Extra Space Storage Inc · NYSE:EXR
Extra Space Storage — REITweek Virtual Conference 2020
51 slides from Extra Space Storage's conference presentation, Jun 3, 2020
Slide 1: REITweek Virtual Conference June 2020
Exhibit 99.1 REITweek Virtual Conference June 2020Exhibit 99.1 REITweek Virtual Conference June 2020
Slide 2: Forward-Looking Statements
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, ou
Slide 3: Q1 2020 Quick Facts
Q1 2020 QUICK FACTS 1,852 6.9% 926.1% Properties Core FFO 10-year Total Shareholder Return Growth Per Share $6.8 Billion in acquisitions 91.7% $13.2 Billion over past 10 years Average Same-store Market Cap 143 Million Occupancy Square feet 1977 S&P 500 Founded 1.9% YTD Same-Store 52.5% 2004 $1.3 Bil
Slide 4: Extra Space Storage Timeline
EXTRA SPACE STORAGE TIMELINE 500 1998 2005 2015 2018 2020 Recapitalized through JV Acquired Storage USA Acquired SmartStop Ranked 73 Ranked 90 out of 1 million+ with Prudential Real (458 stores) for $2.3 Self Storage (122 out of 700,000+ Estate Investors (PREI) billion in a JV with PREI owned & 43 m
Slide 5: Why Invest in Extra Space Storage (EXR)?
WHY INVEST IN EXTRA SPACE STORAGE (EXR)? ATTRACTIVE OPERATIONAL DISCIPLINED SOLID BALANCE STRONG SECTOR EXCELLENCE GROWTH SHEET PARTNERSHIPS Need-based, Enhancing value of Consistent growth Appropriately Creating growth recession resilient existing and newly of our leveraged balance opportunities as
Slide 6: Management Depth
MANAGEMENT DEPTH SAMRAT SONDHI SCOTT STUBBS JOE MARGOLIS GWYN MCNEAL MATT HERRINGTON CMO CFO CEO CLO COO 17 YEARS 19 YEARS 15 YEARS* 15 YEARS 13 YEARS *Includes Mr. Margolis’ time as Director on Extra Space Storage’s board.MANAGEMENT DEPTH SAMRAT SONDHI SCOTT STUBBS JOE MARGOLIS GWYN MCNEAL MATT HER
Slide 7: Environmental Highlights
ENVIRONMENTAL HIGHLIGHTS Best ESG Risk Rating of U.S. Self-storage REIT th 8 Percentile – Company Risk Highest Rated U.S. Self-storage REIT (Lowest = Best)ENVIRONMENTAL HIGHLIGHTS Best ESG Risk Rating of U.S. Self-storage REIT th 8 Percentile – Company Risk Highest Rated U.S. Self-storage REIT (Lowe
Slide 8: Environmental Highlights
ENVIRONMENTAL HIGHLIGHTS 43% WHOLLY-OWNED STORES WITH SOLAR 26.4 GWh GENERATED IN 2019 48 ENOUGH TO POWER 2019 SOLAR 2,500 HOMES FOR ONE YEAR INSTALLATIONSENVIRONMENTAL HIGHLIGHTS 43% WHOLLY-OWNED STORES WITH SOLAR 26.4 GWh GENERATED IN 2019 48 ENOUGH TO POWER 2019 SOLAR 2,500 HOMES FOR ONE YEAR INS
Slide 9: Social Highlights
SOCIAL HIGHLIGHTS FORBES 2020 BEST EMPLOYERS FOR DIVERSITY WINNER GLASSDOOR 2020 BEST PLACES TO WORK WINNER WOMEN’S LEADERSHIP INSTITUTION EMPLOYEE EDUCATION PARTNERSHIP PAID EMPLOYEE VOLUNTEER “ELEVATE HER” CHALLENGE MEMBER WESTERN GOVERNORS UNIVERSITY TIME OFF PROGRAMSOCIAL HIGHLIGHTS FORBES 2020
Slide 10: Governance Highlights
GOVERNANCE HIGHLIGHTS rd 2/3 INDEPENDENT DIRECTORS 22% FEMALE BOARD MEMBERS ANNUAL ADVISORY VOTE TO STOCKHOLDER ABILITY TO SEPARATE CHAIRMAN AND CEO APPROVE EXECUTIVE COMPENSATION AMMEND BYLAWSGOVERNANCE HIGHLIGHTS rd 2/3 INDEPENDENT DIRECTORS 22% FEMALE BOARD MEMBERS ANNUAL ADVISORY VOTE TO STOCKHO
Slide 11: Portfolio & Performance
PORTFOLIO & PERFORMANCEPORTFOLIO & PERFORMANCE
Slide 12: Efficient Ownership Structure
EFFICIENT OWNERSHIP STRUCTURE 1,852 PROPERTIES JOINT MANAGED 927 249 676 VENTURE WHOLLY-OWNED JOINT VENTURE MANAGED 50% 13% 37% *As of March 31, 2020 EFFICIENT OWNERSHIP STRUCTURE 1,852 PROPERTIES JOINT MANAGED 927 249 676 VENTURE WHOLLY-OWNED JOINT VENTURE MANAGED 50% 13% 37% *As of March 31, 2020
Slide 13: Diversification and Scale
DIVERSIFICATION AND SCALE Northwest 40 2% Northeast 293 16% Midwest 229 California 12% 273 Mid-Atlantic 15% Mtn West 192 10% 176 LA 10% Other, 39% Southeast 14% 218 12% NY/NJ Hawai Hawaii Texas 12% i SAME-STORE 17 191 EXR PRESENCE REVENUE 1% 10% Florida CONTRIBUTION & P.R. NO PRESENCE SFO 223 BY MSA
Slide 14: Best In-Class Operator
BEST IN-CLASS OPERATOR 5-years of Average Same-Store Outperformance 7.0% 6.6% 6.0% 5.5% 5.4% 5.0% 4.5% 4.3% 3.8% 3.7% 4.0% 3.4% 3.4% 3.3% 2.8% 3.0% 2.2% 2.0% 1.0% 0.0% REVENUE EXPENSES NOI *EXR and PSA results exclude tenant reinsurance revenues and expenses. CUBE results (and LSI results prior to 2
Slide 15: Sector-Leading Core FFO Growth
SECTOR-LEADING CORE FFO GROWTH Core FFO Per Share Growth - Normalized 800.0% EXR PSA LSI CUBE 700.0% 600.0% 500.0% 400.0% 300.0% 200.0% 100.0% 0.0% *Data as of March 31, 2020 as reported in public filings Q1 2006 Q1 2007 PSA PSA Q1 2008 SSS SSS Q1 2009 CUBE Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1
Slide 16: Significant Dividend Growth
SIGNIFICANT DIVIDEND GROWTH Quarterly Dividend Per Share $0.95 $0.90 $0.90 $0.85 $0.80 5-year total $0.75 increase of $0.70 52.5% $0.65 $0.59 $0.60 $0.55 $0.50 2015 2016 2017 2018 2019 2020 *As reported in public filingsSIGNIFICANT DIVIDEND GROWTH Quarterly Dividend Per Share $0.95 $0.90 $0.90 $0.85
Slide 17: Top REIT Stock of the Decade
TOP REIT STOCK OF THE DECADE 1,179% 10-Year Total Return to Shareholders #11 3x #1 Among Publicly Among Members Average Return of Publicly Traded REITs of S&P 500 Traded Storage Peers *Results from “KeyBanc Leaderboard” January 3, 2019 and MarketWatch article December 28, 2019.TOP REIT STOCK OF THE
Slide 18: Solid Balance Sheet
SOLID BALANCE SHEET S&P Global Ratings: BBB/Stable 03/31/2020 12/31/2019 12/31/2018 12/31/2017 12/31/2016 1 Interest Coverage Ratio : 4.98 4.81 4.85 4.95 5.34 1 4.02 3.82 3.76 3.68 3.75 Fixed Charge Ratio : 1 Net Debt/EBITDA : 5.73 5.59 5.54 5.79 6.06 Fixed Debt %: 78.3% 78.7% 74.1% 74.7% 70.0% Weig
Slide 19: Sector Trends
SECTOR TRENDSSECTOR TRENDS
Slide 20: Current Sector Trends
CURRENT SECTOR TRENDS Changes To Operations Related To COVID-19 New Supply in Many Markets / Deliveries Experiencing Delays Near Peak Occupancy Levels, With Pressure Related To COVID Moderating Revenue Growth Increasing Customer Utilization Scale and Technology Advantage of REITs Ownership and Manag
Slide 21: COVID-19 Updates
COVID-19 UPDATES • All properties and offices open • No layoffs or furloughs necessary • Physical and digital updates for “No Contact” rental process completed • Existing customer increases and auctions resumed selectively by geographic location • Rentals down year-over-year with trends improving na
Slide 22: New Supply in Many Markets
NEW SUPPLY IN MANY MARKETS Initially Impacted Primary Markets; Moving to Secondary and Tertiary Markets Geographically Diversified Portfolios are Holding up Better Lease-up Periods Reverting to Historical Durations Development Yields Compressing Due to Increased Construction Costs and Moderating Rev
Slide 23: Increasing Length of Tenant Stay
INCREASING LENGTH OF TENANT STAY 65.0% 61.6% 60.0% % of customer stays > 12mos 57.9% 55.0% 50.0% 43.7% 45.0% 40.0% % of customer stays > 24mos 38.6% 35.0% 2013 2014 2015 2016 2017 2018 2019 2020 *Data measured for in-place customers mid-month to reduce volatility. 597 “Core” EXR stores.INCREASING LE
Slide 24: Technology Advantage
TECHNOLOGY ADVANTAGE SMALL OPERATORS EXTRA SPACE CUSTOMER ACQUISITION CALL PAY-PER STATIC ADVERTISING SEARCH SOCIAL CENTER CLICK ENGINES PRICING ALGORITHMIC PROPRIETARY MANUAL REVENUE MANAGEMENT PROCESSES DECISION MAKING ANALYTICS OPTIMIZATION INTUITION DATATECHNOLOGY ADVANTAGE SMALL OPERATORS EXTRA
Slide 25: Technology and Data Quick Facts
TECHNOLOGY AND DATA QUICK FACTS $30 rd 39 Million 1+ Million 3 Gen 17 Million+ revenue digital marketing in digital annual website calls to call management system employees marketing spend views center Millions 10 Million 1+ Million Google 11 customers data scientists of key words bid advisory board
Slide 26: Opportunity for Consolidation
OPPORTUNITY FOR CONSOLIDATION 9.0% 7.5% ~25.0% 4.4% Non-REIT Non-Institutional Quality Properties 3.4% 3.3% Non-REIT Institutional Quality Properties 2.6% ~45.0% *REIT data from public filings as of March 31, 2019. U-Haul and total U.S. storage square footage per the 2020 Self-Storage Almanac. Perce
Slide 27: Growth Strategy
GROWTH STRATEGYGROWTH STRATEGY
Slide 28: Overview of Growth Strategies
OVERVIEW OF GROWTH STRATEGIES Third-Party Management Acquisitions Before After ATLANTA, GA BRONX, NY Certificate of Occupancy Redevelopment Before After BRONX, NY DALLAS, TXOVERVIEW OF GROWTH STRATEGIES Third-Party Management Acquisitions Before After ATLANTA, GA BRONX, NY Certificate of Occupancy R
Slide 29: Consistent Growth
CONSISTENT GROWTH Extra Space Storage Branded Stores 2,000 1,852 1,817 1,647 1,600 1,483 676 1,427 646 1,347 536 422 411 1,200 1,088 348 1,029 249 246 910 233 882 260 180 215 820 250 253 181 800 185 160 271 273 281 341 364 925 927 878 836 808 400 746 557 506 448 356 296 0 2010 2011 2012 2013 2014 20
Slide 30: Third-Party Management Strategy
THIRD-PARTY MANAGEMENT STRATEGY Total Stores Managed for Third-Party Owners 676 700 646 602 600 558 536 500 442 422 411 400 348 335 300 260 250 200 184 172 200 162 139 125 100 100 55 55 42 26 22 21 17 0 2013 2014 2015 2016 2017 2018 2019 2020 PSA LSI CUBE EXR *Data as of March 31, 2020 as reported i
Slide 31: Third-Party Management Strategy
THIRD-PARTY MANAGEMENT STRATEGY “My challenges before EXR were to stay afloat. Today, occupancy and profits are great. I have been in the business around 40 years and I could not think of the numbers or keeping the properties on the par that you (EXR) have done.” -Partner since 2012, 6 stores in Flo
Slide 32: Acquisition Strategy
ACQUISITION STRATEGY • Acquire undermanaged stores, raise to EXR portfolio operating averages, achieve outsized NOI growth • Emphasis on geographic diversification • Focus on primary and secondary markets • Reduce transaction and integration risk through acquiring assets already on the management pl
Slide 33: Robust Acquisition Activity
ROBUST ACQUISITION ACTIVITY Annual Acquisition Volume ($ in millions) $2,000 $1,752 $1,800 173 $1,600 173 Stores Stores $1,400 $1,200 $1,127 $1,000 108 108 Stores $800 Stores $586 $603 $580 $531 $600 $424 78 52 $400 51 67 Stores Stores Stores Stores $33 $200 47 6 Stores Stores $0 2013 2014 2015 2016
Slide 34: Sources of Acquisitions
SOURCES OF ACQUISITIONS Percentage of Annual Acquisition Investment by Seller Type 4% 1% 5% 10% 14% 17% 34% 2014 2015 2016 MANAGED 28% 41% 54% EXR JOINT VENTURE 90% 2% 7% 6% EXR RELATIONSHIP 12% 19% BROKERED 47% 24% 2018 2019 2017 52% 41% 47% 33% 12% *Data based on EXR investment dollar volume.SOURC
Slide 35: Additional Growth Strategies
ADDITIONAL GROWTH STRATEGIES ü Enhance NOI at existing properties by CERTIFICATE OF OCCUPANCY increasing net rent per square foot and optimizing unit mix • Acquire newly developed properties at completion of construction • Avoid development, entitlement and ü Maintain balanced average portfolio life
Slide 36: Certificate of Occupancy: Philadelphia, PA
CERTIFICATE OF OCCUPANCY PHILADELPHIA, PACERTIFICATE OF OCCUPANCY PHILADELPHIA, PA
Slide 37: Certificate of Occupancy: Wholly-Owned vs. JV Investments
CERTIFICATE OF OCCUPANCY: WHOLLY-OWNED VS. JV INVESTMENTS • Primarily held 100% ownership of projects delivered early in the current real estate cycle with early deliveries experiencing very fast lease-up and strong yields • Currently closing most “C of O” acquisitions in joint venture structures to
Slide 38: Proactive Site Redevelopment: Before, Atlanta, GA
PROACTIVE SITE REDEVELOPMENT: BEFORE ATLANTA, GAPROACTIVE SITE REDEVELOPMENT: BEFORE ATLANTA, GA
Slide 39: Proactive Site Redevelopment: After, Atlanta, GA
PROACTIVE SITE REDEVELOPMENT: AFTER ATLANTA, GAPROACTIVE SITE REDEVELOPMENT: AFTER ATLANTA, GA
Slide 40: Site Expansion, St. Petersburg, FL
Project Cost: $4.1 million SITE EXPANSION Units Added: 419 Expected ROI: 12.2% ST. PETERSBURG, FLProject Cost: $4.1 million SITE EXPANSION Units Added: 419 Expected ROI: 12.2% ST. PETERSBURG, FL
Slide 41: Bridge Lending
Recently Closed $8,300,000 BRIDGE LENDING Atlanta, GA • Completed projects only (no construction loans) • All properties to be managed by EXR • Steady loan submission volume • Volume of approvals increasing • Mix of requests on existing and to be delivered projects 2020 Year-to-Date Overview $21M $1
Slide 42: Quarterly Update
QUARTERLY UPDATEQUARTERLY UPDATE
Slide 43: 2020 Q1 Same-Store Performance
2020 Q1 SAME-STORE PERFORMANCE 6.0% 4.8% 5.0% 4.0% 3.8% 3.8% 4.0% 3.0% 2.6% 1.9% 1.7% 2.0% 1.2% 1.2% 0.8% 1.0% 0.1% 0.0% -1.0% -1.3% -2.0% REVENUE EXPENSES NOI * CUBE results include the benefit from tenant insurance revenue. Data as of March 31, 2020 as reported in public filings. EXR PSA PSA SSS L
Slide 44: 2020 Q1 Core FFO Per Share Growth
2020 Q1 CORE FFO PER SHARE GROWTH 8.0% 6.9% 6.9% 7.0% 6.0% 5.0% 4.0% 2.5% 3.0% 2.0% 2.0% 1.0% 0.0% *Data as of March 31, 2020 as reported in public filings. EXR PSA LSI CUBE CUBE2020 Q1 CORE FFO PER SHARE GROWTH 8.0% 6.9% 6.9% 7.0% 6.0% 5.0% 4.0% 2.5% 3.0% 2.0% 2.0% 1.0% 0.0% *Data as of March 31, 2
Slide 45: Occupancy Trends – Same-Store Pool
OCCUPANCY TRENDS – SAME-STORE POOL 95.0% 94.0% 93.0% 92.7% 92.4% 92.1% 92.0% 91.5% 91.2% 91.0% 90.9% 90.0% 2018 2019 2020 *Data for 2020 “Same-store” pool of 863 stores. OCCUPANCY TRENDS – SAME-STORE POOL 95.0% 94.0% 93.0% 92.7% 92.4% 92.1% 92.0% 91.5% 91.2% 91.0% 90.9% 90.0% 2018 2019 2020 *Data fo
Slide 46: Rental Activity
RENTAL ACTIVITY Average Monthly Rentals Per Store 50 45 40 35 30 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average: 2008-2018 2019 2020 *Data for “Core” pool of 597 storesRENTAL ACTIVITY Average Monthly Rentals Per Store 50 45 40 35 30 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Ju
Slide 47: Rental Trend Slide During May
RENTAL TREND SLIDE DURING MAY 10.0% 7.8% 5.0% 0.0% -0.2% -5.0% -10.0% -15.0% -17.0% -20.0% -25.0% -26.7% -30.0% 5/1 - 5/7 5/8 - 5/14 5/15 - 5/21 5/22 - 5/28 May 1-7 May 8-15 May 15-22 May 15-29 *Data for “Mature” pool of 1,407 storesRENTAL TREND SLIDE DURING MAY 10.0% 7.8% 5.0% 0.0% -0.2% -5.0% -10.
Slide 48: Stable Vacates
STABLE VACATES Average Monthly Vacates Per Store 50 45 40 35 30 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average: 2008-2018 2019 2020 *Data for “Core” pool of 597 storesSTABLE VACATES Average Monthly Vacates Per Store 50 45 40 35 30 25 20 15 10 5 0 Jan Feb Mar Apr May Jun Jul
Slide 49: Discount Trends
DISCOUNT TRENDS Discounts as a Percentage of Rental Revenue 5% 4% 3% 2% 1% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017-2019 Average 2019 2020 *Data for “Core” pool of 597 storesDISCOUNT TRENDS Discounts as a Percentage of Rental Revenue 5% 4% 3% 2% 1% 0% Jan Feb Mar Apr May Jun Jul Aug S
Slide 50: Appendix
APPENDIXAPPENDIX
Slide 51: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 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 disclos
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