Extra Space Storage (NYSE:EXR) reported fourth-quarter and full-year 2025 results that management described as positive despite what it called a “challenging but improving” operating backdrop. On the call, CEO Joe Margolis said the company posted Core FFO growth of 2.5% in the fourth quarter and 1.1% for the full year, while same-store revenue turned positive in the quarter.
Operating trends: move-ins improved while occupancy remained steady
Management emphasized improving customer demand indicators, particularly new customer move-in rates, while maintaining what it characterized as strong occupancy. Margolis said that in the fourth quarter, 16 of the company’s top 20 markets posted positive year-over-year move-in rates to new customers and also showed sequential improvement in revenue growth. Those trends contributed to same-store revenue growth of 0.4% in the quarter, compared with only two of the top 20 markets meeting that measure in the fourth quarter of 2024, according to the company.
Executives also reiterated that improvements in new customer rates take time to affect results because customer churn is limited. Margolis said the company “only churn[s] 5%–6% of our customers a month,” making move-in rate strength a forward indicator rather than an immediate driver of the rent roll.
Expenses and NOI: property taxes and utilities helped offset healthcare and marketing
On costs, Norman said same-store operating expenses rose 1.1% in the fourth quarter. He highlighted several drivers:
- Property taxes declined 3.4%, which he attributed to “expected normalization of prior year increases.”
- Property operating expenses, including utilities, fell more than 5%.
- Those savings were partially offset by higher healthcare costs and elevated marketing expense.
Norman said the company’s increased marketing investment has been “instrumental” in driving stronger move-in rates and is intended to support revenue growth through 2026. With those factors, the company posted same-store NOI growth of 0.1% for the quarter.
Asked about 2026 expense guidance, Norman pointed to property tax normalization as the “biggest needle mover” versus 2025, noting that the first half of 2025 included outsized increases. He also said insurance costs were elevated in the second half of 2025, but the company’s mid-year renewal and market conditions suggested improvement in the back half of 2026. On healthcare, Norman said pressure is expected to persist, but the company is working to find staffing and payroll efficiencies to help offset it.
Capital allocation and external growth: repurchases, acquisitions, JVs, and managed stores
Margolis outlined a range of fourth-quarter capital deployment and external growth activity. He said the company repurchased approximately $141 million of common shares at an average price of about $129. Extra Space also acquired 27 operating stores for $305 million in the quarter, bringing 2025 acquisitions to 69 stores for $826 million.
The company also executed joint venture-related activity, acquiring seven stores for $107 million gross while selling its interest in nine JV properties and “unlocking a $37 million promote,” according to Margolis. On its lending platform, the company originated $80 million in bridge loans, growing the portfolio to about $1.5 billion at year-end.
Third-party management continued to expand. Margolis said Extra Space added 78 third-party managed stores in the quarter, for net growth of 45 stores. For the full year, the company added 379 stores and 281 net new stores, bringing the managed portfolio to 1,856 stores. Margolis said the company’s “diversified external growth platform” provides opportunities across multiple channels and gives it an “external growth advantage” versus industry peers.
Balance sheet and 2026 outlook: “slow and steady recovery” embedded in guidance
Norman described the balance sheet as low leverage and conservative, noting that 93% of total debt is fixed-rate (net of loan receivables) with a 4.3% weighted average interest rate. He also said the commercial paper program launched in December 2024 saved more than $3 million in incremental interest expense during 2025. Management said the company has only one material debt maturity in 2026 and a balanced maturity schedule over the next decade.
For 2026, Norman said guidance reflects a “slow and steady recovery” in storage fundamentals and does not assume specific catalysts to boost demand or material economic changes. He added that the outlook does not assume a meaningful housing-market improvement and does not assume changes to current pricing restrictions in Los Angeles County. Extra Space’s 2026 guidance includes:
- Same-store revenue: -0.5% to +1.5%
- Same-store expense growth: 2% to 3.5%
- Same-store NOI: -2.25% to +1.25%
- Core FFO: $8.05 to $8.35 per share (approximately flat at the midpoint)
In Q&A, Norman acknowledged that the midpoint of same-store revenue guidance implies a generally flat trajectory versus the company’s fourth-quarter exit rate, while the range allows for either acceleration or deceleration. He also cited a roughly 40 basis point headwind from Los Angeles County pricing restrictions, describing it as dilution versus what the company would have expected absent those restrictions.
On acquisitions, Norman said the company expects most 2026 acquisitions to be done in joint venture structures where Extra Space contributes a minority of the capital, allowing returns to be enhanced versus wholly owned acquisitions at prevailing market deal returns. Management also said it has capital flexibility and could increase acquisition guidance if opportunities emerge.
Regulatory and market backdrop: New York complaint, disclosure rules, supply and jobs
Margolis addressed questions about regulation. He said the company was served with a complaint filed by the New York City Department of Consumer and Worker Protection and that Extra Space “disagree[s] with the allegations” and will defend itself. He noted the complaint cites 117 consumer complaints over a three-year period tied to the company’s 60 New York City properties, compared with what he said were well over 100,000 customers over that timeframe. Because the matter is active litigation, he said he could not elaborate further.
Elsewhere, Margolis said self-storage has seen increased regulatory focus post-COVID, including some jurisdictions proposing price caps, though he said none have been implemented and are difficult to pass. He said disclosure-related legislation is more common and that Extra Space welcomes standardized disclosure requirements because it views its own disclosure practices as robust.
On California’s Senate Bill 709, management said Extra Space’s disclosures were already as robust as the new requirements and that it has not seen any leasing impact from the changes.
Looking at fundamentals, Margolis cited job growth as a key driver correlated with storage performance and said he expects Sun Belt markets to benefit longer term from outsized job growth, even though the region was a headwind in 2025 due to oversupply. He also pointed to supply as a critical variable, saying the company sees continued incremental reductions in new store deliveries. Asked about supply data, he said the company starts with Yardi and then layers in local intelligence, and he named several markets he said have experienced significant supply pressure, including northern New Jersey, Las Vegas, Phoenix, and Atlanta.
Management also discussed operations and technology, saying customers continue to use multiple leasing channels, including in-store interactions. Margolis said 31% of leases come from customers who walk into a store without first interacting online or by phone, and he argued store managers remain important both to customer conversion and to maintaining property condition and security. On AI, management said it is monitoring shifts in search behavior and also using machine learning in pricing and in areas such as marketing spend and call center functions, with an internal team formed to evaluate opportunities.
About Extra Space Storage (NYSE:EXR)
Extra Space Storage (NYSE: EXR) is a real estate investment trust that specializes in the ownership, development and operation of self-storage properties. The company provides storage solutions for residential and commercial customers, offering a range of unit sizes, climate-controlled units and specialized options such as vehicle and boat storage. Extra Space Storage markets itself as a customer-focused operator, with online rentals, contactless move-in options and ancillary retail products like packing supplies and insurance to support tenant needs.
Its business model combines property ownership with third-party management and development activities.
