EXTRA SPACE STORAGE INC. SALT LAKE CITY, Nov. 1, 2017 /PRNewswire/ -- Extra Space Storage Inc. (NYSE: EXR) (the "Company"), a leading owner and operator of self-storage facilities in the United States and a member of the S&P 500, announced operating results for the three and nine months ended September 30, 2017.
Highlights for the three months ended September 30, 2017:
-- Achieved net income attributable to common stockholders of $0.74 per
diluted share, representing a 20.4% decrease compared to the same period
in 2016.
-- Achieved funds from operations attributable to common stockholders and
unit holders ("FFO") of $1.09 per diluted share. Excluding non-cash
interest and property losses and tenant reinsurance claims due to
hurricanes, FFO as adjusted was $1.13 per diluted share, representing a
10.8% increase compared to the same period in 2016.
-- Increased same-store revenue by 4.8% and same-store net operating income
("NOI") by 5.5% compared to the same period in 2016.
-- Reported same-store occupancy of 93.9% as of September 30, 2017,
compared to 92.5% as of September 30, 2016.
-- Acquired three operating stores and one store at completion of
construction (a "Certificate of Occupancy store") for a total purchase
price of approximately $31.8 million.
-- Acquired one Certificate of Occupancy store with a joint venture partner
for a total purchase price of approximately $8.8 million.
-- Paid a quarterly dividend of $0.78 per share.
Highlights for the nine months ended September 30, 2017:
-- Achieved net income attributable to common stockholders of $2.07 per
diluted share, representing a 7.6% decrease compared to the same period
in 2016.
-- Achieved FFO of $3.20 per diluted share. Excluding non-cash interest and
property losses and tenant reinsurance claims due to hurricanes, FFO as
adjusted was $3.26 per diluted share, representing a 16.0% increase
compared to the same period in 2016.
-- Increased same-store revenue by 5.2% and same-store NOI by 7.4% compared
to the same period in 2016.
-- Acquired six operating stores and two Certificate of Occupancy stores
for a total purchase price of approximately $75.7 million.
-- Acquired four Certificate of Occupancy stores with joint venture
partners for a total purchase price of approximately $40.9 million.
Joe Margolis, CEO of Extra Space Storage Inc., commented: "I am proud of the efforts and sacrifices our team made to take care of our customers, fellow employees and our stores during three hurricanes in the quarter. In the midst of these tragic events, we had strong execution this quarter and posted another solid result. We increased rental rates and gained occupancy by 140 basis points in the same-store pool. This led to same-store revenue growth of 4.8%, NOI growth of 5.5% and FFO as adjusted growth of 10.8%."
FFO Per Share:
--------------
The following table outlines the Company's FFO and FFO as adjusted for the three and nine months ended September 30, 2017 and 2016. The table also provides a reconciliation to GAAP net income attributable to common stockholders and earnings per diluted share for each period presented (amounts shown in thousands, except share and per share data(1) - unaudited):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
(per share) (per share) (per share) (per share)
Net income attributable to common stockholders $93,764 $0.74 $118,088 $0.93 $263,052 $2.07 $283,724 $2.24
Impact of the difference in weighted (0.05) (0.05) (0.11) (0.12)
average number of shares - diluted(2)
Adjustments:
Real estate depreciation 43,303 0.32 39,971 0.30 127,729 0.95 113,795 0.85
Amortization of intangibles 2,316 0.02 4,853 0.04 11,164 0.08 14,425 0.11
Loss (gain) on real estate transactions, earnout from prior
acquisition and impairment of real estate - - - - 6,019 0.04 (9,814) (0.07)
Unconsolidated joint venture real estate depreciation and
amortization 1,429 0.01 1,227 0.01 4,267 0.03 3,481 0.03
Unconsolidated joint venture gain on sale of properties and
purchase of partners' interests - - (37,509) (0.29) - - (64,432) (0.49)
Distributions paid on Series A Preferred Operating Partnership
units (572) - (1,272) (0.01) (2,547) (0.02) (3,814) (0.03)
Income allocated to Operating Partnership noncontrolling interests 7,363 0.05 9,137 0.07 21,928 0.16 22,949 0.17
----- ----- ------ ------ ----
FFO attributable to common stockholders and unit holders $147,603 $1.09 $134,495 $1.00 $431,612 $3.20 $360,314 $2.69
Adjustments:
Property losses and tenant re-insurance claims due to hurricanes,
net 4,360 0.03 - - 4,360 0.03 - -
Non-cash interest expense related to amortization of discount on
equity portion of exchangeable senior notes 1,268 0.01 1,243 0.01 3,827 0.03 3,716 0.03
Non-cash interest benefit related to out of market debt - - (132) - - - (828) (0.01)
Loss related to settlement of legal action - - - - - - 4,000 0.03
Acquisition related costs and other(3) - - 1,933 0.01 - - 9,124 0.07
FFO as adjusted attributable to common stockholders and unit
holders $153,231 $1.13 $137,539 $1.02 $439,799 $3.26 $376,326 $2.81
======== ===== ======== ===== ======== ===== ======== =====
Weighted average number of shares - diluted4 135,090,385 134,611,016 135,033,047 133,714,350
(1) Per share amounts may not
recalculate due to rounding.
(2) Adjustment to account for the
difference between the number of
shares used to calculate earnings
per share and the number of shares
used to calculate FFO per share.
Earnings per share is calculated
using the two-class method, which
uses a lower number of shares than
the calculation for FFO per share
and FFO as adjusted per share,
which are calculated assuming full
redemption of all OP units as
described in note (4).
(3) Beginning January 1, 2017,
acquisition related costs have
been capitalized due to a change
in accounting literature, thus
eliminating the need for an
adjustment to FFO as adjusted
attributable to common
stockholders and unit holders.
(4) Extra Space Storage LP (the
"Operating Partnership") has
outstanding preferred and common
operating partnership units ("OP
units"). These OP units can be
redeemed for cash or, at the
Company's election, shares of the
Company's common stock. Redemption
of all OP units for common stock
has been assumed for purposes of
calculating the weighted average
number of shares - diluted as
presented above. The computation
of weighted average number of
shares - diluted for FFO per
share and FFO as adjusted per
share also includes the effect of
share-based compensation plans
and shares related to the
exchangeable senior notes using
the treasury stock method.
Hurricanes Harvey, Irma and Maria Update:
During the three months ended September 30, 2017, 34 properties in the greater Houston area and 219 properties in Florida, Georgia, Puerto Rico and South Carolina were temporarily closed due to hurricanes Harvey, Irma and Maria. The Company maintains property and casualty insurance on its properties, which covers damages and business interruption expenses subject to varying deductibles depending on the cause and extent of the claim. The Company recorded property losses, net of expected insurance proceeds, of $2.1 million due to building damage and expenses for repairs, cleanup and trash removal. The Company also recorded $2.3 million in additional tenant reinsurance claims cost resulting from the hurricanes with respect to tenants covered under our tenant reinsurance program.
The property losses and tenant reinsurance claims cost from the hurricanes are excluded from FFO as adjusted. Same-store reporting excludes all casualty losses to provide more useful measures when comparing year over year results. Additional details related to the same-store pool including performance breakouts of markets impacted by hurricanes are provided in the supplemental financial information published on the Company's website at www.extraspace.com.
Operating Results and Same-Store Performance:
---------------------------------------------
The following table outlines the Company's same-store performance for the three and nine months ended September 30, 2017 and 2016 (amounts shown in thousands, except store count data-unaudited)(1):
For the Three Months Percent For the Nine Months Percent
Ended September 30, Ended September 30,
2017 2016 Change 2017 2016 Change
---- ---- ------ ---- ---- ------
Same-store
rental
revenues(2) $220,123 $210,075 4.8% $640,322 $608,462 5.2%
Same-store
operating
expenses(2) 59,183 57,507 2.9% 174,661 174,820 (0.1)%
------ ------ --- ------- ------- -----
Same-store
net
operating
income(2) $160,940 $152,568 5.5% $465,661 $433,642 7.4%
======== ======== === ======== ======== ===
Same-store
square foot
occupancy as
of quarter
end 93.9% 92.5% 93.9% 92.5%
Properties
included in
same-store 732 732 732 732
(1) A reconciliation of net income to
same-store net operating income is
provided later in this release,
entitled "Reconciliation of GAAP Net
Income to Total Same-Store Net
Operating Income."
(2) Same-store revenues, same-store
operating expenses and same-store
net operating income do not include
tenant reinsurance revenue or
expense.
Same-store revenues for the three and nine months ended September 30, 2017 increased due to gains in occupancy and higher rental rates for both new and existing customers. Expenses were higher for the three months ended September 30, 2017, primarily due to increases in property taxes and payroll and benefits, which were partially offset by decreases in repairs and maintenance and insurance. Expenses for the nine months ended September 30, 2017 were generally flat with increases in property taxes and marketing expense offset by decreases in repairs and maintenance and insurance.
Major markets with revenue growth above the Company's portfolio average for the nine months ended September 30, 2017 included Las Vegas, Los Angeles, Orlando, Sacramento and West Palm Beach/Boca Raton. Major markets performing below the Company's portfolio average included Boston, Dallas, Denver and Houston.
Investment and Third-Party Management Activity:
-----------------------------------------------
The following table outlines the Company's acquisitions and developments that are closed, completed or under agreement (dollars in thousands - unaudited):
Closed through Closed Subsequent to
September 30, 2017 To Close/Complete Total to To Close/Complete
September 30, 2017 in 2017 Close/Complete in 2017 in 2018-2019
Stores Price Stores Price Stores Price Stores Price Stores Price
------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Operating Stores 6 $59,350 3 $54,850 6 $91,500 15 $205,700 1 $16,250
Certificate of Occupancy and Development Stores(1) 2 16,313 1 9,600 6 88,600 9 114,513 12 149,441
Buyout of JV Partners' Interest - - 3 18,675 3 40,194 6 58,869 - -
In Operating Stores(2)
Buyout of JV Partners' Interest In Certificate of Occupancy
Stores2,3 - - - - - 4,806 - 4,806 - -
--- --- --- --- --- ----- --- ----- --- ---
Total Wholly-Owned and Buyout of JV Partners' Interest 8 75,663 7 83,125 15 225,100 30 383,888 13 165,691
JV Certificate of Occupancy and Development Stores(1) 4 40,855 1 7,830 5 67,874 10 116,559 15 357,204
--- ------ --- ----- --- ------ --- ------- --- -------
Total 12 $116,518 8 $90,955 20 $292,974 40 $500,447 28 $522,895
=== ======== === ======= === ======== === ======== === ========
(1) The locations of development and Certificate of
Occupancy stores and joint venture ownership
interest details are included in the supplemental
financial information published on the Company's
website at www.extraspace.com.
(2) The buyout of JV partners' interest in stores is
reported at the value paid for the partners'
remaining ownership interest.
(3) A joint venture, in which the Company had a
majority interest, purchased a Certificate of
Occupancy store on April 11, 2017. The Company is
under agreement to purchase the JV partner's
interest in the same property for $4,806 prior to
year-end. The buyout is not counted in the store
count totals since it was already considered in
the "Closed through September 30, 2017" store
count, but the buyout amount is considered.
The projected developments and acquisitions under agreement described above are subject to customary closing conditions and no assurance can be provided that these developments and acquisitions will be completed on the terms described, or at all.
Property Management:
As of September 30, 2017, the Company managed 485 stores for third-party owners. With an additional 184 stores owned and operated in joint ventures, the Company had a total of 669 stores under management.
In July of 2017, the Company received notification that a management contract for 94 third-party managed stores would be terminated on October 1, 2017. Subsequent to quarter end, these 94 stores were removed from the Company's third-party management platform. As of October 31, 2017, the Company has added 121 new stores to the third-party management platform, with an additional 30 stores scheduled to be added by year-end. The Company continues to be the largest self-storage management company in the United States.
Balance Sheet:
During the three months ended September 30, 2017, the Company did not sell any shares of common stock using its "at the market" ("ATM") equity program. At September 30, 2017, the Company had $349.4 million available for issuance under the ATM program.
On August 24, 2017, the Company's Operating Partnership closed and received funds from its previously announced private placement of $300.0 million of 10-year 3.95% senior notes. The net proceeds have been used to refinance existing indebtedness and for general corporate purposes.
As of September 30, 2017, the Company's percentage of fixed-rate debt to total debt was 80.8%. The weighted average interest rates of the Company's fixed and variable-rate debt were 3.3% and 3.0%, respectively. The combined weighted average interest rate was 3.3% with a weighted average maturity of approximately 4.8 years.
Dividends:
On September 29, 2017, the Company paid a third quarter common stock dividend of $0.78 per share to stockholders of record at the close of business on September 15, 2017.
Outlook:
--------
The following table outlines the Company's FFO estimates and annual assumptions for the year ending December 31, 2017(1):
Ranges for 2017 Notes
Annual Assumptions
Low High
Funds from Assumes sale of 36 wholly-owned
operations assets into a JV on December 1,
attributable to 2017
common stockholders
and unit holders $4.25 $4.28
Funds from Assumes sale of 36 wholly-owned
operations as assets into a JV on December 1,
adjusted 2017
attributable to
common stockholders $4.32 $4.35
Same-store property 4.50% 5.00% Assumes a same-store pool of 732
revenue growth stores and excludes tenant
reinsurance
Same-store property 1.25% 1.75% Assumes a same-store pool of 732
expense growth stores and excludes tenant
reinsurance
Same-store property 5.75% 6.50% Assumes a same-store pool of 732
NOI growth stores and excludes tenant
reinsurance
Weighted average
one-month LIBOR 1.09% 1.09%
Net tenant
reinsurance income $78,500,000 $79,500,000
General and Includes non-cash compensation
administrative expense
expenses $78,500,000 $79,500,000
Average monthly cash
balance $50,000,000 $50,000,000
Equity in earnings $15,000,000 $15,500,000 Assumes sale of 36 wholly-owned
of real estate assets into a JV on December 1,
ventures 2017
Acquisition of
operating stores
(wholly-owned) $205,000,000 $205,000,000
Development and
Certificate of
Occupancy stores
(wholly-owned) $115,000,000 $115,000,000
Buyout of JV
Partners interest $65,000,000 $65,000,000
Development and Company investment totals
Certificate of approximately $30.0 million
Occupancy stores
(joint ventures) $115,000,000 $115,000,000
Interest expense $153,000,000 $154,000,000
Non-cash interest
expense related to
exchangeable senior
notes $5,000,000 $5,000,000 Excluded from FFO as adjusted
Taxes associated
with the Company's
taxable REIT
subsidiary $13,000,000 $13,500,000
Weighted average 135,100,000 135,100,000 Assumes redemption of all OP units
share count for common stock
(1) A reconciliation of net income
outlook to same-store net operating
income outlook is provided later in
this release entitled
"Reconciliation of Estimated GAAP
Net Income to Estimated Same-Store
Net Operating Income." The
reconciliation includes details
related to same-store revenue and
same-store expense outlooks. A
reconciliation of net income per
share outlook to funds from
operations per share outlook is
provided later in this release
entitled "Reconciliation of the
Range of Estimated GAAP Fully
Diluted Earnings Per Share to
Estimated Fully Diluted FFO Per
Share."
FFO estimates for the year are fully diluted for an estimated average number of shares and OP units outstanding during the year. The Company's estimates are forward-looking and based on management's view of current and future market conditions. The Company's actual results may differ materially from these estimates.
Supplemental Financial Information:
Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Click on the "Investor Relations" link on the home page, then on "Financials & Stock Info," then on "Quarterly Earnings" in the navigation menu. This supplemental information provides additional detail on items that include store occupancy and financial performance by portfolio and market, debt maturity schedules and performance of lease-up assets.
Conference Call:
The Company will host a conference call at 11:00 a.m. Eastern Time on Thursday, November 2, 2017, to discuss its financial results. To participate in the conference call, please dial 855-791-2026 or 631-485-4899 for international participants; conference ID: 98646057. The conference call will also be available on the Company's website at www.extraspace.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will be available for 30 days on the Company's website in the Investor Relations section.
A replay of the call will also be available by telephone, from 2:00 p.m. Eastern Time on November 2, 2017, until 1:00 p.m. Eastern Time on November 7, 2017. The replay dial-in numbers are 855-859-2056 or 404-537-3406 for international callers; conference ID: 98646057.
Forward-Looking Statements:
Certain information set forth in this release contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements include statements concerning the benefits of store acquisitions, developments, favorable market conditions, our outlook and estimates for the year and other statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and developments and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes," "estimates," "expects," "may," "will," "should," "anticipates," or "intends," or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Any forward-looking statements should be considered in light of the risks referenced in the "Risk Factors" section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:
-- adverse changes in general economic conditions, the real estate industry
and the markets in which we operate;
-- failure to close pending acquisitions on expected terms, or at all;
-- the effect of competition from new and existing stores or other storage
alternatives, which could cause rents and occupancy rates to decline;
-- difficulties in our ability to evaluate, finance, complete and integrate
acquisitions and developments successfully and to lease up those stores,
which could adversely affect our profitability;
-- potential liability for uninsured losses and environmental
contamination;
-- the impact of the regulatory environment as well as national, state and
local laws and regulations, including, without limitation, those
governing real estate investment trusts ("REITs"), tenant reinsurance
and other aspects of our business, which could adversely affect our
results;
-- disruptions in credit and financial markets and resulting difficulties
in raising capital or obtaining credit at reasonable rates or at all,
which could impede our ability to grow;
-- the failure to effectively manage our growth and expansion into new
markets or to successfully operate acquired stores and operations;
-- increased interest rates and operating costs;
-- reductions in asset valuations and related impairment charges;
-- the failure of our joint venture partners to fulfill their obligations
to us or their pursuit of actions that are inconsistent with our
objectives;
-- the failure to maintain our REIT status for U.S. federal income tax
purposes;
-- economic uncertainty due to the impact of natural disasters, war or
terrorism, which could adversely affect our business plan; and
-- difficulties in our ability to attract and retain qualified personnel
and management members.
All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
Definition of FFO:
FFO provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income and cash flows, for an understanding of the Company's operating results. The Company believes FFO is a meaningful disclosure as a supplement to net income. Net income assumes that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and the Company believes FFO more accurately reflects the value of the Company's real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with U.S. generally accepted accounting principles ("GAAP"), excluding gains or losses on sales of operating stores and impairment write downs of depreciable real estate assets, plus depreciation and amortization related to real estate and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. The Company believes that to further understand the Company's performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.
For informational purposes, the Company also presents FFO as adjusted which excludes revenues and expenses not core to our operations, acquisition related costs (prior to 2017) and non-cash interest. Although the Company's calculation of FFO as adjusted differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, the Company believes it provides a meaningful supplemental measure of operating performance. The Company believes that by excluding revenues and expenses not core to our operations, the costs related to acquiring stores and non-cash interest charges, stockholders and potential investors are presented with an indicator of its operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. FFO as adjusted by the Company should not be considered a replacement of the NAREIT definition of FFO. The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of the Company's performance, as an alternative to net cash flow from operating activities as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.
Definition of Same-Store:
The Company's same-store pool for the periods presented consists of 732 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented. The Company considers a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80.0% or more for one calendar year. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to occupancy, rental revenue (growth), operating expenses (growth), net operating income (growth), etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of the Company's stores as a whole.
About Extra Space Storage Inc.:
Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500. As of September 30, 2017, the Company owned and/or operated 1,513 self-storage stores in 38 states, Washington, D.C. and Puerto Rico. The Company's stores comprise approximately 1,030,000 units and approximately 114 million square feet of rentable space. The Company offers customers a wide selection of conveniently located and secure storage units across the country, including boat storage, RV storage and business storage. The Company is the second largest owner and/or operator of self-storage stores in the United States and is the largest self-storage management company in the United States.
Extra Space Storage Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
September 30, 2017 December 31, 2016
------------------ -----------------
(Unaudited)
Assets:
Real estate assets, net $6,770,086 $6,770,447
Investments in unconsolidated real
estate ventures 78,512 79,570
Cash and cash equivalents 63,732 43,858
Restricted cash 17,277 13,884
Receivables from related parties
and affiliated real estate joint
ventures 4,618 16,611
Other assets, net 152,730 167,076
------- -------
Total assets $7,086,955 $7,091,446
========== ==========
Liabilities, Noncontrolling Interests and Equity:
Notes payable, net $3,568,113 $3,213,588
Exchangeable senior notes, net 602,485 610,314
Notes payable to trusts, net 117,414 117,321
Revolving lines of credit 25,000 365,000
Accounts payable and accrued
expenses 114,247 101,388
Other liabilities 85,971 87,669
------ ------
Total liabilities 4,513,230 4,495,280
--------- ---------
Commitments and contingencies
Noncontrolling Interests and Equity:
Extra Space Storage Inc. stockholders' equity:
Preferred stock, $0.01 par value,
50,000,000 shares authorized, no
shares issued or outstanding - -
Common stock, $0.01 par value,
500,000,000 shares authorized,
126,007,207 and 125,881,460 shares
issued and outstanding at
September 30, 2017 and December
31, 2016, respectively 1,260 1,259
Additional paid-in capital 2,567,234 2,566,120
Accumulated other comprehensive
income 17,731 16,770
Accumulated deficit (370,959) (339,257)
-------- --------
Total Extra Space Storage Inc.
stockholders' equity 2,215,266 2,244,892
Noncontrolling interest represented
by Preferred Operating Partnership
units, net of $120,230 notes
receivable 154,432 147,920
Noncontrolling interests in
Operating Partnership 202,232 203,354
Other noncontrolling interests 1,795 -
Total noncontrolling interests and
equity 2,573,725 2,596,166
--------- ---------
Total liabilities, noncontrolling
interests and equity $7,086,955 $7,091,446
========== ==========
Consolidated Statement of Operations for the three and nine months ended September 30, 2017 and 2016
(In thousands, except share and per share data) - Unaudited
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Property rental $248,589 $224,451 $720,878 $635,730
Tenant reinsurance 25,882 22,727 73,050 64,936
Management fees and other
income 9,685 10,005 29,239 30,193
Total revenues 284,156 257,183 823,167 730,859
------- ------- ------- -------
Expenses:
Property operations 70,430 62,341 204,370 185,883
Tenant reinsurance 6,272 4,093 13,996 12,345
Acquisition related costs and
other(1) - 1,933 - 9,124
General and administrative 19,498 19,537 60,171 63,451
Depreciation and amortization 48,075 46,555 144,139 133,402
Total expenses 144,275 134,459 422,676 404,205
------- ------- ------- -------
Income from operations 139,881 122,724 400,491 326,654
Gain (loss) on real estate
transactions, earnout from
prior acquisition and
impairment of real estate - - (6,019) 9,814
Interest expense (39,766) (33,494) (113,192) (97,655)
Non-cash interest expense
related to amortization of
discount on equity component
of exchangeable senior notes (1,268) (1,243) (3,827) (3,716)
Interest income 869 1,358 2,797 4,697
Interest income on note
receivable from Preferred
Operating Partnership unit
holder 532 1,213 2,404 3,638
--- -----
Income before equity in
earnings of unconsolidated
real estate ventures and
income tax expense 100,248 90,558 282,654 243,432
Equity in earnings of
unconsolidated real estate
ventures 3,990 3,625 11,407 9,813
Equity in earnings of
unconsolidated real estate
ventures -gain on sale of
real estate assets and
purchase of joint venture
partners' interests - 37,509 - 64,432
Income tax expense (3,163) (4,466) (9,154) (11,004)
------ ------ ------ -------
Net income 101,075 127,226 284,907 306,673
Net income allocated to
Preferred Operating
Partnership noncontrolling
interests (3,394) (4,144) (10,775) (10,758)
Net income allocated to
Operating Partnership and
other noncontrolling
interests (3,917) (4,994) (11,080) (12,191)
------ ------
Net income attributable to
common stockholders $93,764 $118,088 $263,052 $283,724
======= ======== ======== ========
Earnings per common share
Basic $0.74 $0.94 $2.09 $2.26
===== ===== ===== =====
Diluted $0.74 $0.93 $2.07 $2.24
===== ===== ===== =====
Weighted average number of shares
Basic 125,717,517 125,752,291 125,665,787 125,244,761
Diluted 133,044,473 133,763,472 133,008,622 132,476,691
Cash dividends paid per
common share $0.78 $0.78 $2.34 $2.15
===== ===== ===== =====
(1) Beginning January 1, 2017,
acquisition related costs
have been capitalized due to
a change in accounting
literature.
Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income - for the three and nine months ended September 30, 2017 and 2016 (In thousands) - Unaudited
For the Three Months Ended For the Nine Months Ended
September 30,
September 30,
-------------
2017 2016 2017 2016
---- ---- ---- ----
Net income $101,075 $127,226 $284,907 $306,673
Adjusted to exclude:
Loss (gain) on real estate
transactions, earnout from
prior acquisition and
impairment of real estate - - 6,019 (9,814)
Equity in earnings of
unconsolidated real estate
joint ventures (3,990) (3,625) (11,407) (9,813)
Equity in earnings of
unconsolidated real estate
ventures -gain on sale of
real estate assets and
purchase of joint venture
partners interests - (37,509) - (64,432)
Acquisition related costs and
other(1) - 1,933 - 9,124
Interest expense 41,034 34,737 117,019 101,371
Depreciation and amortization 48,075 46,555 144,139 133,402
Income tax expense 3,163 4,466 9,154 11,004
General and administrative
(includes stock compensation) 19,498 19,537 60,171 63,451
Management fees, other income
and interest income (11,086) (12,576) (34,440) (38,528)
Net tenant reinsurance (19,610) (18,634) (59,054) (52,591)
Non same-store revenue (28,466) (14,376) (80,556) (27,268)
Non same-store expenses 11,247 4,834 29,709 11,063
-----
Total same-store NOI $160,940 $152,568 $465,661 $433,642
======== ======== ======== ========
Same-store rental revenues 220,123 210,075 640,322 608,462
Same-store operating expenses 59,183 57,507 174,661 174,820
------ -------
Total same-store NOI $160,940 $152,568 $465,661 $433,642
======== ======== ======== ========
(1) Beginning January 1, 2017,
acquisition related costs
have been capitalized due to
a change in accounting
literature.
Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per Share to Estimated Fully Diluted FFO Per Share - for the three months and year ending December 31, 2017 - Unaudited(1)
For the Three Months Ending For the Year Ending
December 31, 2017 December 31, 2017
Low End High End Low End High End
------- -------- ------- --------
Net income attributable
to common stockholders
per diluted share $0.63 $0.66 $2.59 $2.62
Income allocated to
noncontrolling interest
-Preferred Operating
Partnership and
Operating Partnership 0.06 0.06 0.22 0.22
Fixed component of income
allocated to non-
controlling interest -
Preferred Operating
Partnership - - (0.02) (0.02)
--- --- ----- -----
Net income attributable
to common stockholders
for diluted computations 0.69 0.72 2.79 2.82
Adjustments:
Real estate depreciation 0.33 0.33 1.27 1.27
Amortization of
intangibles 0.03 0.03 0.11 0.11
Unconsolidated joint
venture real estate
depreciation and
amortization 0.01 0.01 0.04 0.04
Loss (gain) on real
estate transactions,
earnout from prior
acquisition and
impairment of real
estate - - 0.04 0.04
--- --- ---- ----
Funds from operations
attributable to common
stockholders $1.06 $1.09 $4.25 $4.28
Adjustments:
Non-cash interest
expense related to
amortization of discount
on equity portion of
exchangeable senior
notes 0.01 $0.01 0.04 0.04
Property losses and
tenant re-insurance
claims due to
hurricanes, net - - 0.03 0.03
--- --- ---- ----
Funds from operations as
adjusted attributable to
common stockholders $1.07 $1.10 $4.32 $4.35
===== ===== ===== =====
(1) The Company's outlook for the
three months and year ending
December 31, 2017 assumes
the ownership restructure of
36 wholly-owned stores into
a joint venture in which the
Company will have a minority
interest on December 1,
2017.
Reconciliation of Estimated GAAP Net Income to Estimated Same-Store Net Operating Income - for the year ending December 31,
2017 (In thousands) - Unaudited(1)
For the Year Ending December 31, 2017
Low High
--- ----
Net Income $382,750 $392,010
Adjusted to exclude:
Equity in earnings of
unconsolidated joint ventures (15,000) (15,500)
Interest expense (includes non-
cash) 159,000 158,000
Depreciation and amortization 194,000 194,000
Income tax expense 13,500 13,000
General and administrative
(includes stock compensation) 79,500 78,500
Management fees, other income
and interest income (46,000) (46,000)
Net tenant insurance (78,500) (79,500)
Non Same Store Revenue (109,000) (109,000)
Non Same Store Expense 37,000 37,000
------ ------
Total Same Store NOI $617,250 $622,510
======== ========
Same Store Revenue $852,300 $856,400
Same Store Expense (235,050) (233,890)
-------- --------
Total Same Store NOI $617,250 $622,510
======== ========
(1) The Company's outlook for the
three months and year ending
December 31, 2017 assumes
the ownership restructure of
36 wholly-owned stores into
a joint venture in which the
Company will have a minority
interest on December 1,
2017.
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SOURCE Extra Space Storage Inc.
