Extra Space Storage, Inc. 2026 Q3 Earnings Call

Welcome to Extra Space Storage, third quarter 2026 earnings call. In addition to our press release, we have 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 estimate as of today, October 28, 2026. 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 would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Thanks, Jared, and thank you everyone for joining today's call. I am joined today by our President and future CEO, Noah Springer, and our CFO, Jeff Norman. As this will be my final earnings call as CEO, I would like to take a moment to reflect on what our team has accomplished together during my tenure. At the end of 2016, Extra Space owned or managed 1,427 stores. Today, we operate over 4,400, more than three times as many properties, vastly increasing our efficiency, scale, data, and diversification. Our third-party management platform has grown from 411 stores to nearly 2,000. During this time period, we restructured and strengthened the company's balance sheet, earning our first investment grade rating in 2019, and we have since been active issuers in the debt capital markets.

We launched our bridge lending program in 2019 and built it from an idea into over $3.5 billion worth of loans. This program produces a reliable source of interest income, management fees, tenant insurance income, future acquisitions, and broadens our industry relationships. In 2022, we acquired Storage Express, and in 2023, we completed the $15 billion merger with Life Storage. We have led the industry in many innovations in investment structuring, customer acquisition, pricing, and operating methodologies. Most importantly, we have aggressively grown FFO on a per share basis. Core FFO per share has more than doubled from $3.70 in 2016 to $8.21 last year. Our quarterly dividend has grown from $0.78 per share to $1.62 per share. Including dividends, our shareholders have earned a sector-leading total return of roughly 170% since the start of 2017. None of these are my accomplishments.

They are the result of the industry's best team, thousands of team members in our stores, call centers, and offices who work extremely hard every day to take care of our customers and our stores and to produce outstanding results. They do so while living Extra Space's values of integrity, teamwork, passion, innovation, and excellence. I am proud to be associated with this unique and impressive team, and am grateful for every one of them. One of those teammates is Noah Springer. I have been working directly with Noah for over 11 years. Over that time, his mandate has increased from starting and growing our third-party management business to include asset management, our joint venture program, construction, human resources, and operations. I have had the privilege of watching him grow into an extraordinary professional and leader.

No one could be better prepared or qualified to take over the helm of this great company. He knows our business, our strategy, our people, and our partners as well as anyone. He has the full support of the board, the executive team, and the entire organization. Noah is ready to lead the next chapter of excellence for Extra Space Storage. With that, it is my privilege to turn the call over to Noah.

Thanks, Joe, and thank you all for being here. Joe and I have worked side by side for more than a decade, and I appreciate everything he has taught me and done for the company. I want to thank him and the board for giving me the opportunity of a lifetime, to lead Extra Space. This transition doesn't call for a new direction. It calls for taking an exceptional company and making it better. Let me tell you exactly what I'm committing to.

Extra Space will continue to operate better than anyone else in the industry, and we will keep growing in a way that compounds value per share. That is the promise. Everything else I have to say today is how we will deliver on that promise. Let me start with this quarter's results because they are the best evidence of our execution of this commitment. Core FFO was $2.17 per share, up 4.3% from a year ago. Same-store revenue grew 2.7%, our fifth consecutive quarter of sequential improvement. Same-store expenses declined 1.8%, and same-store NOI grew 4.6%. We ended the quarter at 94% occupancy, 30 basis points higher than a year ago. With three quarters behind us, we are again raising our full-year core FFO guidance to a midpoint of $8.45 per share.

These results are a credit to our team. They didn't come from one big initiative. They came from good decisions made every day in how we serve our customers. I want to thank everyone at Extra Space for the discipline and effort behind these numbers. Our team is also the reason I'm confident about what comes next, because making an exceptional company even better isn't about a new strategy. It's about the people who execute the proven strategy we already have. Our executive team averages 19 years at Extra Space, to my knowledge, the longest-tenured leadership team in the sector. Supporting them is another generation of leaders who grew up here, worked in storage through multiple cycles, and integrated many acquisitions. Our team is staying together. This company has never been about one person.

It's about thousands of people executing a great strategy on a great platform, and it's my job to make that platform even more powerful. I was named President in January, and since then, I've spent a lot of time with our teams in the field and here in Salt Lake City, including sitting down with every one of our 25 divisional Vice Presidents and nearly all of our 244 district managers, and I've walked a lot of stores along the way. The one thing has become very clear, our biggest lever is within the portfolio we already own. Driving property-level NOI is our number one operating priority. As I've listened to our teams, we continue to look for areas where we can move faster, sharpen our tools, and improve our execution. This is how we have always done it, and we'll continue to challenge ourselves to find even more.

Often, the best ideas come from our people tested against what our data tells us. That's because data by itself is not an advantage. The advantage is the combination of this data, the technology, the people, and a culture that keeps asking what we're missing and then actually does something about it. That is how scale becomes an operating advantage, and that is our moat. This is one of the reasons that so many owners trust us with their stores. Today, we manage almost 2,000 stores on their behalf, the largest third-party management platform in the industry. Many of those owners are now longtime partners and friends. We manage for them, we lend to them, we have acquired from them. These businesses reinforce one another, and our operating platform connects them all. Joint ventures and third-party management builds relationships, and these relationships can create more lending and acquisition opportunities.

This brings more stores onto our platform, adding scale and data. That is the Extra Space flywheel. In this business, the best opportunities begin with a phone call from someone you have known for 15 years. We have earned the right to receive those calls, and we intend to use them. A deeper pipeline doesn't mean doing more deals. It means having more choices. The best use of our capital may be an acquisition, a loan, an expansion, an investment alongside a partner, or buying back our own stock. We don't need every one of these channels to be open at the same time. Every dollar competes, and the objective isn't growth for growth's sake, it's growth in FFO per share. I have been here more than 20 years. I know this company, this industry, our people, our partners, and our competitors. My commitment to you is straightforward. We will be transparent. Our focus will be the stores and property-level NOI.

We will continue to grow. We will be disciplined with your capital, and we will judge ourselves the same way I expect you to judge us, by our performance. Joe has built an extraordinary company. My job is to make sure its best years are still ahead of it. I will turn it over to our CFO, Jeff Norman.