SALT LAKE CITY, Oct. 27, 2021 /PRNewswire/ -- 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, 2021.
Highlights for the three months ended September 30, 2021:
- Achieved net income attributable to common stockholders of
$1.40 per diluted share, representing
a 59.1% increase compared to the same period in 2020.
- Achieved funds from operations attributable to common
stockholders and unit holders ("FFO") of $1.85 per diluted share. FFO, excluding
adjustments for non-cash interest ("Core FFO"), was also
$1.85 per diluted share, representing
a 41.2% increase compared to the same period in 2020.
- Increased same-store revenue by 18.4% and same-store net
operating income ("NOI") by 27.8% compared to the same period in
2020.
- Reported same-store occupancy of 96.7% as of September 30, 2021, compared to 95.8% as of
September 30, 2020.
- Acquired 10 operating stores and four stores at completion of
construction (a "Certificate of Occupancy store" or "C of O store")
for a total cost of approximately $198.0
million.
- In conjunction with joint venture partners, acquired 10
operating stores for a total cost of approximately $133.6 million, of which the Company invested
$13.4 million.
- Closed $75.5 million in mortgage
and mezzanine bridge loans, and sold $30.1
million in mortgage bridge loans.
- Completed a public bond offering issuing $600.0 million of 2.35% senior unsecured notes
due 2032.
- Added 96 stores (gross) to the Company's third-party management
platform. As of September 30, 2021,
the Company managed 827 stores for third parties and 261 stores in
joint ventures, for a total of 1,088 managed stores.
- Paid a quarterly dividend of $1.25 per share, a 25% increase over the second
quarter 2021 dividend.
Highlights for the nine months ended September 30, 2021
- Achieved net income attributable to common stockholders of
$4.19 per diluted share, representing
a 67.6% increase compared to the same period in 2020.
- Achieved FFO of $5.00 per diluted
share. Core FFO was also $5.00 per
diluted share, representing a 32.3% increase compared to the same
period in 2020.
- Increased same-store revenue by 12.2% and same-store NOI by
18.1% compared to the same period in 2020.
- Acquired 32 operating stores and six C of O stores for a total
cost of approximately $530.4
million.
- In conjunction with joint venture partners, acquired 15
operating stores for a total cost of approximately $202.2 million, of which the Company invested
$20.2 million.
- Sold 16 wholly-owned stores into a new joint venture for a
total sales price of $168.9 million,
resulting in a gain on real estate transactions of $64.8 million. The Company retained a 55%
interest in the joint venture.
- Closed $145.6 million in mortgage
and mezzanine bridge loans, and sold $117.9
million in mortgage bridge loans.
- Sold 1,600,000 shares of common stock through an overnight
offering and an additional 585,685 shares of common stock using the
Company's "at the market" ("ATM") program resulting in total net
proceeds of approximately $273.7
million.
- Added 196 stores (gross) to the Company's third-party
management platform.
Joe Margolis, CEO of Extra Space
Storage Inc., commented: "Same-store revenue and NOI accelerated in
the third quarter to 18.4% and 27.8%, respectively, due to record
setting occupancy and exceptionally strong rental rates. We
also continue to experience strong external growth, and during the
quarter surpassed 2,000 Extra Space Storage branded locations. Our
excellent property performance, coupled with our disciplined
investment strategy, led to FFO growth of 41.2% in the
quarter."
FFO Per Share:
The following table (unaudited) outlines the Company's FFO and
Core FFO for the three and nine months ended September 30, 2021 and 2020. 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):
|
For the Three
Months Ended September 30,
|
|
For the Nine
Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
(per
share)1
|
|
|
|
(per
share)1
|
|
|
|
(per
share)1
|
|
|
|
(per
share)1
|
Net income
attributable to
common stockholders
|
$
|
188,276
|
|
|
$
|
1.40
|
|
|
$
|
114,633
|
|
|
$
|
0.88
|
|
|
$
|
559,222
|
|
|
$
|
4.19
|
|
|
$
|
325,723
|
|
|
$
|
2.50
|
|
Impact of the
difference in
weighted average number of
shares – diluted2
|
|
|
(0.07)
|
|
|
|
|
(0.05)
|
|
|
|
|
(0.23)
|
|
|
|
|
(0.15)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
depreciation
|
58,177
|
|
|
0.41
|
|
|
53,909
|
|
|
0.38
|
|
|
170,462
|
|
|
1.21
|
|
|
160,202
|
|
|
1.16
|
|
Amortization of
intangibles
|
1,262
|
|
|
0.01
|
|
|
247
|
|
|
—
|
|
|
2,963
|
|
|
0.02
|
|
|
1,402
|
|
|
0.01
|
|
Gain on real estate
transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,883)
|
|
|
(0.45)
|
|
|
—
|
|
|
—
|
|
Unconsolidated joint
venture
real estate depreciation and
amortization
|
3,051
|
|
|
0.02
|
|
|
2,279
|
|
|
0.02
|
|
|
8,635
|
|
|
0.06
|
|
|
6,667
|
|
|
0.05
|
|
Unconsolidated joint
venture
gain on sale of real estate
assets and purchase of
partner's interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,251)
|
|
|
(0.04)
|
|
|
—
|
|
|
—
|
|
Distributions paid on
Series
A Preferred Operating
Partnership units
|
(572)
|
|
|
—
|
|
|
(572)
|
|
|
—
|
|
|
(1,716)
|
|
|
(0.01)
|
|
|
(1,716)
|
|
|
(0.01)
|
|
Income allocated to
Operating Partnership
noncontrolling interests
|
11,544
|
|
|
0.08
|
|
|
9,221
|
|
|
0.07
|
|
|
34,678
|
|
|
0.25
|
|
|
25,550
|
|
|
0.18
|
|
FFO
|
$
|
261,738
|
|
|
$
|
1.85
|
|
|
$
|
179,717
|
|
|
$
|
1.30
|
|
|
$
|
704,110
|
|
|
$
|
5.00
|
|
|
$
|
517,828
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of
share-based
compensation expense due to executive officer retirement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,823
|
|
|
0.01
|
|
Non-cash interest
expense
related to amortization of
discount on equity portion of
exchangeable senior notes
|
—
|
|
|
—
|
|
|
1,233
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
3,675
|
|
|
0.03
|
|
CORE
FFO
|
$
|
261,738
|
|
|
$
|
1.85
|
|
|
$
|
180,950
|
|
|
$
|
1.31
|
|
|
$
|
704,110
|
|
|
$
|
5.00
|
|
|
$
|
523,326
|
|
|
$
|
3.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of
shares – diluted3
|
141,315,129
|
|
|
|
|
138,719,395
|
|
|
|
|
140,910,152
|
|
|
|
|
138,415,939
|
|
|
|
|
|
(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.
|
Operating Results and Same-Store Performance:
The following table (unaudited) outlines the Company's
same-store performance for the three and nine months ended
September 30, 2021 and 2020 (amounts
shown in thousands, except store count data)1:
|
For the Three
Months
Ended September 30,
|
|
Percent
|
|
For the Nine
Months
Ended September 30,
|
|
Percent
|
|
2021
|
|
2020
|
|
Change
|
|
2021
|
|
2020
|
|
Change
|
Same-store rental
revenues2
|
$
|
318,448
|
|
|
$
|
268,889
|
|
|
18.4%
|
|
$
|
892,100
|
|
|
$
|
795,207
|
|
|
12.2%
|
Same-store operating
expenses2
|
75,909
|
|
|
79,090
|
|
|
(4.0)%
|
|
228,691
|
|
|
233,699
|
|
|
(2.1)%
|
Same-store net
operating income2
|
$
|
242,539
|
|
|
$
|
189,799
|
|
|
27.8%
|
|
$
|
663,409
|
|
|
$
|
561,508
|
|
|
18.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Same-store square
foot occupancy as of quarter end
|
96.7%
|
|
95.8%
|
|
|
|
96.7%
|
|
95.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Properties included
in same-store
|
860
|
|
860
|
|
|
|
860
|
|
860
|
|
|
|
|
(1)
|
A reconciliation of
net income to same-store net operating income is provided later in
this release, entitled "Reconciliation of GAAP Net Income to Total
Same-Store Net Operating Income."
|
|
|
(2)
|
Same-store revenues,
operating expenses and net operating income do not include tenant
reinsurance revenue or expense.
|
Same-store revenues for the three and nine months ended
September 30, 2021 increased compared
to the same periods in 2020 due to higher average occupancy, higher
average rates to new and existing customers, higher late fees and
lower bad debt, partially offset by higher discounts.
Same-store expenses were lower for the three months ended
September 30, 2021 compared to the
same period in 2020 due to decreases in payroll, marketing expense
and property taxes, partially offset by credit card processing
fees, repairs and maintenance expense and insurance
expense.
Same-store expenses were also lower for the nine months ended
September 30, 2021 compared to the
same period in 2020 due to decreases in payroll and marketing
expense, partially offset by increases in property taxes, credit
card processing fees, repairs and maintenance expense and insurance
expense.
Details related to the same-store performance of stores by
metropolitan statistical area ("MSA") for the three and nine months
ended September 30, 2021 are provided
in the supplemental financial information published on the
Company's Investor Relations website at
https://ir.extraspace.com/.
Investment and Property Management Activity:
The following table (unaudited) outlines the Company's
acquisitions and developments that are closed, completed or under
agreement (dollars in thousands):
|
|
Closed through
September 30, 2021
|
|
Closed/Completed
Subsequent to
September 30, 2021
|
|
Scheduled to
Still
Close/Complete in
2021
|
|
Total
2021
|
Wholly-Owned
Investment
|
|
Stores
|
|
Price
|
|
Stores
|
|
Price
|
|
Stores
|
|
Price
|
|
Stores
|
|
Price
|
Operating
Stores
|
|
32
|
|
$
|
439,990
|
|
|
9
|
|
$
|
151,250
|
|
|
6
|
|
$
|
78,500
|
|
|
47
|
|
$
|
669,740
|
|
Less: Proposed
interest to be sold into a joint venture1
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(13)
|
|
(224,973)
|
|
|
(13)
|
|
(224,973)
|
|
C of O and
Development Stores2
|
|
6
|
|
90,400
|
|
|
—
|
|
—
|
|
|
1
|
|
11,400
|
|
|
7
|
|
101,800
|
|
EXR Investment in
Wholly-Owned Stores
|
|
38
|
|
530,390
|
|
|
9
|
|
151,250
|
|
|
(6)
|
|
(135,073)
|
|
|
41
|
|
546,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint Venture
Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXR Investment in JV
Acquisition of Operating Stores2
|
|
15
|
|
20,220
|
|
|
1
|
|
1,910
|
|
|
9
|
|
20,265
|
|
|
25
|
|
42,395
|
|
Add: Proposed
interest to be sold into a joint venture1
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
13
|
|
56,243
|
|
|
13
|
|
56,243
|
|
EXR Investment in
Joint Ventures
|
|
15
|
|
20,220
|
|
|
1
|
|
1,910
|
|
|
22
|
|
76,508
|
|
|
38
|
|
98,638
|
|
Total EXR
Investment
|
|
53
|
|
$
|
550,610
|
|
|
10
|
|
$
|
153,160
|
|
|
16
|
|
$
|
(58,565)
|
|
|
79
|
|
$
|
645,205
|
|
|
|
(1)
|
The Company acquired
a six-store portfolio during the three months ended September 30,
2021 and a seven-store portfolio subsequent to quarter end on a
wholly-owned basis, which it plans to transfer into a joint venture
in the fourth quarter of 2021. The combined investment of the
two portfolios was $225.0 million, and it is anticipated the
Company's ultimate investment will be reduced to $56.2 million upon
completion of the proposed joint venture.
|
|
|
(2)
|
The locations of C of
O and development stores and joint venture ownership interest
details are included in the supplemental financial information
published on the Company's Investor Relations website at
https://ir.extraspace.com/.
|
The projected developments and acquisitions under agreement
described above are subject to customary closing conditions and no
assurance can be provided that these developments and acquisitions
will be completed on the terms described, or at all.
Bridge Loans:
During the three months ended September
30, 2021 the Company closed $75.5
million in bridge loans, and the Company has an additional
$306.0 million closed or under
agreement to close in 2021 and 2022. The Company sold
$30.1 million in loans during the
three months ended September 30,
2021. Additional details related to the Company's loan
activity and balances held are included in the supplemental
financial information published on the Company's Investor Relations
website at https://ir.extraspace.com/.
Dispositions:
As previously announced, the Company sold 16 properties into a
new unconsolidated joint venture during the first quarter 2021,
retaining a 55% interest, with the expectation to sell a 39%
interest to a third joint venture partner in the third
quarter. The Company did not sell and no longer anticipates
selling any additional interest, and will retain a 55% interest in
the joint venture.
The Company has an additional 16 properties held for sale that
are under agreement, all of which are anticipated to close during
2021. The Company does not anticipate retaining any ownership
in these properties, but will retain management of 14 stores.
Property Management:
As of September 30, 2021, the Company managed 827 stores
for third-party owners and 261 stores owned in joint ventures, for
a total of 1,088 stores under management. The Company is the
largest self-storage management company in the United States.
Balance Sheet:
During the three months ended September
30, 2021, the Company reestablished its ATM program by
entering into a new equity distribution agreement for $800.0 million. The Company did not issue
any shares on its ATM program during the third quarter.
During the three months ended September 30,
2021, the Company completed a public bond offering issuing
$600.0 million of 2.35% senior
unsecured notes due 2032.
As of September 30, 2021, the Company's percentage of
fixed-rate debt to total debt was 80.4%. The weighted average
interest rates of the Company's fixed and variable-rate debt were
3.1% and 1.5%, respectively. The combined weighted average interest
rate was 2.8% with a weighted average maturity of approximately 5.8
years.
Dividends:
On September 30, 2021, the Company
paid a third quarter common stock dividend of $1.25 per share to stockholders of record at the
close of business on September 15,
2021. The dividend represented a 25% increase over the
previous quarter's dividend and a 38.9% increase over the third
quarter 2020 dividend.
Outlook:
The following table outlines the Company's FFO estimates and
annual assumptions for the year ending December 31, 20211:
|
Ranges for
2021
Annual
Assumptions
|
|
Notes
|
|
Low
|
|
High
|
|
|
FFO
|
$
|
6.75
|
|
|
$
|
6.85
|
|
|
|
Core FFO
|
$
|
6.75
|
|
|
$
|
6.85
|
|
|
|
Dilution per share
from C of O and value add acquisitions
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
|
Same-store revenue
growth
|
12.50
|
%
|
|
13.50
|
%
|
|
Same-store pool of
860 stores
|
Same-store expense
growth
|
(1.00)
|
%
|
|
—
|
%
|
|
Same-store pool of
860 stores
|
Same-store NOI
growth
|
18.00
|
%
|
|
19.50
|
%
|
|
Same-store pool of
860 stores
|
Weighted average
one-month LIBOR
|
0.10
|
%
|
|
0.10
|
%
|
|
|
|
|
|
|
|
|
Net tenant
reinsurance income
|
$
|
141,000,000
|
|
|
$
|
142,000,000
|
|
|
|
Management fees and
other income
|
$
|
63,000,000
|
|
|
$
|
64,000,000
|
|
|
|
Interest
income
|
$
|
46,500,000
|
|
|
$
|
47,500,000
|
|
|
Includes dividends
from JCAP
preferred investment
|
General and
administrative expenses
|
$
|
100,000,000
|
|
|
$
|
101,000,000
|
|
|
Includes non-cash
compensation
|
Average monthly cash
balance
|
$
|
60,000,000
|
|
|
$
|
60,000,000
|
|
|
|
Equity in earnings of
real estate ventures
|
$
|
31,500,000
|
|
|
$
|
32,500,000
|
|
|
Includes dividends
from
SmartStop preferred investment
|
Acquisitions
|
$
|
700,000,000
|
|
|
$
|
700,000,000
|
|
|
Represents the
Company's
investment
|
Bridge
loans
|
$
|
100,000,000
|
|
|
$
|
100,000,000
|
|
|
Represents the
Company's
share of loans net of loan sales
|
Interest
expense
|
$
|
163,500,000
|
|
|
$
|
164,500,000
|
|
|
|
Taxes associated with
Company's taxable REIT subsidiary
|
$
|
22,000,000
|
|
|
$
|
23,000,000
|
|
|
|
Weighted average
share count
|
141,100,000
|
|
|
141,100,000
|
|
|
Assumes redemption of
all OP
units for common stock
|
|
|
(1)
|
A reconciliation of
net income outlook to same-store net operating income outlook is
provided later in this release entitled "Reconciliation of
Estimated GAAP Net Income to Estimated Same-Store Net Operating
Income." The reconciliation includes details related to
same-store revenue and same-store expense outlooks. A
reconciliation of net income per share outlook to funds from
operations per share outlook is provided later in this release
entitled "Reconciliation of the Range of Estimated GAAP Fully
Diluted Earnings Per Share to Estimated Fully Diluted FFO Per
Share."
|
FFO estimates for the year are fully diluted for an estimated
average number of shares and OP units outstanding during the year.
The Company's estimates are forward-looking and based on
management's view of current and future market conditions. The
Company's actual results may differ materially from these
estimates.
Supplemental Financial Information:
Supplemental unaudited financial information regarding the
Company's performance can be found on the Company's website at
www.extraspace.com. Under the "Company Info" navigation menu on the
home page, click on "Investor Relations," then under the
"Financials & Stock Information" navigation menu click on
"Quarterly Earnings." This supplemental information provides
additional detail on items that include store occupancy and
financial performance by portfolio and market, debt maturity
schedules and performance of lease-up assets.
Conference Call:
The Company will host a conference call at 1:00 p.m.
Eastern Time on Thursday, October 28,
2021, to discuss its financial results. To participate in
the conference call, please dial 855-791-2026 or 631-485-4899 for
international participants; audience passcode: 3194845. The
conference call will also be available on the Company's investor
relations website at https://ir.extraspace.com. To listen to a live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time in order to register, download and install any
necessary audio software. A replay of the call will be available
for 30 days on the Company's website in the Investor Relations
section.
A replay of the call will also be available by telephone from
4:30 p.m. Eastern Time on October 28,
2021, until 4:30 p.m. Eastern
Time on November 4, 2021. The
replay dial-in numbers are 855-859-2056 or 404-537-3406 for
international callers; passcode: 3194845.
Forward-Looking Statements:
Certain information set forth in this release contains
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements include statements
concerning the benefits of store acquisitions, developments,
favorable market conditions, our outlook and estimates for the year
and other statements concerning our plans, objectives, goals,
strategies, future events, future revenues or performance, capital
expenditures, financing needs, the competitive landscape, plans or
intentions relating to acquisitions and developments and other
information that is not historical information. In some cases,
forward-looking statements can be identified by terminology such as
"believes," "estimates," "expects," "may," "will," "should,"
"anticipates," or "intends," or the negative of such terms or other
comparable terminology, or by discussions of strategy. We may also
make additional forward-looking statements from time to time. All
such subsequent forward-looking statements, whether written or
oral, by us or on our behalf, are also expressly qualified by these
cautionary statements. There are a number of risks and
uncertainties that could cause our actual results to differ
materially from the forward-looking statements contained in or
contemplated by this release. Any forward-looking statements should
be considered in light of the risks referenced in the "Risk
Factors" section included in our most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. Such
factors include, but are not limited to:
- adverse changes in general economic conditions, the real estate
industry and the markets in which we operate;
- failure to close pending acquisitions and developments on
expected terms, or at all;
- the effect of competition from new and existing stores or other
storage alternatives, which could cause rents and occupancy rates
to decline;
- potential liability for uninsured losses and environmental
contamination;
- the impact of the regulatory environment as well as national,
state and local laws and regulations, including, without
limitation, those governing real estate investment trusts
("REITs"), tenant reinsurance and other aspects of our business,
which could adversely affect our results;
- disruptions in credit and financial markets and resulting
difficulties in raising capital or obtaining credit at reasonable
rates or at all, which could impede our ability to grow;
- impacts from the COVID-19 pandemic or the future outbreak of
other highly infectious or contagious diseases, including reduced
demand for self-storage space and ancillary products and services
such as tenant reinsurance, and potential decreases in occupancy
and rental rates and staffing levels, which could adversely affect
our results;
- increases in interest rates;
- reductions in asset valuations and related impairment
charges;
- our lack of sole decision-making authority with respect to our
joint venture investments;
- the effect of recent or future changes to U.S. tax laws;
- the failure to maintain our REIT status for U.S. federal income
tax purposes; and
- economic uncertainty due to the impact of natural disasters,
war or terrorism, which could adversely affect our business
plan.
All forward-looking statements are based upon our current
expectations and various assumptions. Our expectations, beliefs and
projections are expressed in good faith and we believe there is a
reasonable basis for them, but there can be no assurance that
management's expectations, beliefs and projections will result or
be achieved. All forward-looking statements apply only as of the
date made. We undertake no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or
circumstances after the date made or to reflect the occurrence of
unanticipated events.
Definition of FFO:
FFO provides relevant and meaningful information about the
Company's operating performance that is necessary, along with net
income and cash flows, for an understanding of the Company's
operating results. The Company believes FFO is a meaningful
disclosure as a supplement to net income. Net income assumes that
the values of real estate assets diminish predictably over time as
reflected through depreciation and amortization expenses. The
values of real estate assets fluctuate due to market conditions and
the Company believes FFO more accurately reflects the value of the
Company's real estate assets. FFO is defined by the National
Association of Real Estate Investment Trusts, Inc. ("NAREIT")
as net income computed in accordance with U.S. generally accepted
accounting principles ("GAAP"), excluding gains or losses on sales
of operating stores and impairment write downs of depreciable real
estate assets, plus depreciation and amortization related to real
estate and after adjustments to record unconsolidated partnerships
and joint ventures on the same basis. The Company believes that to
further understand the Company's performance, FFO should be
considered along with the reported net income and cash flows in
accordance with GAAP, as presented in the Company's consolidated
financial statements. FFO should not be considered a replacement of
net income computed in accordance with GAAP.
For informational purposes, the Company also presents Core
FFO. Core FFO excludes revenues and expenses not core to our
operations and non-cash interest. Although the Company's
calculation of Core FFO differs from NAREIT's definition of FFO and
may not be comparable to that of other REITs and real estate
companies, the Company believes it provides a meaningful
supplemental measure of operating performance. The Company
believes that by excluding revenues and expenses not core to our
operations and non-cash interest charges, stockholders and
potential investors are presented with an indicator of our
operating performance that more closely achieves the objectives of
the real estate industry in presenting FFO. Core FFO by the
Company should not be considered a replacement of the NAREIT
definition of FFO. The computation of FFO may not be comparable to
FFO reported by other REITs or real estate companies that do not
define the term in accordance with the current NAREIT definition or
that interpret the current NAREIT definition differently. FFO does
not represent cash generated from operating activities determined
in accordance with GAAP, and should not be considered as an
alternative to net income as an indication of the Company's
performance, as an alternative to net cash flow from operating
activities as a measure of liquidity, or as an indicator of the
Company's ability to make cash distributions.
Definition of Same-Store:
The Company's same-store pool for the periods presented consists
of 860 stores that are wholly-owned and operated and that were
stabilized by the first day of the earliest calendar year
presented. The Company considers a store to be stabilized
once it has been open for three years or has sustained average
square foot occupancy of 80.0% or more for one calendar year. The
Company believes that by providing same-store results from a
stabilized pool of stores, with accompanying operating metrics
including, but not limited to occupancy, rental revenue (growth),
operating expenses (growth), net operating income (growth), etc.,
stockholders and potential investors are able to evaluate operating
performance without the effects of non-stabilized occupancy levels,
rent levels, expense levels, acquisitions or completed
developments. Same-store results should not be used as
a basis for future same-store performance or for the
performance of the Company's stores as a whole.
About Extra Space Storage Inc.:
Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is
a self-administered and self-managed REIT and a member of the
S&P 500. As of September 30, 2021, the Company owned
and/or operated 2,054 self-storage stores in 41 states and
Washington, D.C. The Company's
stores comprise approximately 1.5 million units and approximately
159.0 million square feet of rentable space. The Company
offers customers a wide selection of conveniently located and
secure storage units across the country, including boat storage, RV
storage and business storage. The Company is the second largest
owner and/or operator of self-storage stores in the United States and is the largest
self-storage management company in the
United States.
Extra Space
Storage Inc.
Condensed
Consolidated Balance Sheets
(In thousands,
except share data)
|
|
September 30,
2021
|
|
December 31,
2020
|
|
(Unaudited)
|
|
|
Assets:
|
|
|
|
Real estate assets,
net
|
$
|
8,272,671
|
|
|
$
|
7,893,802
|
|
Real estate assets -
operating lease right-of-use assets
|
229,184
|
|
|
252,172
|
|
Investments in
unconsolidated real estate entities
|
373,765
|
|
|
397,444
|
|
Investments in debt
securities and notes receivable
|
606,115
|
|
|
593,810
|
|
Cash and cash
equivalents
|
65,565
|
|
|
109,124
|
|
Restricted
cash
|
15,717
|
|
|
18,885
|
|
Other assets,
net
|
145,341
|
|
|
130,611
|
|
Total
assets
|
$
|
9,708,358
|
|
|
$
|
9,395,848
|
|
Liabilities,
Noncontrolling Interests and Equity:
|
|
|
|
Notes payable,
net
|
$
|
5,409,828
|
|
|
$
|
4,797,303
|
|
Revolving lines of
credit
|
174,000
|
|
|
949,000
|
|
Operating lease
liabilities
|
234,118
|
|
|
263,485
|
|
Cash distributions in
unconsolidated real estate ventures
|
63,196
|
|
|
47,126
|
|
Accounts payable and
accrued expenses
|
164,674
|
|
|
130,012
|
|
Other
liabilities
|
279,668
|
|
|
272,798
|
|
Total
liabilities
|
6,325,484
|
|
|
6,459,724
|
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
Interests and Equity:
|
|
|
|
Extra Space Storage
Inc. stockholders' equity:
|
|
|
|
Preferred stock, $0.01
par value, 50,000,000 shares authorized, no shares issued
or outstanding
|
—
|
|
|
—
|
|
Common stock, $0.01
par value, 500,000,000 shares authorized, 133,819,163 and
131,357,961 shares issued and outstanding at September 30, 2021 and
December
31, 2020, respectively
|
1,338
|
|
|
1,314
|
|
Additional paid-in
capital
|
3,283,847
|
|
|
3,000,458
|
|
Accumulated other
comprehensive loss
|
(64,155)
|
|
|
(99,093)
|
|
Accumulated
deficit
|
(229,269)
|
|
|
(354,900)
|
|
Total Extra Space
Storage Inc. stockholders' equity
|
2,991,761
|
|
|
2,547,779
|
|
Noncontrolling
interest represented by Preferred Operating Partnership units,
net
|
170,248
|
|
|
172,052
|
|
Noncontrolling
interests in Operating Partnership, net and other noncontrolling
interests
|
220,865
|
|
|
216,293
|
|
Total noncontrolling
interests and equity
|
3,382,874
|
|
|
2,936,124
|
|
Total liabilities,
noncontrolling interests and equity
|
$
|
9,708,358
|
|
|
$
|
9,395,848
|
|
Consolidated
Statement of Operations for the Three and Nine Months Ended
September 30, 2021 and 2020
(In thousands,
except share and per share data) - Unaudited
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
|
|
|
|
Property
rental
|
$
|
351,355
|
|
|
$
|
290,423
|
|
|
$
|
976,448
|
|
|
$
|
856,438
|
|
Tenant
reinsurance
|
44,258
|
|
|
39,294
|
|
|
126,211
|
|
|
107,985
|
|
Management fees and
other income
|
16,879
|
|
|
13,307
|
|
|
47,320
|
|
|
38,299
|
|
Total
revenues
|
412,492
|
|
|
343,024
|
|
|
1,149,979
|
|
|
1,002,722
|
|
Expenses:
|
|
|
|
|
|
|
|
Property
operations
|
92,794
|
|
|
92,322
|
|
|
274,316
|
|
|
271,659
|
|
Tenant
reinsurance
|
7,509
|
|
|
7,189
|
|
|
21,405
|
|
|
20,725
|
|
General and
administrative
|
24,395
|
|
|
23,894
|
|
|
74,276
|
|
|
72,242
|
|
Depreciation and
amortization
|
61,516
|
|
|
56,412
|
|
|
179,685
|
|
|
167,705
|
|
Total
expenses
|
186,214
|
|
|
179,817
|
|
|
549,682
|
|
|
532,331
|
|
Gain on real estate
transactions
|
—
|
|
|
—
|
|
|
63,883
|
|
|
—
|
|
Income from
operations
|
226,278
|
|
|
163,207
|
|
|
664,180
|
|
|
470,391
|
|
Interest
expense
|
(39,670)
|
|
|
(42,213)
|
|
|
(120,605)
|
|
|
(127,610)
|
|
Non-cash interest
expense related to amortization of discount on
equity component of exchangeable senior notes
|
—
|
|
|
(1,233)
|
|
|
—
|
|
|
(3,675)
|
|
Interest
income
|
11,729
|
|
|
3,145
|
|
|
36,871
|
|
|
6,488
|
|
Income before equity
in earnings and dividend income from
unconsolidated real estate ventures and income tax
expense
|
198,337
|
|
|
122,906
|
|
|
580,446
|
|
|
345,594
|
|
Equity in earnings and
dividend income from unconsolidated real
estate entities
|
8,255
|
|
|
5,605
|
|
|
23,533
|
|
|
15,692
|
|
Equity in earnings of
unconsolidated real estate ventures - gain on
sale of real estate assets and purchase of joint venture
partner's
interest
|
—
|
|
|
—
|
|
|
6,251
|
|
|
—
|
|
Income tax
expense
|
(6,772)
|
|
|
(4,657)
|
|
|
(16,330)
|
|
|
(10,013)
|
|
Net income
|
199,820
|
|
|
123,854
|
|
|
593,900
|
|
|
351,273
|
|
Net income allocated
to Preferred Operating Partnership
noncontrolling interests
|
(3,529)
|
|
|
(3,248)
|
|
|
(10,647)
|
|
|
(9,498)
|
|
Net income allocated
to Operating Partnership and other
noncontrolling interests
|
(8,015)
|
|
|
(5,973)
|
|
|
(24,031)
|
|
|
(16,052)
|
|
Net income
attributable to common stockholders
|
$
|
188,276
|
|
|
$
|
114,633
|
|
|
$
|
559,222
|
|
|
$
|
325,723
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
Basic
|
$
|
1.41
|
|
|
$
|
0.89
|
|
|
$
|
4.19
|
|
|
$
|
2.52
|
|
Diluted
|
$
|
1.40
|
|
|
$
|
0.88
|
|
|
$
|
4.19
|
|
|
$
|
2.50
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
Basic
|
133,809,750
|
|
|
128,862,341
|
|
|
133,197,903
|
|
|
129,044,954
|
|
Diluted
|
140,425,269
|
|
|
129,871,096
|
|
|
139,854,881
|
|
|
130,066,121
|
|
Cash dividends paid
per common share
|
$
|
1.25
|
|
|
$
|
0.90
|
|
|
$
|
3.25
|
|
|
$
|
2.70
|
|
Reconciliation of
GAAP Net Income to Total Same-Store Net Operating Income — for the
Three and Nine Months
Ended September 30, 2021 and 2020 (In thousands) -
Unaudited
|
|
For the Three
Months
Ended September 30,
|
|
For the Nine
Months
Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net
Income
|
$
|
199,820
|
|
|
$
|
123,854
|
|
|
$
|
593,900
|
|
|
$
|
351,273
|
|
Adjusted to
exclude:
|
|
|
|
|
|
|
|
Gain on real estate
transactions
|
—
|
|
|
—
|
|
|
(63,883)
|
|
|
—
|
|
Equity in earnings
and dividend income from
unconsolidated real estate entities
|
(8,255)
|
|
|
(5,605)
|
|
|
(23,533)
|
|
|
(15,692)
|
|
Equity in earnings of
unconsolidated real estate ventures
- gain on sale of real estate assets and purchase of joint
venture partner's interest
|
—
|
|
|
—
|
|
|
(6,251)
|
|
|
—
|
|
Interest
expense
|
39,670
|
|
|
43,446
|
|
|
120,605
|
|
|
131,285
|
|
Depreciation and
amortization
|
61,516
|
|
|
56,412
|
|
|
179,685
|
|
|
167,705
|
|
Income tax
expense
|
6,772
|
|
|
4,657
|
|
|
16,330
|
|
|
10,013
|
|
General and
administrative
|
24,395
|
|
|
23,894
|
|
|
74,276
|
|
|
72,242
|
|
Management fees,
other income and interest income
|
(28,608)
|
|
|
(16,452)
|
|
|
(84,191)
|
|
|
(44,787)
|
|
Net tenant
insurance
|
(36,749)
|
|
|
(32,105)
|
|
|
(104,806)
|
|
|
(87,260)
|
|
Non-same store rental
revenue
|
(32,907)
|
|
|
(21,534)
|
|
|
(84,348)
|
|
|
(61,231)
|
|
Non-same store
operating expense
|
16,885
|
|
|
13,232
|
|
|
45,625
|
|
|
37,960
|
|
Total same-store
net operating income
|
$
|
242,539
|
|
|
$
|
189,799
|
|
|
$
|
663,409
|
|
|
$
|
561,508
|
|
|
|
|
|
|
|
|
|
Same-store rental
revenues
|
318,448
|
|
|
268,889
|
|
|
892,100
|
|
|
795,207
|
|
Same-store operating
expenses
|
75,909
|
|
|
79,090
|
|
|
228,691
|
|
|
233,699
|
|
Same-store net
operating income
|
$
|
242,539
|
|
|
$
|
189,799
|
|
|
$
|
663,409
|
|
|
$
|
561,508
|
|
Reconciliation of
the Range of Estimated GAAP Fully Diluted Earnings Per Share to
Estimated Fully Diluted FFO Per
Share — for the Year Ending December 31,
2021 (Unaudited)
|
|
|
For the Year
Ending December 31, 2021
|
|
|
Low
End
|
|
High
End
|
Net income
attributable to common stockholders per diluted
share
|
|
$
|
5.20
|
|
|
$
|
5.30
|
|
Income allocated to
noncontrolling interest - Preferred Operating Partnership
and Operating Partnership
|
|
0.33
|
|
|
0.33
|
|
Fixed component of
income allocated to non-controlling interest - Preferred
Operating Partnership
|
|
(0.02)
|
|
|
(0.02)
|
|
Net income
attributable to common stockholders for diluted
computations
|
|
5.51
|
|
|
5.61
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Real estate
depreciation
|
|
1.63
|
|
|
1.63
|
|
Amortization of
intangibles
|
|
0.02
|
|
|
0.02
|
|
Unconsolidated joint
venture real estate depreciation and amortization
|
|
0.08
|
|
|
0.08
|
|
Unconsolidated joint
venture gain on sale of real estate assets and purchase
of partners' interests
|
|
(0.04)
|
|
|
(0.04)
|
|
Gain on real estate
transactions
|
|
(0.45)
|
|
|
(0.45)
|
|
Funds from
operations attributable to common stockholders
|
|
6.75
|
|
|
6.85
|
|
Core funds from
operations attributable to common stockholders
|
|
$
|
6.75
|
|
|
$
|
6.85
|
|
Reconciliation of
Estimated GAAP Net Income to Estimated Same-Store Net Operating
Income —
for the Year
Ending December 31, 2021 (In thousands, unaudited)
|
|
For the Year
Ending December 31, 2021
|
|
Low
|
|
High
|
|
|
|
|
Net
Income
|
$
|
706,500
|
|
|
$
|
727,500
|
|
Adjusted to
exclude:
|
|
|
|
Equity in earnings of
unconsolidated joint ventures
|
(31,500)
|
|
|
(32,500)
|
|
Interest
expense
|
164,500
|
|
|
163,500
|
|
Depreciation and
amortization
|
242,000
|
|
|
242,000
|
|
Income tax
expense
|
23,000
|
|
|
22,000
|
|
General and
administrative
|
101,000
|
|
|
100,000
|
|
Management fees and
other income
|
(63,000)
|
|
|
(64,000)
|
|
Interest
income
|
(46,500)
|
|
|
(47,500)
|
|
Net tenant insurance
income
|
(141,000)
|
|
|
(142,000)
|
|
Non same-store rental
revenues
|
(119,000)
|
|
|
(119,000)
|
|
Non same-store
operating expenses
|
61,000
|
|
|
61,000
|
|
Total same-store
net operating income1
|
$
|
897,000
|
|
|
$
|
911,000
|
|
|
|
|
|
Same-store rental
revenues1
|
1,206,000
|
|
|
1,217,000
|
|
Same-store operating
expenses1
|
309,000
|
|
|
306,000
|
|
Total same-store
net operating income1
|
$
|
897,000
|
|
|
$
|
911,000
|
|
|
|
(1)
|
Estimated same-store
rental revenues, operating expenses and net operating income are
for the Company's 2021 same-store pool of 860 stores.
|
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multimedia:https://www.prnewswire.com/news-releases/extra-space-storage-inc-reports-2021-third-quarter-results-301410242.html
SOURCE Extra Space Storage Inc.