Extra Space Storage Inc. (EXR) Q4 2022 Earnings Call Transcript

Extra Space Storage Inc. (NYSE:EXR) Q4 2022 Results Conference Call February 23, 2023 1:00 PM ET

Company Participants

Jeff Norman - VP of IR and Corporate Communications

Joe Margolis - Chief Executive Officer

Scott Stubbs - CFO

Conference Call Participants

Michael Goldsmith - UBS

Jeffrey Spector - BofA Securities

Todd Thomas - KeyBanc Capital Markets

Keegan Carl - Wolfe Research

Smedes Rose - Citi

Spenser Allaway - Green Street

Ronald Kamdem - Morgan Stanley

Juan Sanabria - BMO Capital Markets

Steve Sakwa - Evercore ISI

Ki Bin Kim - Truist

Operator

Good day, and thank you for all for standing by. Welcome to the Q4 2022 Extra Space Storage, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After speakers’ presentation, there will be a question-and-answer session [Operator Instructions].

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Jeff Norman. Please go ahead.

Jeff Norman

Thank you, Chris. Welcome to Extra Space Storage's fourth quarter 2022 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our Web site. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in the company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, February 23, 2023. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call.

I would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Joe Margolis

Thanks, Jeff. And thank you, everyone, for joining today's call. We had another strong quarter to cap off an exceptional year. Our 2022 same store revenue growth of 17.4% is the highest in our company's history and for the second consecutive year, core FFO growth was above 20%. I am proud of the Extra Space team for another year of strong performance across all aspects of the business. Now speaking to the fourth quarter, despite difficult comps and the return of seasonality, same store revenue growth was ahead of our expectations at 11.8%. Vacates continued to normalize during the quarter and demand remained seasonally steady, leading to strong same store occupancy levels ending the year at 94.2%. Our high occupancy allowed us to maximize revenue and grow customer rates across the portfolio. Despite offering lower rates to new customers, total net rent per square foot increased 12.8% year-over-year. We experienced expense pressure across many line items with same store expense growth of 6.7%, resulting in same store NOI growth of 13.4%. We were busy on the external growth front, acquiring 10 stores in the REIT or in joint ventures, adding 46 stores gross to our third party management platform and closing over $250 million in bridge loans.