Following Through: 2022
Extra Space had a record-setting year in 2022. The company had very strong occupancy, driven by elevated demand and sophisticated customer acquisition strategies, peaking at 96%, and averaging 95% for the year. Elevated occupancy resulted in exceptional average rent per square foot growth, which was 18.4% for the year. Strong fundamentals coupled with the Extra Space team’s outstanding execution, resulted in same-store revenue growth of 17.4%, the highest in the company’s history. Same-store net operating income growth was 20.3%, the highest in the self-storage sector. In short, store operations continued to be strong in 2022, and the Extra Space team believes the storage sector is positioned to continue growing, despite concerns around inflation, recession, or other economic changes.
The company also saw significant contributions to Core-FFO, from external growth activities such as acquisitions, tenant reinsurance, management fees, interest income from bridge loans, and preferred equity investments. This resulted in exceptional Core-FFO growth of over $230 million, or 22.1% per share, a very strong result, especially compared to public REITs averages. Core-FFO growth allowed Extra Space to raise the full-year dividend payout 33% during 2022. Extra Space Storage also maintained its #1 position for the highest total 10-year return to shareholders of any publicly traded U.S. REITs, at 470%.
SAME STORE NET OPERATING INCOME GROWTH
SAME STORE REVENUE GROWTH
CORE FFO PER SHARE GRWOTH
10-Year Total Shareholder Return
5-YEAR TOTAL RETURN GRAPH
Extra Space’s balance sheet continued to strengthen during the year, maintaining a Baa2 stable rating from Moody’s and a BBB stable rating from S&P Global. The Extra Space team completed one investment grade bond, issuing $400 million in seven-year bonds at 3.9%. The company reduced secured debt concentration through unsecured financing transactions, amending and increasing its unsecured credit facility and through issuing operating partnership units in conjunction with acquisitions. As of December 31, 2022, net debt to EBITDA was 4.8x the unencumbered asset pool was over $17 billion, and the Company was comfortably within all its debt covenant ratios.
Extra Space’s goal is to maintain an appropriately levered balance sheet with the financial flexibility to ensure the company has multiple sources of capital available to support operations, refinance debt maturities, and finance growth efficiently in any market environment.