opportunity that you see there?

32m

I'm not sure. I think the opportunity is the same that we see in prior years where we want to have a fair and sustainable program where we get customers to the market rate, to the street rate, within a reasonable period of time.

32m 21s

Okay, very good. Thank you for the color.

32m 25s

Thank you. And your next question comes from the line of Ronald Camdell from Morgan Stanley. Please go ahead.

32m 34s

Just two quick ones for me. One, just on the I know you mentioned in the opening comments surprised, but can you sort of say a little bit more what what sort of happened Clearly, that's not being baked into the guidance for this year. Just a little bit more color there and would love some thoughts on insurance as well. For this year?

32m 55s

Yes. So property taxes in the fourth quarter were higher partly if we're at a state level, the one state that was consistently higher across the board was Georgia. We saw more aggressive reassessment there. We also saw individual properties in the states of Illinois, Indiana, New Jersey, where you saw very large increases on specific properties that caused a large variance. Our assumption going into 2025 is that some of the property tax increased pressure It's still there in 2025. We budgeted between 68% increase for 2025 per property taxes. We have not budgeted a lot of successful appeals, but that's to be seen. We're going to appeal many of these and hopefully we win and hopefully we're able to keep that lower than that. But I think based on the current environment, we think that it's the proper thing to do to budget at 6% to 8%. In terms of property and casualty insurance, you've seen a pretty heavy year in terms of natural disaster And I think it's really a to be determined type item here. And so we felt like it was prudent to budget a higher number there. We budgeted close to 20% increase in our when we re up our insurance in June.

34m 13s

Great.

34m 14s

That's helpful. Then my second one, obviously, it's early to talk about AI, but you guys have always been sort front footed on the technology front. Just curious if there's any sort of full hanging fruit opportunities, whether it's lease signings, [indiscernible] that you guys are attacking or see as an opportunity near term.

34m 31s

Thanks.

34m 33s

So we want to to be cautious AI applications and not necessarily be a pioneer There's certainly some applications around the office and with data analytics that are pretty straightforward and easy. With respect to customer facing applications, we are testing and walking into those to make sure that they are in fact beneficial and to not hurt our overall operations.

35m 15s

That's for me. Thank you.

35m 19s

Thank you. And your next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Please go ahead.

35m 26s

Hi, thanks. First, I just wanted to go back to the topic of property tax increases you cited in in Georgia, Illinois, Indiana. It sounds like that's recurring at least for the first March. Is this a trend that you see becoming more widespread in other markets? And is there anything else in that 6% to 8% property tax budget outside of what you've mentioned and already experienced?

35m 56s

So we've seen states be aggressive over the past several years. You've seen Florida, Texas, Texas reassess when we go back and compare revenue growth over the last five years to property tax growth, the values of the properties have gone up.

36m 10s

So states typically lag in terms of how they reassess. And so we're hoping this is the back half of that. But it's still [indiscernible] what we're seeing as a result of the property revenue growth that we saw in these states and the across the board for the last five years.

36m 29s

Okay. But it sounded like you commented that it was specific to individual properties. So it wasn't necessarily specific to certain counties or municipalities. It was It was just on an individual property basis. Is that right?

36m 44s

It is. And then it also has to do with the some of the LSI property reassessment. So if you look at growth in the two pools, which no longer going to talk about in the upcoming year, we won't break them out separately. [indiscernible] We have seen larger property tax increases in the LSI pool as some of those stores were reassessed.

37m 4s

Okay. And then Scott, you mentioned that you expect a slight contribution to revenue growth from occupancy throughout the year or the EXR portfolio ended the year about 120 basis points higher. Year over year LSI the LSI segment was a little over 200 basis points higher year over year. Can you just flesh that comment out a bit in terms of what the revenue growth forecast is including maybe at the high and low end of the range in terms of occupancy gains during the year and how we should think about the occupancy build during the height of the rental season, whether you expect it to similar to 2024? Do you expect a little bit more seasonality similar to [indiscernible] Sort of historical averages.

37m 52s

Yes.

37m 52s

Let me talk maybe a little bit on how we model and then come back a little bit to occupancy. Maybe we're a little different in that we're not giving assumptions on rates and exact assumptions on occupancy. You push one and the other one moves. And so I think it's difficult to do. So we typically model revenue and then increase on a month over month basis based on the current economic conditions and what we're seeing at the property level. Now that being said, we do recognize that the front half of this year is going to have an occupancy delta. So you're starting the year 20 basis points ahead. We are 120 basis points ahead on the new same store pool as of the February. So we would expect that occupancy delta to burn off somewhat as you move throughout the year become less important in the back half of the year.

38m 43s

Okay. All right. Thank you. Thanks, John.

38m 48s

Thank you. And your next question comes from the line of Luanda Nabria from BMO Capital Markets. Please go ahead.

38m 56s

Hi, good morning. Just hoping you could talk a little bit about the pricing dynamic You noted some early signs of an uptick, but nothing is But at the same time, if I look at the move in versus move out spread, that hasn't necessarily compressed. So hoping you could flush out why you think that's the case that although the year over year move in rates that year over year decline is compressed that move in versus move out hasn't necessarily moved, if anything, it's gone slightly the other way.

39m 28s

Yes. Some of that's the seasonality in the business, Juan. So third quarter, to fourth quarter, you're typically worse in the fourth quarter than you are in the third quarter. Think you've seen that with some of our peers. So that's not unexpected. We would expect that roll down to be less in the summer months than it is right now. [indiscernible] over time that should tighten up some as rates get better.

39m 55s

And any incremental tidbits on the you said earlier signs of improving pricing power like just hoping you could flush that out a little bit?

40m 7s

That is based on our comment from you went from negative 9% in the third quarter to negative 6% at the end of the year to now being flat year over year. You're seeing those as incremental increases just month over month it is getting better. And we would expect to see that as this is the time of year when rates start ramping up as you move into your leasing season.

40m 32s

When you go from January to July, you always see rate increases. During that time period and we would expect to based on our occupancy and where it is today to be in a position to move rates up again.

40m 46s

Okay. And then just as my second question, you noted a 50 basis point benefit to same store assumptions this year from the inclusion of a life portfolio. Just curious if you can give some context around that versus comments you've made historically that in a normal year yet 01/2020 and it's not too dissimilar of a benefit. Is it just a product of kind of a flattish at best market to causing that benefit from the life inclusion to the pool? Or So historically, we have seen improvement as we've changed the same store pool. Typically it's not all the way up to 50 basis points. This year, if you look at the performance in the fourth quarter of the Life Storage stores, compared to the extra space stores, they're not that dissimilar. In terms of performance at that point. However, as Joe mentioned, we do there. We just haven't necessarily modeled really, really strong rate growth. And then also the fact that you're moving a large portion of properties in we do see incremental increase, but it is weighted a bit to that group of properties in terms of the increase.

42m 5s

Thank you. Thanks, Juan.

42m 9s

Thank you. And your next question comes from the line of Eric Wold from Citi. Please go ahead.

42m 16s

Hey, thanks. For the LA rent cap of 10% I guess what does that cap pertain to? Like what's the initial rate from which you can only grow at 10%? Is that the the existing rate that your customers are already paying? Is that the discounted rate that you offer on a move in just trying to understand what that that sort of rate is within a dynamic pricing model and how you determine that.

42m 40s

Yes, it's an excellent question. And it is not I'm not sure it's 100% clear.

42m 48s

In the state of emergency, but we are not increasing rates over Existing rates that are paid by the customers. So Whether whether that's street rate, web rate or whatever, Those are the base rates we're using.

43m 11s

Okay.

43m 12s

I think So it's not I can't just look at what's in the sub and say, okay, this is what the average customer is paying right now and it will never be 10% above that, I'd say a different process of looking at what the street rate, the web rate is and some other things and it's bit more dynamic than just taking that average of what your customers are paying right now.

43m 35s

I think that's true, but I also think that will get you pretty close.

43m 40s

Got it.

43m 40s

Okay. And then second question, You said that I appreciate that you don't guide the rate and occupancy and the dynamic, one goes up, universally correlated, the other goes down. But I thought I heard you say that move in rent growth was sort of flattish year over year. It's expected to turn positive and get a little bit better as the year goes on. And then occupancy, to your point, is over year and probably should be a positive contributor I was just curious how you're getting the kind of flattish revenue growth within that? Is there like an offset that I'm missing, whether it's higher churn, lower ECRIs, like what I guess why wouldn't it be more positive as if you're already flat on move and rents and it's going to get better then your occupancy is a positive contributor?

44m 27s

So obviously, it depends on where you are in the range. So you're making those assumptions on the midpoint there. As you move through the year, you get more benefit in the back half of the year than the front half. So we ended the in the fourth quarter, you were down 4%, the life storage stores were also down. So moving forward, you're starting on a lower number and then it obviously gets better as you move through the year. So a lot of your assumptions are somewhat based on where you are in that range.

44m 59s

Got it. All right. Thank you. Thank you. And your next question comes from the line of Kegan Karl from Wolfe Research.

45m 10s

Yes. Thanks for the time guys. I guess before I get into my questions, just to clarify delta year over year, that commentary for both the extra space and LSI pools together or would that hold true for both individual pools?

45m 28s

So I'm not sure I'm following where you're saying street rate delta. When we're giving rates here, giving assumptions, it's the average rate to our new customers. So it's the move in rate Yes, but you're saying like it was flat year over year, right? Like does that hold true for the combined same store pool? Was that only for the extra space pool? Was that like, I guess, I'm just trying to figure out how the extra space and life storage pools fit in that.

45m 51s

That is the new same store pool. Okay.

45m 56s

That's super helpful.

45m 58s

So I guess getting to the questions. First, just how should we think about like the curve of moving rates versus typical seasonality? Like are you expecting anything different in 2025 relative to you normally would expected or what you experienced last year?

46m 14s

I think that's to be determined kind of the strength of what demand looks like as you move through the season here. You would expect it to move up. It always does during the summer months. Those are kind of that June timeframe is really our peak revenue our peak rate timeframe and then you start moving them back down as rentals start slowing as you move through the summer. So we would expect that again this summer. And then the degree of those increases is going to be depend on how rentals vacates turn out and how your occupancy stands.

46m 47s

Got it. And then maybe one for Joe. Just how should we think about capital recycling this year given your LSI portfolio becomes ten thirty one eligible?

46m 58s

So we sold a handful of properties last year. The majority of them were LSI properties. We have modest list of properties that we're looking some to bring to the market, which would be ten thirty one eligible.

47m 15s

Some we may offer to joint venture [indiscernible] but we constantly want to improve the overall quality and market exposure, market diversification of the portfolio. Through dispositions and this year will be no different.

47m 35s

Great.

47m 35s

Thanks for the time guys.

47m 36s

Sure. Thank you. And your next question comes from the line of Nikhilikov from Scotiabank.

47m 46s

Thanks. First question, I guess for Scott.

47m 49s

Can you just talk about why the G and A and guidance is up about 10% this year? [indiscernible] So we've experienced a lot of growth over the past couple of years. We had a very strong fourth quarters. We added properties. We're forecasting growth this year in terms of acquisitions as well as the third party management that required to manage those properties, both in the field as well as back office If you think about the properties, they're managed by regional managers. It's not completely linear. This is one of those years when we have to take one of those stair steps up as we add additional support level that's supporting the regional managers. So that's the largest one. And then to a lesser degree, we've also gone back we've increased our technology spend as we have focused the last couple of years on integrating the LSI properties and put a few things on hold. So we've really tried to move those items back up. So it's really to support the properties and support the technology spend.

48m 53s

Okay, thanks. And then second question is just as you think about the pricing strategy, which has been in place for a while now of some discounting on the front end. And then getting ECRI benefit for the customer to get up to a street rate. Can you talk a little bit about whether you're seeing any differences in regions or maybe in testing on pricing strategies about where you feel you have ability to kind of get remove some of that discounting on the front end. And I guess the second question on that is, at what point does is there maybe a risk here that the entire industry is moving to this heavily discounted front end pricing and it becomes hard to get the consumer to be untrained from that type of pricing?

49m 53s

Yes, good question. So to answer the first one, we really Don't look at it by region or market, Our algorithms, our systems will reprice every unit type in every store every night. And to the extent that conditions in the market, rentals, vacates, whatever, dictate a change one way or another. That will automatically happen on a very, very granular basis. So Different behavior in different buildings, not necessarily markets or regions or demographics. Different behavior in different buildings is addressed on a nightly basis. So I'm not overly concerned about what others do. In the market for a couple of reasons. One is customers shop very, very few alternatives when they're looking for storage. It's not that important of a purchase. They're not buying a house or a car. So almost 85% of our customers shop two, one or zero alternatives before they rent with us. So what's most important is to be visible to that customer when they look. Most of them look online. To be in one of those top positions on the search page, on the first page of the search page. So what others are doing who are not that visible to customers is not that much of a threat to us.

51m 36s

But again, we're going to to the extent we need to to change and adapt and innovate, we will. Thank you. And your next question comes from the line of Michael Mueller from JPMorgan. Please go ahead.

52m 2s

Yes. Hi. I guess first, can you talk a little bit about acquisition pricing and where you think returns need to be to see a lot more on balance sheet activity compared to JV activity?

52m 17s

Sure. So we Try to be and are very faithful to our cost of capital analysis and given where interest rates are, in our stock price, we have what we see as a cost of capital that is not too different than what things are trading for. In the market, and therefore on market opportunities are few and far between to put on balance sheet. The heavy transaction load that we did in the fourth quarter was structured off market, opportunities. We took advantage of a $74,000,000 embedded promote in one deal. That made it accretive.

53m 11s

So I think until the market changes, you'll see us lean heavily into the joint venture structure where we can put in a minority of the capital in a very accretive fashion because of the benefit of the structure and the management fees and the tenant insurance. And not not do a lot of on balance sheet acquisitions. Got it. Okay.

53m 37s

And then, second question, going back to the comment about seeing a pickup in rental activity in the LSI portfolio post moving back to one brand. I mean, What What's driving that do you think? I mean, what was the drag from operating under the LSI banner? Or are you doing something different on the rate side again? I mean, what's driving that [indiscernible] Sure. Good question. So the theory of having two brands was that we could get hopefully double the digital real estate. We could get two entries in the paid search section two entries in the local or map section and two entries in the organic or [indiscernible] And when we went to two brands, it was easy to get to entries in the paid section because we bought we were spending on an annual run rate $10,000,000 more in paid search to have those two entries. And we had some improvement in the maps, but not as much as we anticipated. And we had significant improvement in the SEO where we went from LSI maybe had an average spot of seven or eight and we moved them up to closer to four or five. But 70% of the clicks are in the first three entries.

54m 57s

You had to be on the first page. Of the organic section. So although Theoretically, we were right. We were improving our position. We weren't improving it enough to pay for the cost of the second brand and move the needle. So now everything is granted extra space Digitally, At least And We are seeing the customers come to the Extra Space brand and Extra Space almost always ranks in the top spots in all of those three categories. So we're seeing getting more clicks, more views, higher conversion rate, leading to more rentals. We're saving money because we don't have that extra Got it. Okay. That's super helpful. Appreciate it. Thank you.

55m 50s

Sure.

55m 52s

Thank you. And your next question comes from the line of Salometta from Green Street.

55m 59s

Hi, guys. Thanks for taking my question. Got a quick one here kind of on the ECRI front, but can you guys provide some color on how ECRI has trended and where do you guys see them going into the future? As move in rates, as you said, look to improve in 2025, could we expect to see maybe slightly less aggressive rent increases than what we saw in 2024. And has there been any increased sensitivity as well that you've seen as of the fourth quarter?

56m 32s

So I'll take those in reversed order. We haven't seen any change in Our NPS scores for departing customers are extraordinarily high. We do have some customers that will call the store manager or the call center and complain about a rent increase or want to know more information. And we give those those teammates the authority within a range to address that customer concern. We don't want to lose that customer. We think it's a good customer experience to have those concerns addressed right away. The number of customers who are are going we're getting that relief has not changed at all. A very small number and it hasn't increased at all. The number of customers who are vacating stores based on getting an ECRI notice. We keep control group of folks who don't get an ECR notice who were supposed to and compare their move out rates to those who did get an ECRN notice, is very steady. That hasn't increased at all.

57m 41s

So we monitor this very closely and there's nothing in what we see that would suggest a need for a change in the program.

57m 54s

Thank you. And could you just touch on on if you see rents improve in '25, if you're always look to be pretty aggressive in 2024, Do we expect to see maybe see slightly less aggressive ECRIs because of that?

58m 10s

I'm not sure I know what the word aggressive means, what an aggressive ECRI is. [indiscernible] The ECRI amount is going to be driven by what market rate of the unit is and what the rate of that customer is and whether it's because they came in at a discount or whatever. And street rates spike that will give us the opportunity to send out incrementally larger ECRIs or if our strategy is to offer even greater discounts on introductory rates, the same thing, but it's the aggression as you put it is just to get the customer to what the current market rate is.

59m

All right. Thanks for that.

59m 5s

Thank you. And your next question comes from the line of Caitlin Burrows from Goldman Sachs. Please go ahead.

59m 13s

Hi.

59m 13s

This is Jeremy Kiel on for Caitlin. You guys touched on it briefly earlier in the call, but for incoming supply reduction, can that really help dramatically improve move in rates while housing turnover remains low? I guess, can less competition be a catalyst or pricing while the main remains low? Is kind of what I'm getting at.

59m 35s

So, it's a factor. I don't think it's a sole factor, but certainly a positive factor that helps And I also would I would also maybe disagree a little bit that demand is low. Right? Everything that we're seeing in terms of top of funnel activity In the case of maybe demand is low compared to COVID, but compared to historical periods, demand is is healthy. Demand is steady. And if you look at our occupancy, we ended the year at Extra space pool at 93.7%. We're keeping our stores very full. Price sensitivity in the customers that is leading that demand not to price at levels we want, but there's is enough customers out there to keep the stores full.

1h 31s

Got it. Thanks for the clarification.

1h 33s

That's all from me. Thank you. And your next question comes from the line of Omatayo Okusanya from Deutsche Bank. Please go ahead.

1h 45s

Yes. Good morning out there.

1h 48s

Quick question on interest expense. Again, I understand you have the new CP line, you did some debt refinancing. But just your $25,000,000 guidance relative to So curious if there's anything going on in regards to like swap maturities or any other kind of less capitalized interest? So how do or anything else that might be in that interest fully accounting for?

1h 1m 19s

Not terms of swaps, we do have some loans coming due. And so some of the and so I guess it is indirectly related to swaps where some of those loans are swaps. For instance, we had a $245,000,000 loan come due in January that was swapped and now you're refinancing it at market rates today. Those rates should be reflected in our [indiscernible] in the debt detail, you should be able to see those. But otherwise, what we've done to model interest is we model the forward curve and then we also have increased our debt to account for any investment activity including the bridge loans.

1h 1m 56s

Okay. That's helpful. And then in regards to the insurance program, just given a lot of what we're seeing, whether it's again hurricanes and flu to hurricanes in Florida, the unfortunate wildfires in LA, Just kind of curious, one, how you're underwriting that program? Two, whether it changes your appetite to take some of that property risk on through your insurance program?

1h 2m 21s

Yes. So, we continue to shop at as much as box [indiscernible] Tried to make sure we have a lot of competition with the addition of the LSI stores. We actually added some additional vendors there.

1h 2m 38s

So we'll continue to do that. We will potentially take some risk. It's possible So I think that's to be seen. But we always have them price it multiple ways to see the price of that incremental risk that we're taking.

1h 2m 55s

And so it is something we're open to. Thank you.

1h 3m 2s

Thank you. And your next question comes from the line of John Peterson from Jefferies. Please go ahead.

1h 3m 9s

Okay. Thank you. So on the year over year change in move in rates, two questions on that. One, are you able to give us what that is on the LSI portfolio isolated out? I'm just curious about the cadence of that change because you said it was down percent at the end of the year and were flat today.

1h 3m 27s

Has closing that gap been something that's happened in the last like two or three weeks or something that's gradually happened given that we're already two thirds of the way through the quarter.

1h 3m 36s

Yes. So we've combined the pools.

1h 3m 40s

We'll continue to report on the one pool.

1h 3m 43s

I can tell you they're not that different. In terms of cadence, it actually took place in in January and part of that is just the comparable for last year. So rates did go down last January. So it was an easier comp compared to December.

1h 3m 59s

Okay. All right. That's helpful.

1h 4m 1s

And then maybe shifting gears another question. So there's obviously been some job losses in the DC market. Just curious if you guys are seeing anything in that portfolio And then maybe bigger picture because it's been more than a decade since we've had have had a normal recession, I guess, putting COVID aside.

1h 4m 20s

Maybe talk about what a job loss driven recession might look like for the storage business since we haven't seen that in a while?

1h 4m 29s

Yes. So way too soon to see anything in D. C. We haven't seen any increase in vacate to move out anything significant [indiscernible] D. C. Is one of those markets historically that's been incredibly steady. Doesn't have the ups and doesn't have the downs in other markets. But maybe we're in a new world, I don't know. Job loss driven recession is a scary thing.

1h 4m 55s

Right? The number one kind of correlate a factor for storage success is job growth, not housing market. [indiscernible] we would have to manage through that That being said, storage is an asset class that has demand generators through all economic cycles. Not only good economic cycles, people need to move home, people need to move across the country, people need to get roommates, people need to run their businesses out of a storage facility, not out of a flex space. So we do better than other property types during downturns, but we're showing not immune Got it. Appreciate the color. Thank you.

1h 5m 45s

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Joel Margolis, for any closing remarks.

1h 5m 53s

Thank you everyone for your interest in Extra Space We the team looks forward to continuing our conversations. In the near future.

1h 6m 4s

And the team is also very excited to take advantage of improving market and some of the tailwinds that we anticipate in 2025. Thank you very much. Have a good day.

Key Insights

Core FFO Performance: Core FFO for Q4 2024 was $2.03 per share, with a full-year figure of $8.12 per share. The 2025 guidance for Core FFO is $8.00 to $8.30 per share, implying a growth rate of 0.4% to 2% at the midpoint and top end, respectively.
Same Store Revenue and NOI Guidance: For 2025, same-store revenue is expected to range from -0.75% to +1.25%, with expense growth projected at 3.75% to 5.25%, driven by property tax and insurance increases. This results in an NOI range of -3% to +0.25%.
Occupancy and Pricing Trends: Occupancy levels remain near record highs, with a year-over-year improvement of 120 basis points as of February 2025. Move-in rates have improved from a -9% year-over-year decline in Q3 2024 to flat as of early 2025, with expectations for moderate rate increases during the leasing season.
Growth Initiatives: In 2024, $950 million was invested in joint ventures, structured investments, and wholly owned properties, with $610 million occurring in Q4. The bridge loan program originated $980 million in loans for the year, with plans to continue expanding this program in 2025.
Brand Consolidation and Operational Efficiencies: The transition to a single Extra Space brand from the dual-brand strategy has resulted in $2 million in Q4 marketing savings and a 5.5% increase in rentals for former Life Storage stores. This move is expected to drive further efficiencies and rental activity improvements in 2025.

Recent Transcripts

2024 results show steady performance amid challenges, with diverse revenue streams driving growth.

Income Statement

Revenue

	2020	2021	2022	2023	2024
Revenue	$1.4B	$1.6B	$1.9B	$2.6B	$3.3B
Cost of Revenue	$387M	$398M	$469M	$671M	$905M
Gross Profit	$969M	$1.2B	$1.5B	$1.9B	$2.4B
Gross Profit %	71%	75%	76%	74%	72%
R&D Expenses	$0.41	$0.55	$0.49	$0	$0

2020

2021

2022

2023

2024

Revenue

$1.4B

$1.6B

$1.9B

$2.6B

$3.3B

Cost of Revenue

$387M

$398M

$469M

$671M

$905M

Gross Profit

$969M

$1.2B

$1.5B

$1.9B

$2.4B

Gross Profit %

71%

75%

76%

74%

72%

R&D Expenses

$0.41

$0.55

$0.49

Cash Flow

Net Income

	2020	2021	2022	2023	2024
Net Income	$518M	$878M	$921M	$850M	$900M
Dep. & Amort.	$224M	$242M	$288M	$506M	$783M
Def. Tax	-$11M	-$140M	$0	$0	$0
Stock Comp.	$16M	$17M	$21M	$27M	$23M
Chg. in WC	$18M	-$22M	$36M	-$558K	$58M

2020

2021

2022

2023

2024

Net Income

$518M

$878M

$921M

$850M

$900M

Dep. & Amort.

$224M

$242M

$288M

$506M

$783M

Def. Tax

-$11M

-$140M

Stock Comp.

$16M

$17M

$21M

$27M

$23M

Chg. in WC

$18M

-$22M

$36M

-$558K

$58M

Balance Sheet

Cash

	2020	2021	2022	2023	2024
Cash	$109M	$71M	$93M	$99M	$138M
ST Investments	$0	$270K	-$558M	$0	$0
Cash & ST Inv.	$109M	$71M	$93M	$99M	$138M
Receivables	$0	$0	$644M	$739M	$0
Inventory	-$147M	$81M	-$699M	$0	$0

2020

2021

2022

2023

2024

Cash

$109M

$71M

$93M

$99M

$138M

ST Investments

$270K

-$558M

Cash & ST Inv.

$109M

$71M

$93M

$99M

$138M

Receivables

$644M

$739M

Inventory

-$147M

$81M

-$699M

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Financial information provided by Financial Modeling Prep. Options data provided by Unusual Whales. Live transcripts provided by Quartr. All data is provided for informational purposes only, and is not intended for trading purposes or financial, investment, tax, legal, accounting or other advice. · See all tickers.

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Earnings

Report Date

—

Rev Estimate

—

Avg 1d Change

2.63%

Report Period

Q4 2024

EPS Estimate

—

Implied Move 1d

—

Transcript

11m 10s

11m 33s

12m 19s

14m 16s

14m 59s

15m 53s

16m 48s

Thanks, Joe, and hello, everyone.

16m 51s

18m 3s

19m 53s

20m 28s

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Ki Bin Kim from Turis. Please go ahead.

21m 3s

22m 17s

22m 47s

23m 2s

Yes. It's hard for me to comment on others [indiscernible] I'm not sure I can give you an answer for that.

23m 11s

Okay. Thank you. And your next question comes from the line of Jeff Spector from BofA.

23m 20s

Please go ahead.

23m 22s

24m 4s

24m 43s

Okay, that's fair. And then I guess just to summarize, listening to both you and Scott's comments, it sounds like 25 right now the setup into peak leasing is very similar to last year.

24m 59s

Is it fair to say laser focus still on housing as a key driver of demand Anything you would add to that or Is that incorrect summary? Thank you.

25m 13s

26m 48s

Sorry for the long answer.

26m 50s

Thank you.

26m 54s

Thank you. And your next question comes from the line of Michael Goldsmith from UBS. Please go ahead.

27m 1s

28m 31s

30m

30m 38s

Thank you very much. Sure.

30m 42s

Thank you. And your next question comes from the line of Brandon Lynch from Barclays. Please go ahead.

30m 48s

Great. Thanks for taking my questions. It looks like vacates were down about 4.4% year over year. Maybe you could talk a little bit about what you're doing differently to improve that retention?

31m

31m 41s

32m

32m 21s

Okay, very good. Thank you for the color.

32m 25s

Thank you. And your next question comes from the line of Ronald Camdell from Morgan Stanley. Please go ahead.

32m 34s

32m 55s

34m 13s

Great.

34m 14s

34m 31s

Thanks.

34m 33s

35m 15s

That's for me. Thank you.

35m 19s

Thank you. And your next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Please go ahead.

35m 26s

35m 56s

36m 10s

36m 29s

36m 44s

37m 4s

37m 52s

Yes.

37m 52s

38m 43s

Okay. All right. Thank you. Thanks, John.

38m 48s

Thank you. And your next question comes from the line of Luanda Nabria from BMO Capital Markets. Please go ahead.

38m 56s

39m 28s

39m 55s

And any incremental tidbits on the you said earlier signs of improving pricing power like just hoping you could flush that out a little bit?

40m 7s

40m 32s

40m 46s

42m 5s

Thank you. Thanks, Juan.

42m 9s

Thank you. And your next question comes from the line of Eric Wold from Citi. Please go ahead.

42m 16s

42m 40s

Yes, it's an excellent question. And it is not I'm not sure it's 100% clear.

42m 48s

43m 11s

Okay.

43m 12s

43m 35s

I think that's true, but I also think that will get you pretty close.

43m 40s

Got it.

43m 40s

44m 27s

44m 59s

Got it. All right. Thank you. Thank you. And your next question comes from the line of Kegan Karl from Wolfe Research.

45m 10s

45m 28s

45m 51s

That is the new same store pool. Okay.

45m 56s

That's super helpful.

45m 58s

46m 14s

46m 47s

Got it. And then maybe one for Joe. Just how should we think about capital recycling this year given your LSI portfolio becomes ten thirty one eligible?

46m 58s

47m 15s

47m 35s

Great.

47m 35s

Thanks for the time guys.

47m 36s

Sure. Thank you. And your next question comes from the line of Nikhilikov from Scotiabank.

47m 46s

Thanks. First question, I guess for Scott.

47m 49s

48m 53s

49m 53s

51m 36s

But again, we're going to to the extent we need to to change and adapt and innovate, we will. Thank you. And your next question comes from the line of Michael Mueller from JPMorgan. Please go ahead.

52m 2s

Yes. Hi. I guess first, can you talk a little bit about acquisition pricing and where you think returns need to be to see a lot more on balance sheet activity compared to JV activity?

52m 17s

53m 11s

53m 37s

54m 57s

55m 50s

Sure.

55m 52s

Thank you. And your next question comes from the line of Salometta from Green Street.

55m 59s

56m 32s

57m 41s

So we monitor this very closely and there's nothing in what we see that would suggest a need for a change in the program.

57m 54s

58m 10s

59m

All right. Thanks for that.

59m 5s

Thank you. And your next question comes from the line of Caitlin Burrows from Goldman Sachs. Please go ahead.

59m 13s

Hi.

59m 13s

59m 35s

1h 31s

Got it. Thanks for the clarification.

1h 33s

That's all from me. Thank you. And your next question comes from the line of Omatayo Okusanya from Deutsche Bank. Please go ahead.

1h 45s

Yes. Good morning out there.

1h 48s

1h 1m 19s

1h 1m 56s

1h 2m 21s

Yes. So, we continue to shop at as much as box [indiscernible] Tried to make sure we have a lot of competition with the addition of the LSI stores. We actually added some additional vendors there.

1h 2m 38s

1h 2m 55s

And so it is something we're open to. Thank you.

1h 3m 2s

Thank you. And your next question comes from the line of John Peterson from Jefferies. Please go ahead.

1h 3m 9s

1h 3m 27s

Has closing that gap been something that's happened in the last like two or three weeks or something that's gradually happened given that we're already two thirds of the way through the quarter.

1h 3m 36s

Yes. So we've combined the pools.

1h 3m 40s

We'll continue to report on the one pool.

1h 3m 43s

1h 3m 59s

Okay. All right. That's helpful.

1h 4m 1s

1h 4m 20s

Maybe talk about what a job loss driven recession might look like for the storage business since we haven't seen that in a while?

1h 4m 29s

1h 4m 55s

1h 5m 45s

Thank you. There are no further questions at this time. I will now hand the call back to Mr. Joel Margolis, for any closing remarks.

1h 5m 53s

Thank you everyone for your interest in Extra Space We the team looks forward to continuing our conversations. In the near future.

1h 6m 4s

And the team is also very excited to take advantage of improving market and some of the tailwinds that we anticipate in 2025. Thank you very much. Have a good day.

Key Insights

Core FFO Performance: Core FFO for Q4 2024 was $2.03 per share, with a full-year figure of $8.12 per share. The 2025 guidance for Core FFO is $8.00 to $8.30 per share, implying a growth rate of 0.4% to 2% at the midpoint and top end, respectively.
Same Store Revenue and NOI Guidance: For 2025, same-store revenue is expected to range from -0.75% to +1.25%, with expense growth projected at 3.75% to 5.25%, driven by property tax and insurance increases. This results in an NOI range of -3% to +0.25%.
Occupancy and Pricing Trends: Occupancy levels remain near record highs, with a year-over-year improvement of 120 basis points as of February 2025. Move-in rates have improved from a -9% year-over-year decline in Q3 2024 to flat as of early 2025, with expectations for moderate rate increases during the leasing season.
Growth Initiatives: In 2024, $950 million was invested in joint ventures, structured investments, and wholly owned properties, with $610 million occurring in Q4. The bridge loan program originated $980 million in loans for the year, with plans to continue expanding this program in 2025.
Brand Consolidation and Operational Efficiencies: The transition to a single Extra Space brand from the dual-brand strategy has resulted in $2 million in Q4 marketing savings and a 5.5% increase in rentals for former Life Storage stores. This move is expected to drive further efficiencies and rental activity improvements in 2025.

Extra Space Storage Inc. Price & Performance (EXR)

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Implied Move 1d

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