241b18be80e757e3d63f528d2a21cdb98ce17b875b97219cf48924070dfdf9a0

Extra Space Storage Inc. operates as a fully integrated, self-administered, and self-managed real estate investment trust (REIT) focused on the self-storage industry. The company is involved in owning, operating, managing, acquiring, developing, and redeveloping self-storage properties across the United States. Extra Space Storage generates revenue primarily through its self-storage operations and also offers tenant reinsurance services, providing additional income through reinsurance premiums collected from tenants **[0001628280-24-045038_exr-20240930.htm:26]** **[0001628280-24-008044_exr-20231231.htm:6]** **[0001193125-24-096283_d741588ds3asr.htm:5]**. As of December 31, 2023, the company owned and/or operated 3,714 stores across 42 states and Washington, D.C., managing approximately 283 million square feet of net rentable space **[0001193125-24-096283_d741588ds3asr.htm:5]** **[0001193125-24-088607_d816613ds3asr.htm:3]**.

1. **Self-Storage Operations** - Manages rental operations of wholly-owned stores, which are the primary source of revenue, contributing significantly to the company's overall income.
2. **Tenant Reinsurance** - Provides reinsurance of risks related to the loss of goods stored by tenants, generating additional revenue through reinsurance premiums collected from tenants.

241ca2731cbe0141ccc9d46c020176625a310af7561b7b2a7e3376fa492287aa

Adjustments for Non-Cash Items

Stock-Based Compensation

Changes in Working Capital

Capital Expenditures (CapEx)

Proceeds from / Repayments of Debt

Share Repurchases

Dividend Payments

Net Change in Cash

ed9075537953180fc09c102b9f872e7895cc4dcaefeb7d5a1b75843c180aad33

| Metric | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Same-store square foot occupancy (%)** | **94.2** **[0001628280-23-004577_q42022ex991earningsrelease.htm:2]** | **93.5** **[0001628280-23-014876_q12023ex991earningsrelease.htm:2]** | **94.5** **[0001628280-23-027254_q22023ex991earningsrelease.htm:0]** | **94.1** **[0001628280-23-037374_q32023ex991earningsrelease.htm:3]** | **93.0** **[0001628280-24-007229_q42023ex991earningsrelease.htm:3]** **[0001628280-24-007229_q42023ex991earningsrelease.htm:0]** | **93.2** **[0001628280-24-020317_exr-20240331.htm:35]** | **94.3** **[0001628280-24-034445_exr-20240630.htm:36]** | **94.3** **[0001628280-24-045038_exr-20240930.htm:38]** |
| **Net Rentable Square Feet (million sq ft)** | **176.1** **[0001628280-23-004577_q42022ex991earningsrelease.htm:10]** | **179.99** **[0001628280-23-015789_exr-20230331.htm:32]** | **184.3** **[0001193125-23-216015_d526103ds3asr.htm:2]** | **278.79** **[0001628280-23-038325_exr-20230930.htm:35]** | **283** **[0001193125-24-088607_d816613ds3asr.htm:3]** | **290** **[0001628280-24-019360_q12024ex991earningsrelease.htm:9]** | **292.07** **[0001628280-24-034445_exr-20240630.htm:30]** | **296.65** **[0001628280-24-045038_exr-20240930.htm:31]** |
| **Number of operating stores** | **1,451** **[0001628280-23-005628_exr-20221231.htm:31]** | **1,457** **[0001628280-23-015789_exr-20230331.htm:31]** | **1,460** **[0001628280-23-028613_exr-20230630.htm:35]** | **2,369** **[0001628280-23-038325_exr-20230930.htm:34]** | **2,377** **[0001628280-24-008044_exr-20231231.htm:46]** | **2,384** **[0001628280-24-020317_exr-20240331.htm:28]** | **2,389** **[0001628280-24-034445_exr-20240630.htm:29]** | **2,401** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Number of stores managed for third parties** | **887** **[0001628280-23-004577_q42022ex991earningsrelease.htm:3]** | **931** **[0001628280-23-015789_exr-20230331.htm:7]** | **978** **[0001628280-23-028613_exr-20230630.htm:35]** | **1,282** **[0001628280-23-037374_q32023ex991earningsrelease.htm:4]** | **1,337** **[0001193125-24-088607_d816613ds3asr.htm:3]** | **1,409** **[0001628280-24-019360_q12024ex991earningsrelease.htm:3]** | **1,423** **[0001628280-24-033498_q22024ex991earningsrelease.htm:4]** | **1,461** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Total number of stores** | **2,338** **[0001628280-23-004577_q42022ex991earningsrelease.htm:10]** | **2,388** **[0001628280-23-015789_exr-20230331.htm:7]** | **2,438** **[0001628280-23-028613_exr-20230630.htm:8]** | **3,651** **[0001628280-23-038325_exr-20230930.htm:9]** | **3,714** **[0001628280-24-008044_exr-20231231.htm:5]** | **3,793** **[0001628280-24-020317_exr-20240331.htm:28]** | **3,812** **[0001193125-24-196948_d880059dex991.htm:0]** | **3,862** **[0001628280-24-045038_exr-20240930.htm:8]** |
| **Number of tenants** | **1,335,000** **[0001628280-23-005628_exr-20221231.htm:31]** | **1,380,000** **[0001628280-23-015789_exr-20230331.htm:31]** | **1,440,000** **[0001628280-23-028613_exr-20230630.htm:35]** | **2,100,000** **[0001628280-23-038325_exr-20230930.htm:34]** | **2,100,000** **[0001628280-24-008044_exr-20231231.htm:33]** | **2,155,000** **[0001628280-24-020317_exr-20240331.htm:28]** | **2,235,000** **[0001628280-24-034445_exr-20240630.htm:29]** | **2,245,000** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Average length of stay (months)** | **16.4** **[0001628280-23-005628_exr-20221231.htm:31]** | **16.6** **[0001628280-23-015789_exr-20230331.htm:31]** | **~18** **[EXR_3385612_17]** | **17.2** **[0001628280-23-038325_exr-20230930.htm:34]** | **17.4** **[0001628280-24-008044_exr-20231231.htm:33]** | **17.4** **[0001628280-24-020317_exr-20240331.htm:28]** | **17.5** **[0001628280-24-034445_exr-20240630.htm:29]** | **17.2** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Average annual rent per sq ft (existing) ($)** | **21.09** **[0001628280-23-005628_exr-20221231.htm:31]** | **21.05** **[0001628280-23-015789_exr-20230331.htm:31]** | **21.08** **[0001628280-23-028613_exr-20230630.htm:35]** | **21.43** **[0001628280-23-038325_exr-20230930.htm:34]** | **21.25** **[0001628280-24-008044_exr-20231231.htm:33]** | **20.36** **[0001628280-24-020317_exr-20240331.htm:28]** | **20.38** **[0001628280-24-034445_exr-20240630.htm:29]** | **20.55** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Average annual rent per sq ft (new) ($)** | **18.55** **[0001628280-23-005628_exr-20221231.htm:31]** | **17.00** **[0001628280-23-015789_exr-20230331.htm:31]** | **17.71** **[0001628280-23-028613_exr-20230630.htm:35]** | **16.01** **[0001628280-23-038325_exr-20230930.htm:34]** | **16.19** **[0001628280-24-008044_exr-20231231.htm:33]** | **13.60** **[0001628280-24-020317_exr-20240331.htm:28]** | **15.60** **[0001628280-24-034445_exr-20240630.htm:29]** | **13.49** **[0001628280-24-045038_exr-20240930.htm:30]** |
| **Average discounts (%)** | **2.4** **[0001628280-23-015789_exr-20230331.htm:31]** | **2.4** **[0001628280-23-015789_exr-20230331.htm:31]** | **2.6** **[0001628280-23-028613_exr-20230630.htm:35]** | **2.7** **[0001628280-23-038325_exr-20230930.htm:34]** | **2.5** **[0001628280-24-008044_exr-20231231.htm:33]** | **2.2** **[0001628280-24-020317_exr-20240331.htm:28]** | **2.3** **[0001628280-24-034445_exr-20240630.htm:29]** | **2.2** **[0001628280-24-045038_exr-20240930.htm:30]** |

7dd4005a12ba23dab491b58e9c3096cfdd35d8b8c9dfe54a9f2b7014fbca6c9a

bdbd217878ffe030ebff36b545c5cbb88409db1eee43201ce1cbdfbac94055e1

1. With recent underperformance in key markets like Florida, what specific strategies are you implementing to mitigate further deterioration, and how confident are you in their effectiveness?
2. Despite efforts to close the performance gap between Life Storage and Extra Space properties, there's still a 6% spread in like-for-like markets; what challenges are preventing parity, and how do you plan to address them?
3. Given that you retain mezzanine positions when selling the A pieces of loans, how are you managing the increased credit risk associated with holding onto the riskier portions of these loans?
4. You anticipate $10 million in marketing cost savings from integrating Life Storage stores under the Extra Space brand; what is the timeline for realizing these savings, and what risks could impact achieving this goal?
5. As some customers are moving out due to rate increases from your ECRI program, how sustainable is this strategy without negatively affecting occupancy rates, and how do you balance rent growth with customer retention?

46d3c12e3b60af86288189c4d14474b87dc23ce07b6e533d0e47f67d607a19b8

1. **Revenue Guidance and Housing Market**  
   **Q:** What are your assumptions for new move-in rates and guidance?  
   **A:** Management assumes sequential rate growth month-over-month into the leasing season but does not expect a strong rebound in the housing market. They see continued price sensitivity from new customers and do not anticipate interest rates declining enough to impact leasing. Therefore, they have given prudent guidance without assuming a housing market rebound.  **[EXR_3375688_4]** 

2. **Life Storage Synergies and Market Conditions**  
   **Q:** Is slower demand and rate pressure affecting Life Storage synergies?  
   **A:** Yes, market headwinds like slower demand and rate pressure are slowing the achievement of full property synergies from the Life Storage acquisition. While G&A and tenant insurance savings are exceeding expectations, property-level synergies may take longer, potentially not occurring until after this year. At the high end of guidance, they might get close; at the low end, they may fall short.  **[EXR_3375688_7]** 

3. **Same-Store Revenue Growth Differences**  
   **Q:** What's driving differences in same-store revenue growth between EXR and LSI?  
   **A:** The primary driver is the occupancy delta between the portfolios. The gap has decreased from **400 basis points** last summer to about **200 basis points** in February. Life Storage properties are accepting ECRIs well, moving out at slightly lower rates than EXR customers. However, current market conditions are a headwind, slowing the achievement of full synergies.  **[EXR_3375688_8]** 

4. **Early Year Occupancy and Rate Trends**  
   **Q:** Can you update us on January and February occupancy and move-in rates?  
   **A:** Occupancy is at **93.1%**, with a positive **40 basis point** delta compared to the end of the year. Strong rentals in January are boosting occupancy, but this is coming at the expense of new customer rates. Rates were down **17%** in January and February, reflecting price sensitivity among new customers.  **[EXR_3375688_9]** 

5. **Expense Outlook**  
   **Q:** Can you comment on expenses and line items in the $475 million midpoint?  
   **A:** The $475 million expense midpoint includes a **3%** increase in payroll, upper teens percentage increase in marketing expenses, property taxes rising between **2% and 3%**, and property and casualty insurance growing close to **20%**. Marketing spend is viewed as an investment with an expected ROI.  **[EXR_3375688_10]** 

6. **Transaction Market and Cap Rates**  
   **Q:** What are you seeing in the transaction market and cap rates today?  
   **A:** Most acquisition guidance is already identified and under contract, with **$50 million** yet to be identified. Transaction volume is very low, and recent deals often have unique circumstances. As such, it's difficult to define a market cap rate, and management wouldn't want to put a specific number on it.  **[EXR_3375688_16]** 

7. **ECRI Strategy and Customer Reception**  
   **Q:** Has the strategy of using ECRI to drive rent growth been effective?  
   **A:** Management believes the strategy is valid and working. Leaning into occupancy and acquiring web customers at lower rates, then relying on ECRI, maximizes long-term revenue. Customers' acceptance of ECRI has not changed, with no increase in vacates due to ECRI notices.  **[EXR_3375688_6]** 

8. **Marketing Spend Importance**  
   **Q:** How important is aggressive marketing given current demand?  
   **A:** Despite price sensitivity, there isn't minimal new customer demand; units are still renting every month. Marketing spend, about **2%** of revenue, is considered an investment with ROI metrics in place to ensure effectiveness. Costs are slightly higher, partly due to increased use of SpareFoot, which carries higher costs.  **[EXR_3375688_12]** 

9. **New York Market Performance**  
   **Q:** What's impacting performance in the New York/New Jersey market?  
   **A:** Northern New Jersey is negatively impacting the MSA performance. While New York boroughs are outperforming and have rotated to strong performance, Northern New Jersey is dragging down overall results in the region.  **[EXR_3375688_10]** 

10. **Street Rate Expectations**  
    **Q:** What's implied for street rates in 2024 guidance?  
    **A:** Management does not expect significant growth in street rates this year. At the guidance midpoint, they expect occupancy to remain relatively flat and do not foresee considerable street rate power in 2024.  **[EXR_3375688_24]** 

ed4e5a51f2bf84b12887d609e7d882ed61f581b4e1da7400253f9b6e00328a4c

- CubeSmart: A primary competitor and a public self-storage REIT  **[0001628280-24-008044_exr-20231231.htm:9]** .
- National Storage Affiliates: A primary competitor and a public self-storage REIT  **[0001628280-24-008044_exr-20231231.htm:9]** .
- Public Storage: A primary competitor and a public self-storage REIT  **[0001628280-24-008044_exr-20231231.htm:9]** .

d24822a2f82ac0a91a85cdfac7000190bac0c3f605f936f0b1d502282f894664

**Same-store square foot occupancy (%)**

**Net Rentable Square Feet (million sq ft)**

**Number of operating stores**

**Number of stores managed for third parties**

**Number of tenants**

**Average length of stay (months)**

**Average annual rent per sq ft (existing) ($)**

**Average annual rent per sq ft (new) ($)**

**Average discounts (%)**

63c2433e69bde59aa2ea5d02f8aa641a0b9fb0b410ce2c8d9c9f95cfba373f8d

4be9b574ecd9ce5ca26aa6b4de5e6fe247e88931be11a05cc639f02ffd363ba6

Self-Storage Operations

Rental Operations

Tenant Reinsurance

Management Fees and Other

Property Management, Acquisition, and Development

Total Revenue

23f5516bdb3f35cff742a038512b2b9b4d6f1c0bf5a4bd080cb9b0ab3da5ddf0

- **Strong Operational Performance with Increasing Occupancy and Rates**
- **Expansion of Capital-Light Growth Activities Enhancing Earnings**
- **G&A Savings and Expense Management Leading to Better-Than-Expected Results**

6d3d298a4cb5e6c60b775e88da780299ff3f0ac5bb09bea6962928f8b3a5dcba

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Same-Store Revenue Guidance**:
     - Extra Space: Midpoint at **0.125%**.
     - Life Storage: Reduced by 50 basis points at the midpoint.
  2. **Expense Guidance**:
     - Extra Space: Raised by 25 basis points.
     - Life Storage: Revised downward by 100 basis points at the midpoint.
  3. **Net Operating Income (NOI) Guidance**:
     - Extra Space: Midpoint at negative **1.375%**.
     - Life Storage: Range of negative **1.5%** to positive **0.5%**.
  4. **Funds From Operations (FFO) Guidance**:
     - Lower end raised to **$8** per share.
  5. **Bridge Loans and Interest Income**:
     - Increased expected interest income.
  6. **General and Administrative (G&A) Expenses**:
     - Lowered for the year.
  7. **Tenant Reinsurance Guidance**:
     - Increased.
  8. **Impact of Hurricane Milton**:
     - Excludes impact, with estimated damage of $10 million or more  **[EXR_3404733_2]** **[EXR_3404733_1]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Guidance**:
     - Extra Space: Midpoint at negative **0.25%**.
     - Life Storage: Reduced by 200 basis points at the midpoint.
  2. **Expense Guidance**:
     - Extra Space: Midpoint at **4.5%**.
     - Life Storage: Revised downward by 200 basis points at the midpoint.
  3. **Net Operating Income (NOI) Guidance**:
     - Extra Space: Midpoint at negative **1.75%**.
     - Life Storage: Range of negative **1.5%** to positive **1%**.
  4. **Funds From Operations (FFO) Guidance**:
     - Lower end raised to **$7.95** per share.
  5. **Occupancy**:
     - Extra Space: **94.5%**.
     - Life Storage: **93.9%**.
  6. **Interest Income and Expense**:
     - Increased expected interest income  **[EXR_3395582_2]** **[EXR_3395582_5]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Interest Rate Assumptions**:
     - SOFR assumption updated to **5.2%**.
  2. **Same-Store NOI Guidance**:
     - Discussion on portfolio performance, no specific numeric guidance.
  3. **Occupancy and Street Rates**:
     - Emphasis on maximizing revenue, no specific targets.
  4. **Same-Store Revenue Growth**:
     - LSI portfolio: **3.25%** growth expected.
  5. **Occupancy Trends**:
     - Expected to remain flat.
  6. **Supply and Market Conditions**:
     - 3% of same-store pool with new supply in Q1  **[EXR_3382034_25]** **[EXR_3382034_4]** **[EXR_3382034_9]** **[EXR_3382034_19]** **[EXR_3382034_27]** **[EXR_3382034_7]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Same-Store Revenue Growth**:
     - EXR: Negative 2% to positive 0.5%.
     - Legacy LSI: 2% to 4.5%.
  2. **Expense Growth**:
     - EXR: 4% to 5.5%.
     - Legacy LSI: 6.25% to 7.75%.
  3. **Net Operating Income (NOI) Growth**:
     - EXR: Negative 4.25% to negative 0.5%.
     - Legacy LSI: Negative 0.25% to positive 4%.
  4. **Core Funds From Operations (FFO)**:
     - Range of $7.85 to $8.15 per share.
  5. **Interest Rates**:
     - Average SOFR rate of **4.75%** assumed  **[EXR_3375688_3]** **[EXR_3375688_5]** .

ec18af781976c954d75b2a3320fcf9e217bd14f5daff4a41ef8d611167791c92

| Name              | Position                                           | Start Date       | Short Bio                                                                                                                                                                                                                                                                                                                                                   |
|-------------------|----------------------------------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Joseph D. Margolis| Chief Executive Officer                            | January 1, 2017  | Joseph D. Margolis has served as the Chief Executive Officer of Extra Space Storage Inc. since January 1, 2017. Prior to this role, he was the company's Executive Vice President and Chief Investment Officer from July 2015 until December 31, 2016. He has held senior positions at Penzance Properties and was a co-founding partner of Arsenal Real Estate Funds  **[0001628280-24-014598_exr-20240403.htm:6]** **[0001628280-23-010615_exr-20230404.htm:6]** . |
| Zach Dickens      | Executive Vice President and Chief Investment Officer | December 2020    | Zach Dickens has served as the Executive Vice President and Chief Investment Officer at Extra Space Storage since December 2020. He has been with the company since 2002, holding various roles in the real estate department, including Executive Vice President of Investments. Before joining Extra Space Storage, he oversaw a technical support team at eBay  **[0001628280-24-014598_exr-20240403.htm:32]** . |
| Matthew Herrington| Executive Vice President and Chief Operations Officer | June 2020        | Matthew Herrington has served as the Executive Vice President and Chief Operations Officer at Extra Space Storage since June 2020. He has been a member of the company's senior management team for over a decade, previously serving as the Senior Vice President of Operations from 2015 to 2020  **[0001628280-24-014598_exr-20240403.htm:32]** **[0001628280-23-010615_exr-20230404.htm:31]** .                                                        |
| Gwyn G. McNeal    | Executive Vice President and Chief Legal Officer   | July 2013        | Gwyn G. McNeal has served as the Executive Vice President and Chief Legal Officer at Extra Space Storage since July 2013. She has been with the company since 2005, initially serving as Vice President and Associate General Counsel. Before joining Extra Space Storage, she practiced law at Latham & Watkins LLP in San Diego  **[0001628280-24-014598_exr-20240403.htm:32]** **[0001628280-23-010615_exr-20230404.htm:31]** .                          |
| Samrat Sondhi     | Executive Vice President and Chief Marketing Officer | June 2020        | Samrat Sondhi has served as the Executive Vice President and Chief Marketing Officer at Extra Space Storage since June 2020. Prior to this role, he was the Chief Operations Officer from January 2013 to June 2020. He has been a member of the company's senior management team since 2008 and has been with the company since 2003  **[0001628280-24-014598_exr-20240403.htm:32]** **[0001628280-23-010615_exr-20230404.htm:31]** .                        |
| Noah Springer     | Executive Vice President and Chief Strategy and Partnership Officer | December 2020    | Noah Springer has served as the Executive Vice President and Chief Strategy and Partnership Officer at Extra Space Storage since December 2020. He has been with the company since 2006, holding various roles in acquisitions, third-party management, and asset management  **[0001628280-24-014598_exr-20240403.htm:32]** **[0001628280-23-010615_exr-20230404.htm:31]** .                                                                            |
| Scott Stubbs      | Executive Vice President and Chief Financial Officer | December 2011    | Scott Stubbs has served as the Executive Vice President and Chief Financial Officer of Extra Space Storage Inc. since December 2011. Before this role, he was the Senior Vice President of Finance and Accounting since the company's inception as a public company and served as the Corporate Controller of its predecessor starting in December 2000  **[0001628280-24-014598_exr-20240403.htm:32]** **[0001628280-23-010615_exr-20230404.htm:31]** .       |

8a9647dffe6d1c69013094cb665ae7a6d4293cd70af4ab301279322970be31d3

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | November 13, 2023  **[0001628280-24-045038_exr-20240930.htm:22]**  |
| End Date/Duration        | Not explicitly stated  **[0001628280-24-045038_exr-20240930.htm:22]**  |
| Total additional amount  | **$500,000**  **[0001628280-24-045038_exr-20240930.htm:22]**  |
| Remaining authorization amount | **$500,000** as of September 30, 2024  **[0001628280-24-045038_exr-20240930.htm:22]**  |
| Details                  | The program allows for the repurchase of shares with an aggregate value up to **$500 million**  **[0001628280-24-045038_exr-20240930.htm:22]**  |

20a0ed1f814cf2948cdfbd27555d2ae2ab238806f1bfbe9e711c023d1be08473

**Annual guidance for FY 2024:**
- **Same-store revenue (Extra Space)**: 0.125%  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from -0.25%  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Same-store revenue (Life Storage)**: reduced by 50 basis points  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from reduced by 200 basis points  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Expense guidance (Extra Space)**: 4.75%  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from 4.5%  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Expense guidance (Life Storage)**: revised downward by 100 basis points  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from revised downward by 200 basis points  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Net operating income (NOI) guidance (Extra Space)**: -1.375%  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from -1.75%  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Net operating income (NOI) guidance (Life Storage)**: -1.5% to +0.5%  **[EXR_3404733_2]** **[EXR_3404733_1]**  (lowered from -1.5% to +1.0%  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Funds from operations (FFO) guidance**: $8.00 per share  **[EXR_3404733_2]** **[EXR_3404733_1]**  (raised from $7.95 per share  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **Bridge loans and interest income**: increased expected interest income  **[EXR_3404733_2]** **[EXR_3404733_1]**  (no change from prior guidance  **[EXR_3395582_2]** **[EXR_3395582_5]** )  
- **General and administrative (G&A) expenses**: lowered for the year  **[EXR_3404733_2]** **[EXR_3404733_1]**  (no prior guidance)  
- **Tenant reinsurance guidance**: increased  **[EXR_3404733_2]** **[EXR_3404733_1]**  (no prior guidance)  
- **Impact of Hurricane Milton**: excludes impact, estimated damage ≥ $10 million  **[EXR_3404733_2]** **[EXR_3404733_1]**  (no prior guidance)  

a921941aed53f7ef9813252ad3e91645f50ca896d3511aa09356410b60c14c31

1. **Brand Consolidation Impact**  
   **Q:** What benefits are you seeing from the brand consolidation?  
   **A:** We are in early stages since rebranding to Extra Space in late Q3, but we've seen slight improvements in SEO performance for former Life Storage stores, better conversion rates on the Extra Space website, and modest savings in paid marketing spend. We expect converted stores to perform like original Extra Space stores over time.  **[EXR_3404733_3]** 

2. **Guidance Deceleration**  
   **Q:** What's causing the deceleration in fourth-quarter guidance?  
   **A:** The deceleration is primarily due to property performance in the fourth quarter. It depends on where you are in our guidance range, but there's not an extreme revenue drop-off or growth expected.  **[EXR_3404733_4]** **[EXR_3404733_14]** 

3. **LSI Performance and Synergies**  
   **Q:** Can you update us on Life Storage performance and merger synergies?  
   **A:** Life Storage has underperformed expectations, leading us to cut revenue guidance twice. Contributing factors include weaker markets in 2024, LSI's higher concentration in underperforming markets like Florida, and not realizing expected benefits from dual branding. We are targeting $100 million in synergies and have achieved **$80–$90 million** so far, exceeding initial estimates in G&A and tenant insurance savings.  **[EXR_3404733_12]** **[EXR_3404733_15]** 

4. **Acquisition Activity and Yields**  
   **Q:** Can you provide details on recent acquisitions and their yields?  
   **A:** We've approved 10 wholly owned operating deals with first-year yields in the **low 5%** range and stabilized yields of **6.5%**. Our joint venture deals have first-year yields at **10%** and stabilized yields at **12%** due to the economic benefits of the JV structure. We also approved three developments with an **8.6%** development yield.  **[EXR_3404733_9]** 

5. **Move-in Rate Trends**  
   **Q:** How are move-in rates trending compared to last year?  
   **A:** Our average rate to new customers for the quarter was down **9%** year-over-year, and in October, down **8%**. October feels similar to September and August, with no significant changes month-to-month.  **[EXR_3404733_11]** 

6. **Hurricane Impact on Occupancy**  
   **Q:** What impact have hurricanes had on rental activity and occupancy?  
   **A:** We've seen an uptick in rentals, particularly in the Life Storage pool, with occupancies increasing from **92–93%** to **96%** at some stores. A typical hurricane customer stays around **10 months**, which should benefit us, although these gains often offset hurricane-related expenses.  **[EXR_3404733_6]** 

7. **Rebranding Costs for LSI Assets**  
   **Q:** What are the costs associated with rebranding Life Storage assets?  
   **A:** We expect total rebranding costs of about **$117 million**, including **$20 million** of non-branding capital costs that were delayed. Our initial underwriting assumed **$75,000** per property, or **$90 million** in total, which was included in our returns when we announced the deal.  **[EXR_3404733_10]** 

8. **Bridge Loan Activity**  
   **Q:** How is the bridge loan program performing and what's the outlook?  
   **A:** We've had a strong year in bridge loan originations, partly due to new LSI partners and owners opting for bridge loans in a difficult acquisition market. Next year, we'll see meaningful maturities; some will extend, pay off, or be acquisitions. We'll remain active but won't make bad loans just to maintain volume, and we'll manage exposure by selling A notes.  **[EXR_3404733_29]** 

9. **Occupancy Trends and Pricing Strategy**  
   **Q:** How are you balancing occupancy and pricing, and what's the outlook?  
   **A:** We prioritize long-term revenue by balancing occupancy and rates. Currently, data suggests leaning more into occupancy, offering lower rates to attract new customers. We expect to continue operating at higher than historical occupancy levels and are positioned to benefit quickly when the market turns.  **[EXR_3404733_20]** **[EXR_3404733_27]** 

07bacc329298c7616d6b86241cfc6f25c2d50b09ff49883db6cb41598aa408b9

| Name              | Start Date | End Date | Reason for Change |
|-------------------|------------|----------|-------------------|
| Ernst & Young LLP | 2005  **[0001628280-24-008044_exr-20231231.htm:59]**  | Present  | Current auditor   |

4b2893f7ae469310a92f3263c00c3932d94146459509bba62078afb179a655a5

84008f658ec439ed23b1dafd1981dd87dd9f431c9f809b3aca58a871abe1343e

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $824.8M (+10% YoY)  **[0001628280-24-045038_exr-20240930.htm:4]** **[0001628280-24-045038_exr-20240930.htm:33]**   
- Self-Storage Operations: $710.9M (+9% YoY)  **[0001628280-24-045038_exr-20240930.htm:4]** **[0001628280-24-045038_exr-20240930.htm:26]**   
- **Tenant Reinsurance**: $84.0M (+**22%** YoY)  **[0001628280-24-045038_exr-20240930.htm:4]** **[0001628280-24-045038_exr-20240930.htm:26]**   
- EPS (Diluted): $0.91 (+**11%** YoY)  **[0001628280-24-045038_exr-20240930.htm:4]** **[0001628280-24-045038_exr-20240930.htm:26]**   
- Interest Expense: $142.9M (+**16%** YoY)  **[0001628280-24-045038_exr-20240930.htm:4]** **[0001628280-24-045038_exr-20240930.htm:26]**   

be0c288039c07ef82b6c1c341a5754c0265467f59c4ba2ea98f421c427659e81

a2d5d76f5c997f0e76df2a6adc13524e9aa552d1a85924f35ef2feab551c54d6

b9366f6aa04fdaa1d7c2fec0a13646ec7027b5e4f6e93eac1a399c2f2c929c52

c93e9ca15d88cefbb5b1fb6ed798a919c8aedbeea0dcc9c5ddef1e6eed0eb40c

- **Management is not expecting a major recovery from the housing market**, indicating potential headwinds due to reduced housing activity and signs of consumer weakness.  **[EXR_3382034_8]**
- **The company is not comfortable changing its guidance**, suggesting uncertainty about future performance and challenges during the upcoming leasing season.  **[EXR_3382034_6]** **[EXR_3382034_7]**
- **Occupancy is expected to remain flat for most of the year**, indicating limited growth opportunities in occupancy levels.  **[EXR_3382034_19]** **[EXR_3382034_8]**

fa9cb8369b070c6a07475e5c3d3d73b4b912986d4862d8870bf78bca281933f4

- **EXR is experiencing continued pressure on new customer rates, with rates down approximately 17% year-over-year in January and February, indicating challenges in regaining pricing power.**  **[EXR_3375688_9]**
- **The company projects negative same-store revenue growth for the EXR pool in 2024, with guidance ranging from -2% to +0.5%, reflecting difficulties in driving revenue growth.**  **[EXR_3375688_3]**
- **Expenses are expected to increase, particularly marketing expenses, which are anticipated to grow in the upper teens year-over-year, and property and casualty insurance costs, expected to rise by approximately 20%, potentially impacting profitability.**  **[EXR_3375688_10]**

f060ace91346da4cd7f4f79ba572423eb8dcef501740fde923f89d97bce922ed

- **Life Storage (LSI) stores have underperformed expectations**, leading to two revenue guidance cuts for those stores. The markets where LSI has higher concentration, such as Florida, have performed **disproportionately weaker**, and the company did not get the expected benefits from the dual-brand strategy, prompting a shift to a single-brand approach.  **[EXR_3404733_11]**
- **Significant bridge loan maturities are approaching next year**, with uncertainty about how many will extend or pay off. This could put **downward pressure on the bridge loan business**, potentially impacting interest income if loans are not extended or default.  **[EXR_3404733_32]** **[EXR_3404733_29]**
- The company expresses **uncertainty about future pricing power and storage demand**, highlighting dependence on macroeconomic factors like interest rates, housing market, and consumer health, which they lack visibility on and could negatively affect their ability to push pricing.  **[EXR_3404733_24]**

d00ef0704c63909ab5e1c73c3f4e36195f33293def7cb75b82c69bd757949b35

1. **Occupancy and Rate Trends**  
   **Q:** How did occupancy and rates trend in April compared to the end of Q1?  
   **A:** Occupancy at the end of April was **93.7%**, a **50 basis point** increase over last year, with rates improving sequentially month-over-month since January. Achieved rates averaged about **negative 14%** in the quarter, improving to about **negative 9%** year-over-year in April.  **[EXR_3382034_3]** 

2. **Guidance and Street Rates**  
   **Q:** How much must street rates increase to meet guidance midpoint?  
   **A:** Street rates are just one component of revenue, and the company doesn't target a specific increase. They aim to maximize revenue through a mix of street rates, occupancy, discounts, marketing spend, and ECRI, rather than focusing solely on street rates.  **[EXR_3382034_4]** 

3. **Seasonality and Operational Confidence**  
   **Q:** Are normal seasonality trends returning, and how confident are you in operations?  
   **A:** There's some comfort as the leasing season approaches, but due to reduced housing activity and signs of consumer weakness, there's not enough confidence to change guidance. The company notes that occupancy seasonality has been smoothed, but rate power remains an issue.  **[EXR_3382034_6]** 

4. **Transaction Market and Acquisition Yields**  
   **Q:** How is the transaction market, and what yields are you seeing on acquisitions?  
   **A:** The transaction market is muted with a significant bid-ask spread and little distress in storage. In Q1, they approved only 3 transactions: a remotely managed store with an initial cap rate in the **mid-6%** and two developments with property-level yields in the **high-8%**.  **[EXR_3382034_12]** 

5. **Supply Picture and Development Trends**  
   **Q:** How are supply dynamics and construction starts affecting future performance?  
   **A:** In Q1, **3%** of the same-store pool had new supply delivered in their trade area, aligning with an estimated **11–13%** for the year, down **30%** from 2023 deliveries. Headwinds like equity availability, debt costs, and construction costs are limiting self-storage development, though some markets face new supply issues.  **[EXR_3382034_27]** 

6. **Integration of Life Storage**  
   **Q:** How is the integration of Life Storage progressing, and have you realized revenue synergies?  
   **A:** The Life Storage assets are performing as expected, with a **90 basis point** occupancy gap and an **8–12%** rate gap remaining. Progress has been made in operations alignment, but there's still opportunity to capture further synergies.  **[EXR_3382034_18]** 

7. **Consumer Behavior and ECRI Impact**  
   **Q:** How is consumer behavior impacting ECRIs and length of stay?  
   **A:** Existing customers are strong and price-insensitive, with low move-outs despite ECRIs. Length of stay is incrementally better than pre-COVID levels but is normalizing from COVID peaks. There's more price sensitivity among new customers due to factors like reduced savings and consumer weakness.  **[EXR_3382034_15]** 

8. **Bridge Loan Program Growth**  
   **Q:** What's driving the growth in the bridge loan program, and who are the customers?  
   **A:** Demand is strong, partly due to new relationships from the Life Storage merger. They've closed or have under term sheet **$239 million** in bridge loans with former Life Storage partners. Customers often seek to cash out expensive equity partners in a challenging sales market.  **[EXR_3382034_31]** 

5331da36d1099a213a0e991731c4637f4429fa5931fcafde70949b37d61bb7cb

- **Extra Space Storage is achieving greater-than-expected synergies from the Life Storage acquisition**, including **$16 million** in tenant insurance synergies for 2024, exceeding the original estimate by **$4 million**  **[EXR_3375688_20]** , and expecting **$39 million** in G&A synergies, an increase of **$16 million** over the original forecast.  **[EXR_3375688_20]**
- **Occupancy levels and rental rates at legacy Life Storage properties are improving**, with the occupancy gap between Life Storage and Extra Space properties narrowing from **350 basis points** to approximately **200 basis points**  **[EXR_3375688_28]** , and net rent per square foot for legacy Life Storage customers moving closer to nearby Extra Space locations.  **[EXR_3375688_28]**
- **The company has strong growth prospects through capital-light initiatives**, adding **225 new managed stores** last year—the most ever—and expects continued growth in third-party management, bridge loan programs, and joint ventures.  **[EXR_3375688_32]**

cdad407665519eb404601c4603bb05c7d1bf812f57ff809dedd0703cb81611be

- **Expansion of bridge loan program provides additional revenue and growth opportunities.**  **[EXR_3395582_32]** **[EXR_3395582_30]**
- **Third-party management platform continues robust growth, adding 174 stores gross and 86 net year-to-date, one of the strongest first halves ever.**  **[EXR_3395582_1]** **[EXR_3395582_23]** **[EXR_3395582_22]**
- **Efficient expense management and cost savings contribute to better-than-expected performance and increased FFO guidance.**  **[EXR_3395582_2]** **[EXR_3395582_1]**

f81a8c1bd6e0516aae725fff8161364a992c982279bae2619da0620b5ec51c18

- The pricing improvement at the **Life Storage** properties has been **below internal projections**, leading to a **reduction in annual same-store revenue guidance by 200 basis points** at the midpoint. Progress in closing the rate gap is **slower than anticipated**.  **[EXR_3395582_24]** **[EXR_3395582_8]**
- Increased competition and weaker consumer demand have led to the company having to be **aggressive with pricing**, impacting revenue growth, with **Extra Space same-store revenue growth at only 0.6%**. The company does not see a catalyst for significant pricing power improvement.  **[EXR_3395582_11]** **[EXR_3395582_19]**
- The company is experiencing **higher marketing expenses**, with marketing spend **up 20% year-over-year**, and has not achieved the expected improvement in **Life Storage's SEO strength**, leading to reliance on increased paid search to drive demand.  **[EXR_3395582_13]** **[EXR_3395582_16]**

a24c50de20b980382689e0ebfc3f3a133fff1a34df4144c5fe6f7fd4e9e767a5

- The integration and rebranding of Life Storage stores under the Extra Space brand are beginning to show positive results, including **better SEO performance**, **improved conversion rates**, and **modest savings in paid marketing spend**. This is expected to close the performance gap between the two brands over time.  **[EXR_3404733_3]**
- The company anticipates **annual cost savings of $10 million** in paid search expenses as Life Storage stores reach parity with Extra Space stores. Additionally, a stronger unified brand is expected to lead to further marketing savings.  **[EXR_3404733_25]**
- Extra Space is experiencing strong growth in its **third-party asset management business**, benefiting from the absorption of Life Storage's management clients and increased demand from non-institutional owners seeking professional management in a challenging operating environment. This business is growing **faster than anyone else**, despite being **the most expensive in the business** with **very healthy margins**.  **[EXR_3404733_31]**

f60ffebca7ee630bcdefb81731d59101c99b6e51ab57d46a56ff863c5ff647f8

1. **LSI Underperformance Factors**  
   **Q:** What's causing Life Storage to underperform expectations?  
   **A:** The Life Storage portfolio is underperforming due to several factors, including a lack of pricing power as customers remain price-sensitive, preventing rate increases as hoped.  **[EXR_3395582_3]** **[EXR_3395582_10]**  Geographic exposure also played a role; the merger increased our presence in underperforming Sunbelt markets like Florida and reduced exposure to outperforming markets like California.  **[EXR_3395582_3]** **[EXR_3395582_8]** **[EXR_3395582_16]**  Additionally, we haven't achieved the improvement in Life Storage's organic SEO strength that we expected, impacting demand.  **[EXR_3395582_16]** **[EXR_3395582_27]** 

2. **Pricing Power Challenges**  
   **Q:** Why can't you increase rates as planned?  
   **A:** Customers remain highly price-sensitive, making it difficult to raise new customer rates at both Extra Space and Life Storage stores.  **[EXR_3395582_3]** **[EXR_3395582_10]** **[EXR_3395582_11]** **[EXR_3395582_19]**  Despite achieving occupancy parity, we found that new customers are not accepting higher rates, affecting revenue growth.  **[EXR_3395582_3]** **[EXR_3395582_10]** 

3. **Revenue Growth Guidance**  
   **Q:** How are you revising revenue growth guidance?  
   **A:** We reduced Life Storage's revenue growth guidance by **200 basis points** due to lower-than-expected new customer rates and challenging market conditions.  **[EXR_3395582_8]**  Conversely, we tightened Extra Space's revenue guidance by removing the lower end of our prior range, reflecting steady performance.  **[EXR_3395582_26]** 

4. **Marketing Spend and SEO**  
   **Q:** How are marketing efforts impacting demand?  
   **A:** We've increased marketing spend by **20%** year-over-year for the Extra Space portfolio, now at **2%** of revenues, while Life Storage spends slightly higher at **3%**.  **[EXR_3395582_13]**  However, we're disappointed with Life Storage's organic SEO performance, which hasn't improved as much as expected, affecting demand.  **[EXR_3395582_16]** **[EXR_3395582_27]** 

5. **Geographic Impact**  
   **Q:** How is geography affecting results?  
   **A:** The merger reduced our exposure to California and increased it in Florida. This timing has worked against us, as California is outperforming while Florida is underperforming.  **[EXR_3395582_3]** **[EXR_3395582_8]** **[EXR_3395582_16]**  Extra Space has **23%** of same-store revenue from California, whereas Life Storage has **16%** from Florida.  **[EXR_3395582_3]** 

6. **Dual-Brand Strategy Evaluation**  
   **Q:** Will you keep operating two brands?  
   **A:** We're evaluating the dual-brand strategy. While having two brands was intended to increase digital presence, we're not seeing the expected benefits in organic SEO with Life Storage.  **[EXR_3395582_17]** **[EXR_3395582_27]**  We'll let the test run its course before making a decision.  **[EXR_3395582_17]** 

7. **Portfolio Convergence Timeline**  
   **Q:** When will EXR and LSI perform similarly?  
   **A:** We expect the portfolios to converge over time. They are slightly different in demographics and markets, but should behave similarly. We anticipate Life Storage to outperform in year-over-year revenue growth in **2025**.  **[EXR_3395582_18]** 

8. **Consumer Weakness and Competition**  
   **Q:** What's driving increased competition?  
   **A:** A weaker consumer, with inflation outpacing wage growth and reduced savings, is leading to increased price sensitivity.  **[EXR_3395582_19]**  The percentage of customers moving has dropped from **61%** in 2021 to **51%** now.  **[EXR_3395582_19]**  Additionally, new supply from prior development cycles is impacting markets now that excess COVID demand has subsided.  **[EXR_3395582_19]** 

9. **Housing Market Effects**  
   **Q:** How is the housing market affecting demand?  
   **A:** A slower housing market contributes to reduced demand, as fewer customers are moving.  **[EXR_3395582_4]** **[EXR_3395582_19]**  While we expect slow and steady improvement, it's not enough to significantly boost pricing power at this time.  **[EXR_3395582_4]** **[EXR_3395582_12]** 

10. **Bridge Loan Activity and Debt**  
    **Q:** How will bridge loans affect your debt levels?  
    **A:** We've increased bridge loan activity due to a quiet acquisition market, holding more loans on our balance sheet as a good use of capital.  **[EXR_3395582_30]** **[EXR_3395582_32]**  We'll manage debt levels by selling some loans and potentially accessing the bond market later this year or early next year.  **[EXR_3395582_32]** 

11. **Expense Management**  
    **Q:** How are you managing payroll and utilities costs?  
    **A:** Payroll expenses were slightly elevated due to increased hours and wage growth but are expected to align more closely with inflation in the back half of the year.  **[EXR_3395582_21]**  Utilities costs are decreasing thanks to aggressive solar investments, with about **50%** of fully owned stores having solar installations.  **[EXR_3395582_21]** 

12. **Top-of-Funnel Demand**  
    **Q:** How is marketing spend affecting demand?  
    **A:** Increased marketing spend has helped offset weaker organic SEO performance.  **[EXR_3395582_13]** **[EXR_3395582_16]**  Overall, demand measured by search terms is similar to **2019** levels but down from last year.  **[EXR_3395582_14]** 

13. **Rent Increase Practices**  
    **Q:** Are you adjusting rent increase strategies?  
    **A:** Now that pricing is at parity, both Extra Space and Life Storage use the same systems for customer rate increases, and there are no differences in rent increase practices between the portfolios.  **[EXR_3395582_25]** 

14. **Third-Party Management Changes**  
    **Q:** Why did you lose a third-party management client?  
    **A:** We lost **59** stores due to an owner inherited from Life Storage internalizing management after acquiring a self-storage company.  **[EXR_3395582_23]**  This is part of usual business dynamics, and we continue to grow our third-party management platform, adding **174** stores gross this year.  **[EXR_3395582_23]** 

15. **Future Same-Store Reporting**  
    **Q:** Will you combine EXR and LSI in same-store metrics?  
    **A:** Our plan is to move Life Storage into same-store reporting in **2025**, but we'll provide previous year data to maintain transparency, allowing for before-and-after comparisons.  **[EXR_3395582_28]** 

d7fb9181d26b942817476d2db575b3895ad2ae88f0e6e19134bc24ccfd3709ed

Extra Space Storage Inc (EXR)

Financials