• Core FFO: $2 per share, a 2% increase year-over-year.
• Same Store Occupancy: 93.4%, an improvement of 100 basis points from Q1 2024.
• Same Store Revenue Growth: 0.3% increase.
• Wholly Owned Acquisitions: $153.8 million, adding 12 stores.
• Joint Venture Dissolution: Realized an embedded promote of $1.7 million.
• Bridge Loan Program: $53.2 million in loans closed; $27.7 million in loans sold.
• Third-Party Managed Portfolio: Net addition of 100 properties, totaling 1,675 stores.
• Controllable Expenses: Reduced by 1.9% year-over-year.
• Uncontrollable Expenses: Increased by 8% due to property tax and weather-related expenses.
• Same Store NOI: Decrease of 1.2% compared to Q1 2024.
• Bond Offerings: $350 million at 5.17% (5-year) and $500 million at 5.4% (10-year).
• Weighted Average Interest Rate: 4.4%.
• Debt Profile: Almost 90% at fixed rates.
• Annual Acquisition Guidance: Increased to account for JV buyouts.

• Warning! GuruFocus has detected 8 Warning Signs with EXR.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Extra Space Storage Inc (NYSE:EXR) reported a solid first quarter with a core FFO of $2 per share, representing a 2% increase year-over-year.
• Same store occupancy remained high at 93.4%, showing resilience and effective management strategies.
• The company completed $153.8 million in wholly owned acquisitions, adding 12 high-quality stores to its portfolio.
• The management plus platform showed remarkable growth, adding a net of 100 properties, reinforcing its position as a leading third-party management provider.
• Extra Space Storage Inc (NYSE:EXR) maintained a conservative leverage profile with almost 90% of its debt at fixed rates, insulating it from interest rate fluctuations.

Negative Points

• Uncontrollable expenses increased by 8% due to property tax pressure and weather-related expenses, leading to a same store NOI decrease of 1.2%.
• The company did not raise its guidance despite strong performance, indicating caution due to economic uncertainties.
• There is continued pressure from property taxes and other uncontrollable costs, which could impact future financial performance.
• The acquisition market remains muted with continued bid-ask spread issues, affecting potential growth opportunities.
• The company faces challenges from macroeconomic factors such as interest rate volatility and economic uncertainty, which could impact future performance.

Q & A Highlights

Q: Michael Goldsmith from UBS asked about the significant improvement in street rates during the first quarter and whether demand is picking up. He also inquired about conditions in April. A: Peter Stubbs, CFO, explained that street rates improved from negative 9% in Q3 last year to flat by the end of Q1 2025. He noted that while the improvement is encouraging, it's too early to predict trends for the rental season.

Q: Samir Khanal from BofA Securities questioned why Extra Space Storage didn't raise guidance despite positive performance and asked about leasing strategies for the spring season. A: CEO Joseph Margolis stated there was no change in strategy. The company uses algorithms to price units daily, leveraging their data and current market conditions to maximize revenue.

Q: Nicolas Yulico from Scotiabank inquired about acquisition yields for the quarter and current contracts. A: CEO Joseph Margolis detailed that initial yields ranged from 2.3% to 6.5%, stabilizing in the upper 6% to 7% range, depending on the stage of lease-up.

Q: Ronald Kamden from Morgan Stanley asked about expense pressures, particularly property taxes, and any relief expected throughout the year. A: CFO Peter Stubbs noted that property taxes and insurance are areas of pressure. While property taxes were higher in Q1 due to prior accruals, they don't expect the same rate of increase annually.

Q: Eric Wolfe from Citi Group questioned the sources of demand given the soft moving environment and strong Google search data. A: CEO Joseph Margolis explained that while moving-related demand has declined, the "lack of space" customer segment has grown, now comprising 35% of their customer base, which has a longer average stay.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.