Extra Space Storage kicked off 2021 by racking up the highest first-quarter occupancy rate in the history of the self-storage REIT. Now, the company anticipates its elevated occupancy should extend through the busy summer season and may stretch into the slower fall season.
As of March 31, same-store occupancy stood at 95.7%, compared with 90.9% at the same time last year.
In fact, the REIT’s better-than-expected performance in the first quarter, coupled with relaxed pandemic restrictions and strong storage fundamentals as COVID-19 vaccines roll out, prompted executives to lift their 2021 forecast on April 28. Extra Space’s new outlook for the year anticipates:
- Same-store revenue growth of 5% to 6%.
- Same-store NOI growth of 6% to 8%.
- Same-store expense growth of 2% to 3%.
‘Off to a great start’
The revised forecast comes on the heels of a robust first quarter, when same-store revenue rose by 4.6% compared with the same period in 2020, same-store NOI jumped by 6.5% and same-store expenses declined by 0.2%.
“We’re obviously off to a great start this year. Occupancy is at an all-time high. We have exceptional new customer rate growth. We continue smart, careful external growth,” CEO Joe Margolis said during the April 29 earnings call for the Salt Lake City-based REIT.
So far this year, Extra Space has closed or put under contract a little over $300 million in acquisitions. Margolis said the REIT remains “disciplined but opportunistic” in terms of buying new facilities, as the acquisition market “continues to be expensive.”
Looking ahead, Margolis expects most of the company’s acquisitions to be completed through joint ventures. “We have plenty of capital to invest if we find additional opportunities that create long-term value for our shareholders,” he said.
Growing the management business
In tandem with acquisitions, Extra Space is notching growth through its third-party management platform. In the first quarter, the company added 61 facilities to the platform, which comprised 763 facilities as of March 31.
Margolis envisions “solid growth” of the third-party management platform throughout 2021.
“We have a very full pipeline in that area of our business, and we’re onboarding an awful lot of stores,” Margolis said. “We are very confident that [we] will achieve our original projections for growth in that business.”