Extra Space Storage Inc. (EXR) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 3, 2023 1:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Thank you for all for standing by and welcome to the Extra Space Management First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program is being recorded.

And now, I’d now like to introduce your host for today’s program Mr. Jeff Norman. Please go ahead, sir.

Jeff Norman

Thank you, Jonathan. Welcome to Extra Space Storage’s first quarter 2023 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website. 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, May 3, 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

Thank you, Jeff. And thank you, everyone, for joining today’s call.

We have had an exciting couple of months, and a lot has happened since our fourth quarter earnings call in late February. Operationally, occupancy remained very strong through the first quarter, ending March at 93.5%, our highest first quarter result outside of the COVID years. Our strategy to maintain high occupancy through the winter allowed us to sequentially increase rates to new and existing customers through the first quarter, driving same-store revenue growth of 7.4%. Same-store expenses were lower than expected due to normalizing payroll expense growth, as well as year-over-year savings from repairs and maintenance and property taxes. As expected our same-store NOI growth rate moderated sequentially from the fourth quarter due to an exceptionally difficult 2022 comparable and was modestly ahead of our internal projections at 8.7%.

We have also been busy on the external growth front. We continued to grow our third-party management platform with net additions of 44 stores. We acquired six stores primarily in joint venture structures. We originated $53 million in bridge loans. We started our external growth phase of our remote storage strategy, approving three remote model acquisitions, two of which are in our primary markets. Subsequent to quarter-end, we closed the second preferred investment with an affiliate of SmartStop in the amount of $150 million. And of course on April 3rd, we announced a strategic merger with Life Storage through a leverage neutral all stock deal.