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A month has gone by since the last earnings report for Extra Space Storage (EXR). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Extra Space Storage due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Extra Space Storage Beats on Q4 FFO, Issues Upbeat View
Extra Space Storagereported fourth-quarter 2020 core FFO per share of $1.48, beating the Zacks Consensus Estimate of $1.35. The figure comes in 16.5% higher than the prior-year quarter’s $1.27.
Quarterly revenues came in at $353.5 million, up 5.3% year over year. Moreover, the top-line figure surpassed the Zacks Consensus Estimate of $348.8 million.
Results reflect strong average occupancy and higher average rates to existing customers for the quarter, partially offset by lower late fees. The company also experienced reductions in most expense categories, partly muted by rise in property taxes.
Per Joe Margolis, CEO of Extra Space Storage, “Steady demand and muted vacates continue to result in all-time high occupancy levels, leading to solid rental rate growth across our diversified portfolio.”
For full-year 2020, the company reported core FFO per share of $5.28, representing an 8.2% increase year on year. Revenues came in at $1.36 billion, up 3.6% year on year.
Quarter in Detail
Same-store rental revenues increased 2.3% year over year to $277.96 million during the fourth quarter. This uptick in same-store revenues resulted from higher average occupancy and higher average rates to existing customers for the quarter, partially negated by lower late fees. Same-store square-foot occupancy expanded 240 basis points (bps) year on year to 94.8% as of Dec 31, 2020.
Same-store expenses edged down 0.6% year on year to $75.7 million and reflect reductions in most expense categories, partially offset by increases in property taxes. Consequently, same-store NOI increased 3.4% year over year to $202.3 million.
Extra Space Storage exited 2020 with $109.1 million of cash and cash equivalents, up from the $65.7 million recorded at the end of 2019. Notably, as of Dec 31, 2020, the company's percentage of fixed-rate debt to total debt was 63.1%.
During the quarter, the company sold 899,048 shares of common stock using its ATM program at an average sales price of $116.42 per share, reaping net proceeds of $103.5 million. After considering subsequent activities, the company had $126.1 million available for issuance under its ATM program as of Feb 22, 2021.
Moreover, the company closed $168.3 million in mortgage and mezzanine bridge loans, and sold $63.1 million in mortgage bridge loans during the fourth quarter.
During the October-December period, Extra Space Storage acquired 12 operating stores and one store at completion of construction for a total cost of $146.9 million.
The company also disposed of four stores in Florida for $46.6 million, and retained management. Further, it completed two preferred stock investments totaling $350 million.
Extra Space Storage added 44 stores (gross) to its third-party management platform. As of Dec 31, 2020, it managed 724 stores for third-parties and 253 stores in joint ventures, with total stores under management reaching 977.
For full-year 2021, the company projects core FFO per share in the range of $5.85-$6.05.
The company’s full-year projections are backed by same-store revenue growth assumptions of 4.25-5.50% and same-store NOI increase of 4.25-6.25% and $350 million in acquisitions.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 8.32% due to these changes.
At this time, Extra Space Storage has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Extra Space Storage has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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