Extra Space Storage's CEO Discusses Q4 2012 Results - Earnings Call Transcript

Feb.22.13 | About: Extra Space (EXR)

Extra Space Storage, Inc. (NYSE:EXR)

Q4 2012 Earnings Call

February 22, 2013 2:00 pm ET

Executives

Clint Halverson – Vice President, Corp Communication & Investor Relations

Spencer F. Kirk – Chairman and Chief Executive Officer

Scott Stubbs – Executive Vice President and Chief Financial Officer

Karl Haas – Executive Vice President and Chief Operating Officer

Analysts

Todd Thomas – KeyBanc Capital Markets

Christine McElroy – UBS

David Toti – Cantor Fitzgerald & Co.

Eric Wolfe – Citigroup

Michael Knott – Green Street Advisors

Michael Salinsky – RBC Capital Markets

Omotayo Okusanya – Jefferies & Co.

Tom Lesnick – Robert W. Baird & Co., Inc.

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 Extra Space Storage Incorporated Earnings Conference Call. My name is Chiquana, and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. (Operator Instructions)

I would now like to turn the presentation over to your host for today’s call Mr. Clint Halverson, Vice President, Investor Relations. Please proceed, sir.

Clint Halverson

Thank you, Chiquana. Welcome to Extra Space Storage’s fourth quarter 2012 conference call. In addition to our press release, we’ve 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 Friday, February 22, 2013. 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’d now like to turn the call over to Spencer Kirk, Chief Executive Officer.

Spencer F. Kirk

Good afternoon, everyone. We don’t typically go last amongst our peers, so this has been a nice change to have a chance to see everyone’s results and hear what they have had to say on their calls. For Extra Space, 2012 was a superb year. We produced strong operational results due to multiple factors. They include record high occupancy levels, excellent expense control, potent internet marketing, sophisticated revenue management, a high volume of accretive acquisitions and virtually no new supply.

With the exception of the Storage USA transaction in 2005, this was our single largest acquisition year. We acquired 91 assets in 24 states and grew our wholly owned portfolio by 26%. Our unique structure continues to provide us with numerous options for growth. The result, 71% of our acquisitions came from joint venture and third-party managed relationships. The credit for the outstanding results in 2012 goes to our talented, creative and hardworking team. Time and time again I have spoken of our unique levers that have driven our double-digit FFO growth.

In the fourth quarter of 2012, FFO grew by 23%. This is particularly impressive when you consider that the fourth quarter of 2011 was up 35% over 2010, and for the full year, FFO grew 33% on top of 32% growth in 2011 over 2010.

I’ll now turn the time to Karl to discuss operations.

Karl Haas

Thanks, Spence. During the fourth quarter, we once again experienced excellent same-store revenue growth of 6.5%, and that’s on top of 5.8% revenue growth we realized in the fourth quarter of last year. For the year, revenue was up 6.6% compared to 4.9% in 2011. While the pools were different in these years, it shows an ongoing positive operational trend.

Rental trends were strong in the fourth quarter and our square foot occupancy continued at record high levels. Our same-store pool ended the year at 88.6%, up 1.7% over last year. Demand for the product is stable and our interactive marketing and internet strategies continue to drive higher rental volumes. Strong occupancy coupled with the lack of new supply allowed us to increase street rates 3.5% to 4% on average for the quarter.

During the fourth quarter, we also had excellent expense growth that was partially offset by higher property taxes and Superstorm Sandy. Same-store discounts ended the year at 4.3% of rental income, compared to 5.3% at the start of the year. Overall, discounts were down by 12%. This is due to higher occupancy and a focused effort to offer the right price and promotion.

All this combined to produce the fourth quarter same-store net operating income of 8.5%, compared to 9.3% growth last year. Net operating income for the full year was 10.2% versus 7.6% in 2011. All in all, it was one of the best years I have seen in my 25 years in this business.

And now, I’d like to turn it over to Scott.

Scott Stubbs

Thanks, Karl. Yesterday, we reported fourth quarter FFO of $0.43 per share including a $0.02 charge related to our acquisitions and $0.01 from Superstorm Sandy. For the year, we reported FFO of $1.59 per share, exceeding the top end of our guidance by $0.01. This can be attributed primarily to better-than-expected same-store property results and the performance and timing of our 2012 acquisitions.

As Spencer mentioned, 2012 was a great year for acquisitions. We purchased 91 properties for just over $700 million. Of these 91 properties, 57 were from the two large joint venture transactions. Since the end of the year, we have purchased our partner’s interest in two more properties located in Baltimore and Chicago for approximately $12.9 million.

As of today, we have two assets under contract for $20.6 million located in Maryland and Texas. One of these two assets is a brand new asset that we are buying at [Ciavo]. As of the end of the year, we had 448 wholly-owned, 281 joint venture properties and 181 third-party properties under management. We continue to growth the REIT in a disciplined manner with a long-term view.

As of December 31, the Company had four lines of credit with a total capacity of $240 million of which $85 million was drawn. Interest rates continue to be at all-time lows. Without increasing our variable rate exposure, we have lowered our average interest rate from 4.7% at the end of 2011 to 4.2% at the end of 2012.

Yesterday, we released our full year 2013 FFO guidance of between $1.87 and $1.95 per share. We expect FFO for the first quarter to be between $0.42 and $0.44. Key annual assumptions related to these estimates can be found in our press release from yesterday.

I’ll now turn the time back to Spencer.

Spencer F. Kirk

Thanks Scott. Last year at this time, I stated that our theme for 2012 was to focus on fundamentals. Since we don’t have a MasterCard, we’re going to stick with the theme, for 2013 it is, do it better. Everything we do is in pursuit of maximizing revenue opportunities and appropriately minimizing expenses.

Our focus on the fundamentals has served our shareholders well in 2012 and will continue to serve them well as we move into 2013. Record high occupancy, constrained supply in our operational sophistication set us up to again produce double-digit FFO growth in 2013.

With that, I’d like to turn the time over to Clint to start our Q&A session.

Clint Halverson

Thank you, Spencer. In order to ensure we have adequate time to address everyone’s questions, I’d like to ask that everyone keep your initial questions brief and if possible limited to two. If time allows, we’ll address follow-on questions once everyone’s had an opportunity to ask their initial questions.

With that, we’ll turn it over to Shaquana to start our Q&A session.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And your first question comes from the line of Todd Thomas, representing KeyBanc. Please proceed.

Todd Thomas – KeyBanc Capital Markets

Hi, good afternoon. First question, in terms of investments, you probably have cash sort of the largest investment in that or the widest I guess in terms of what you’re interested in markets and properties, and some of your peers seem to be a little more selective. Can you just talk about your investment rationale a little bit, and then given that, are you seeing sort of reduced competition on acquisitions to the market sort of opening up a little bit for EXR?

Spencer F. Kirk

Todd, its Spencer. Let’s take the broader question. We look at open market acquisitions and then what I’ll call off-market acquisitions. In the open market acquisitions, there continues to be a lot of money chasing what seems to be relatively small number of properties given the size of the total industry. And we just want to participate, but we also want to remain disciplined and make sure that the acquisitions we do are accretive.

On the off-market acquisitions, those out at the partnerships that we have, we have been pleased with what we’ve done. We’ve sold out over 280 assets held in joint venture relationships and we hope that at some point in the future when those partners decide that it’s time to monetize their assets that will be the first call and hopefully the only call when it comes time to transact.

Todd Thomas – KeyBanc Capital Markets

And then second question, just looking at your occupancy today, it appears that there’s still some occupancy upside in the same-store as it stands, but next quarter when the same-store pool resets and the new, I guess, 2011 acquisitions are included, what will occupancy look like for the same-store pool then? I’m just trying to get sense from a same-store perspective whether or not we should expect to see occupancy fall as the pool resets a little bit and what the magnitude of occupancy upside will then look like as we look into 2013?

Spencer F. Kirk

We don’t have the exact numbers right now, but we plan on addressing that at the end of the first quarter. We are expecting that the occupancy will fall slightly. As the pool changes, we’ll be adding a fair number of properties to that pool.

Todd Thomas – KeyBanc Capital Markets

Okay. Thank you.

Operator

Your next question comes from the line of Christy McElroy representing UBS. Please proceed.

Christine McElroy – UBS

Hi, guys, good afternoon. You said it was about $0.01 in your release, but I was wondering if you could quantify the exact Sandy impact and can you describe the nature of the expenses? And did it all flow through OpEx or were there other income statement lines impacted?

Scott Stubbs

It flowed through two items actually. It flowed through property operating expenses to the tune of about $0.5 million and then about $900,000 flowed through the insurance company.

Christine McElroy – UBS

And then with regard to tenant reinsurance, where would you say you are today on overall portfolio penetration? What percentage of new customers opts for the insurance? And if you look at the 18% year-over-year growth in reinsurance revenues in 2012, how much would you say has been driven by continued increases in penetration in your own portfolio versus the benefit that you get if you add managed properties?

Karl Haas

This is Karl. The penetration on new tenants is above 90%. Our overall penetration is in the high 60s. And I don’t really have a breakdown of what’s coming between the new from the third-party management versus just the increase from existing customers. I’m sure we can get that, but we don’t have it handy.

Christine McElroy – UBS

If it’s in the high 60s today, do you have what it was a year ago?

Scott Stubbs

It was about in the mid-60s.

Spencer F. Kirk

The one thing that is clear though Christy is that growth does slow the higher it gets. So a larger amount of our growth does come as we add managed properties.

Christine McElroy – UBS

Okay. Thank you.

Operator

Your next question comes from the line of David Toti representing Cantor Fitzgerald. Please proceed.

David Toti – Cantor Fitzgerald & Co.

Hey, good morning, guys.

Spencer F. Kirk

Hi, Dave.

David Toti – Cantor Fitzgerald & Co.

Quick question Spencer for you, now that we’ve seen the forecasts from your peer group relative to expectations for next year, your top line forecast seem a little bit conservative given what’s been pretty clear pricing power over the last couple of quarters. Then you touched on this before, but can you give us some background on maybe why you’re being a little bit hesitant going forward despite the evidence of pricing power over the last couple of quarters? What makes you sort of hold back in expectations for rent growth prospects?

Spencer F. Kirk

The answer, David is our methodology for providing guidance and visibility has not changed. We are at the very beginning of a year. There is a lot of uncertainty out there and we’ve looked down the road and said what can we reasonably expect to happen.

And as we’ve rolled up our property level budgets baked everything together, we have come to the conclusion that where we are is our best guess as to where we think we might end up with a full year behind us with the benefit of hindsight. There is a lot of churn out there. Occupancy, yeah, there might be a little more gain. We need to see where street rates come in this year. But I think that the guidance we’ve given is what we accurately believe we can produce.

David Toti – Cantor Fitzgerald & Co.

And then, can you just maybe give us a little bit more detail in terms of the mix in that top line? And I apologize I jumped on a little bit late. But is it possible to disaggregate the sort of new versus renewal growth that’s embedded in that top line?

Karl Haas

As far as the exact percentages, David or what specifically…?

David Toti – Cantor Fitzgerald & Co.

Yeah, I mean no, just a very rough number, but what are you assuming relative to the kind of growth you’re going to see on renewal rates going forward?

Karl Haas

Part of that growth obviously is coming from the occupancy delta. We expect to get a bit of an occupancy delta this year. The next largest contributor is discounts. Discounts will continue to be below where they were last year as our occupancy remains highs. And then to a lesser degree, it’s going to be street rates, and probably last in that list is existing customer rate increases.

David Toti – Cantor Fitzgerald & Co.

Okay. And then just one follow-up question, what are some plans relative to technology improvements that you might have going forward relative to your revenue management systems? I know you guys are pretty far out relative to the specification of this system, but what are some improvements you might be looking at putting in place or expecting to begin to perform?

Spencer F. Kirk

David, its Spencer. Actually, I won’t look for any quantum leap. We are on our third-generation of revenue management. Today, we track 56 different inputs and variables and metrics to help us define our pricing and I think it’s going to be more of refinement out on the margin rather than any wholesale new initiative or way of looking at things. That’s really a continuation of what we’ve already been doing. And that is taking what we are learning from our data and applying it with finer granularity.

Karl Haas

This is Karl. We will also be focusing more on discounts, trying to get smarter and how we offer the discount, when we offer the discount, and that will also have an impact.

David Toti – Cantor Fitzgerald & Co.

Okay, great. Thanks for the detail.

Operator

Your next question comes from the line of Eric Wolfe, representing Citi. Please proceed.

Eric Wolfe – Citigroup

Hey guys, thinking back to NAREIT, there was a decent amount of talk about PSA jumping their street rates by like 9% overnight. I’m just curious whether you’ve seen any sort of incremental improvement in pricing powers since that happened or things just have remained pretty consistently strong?

Karl Haas

This is Karl. We are pushing rates, but it’s in the 4% to 5% range. And I think what you’re going to find too is, as when we get these questions about where your street rates are versus existing customer rates, our rates are – our overall GPI and the percent change every month and even during the month is going all over the place.

I mean we’re adjusting constantly, so you almost have to look at it over a longer period of time and it’s in the range of 4% to 5%. We’d like to think that – and I think this is probably the biggest upside potential that’s out there, is as we all continue to get better occupancy that we might have the opportunity to push those rates even more, especially if no new competition comes along.

Eric Wolfe – Citigroup

Gotcha, that’s helpful. And then second question, I guess bit of a change of topic, but as your stock continues to work and your cost of capital comes down as a result, what type of unlevered return do you think makes sense on acquisitions for your shareholders? I’m just wondering whether that metric change as your stock does better and your cost of capital moves lower?

Scott Stubbs

We consider that. Obviously, we consider our short-term cost of capital, but we also can ignore the long-term cost of capital. So, there are times when we might be slightly more aggressive as our short-term cost of capital goes down, but I think that your unlevered IRRs are still somewhere 8 to 10.

Eric Wolfe – Citigroup

Gotcha. Okay, thank you.

Operator

Your next question comes from the line of Michael Knott representing Green Street Advisors. Please proceed.

Michael Knott – Green Street Advisors

Hi, guys. Spencer, when you say that acquisition should be accretive, do you mean accretive only to earnings or would you consider acquiring an attractively priced lease-up situation that that may not immediately be accretive to earnings?

Spencer F. Kirk

Yes, we would consider looking at those lease-up situations and take a short hit on dilution. What we don’t want to do is get whipped into frenzy with the rest of the market and pay rates that may not look so great five years from now.

Michael Knott – Green Street Advisors

What were your thoughts on the Acadia sale? Were you an active bidder on that transaction?

Spencer F. Kirk

We were not.

Michael Knott – Green Street Advisors

Okay, thanks.

Spencer F. Kirk

Thanks, Michael.

Operator

Your next question comes from the line of (inaudible) representing Goldman Sachs. Please proceed.

Unidentified Analyst

Hi. Looking at your same-store results by region, there are some differences obviously. So, first in terms of occupancy, would you say that your goal occupancy varies by region? For example, Chicago was able to increase about 7% to 90%, but Houston is still below 80% or is there difference – is there a reason for the differences by region?

Karl Haas

This is Karl. Yes.

Unidentified Analyst

Could you tell us what they might be?

Karl Haas

At some markets it’s a lot easier to get in. They’re a lot stronger and we’re able to push to our goal overall occupancy quicker than in other markets. I mean, there’s a certain drag that trying to cover or to overcome an occupancy gap in a shorter period of time, the cost can be significant. And so we do it more gradually and our system is looking to get you there, but they are going to get you there – it’s going to get you there in a way that maximizes the opportunity along the way.

So if you’re at 80%, yeah, you could get the 90% pretty quickly if you wanted to, and we could, but we’d rather do it over a longer period of time and give away less and end up getting more of the whole way through it and we will get to our goal occupancy.

Unidentified Analyst

Okay. And then also in terms of the variations between the different regions, it just comes out, I don’t if it’s a coincidence or not, but Chicago, it looked like had the largest reduction in expenses about 20% lower, but then Houston’s are about 20% higher with everybody else kind of in between there. Can you maybe tell us why some are doing so much better on expenses than others?

Karl Haas

It’s a very micro property-by-property. It has nothing to do with occupancy. It has a lot more to do with just variations and it can be just kind of a quirk of the particular properties in that market. But there’s no plan, and really is no correlation between rent per square foot. It can be property taxes as well.

Unidentified Analyst

Okay. Thank you.

Operator

Your next question comes from the line of Michael Salinsky, representing RBC Capital Markets. Please proceed.

Michael Salinsky – RBC Capital Markets

Good afternoon guys. Can you talk a little bit about January and February trends?

Karl Haas

This is Karl. It’s really pretty much the same as it has been. Expenses are up a little bit because we had a little snowstorm in the Northeast that hit us pretty good, and so we’re going to have a little bit of variation as a result of the snow. But otherwise revenues that they’re really holding, occupancy is holding, we’re really pretty pleased with where we are, and it’s pretty much according to our plan.

Michael Salinsky – RBC Capital Markets

Okay. Second of all, you gave a little bit of color on street rates; I think you said 3.5% to 4% up in the fourth quarter. Just as we kind of look at the delta between move-in and move-out rates as you guys have been pushing aggressively on renewals, the street rates have improved, but not quite kept pace. So how is the delta right now between move-in and move-out rents versus kind of a year ago?

Karl Haas

It is about the same.

Michael Salinsky – RBC Capital Markets

Is about the same?

Karl Haas

Yes.

Michael Salinsky – RBC Capital Markets

Okay. And then finally…

Karl Haas

But once again, it is difficult to take a point in time, because our street rates are up and down so much. But when we look at it over a longer period of time, the gap is about the same now as it was a year ago.

Michael Salinsky – RBC Capital Markets

And what is your expectation for street rate growth then in 2013? I mean, I realize it’s on a – it is kind of on a bell curve, but just curious as to what you’re kind of thinking…

Karl Haas

Now, 4% to 5% that we’ve been talking about.

Michael Salinsky – RBC Capital Markets

4% to 5%, okay.

Karl Haas

Yes.

Michael Salinsky – RBC Capital Markets

And then finally, just in terms of acquisitions, the amount of deal that you’re seeing right now, how does that compare versus this time a year ago, and are you seeing greater – I mean, with that interest tick-up if pricing were to compress?

Spencer F. Kirk

Michael, its Spencer. I would say year-over-year interest is about the same. It’s the beginning of a New Year. We don’t have the surge that usually happens in the fourth quarter when people are trying to transact. So year-over-year, it’s about the same and quite frankly, if there is some more cap rate compression, there may be some more sellers. But right now, the question, I think a lot of sellers have is, if I sell my self-storage property and pay taxes, where am I going to reinvest my money and have as good of return as I’m getting out this existing asset.

Operator

Your next question comes from the line of Omotayo Okusanya representing Jefferies. Please proceed.

Omotayo Okusanya – Jefferies & Co.

Hi, yes, good afternoon. Just in regards to the 2013 guidance. I mean, I think you guys have done a great job of telegraphing the potential slowdown on the top line, but in regards to the operating expense and the forecast, could you talk about some of the big ticket items that are kind of driving that large increase?

Scott Stubbs

Your largest increases are going to come from really three items. It’s going to be payroll, property taxes, and credit cards. Credit cards, we had a positive delta last year that has gone away. Property taxes, we haven’t seen major increases for several years and we’re forecasting, depending on the area, 3% to 4% on those.

Omotayo Okusanya – Jefferies & Co.

On the credit card side, is it just swipe fees are going up or interchange fees are going up or what is it?

Scott Stubbs

They’re not going up, but what happened last year is there were some new rules enacted that enabled us to process debit cards more like an ACH, so you weren’t charged credit card interchange on those.

Omotayo Okusanya – Jefferies & Co.

Okay.

Scott Stubbs

So it saved us a significant amount as well as everyone in the business.

Karl Haas

This is Karl. Last year it offset our increases. We don’t expect an enormous increase this year, but we’re not going to get the significant decrease that we got last year.

Omotayo Okusanya – Jefferies & Co.

Got it. And then just a quick second question. I mean are there any markets at this point where you’re actually seeing a slowdown in demand simply because the consumer is actually paying higher taxes and has a smaller paycheck to take home now?

Karl Haas

This is Karl again. No, we have not seen that. I mean, I know that a lot of retailers are and a lot of ad hoc information out there, but we have not have seen that yet.

Omotayo Okusanya – Jefferies & Co.

Okay. That’s helpful. Thank you.

Operator

Your next question comes from the line of Tom Lesnick, representing Robert W. Baird. Please proceed.

Tom Lesnick – Robert W. Baird & Co., Inc.

Hey, guys I’m just filling in for Paula today. A couple of quick questions; first, I just want to talk about the private operator lending environment. What trends are you guys seeing and how have those trends changed at all in the past few months or so?

Spencer F. Kirk

I think for stabilized assets, just about anyone can get a loan. Obviously, I think from what we’re seeing is, it seems like those with money and with scale, it’s easier to get debt for those individuals than for a smaller individual. Not a lot of asset – I mean, not a lot of appetite for non-revenue producing or lease-up assets.

Tom Lesnick – Robert W. Baird & Co., Inc.

All right. And then I guess secondly, are you guys seeing any trends in your tenant mix, maybe more home driven renters or business driven renters?

Karl Haas

This is Karl again. No.

Tom Lesnick – Robert W. Baird & Co., Inc.

Okay. Thanks, that’s all I’ve got.

Spencer F. Kirk

Thanks, Tom.

Operator

(Operator Instructions) You have a follow-up question from the line of Michael Knott representing Green Street Advisors. Please proceed.

Michael Knott – Green Street Advisors

Hey, Spencer, I think you got a version of this question earlier. But with regard to continued attempts to better maximize price and price the product as well as you can, where do you think you’re at now if you think about it on a scale 1 to 10 with 10 being sort of a perfect ability to maximize price to every single customer? Where you’re at now and where do you think you can get to in the next couple of years?

Karl Haas

I’ll give you a good solid three. I think there is a lot of upside, a lot of learning and a lot more that can be done, and I think the application of Big Data and mining our data semantically to better refine our models will yet yield better results, but we are far from the end game on this. We’re far from perfection.

Michael Knott – Green Street Advisors

So is that good news just for Extra Space or do you think that’s sort of a signal that the entire industry going to have maybe above inflation type rent growth over some extended period of time?

Karl Haas

I would maybe characterize it more towards those larger operators that have the resources to go after a disproportionate share of what’s to be had. I think that what we’re doing? For instance, we have six revenue management people in our department. The small operator I highly doubt is ever going to be anywhere close to that. And for us, I think this is as the other publicly traded companies have stated many, many times, benefit that the publicly traded companies possess.

Michael Knott – Green Street Advisors

Yeah, thanks. And then a couple other ones for me. Is the $150 million of acquisition guidance for the year just a pure guess on the conservative side or is there some signs behind that?

Scott Stubbs

How about a guess?

Michael Knott – Green Street Advisors

Okay.

Scott Stubbs

And I’m not trying to be spread out, but we just don’t know what the philosophy of transactions will be this year at the price point at which we’re willing to transact. So it’s purely a guess.

Michael Knott – Green Street Advisors

And guidance was; are those loaded in somewhat evenly over the year guys?

Spencer F. Kirk

Yes.

Michael Knott – Green Street Advisors

Okay. And then last one. Scott, can you remind us of the solar tax credits and what the magnitude of that in the guidance is?

Scott Stubbs

It’s $5 million to $6 million this year as far as benefiting the current year.

Michael Knott – Green Street Advisors

And what’s the duration of that program and can it be replaced at some point?

Scott Stubbs

Right now I believe it goes through 2016. So we started with the best returns on investment and then we’ve gone down from there. But we are also still trying to be fairly conservative in what level of investment we’re willing to make for the return.

Michael Knott – Green Street Advisors

Thank you.

Scott Stubbs

Thanks Michael.

Operator

I would now like to turn the call over to Mr. Spencer for closing remarks.

Spencer F. Kirk

We appreciate your interest in Extra Space today; great questions. We look forward to next quarter’s call. Thank you very much.

Operator

Thank you for your participation on today’s conference. This concludes the presentation. You may now disconnect, and have a great day.

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Extra Space Storage (EXR): Q4 FFO of $0.46 beats by $0.03. Revenue of $113.7M beats by $3.62M. (PR)