Company Reports

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The firm also has a lucrative insurance business and a strategically important third-party management business.

Extra Space Storage reported core funds from operations of $2.15 per share and same-store net operating income growth of 3.5% in the second quarter.

Extra Space Storage reported solid first-quarter results with core funds from operations of $2.04 per share, a 2% increase from the prior-year quarter, and same-store net operating income growth of 1.2% on a year-over-year basis.

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The firm also has a lucrative insurance business and a strategically important third-party management business.

Extra Space Storage reported core funds from operations of $2.08 per share and same-store net operating income growth of 0.1% in the fourth quarter.

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The firm also has a lucrative insurance business and a strategically important third-party management business.

Extra Space Storage posted a middling set of numbers in the third quarter, as demand continues to be relatively weak, impacting move-in rents and rental rates, leading to a lackluster outlook. The firm reported core FFO of $2.08 per share in the third quarter, up 0.5% on a year-over-year basis.

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The firm also has a lucrative insurance business and a strategically important third-party management business.

Extra Space Storage's second-quarter results were affected by weaker demand for self-storage properties, pressuring move-in rents. The firm reported core FFO of $2.05 per share in the second quarter, which was flattish compared with $2.06 per share in the same quarter of the previous year.

Extra Space Storage's first-quarter numbers were better than expected. Management implied that the first-quarter results would have prompted them to raise their 2025 guidance, but they are maintaining it, given significant economic uncertainty.

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The firm also has a lucrative insurance business and a strategically important third-party management business.

Extra Space Storage posted a middling set of numbers in the fourth quarter as fundamentals are expected to remain under pressure due to weakening self-storage demand. The firm reported core FFO of $2.03 per share in the fourth quarter, flattish compared with $2.02 per share in the previous year.

Over the past few years, we have observed an inverse relationship between share prices in the REIT sector and interest-rate movements. We believe a major reason is that all commercial real estate valuations are connected to interest rates. Capitalization rates directly indicate the return expectations for a real estate investment and expectations for risk and growth. Historically, we have observed that commercial real trades at cap rates consistently spread above the 10-year US Treasury. If interest rates rise, investors will require a higher return, and thus a higher cap rate, to accept the risk associated with an investment in a real estate asset. Since return expectations have held relatively steady for most real estate sectors over the past few years, higher cap rates translate to falling prices for real estate.

No-moat-rated Extra Space Storage reported a lackluster set of numbers in the third quarter, given the difficult self-storage demand environment. The occupancy for the self-storage portfolio remained strong, but it came at the expense of weakness in same-store rent growth. The firm reported core funds from operations of $2.07 per share during the third quarter, up 2.5% compared with the same quarter in the previous year. The company has slightly revised the lower end of its 2024 full-year core FFO guidance upward to $8.00-$8.15 per share. We are maintaining our $165 per share fair value estimate for Extra Space Storage after incorporating the third-quarter results.

The REIT sector in the US offers many companies that should see relatively stable cashflow growth over the next several years. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years with many reaching historical levels of net operating income growth, the REIT sector underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that is due to the sector’s negative correlation with interest rates, as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. Still, we still view many of companies in the US REIT sector as being undervalued as the companies should continue to produce solid long-term growth.

Despite a rally over the past two months, we still view the US REIT sector as being undervalued. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors led combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past three years, with many reaching historical levels of net operating income growth, the REIT sector has underperformed the broader equity markets in 2023 and into the first half of 2024. We believe that the cause has been due to the sector's negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, interest rates have fallen since the end of July, leading to a rally for the REIT sector. We believe that US REITs will continue to see share price movements that are inverse of interest rate movements.

Extra Space Storage acquires, owns, and operates self-storage facilities, which offer storage spaces of varying sizes and features on a monthly lease, for personal and business use. The company also has a lucrative insurance business and a strategically important third-party management business.

No-moat-rated Extra Space Storage reported a decent set of numbers in the second quarter given the context of a relatively difficult self-storage demand environment. The firm reported core funds from operations, or FFO, of $2.06 per share during the second quarter, flat compared with the same quarter in the previous year. The company has slightly revised the lower range of its 2024 full-year core FFO guidance upward to $7.95-$8.15 per share. We are maintaining our $160 per share fair value estimate for Extra Space Storage after incorporating the second-quarter results.

The US REIT sector remains significantly undervalued, in our perspective. While the pandemic hurt REIT valuations in 2020, the recovery of fundamentals across most sectors combined with low interest rates led to strong total returns in 2021 and early 2022. However, despite fundamentals continuing to perform well over the past two years, with many REITs reaching historical levels of net operating income growth, the sector has underperformed the broader equity markets over the past two years. We believe that the cause has been the sector’s negative correlation with interest rates as income-oriented investors rotate out of the sector, higher rates lower the value REITs can create with external growth, and property valuations fall in line with higher rates. However, we don’t believe that higher rates significantly change our fair value estimates for the sector. Additionally, interest rates are down from the October 2023 highs, and REIT share prices have generally inversely followed the movements of the US 10-year Treasury.

No-moat-rated Extra Space Storage reported a decent set of numbers in the first quarter given the context of a relatively difficult demand environment. The firm reported core funds from operations, or FFO, of $1.96 per share, 3.0% lower than the $2.02 per share FFO during the first quarter of 2023. The company has maintained its 2024 full-year core FFO guidance of $7.85-$8.15 per share, representing a 1.2% decline at the midpoint. We are maintaining our $160 per share fair value estimate for Extra Space Storage after incorporating the first-quarter results.