Extra Space Storage Q1 Core FFO Beats Estimates, Occupancy Grows Y/Y

Extra Space Storage Inc. EXR reported first-quarter 2025 core funds from operations (FFO) per share of $2.00, beating the Zacks Consensus Estimate of $1.96. The figure increased 2% from the prior-year quarter.

Results reflect a year-over-year rise in revenues due to growth in occupancy. However, high interest expenses during the quarter were a spoilsport.

Quarterly revenues of $820 million missed the Zacks Consensus Estimate of $823.4 million. However, the top line increased 2.6% year over year.

Per Joe Margolis, CEO of Extra Space Storage, “We had a solid first quarter, beating same-store revenue expectations, maintaining historically high occupancy, and continuing to grow our capital-light ancillary businesses. This led to FFO growth above our internal projections. Despite this level of performance, the recent economic uncertainty has caused us to maintain our same-store guidance. While the current environment is volatile and may lead to difficult economic times, our team, strategy, and systems have proven the ability to produce stable cash flow returns in similar conditions.”

EXR’s First Quarter in Detail

Same-store revenues increased 0.3% year over year to $659.7 million. This uptick resulted from a rise in net rental income, partly offset by other income.

Same-store operating expenses rose 4.2% year over year to $192.4 million, reflecting an increase in property operating expenses, repairs and maintenance, and property taxes.

Same-store net operating income (NOI) decreased 1.2% year over year to $467.3 million.

The same-store square-foot occupancy expanded 100 basis points year over year to 93.4% as of March 31, 2025. Our estimate was pegged at 93.6%.

Interest expenses flared up to $142.4 million from $132.9 million a year ago. Our estimate was $139.7 million.

EXR’s Portfolio Activity

During the January-March quarter, Extra Space Storage acquired 12 operating stores for around $153.8 million. It also acquired six additional properties by exchanging ownership interest in 17 properties from an existing joint venture (JV).

With JV partners, the company acquired two operating stores and completed the development of one store for approximately $38.3 million, of which the company invested $24.5 million.

Extra Space Storage added 113 stores (100 stores net) to its third-party management platform. As of March 31, 2025, it managed 1,675 stores for third parties and 439 stores in unconsolidated JVs, with a total store count of 2,114 under management.

EXR’s Balance Sheet Position

Extra Space Storage exited the first quarter with $119.6 million of cash and cash equivalents, down from $138.2 million recorded as of Dec. 31, 2024.

As of March 31, 2025, EXR's percentage of fixed-rate debt to total debt was 78.8%. The combined weighted average interest rate was 4.4%, with a weighted average maturity of around 4.5 years.

In the first quarter, the company did not issue any shares under its at-the-market program and has $800 million available for issuance as of March 31, 2025. Also, it did not repurchase any shares of common stock and had the authorization to buy up to an additional $500 million under the plan as of March 31, 2025.

Subsequent to the quarter end, EXR repurchased 68,585 shares of common stock for $8.6 million at an average price of $125.60 per share.

2025 Guidance Reaffirmed by EXR

Extra Space Storage projects its 2025 core FFO per share in the range of $8.00 and $8.30. The Zacks Consensus Estimate of $8.16 lies within this range.

The full-year guidance is based on the assumption of negative 0.75% to 1.25% growth in same-store revenues and a 3.75-5.25% increase in same-store expenses. Same-store NOI is projected within negative 3.00% to 0.25% growth.

EXR’s Zacks Rank

Extra Space Storage currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Extra Space Storage Inc Price, Consensus and EPS Surprise

Extra Space Storage Inc price-consensus-eps-surprise-chart | Extra Space Storage Inc Quote

Performance of Other REITs

Digital Realty Trust DLR reported first-quarter 2025 core FFO per share of $1.77, beating the Zacks Consensus Estimate of $1.73. The FFO also increased 6% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Results reflected steady leasing momentum with better rental rates amid rising demand. However, higher operating expenses undermined the performance to an extent. DLR raised its 2025 core FFO guidance range.

Alexandria Real Estate Equities, Inc. ARE reported first-quarter 2025 adjusted funds from operations (AFFO) per share of $2.30, beating the Zacks Consensus Estimate of $2.28. This compares unfavorably to the AFFO of $2.35 reported in the prior year.

Results reflected decent leasing activity and rental rate growth. However, lower occupancy and higher interest expenses year over year undermined the results to some extent. ARE has revised its 2025 outlook.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research