Extra Space Storage experienced positive rate growth and high occupancies, resulting in same-store revenue growth of 4.2% and same-store NOI growth of 4.8%. According to the firm’s CEO, Joe Margolis, this contributed to better-than-expected FFO growth, which was $0.02 above the top end of its guidance.
“Performance continues to be steady despite new supply and we are well positioned heading into the summer leasing season,” he said. “While we are very pleased with the better-than-expected first quarter results, our views for the balance of 2019 remain generally unchanged. We still believe 2018 was likely the high watermark for total deliveries, and we expect 2019 deliveries to be only modestly lower.”
Further, he said, he expects the total impact on performance from new supply to be greater in 2019 than it was in 2018 due to the cumulative impact of several years of elevated development. “We are seeing this impact in the lease up of our C of O stores. Lease up has slowed from a pace that was well above pro formas in 2015 to ’17 to trends that today are more in line with historic norms and with our underwriting.”
In the current environment, large operators, like Extra Space, are best positioned for success on the web, he explained. “In the quarter, we invested $270 million in acquisitions. We continue to have success acquiring properties through off market transactions. For example, and as we mentioned last quarter, we bought a joint venture partner’s interest in 12 properties in Los Angeles and the Bay Area for $192 million. We continue to explore other opportunities to enhance shareholder returns through mutually beneficial partnerships.”