On the heels of the recent news that self storage REITs outshined other property types with an impressive 18.4 percent return, is a new report showing Extra Space Storage (NYSE: EXR) with significant same-store revenue increases thanks to strong improvement in the occupancy rate.
Same-store net operating income rose a solid 5.8 percent and management raised earnings expectations for 2011 after a strong first quarter. This prompted analysts to revise their estimates higher which sent shares to a strong buy. First quarter results came in better than expected. EXR reported funds from operations (FFO) of 25 cents per share, edging out the Zacks Consensus Estimate by a penny. It was a 32% increase over the same quarter in 2010.
Total revenue was up 10.2% to $74.481 million in the quarter, well ahead of the Zacks Consensus Estimate of $65.0 million. Same-store revenue increased 4.2% driven by a 290 basis point improvement in same-store occupancy to 85.4%. Both management and analysts expect Extra Space Storage to grow earnings by double-digits in 2011. In addition to this growth, EXR pays a dividend that yields an attractive 2.7%.
After first quarter results, management now expects FFO between $1.06 and $1.11 per share, up from previous guidance of $1.01 to $1.07. This new guidance is based on same-store property revenue growth of 2.5-3.5%.
This helped analysts revise their estimates significantly higher for both 2011 and 2012, sending the stock to a Zacks #1 Rank (Strong Buy). The 2011 Zacks Consensus Estimate is within guidance at $1.10. This corresponds with 14% growth over 2010 FFO. The 2012 consenus estimate rose to $1.22 per share, which represents 11% growth. Consensus estimates have been steadily rising over the last several quarters as EXR has delivered 9 consecutive positive earnings surprises.
Extra Space Storage Inc., headquartered in Salt Lake City, is a fully integrated, self-administered and self-managed real estate investment trust (REIT) that owns and/or operates 820 self storage properties in 34 states and Washington, D.C. It has a market cap of $1.9 billion. The company’s properties comprise approximately 525,000 units and more than 57 million square feet of rentable storage space offering customers conveniently located and secure storage solutions, including boat storage, RV storage and business storage. Extra Space Storage is the second-largest owner and/or operator of self-storage properties and is the largest self storage management company in the United States.
“Extra Space Storage With A Lot of Room to Thrive.” Forbes.com. June 28, 2011. http://blogs.forbes.com/zacks/2011/06/28/extra-space-storage-with-a-lot-of-room-to-thrive/
Gonzalez, Tony. “Self Storage Ranks as Ruler of the REITs.” Self Storage Industry News. June 9, 2011. http://www.extraspace.com/news/post/2011/06/09/Self-Storage-Ranks-as-Ruler-of-the-REITs.aspx