Analyst Note| Kevin Brown, CFA |
Extra Space Storage reported first-quarter results that were ahead of our expectations, though we don’t see anything from the quarter that would materially change our $185 fair value estimate for the no-moat company. Same-store occupancy fell 70 basis points both sequentially and year over year to 94.5%. However, rent per occupied square foot for the same-store portfolio increased 22.3% year over year to $21.00, which is better than our estimate of 14.0% growth and drove same-store revenue growth of 21.7% for the quarter. Meanwhile, same-store operating expenses only grew 6.8%, leading to same-store net operating income growth of 27.6% in the first quarter. As a result, core funds from operations grew 34% year over year to a reported $2.01 per share figure for the first quarter.