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Extra Space Storage Inc EXR
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/29/2013

Operator: Good day, ladies and gentlemen, and welcome to the First Quarter 2013 Extra Space Storage Inc. Earnings Conference Call. My name is Chandelle and I'll be your facilitator for today's call. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

As a reminder this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today Mr. Clint Halverson, Director of Investor Relations. Please proceed, sir.

Clint Halverson - IR: Thank you, Chandelle. Good afternoon, everyone and welcome to Extra Space Storage's first quarter 2013 conference call. In addition to our press release, we've also furnished unaudited supplemental financial information on our website.

Please remember that management's 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 estimates as of today Monday, April 29, 2013. 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'd now like to turn the call over to Spencer Kirk, Chief Executive Officer.

Spencer F. Kirk - CEO: Good afternoon, everyone. As a participant on a panel earlier this year in New York I was asked to describe in a single sentence how I view the self-storage industry for 2013. Being a man of many words I described my expectations for the year simply as solid. The first quarter definitely produced very solid results as FFO was up 39% and we experienced excellent same-store growth. Demand for storage remained strong, new supply is de minimis and our occupancies are at record levels. Organic growth remains a primary focus for Extra Space. During the quarter we reaped the benefits of previous accretive acquisitions. In addition, we benefited from greater economies of scale resulting from our growing third-party management platform. Our footprint is over 9% larger than one year ago.

I'd now like to turn the time over to Karl, our Chief Operating Officer.

Karl Haas - EVP and COO: Thanks, Spence. During the first quarter, we had great same-store revenue growth of 7.5%, that's on top of 6.3% realized in the first quarter last year. We added 62 properties to our same-store pool in 2013, consisting primarily of a 55 stabilized assets that were acquired in 2011. The addition of these 62 assets to our same-store pool contributed roughly about 100 basis points to same-store revenue growth for the quarter.

Rental rates; rental trends remain strong and our square foot occupancy continued at record high levels. Our same-store occupancy ended the quarter at 88.6%, up 2.9% over last year. We still don't see significant volumes, new development in the industry. With good demand for the product and lack of new supply, we are able to increase Street rates 3% to 4% on average for the quarter. We had strong expense control in the first quarter, increases in payroll and property taxes were partially offset by lower utility and advertising expenses. Utilities were lower, primarily due to solar panels added in 2011 to 2012; advertising was lower in Q1 as we finished our elimination of the Yellow Pages.

Read our Earnings Call Transcript disclaimer.
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