Extra Space Storage: A Year of Resilience and Growth
February 26, 2025 – In a year marked by industry-wide challenges, Extra Space Storage Inc. demonstrated its resilience and commitment to growth, delivering solid results in the fourth quarter of 2024.
During a conference call with investors, Joe Margolis, Chief Executive Officer, reported that the company's core funds from operations (FFO) per share came in at $2.03 for the quarter and $8.12 for the full year. Despite facing headwinds from lower new customer rates, Extra Space was able to maintain near-record occupancy and compress the year-over-year rate gap to negative 6% by year-end.
Operationally, demand remained steady, allowing the company to keep its same-store revenue decrease at a relatively modest 0.4% in the quarter. However, expenses exceeded expectations due to higher-than-estimated property taxes, resulting in same-store net operating income (NOI) of negative 3.5%. The company's diverse growth strategies and channels, including joint ventures, structured investments, and third-party management, continued to drive growth.
One notable highlight from the quarter was the conclusion of Extra Space's dual brand test, where all stores were transitioned to the Extra Space brand. As a result, the company has started to see positive benefits, including savings in marketing and increased rental activity. Furthermore, former Life Storage stores are expected to continue outperforming legacy Extra Space properties in 2025.
In terms of external growth, Extra Space invested $950 million in various joint ventures, structured investments, and wholly owned investments at attractive yields, with nearly all these investments being generated off-market through existing industry relationships. The company also originated $224 million in bridge loans in the fourth quarter, bringing total bridge loan origination to $980 million for the year.
Extra Space's third-party management program experienced its best growth year ever, excluding managed store gains from the Life Storage merger, with 114 net new stores added in the fourth quarter. Total net new managed stores for the year came in at 238.
In conclusion, Joe Margolis summarized Extra Space's performance in 2024 as a year of resilience and growth despite an environment marked by new customer price sensitivity. The company was able to maintain industry-leading occupancy and generate modest same-store revenue growth while offsetting headwinds through strong growth in its ancillary business lines.
