Long Bench EXR:
- Rates to new customers rolled up +43% y/y in the quarter and were +41% above 3Q19 levels
- ECRI rate levels are approaching street rates broadly as state of emergency restrictions are being lifted - this means that the growth rate for the larger "bucket" of revenue is accelerating on a prospective basis
- Now assuming a -200bp decline in FY21-end occupancy versus -300bp previously, resulting in occupancy similar to FY20-ending levels. We have to wonder if (1) normal storage seasonality returns but (2) average occupancy is reset +100-150bp higher structurally going forward
- EXR is seeing material wage pressure at both the property level and corporate level - payroll has been down this year due to (1) higher turnover and (2) longer length of time to fill open positions due to a lack of applicants, however will likely see payroll pressure "above inflation" throughout FY22 as staffing levels pick up and wage increases move through the system, impacting both property payroll and G&A
- Property taxes likely to trend up +5% to +6% going forward, however we would note that EXR has historically been very successful in challenging tax assessments
- Marketing expense growth will likely be "more normal" following declines this year
- On the third-party management platform, there is no target number for revenue or stores, rather management contracts are evaluated on a "lifetime value of the customer basis," - with that said, EXR would love to grow the fee line as large as possible, which we believe should begin to approach the dollar value of corporate overhead in coming years similar to PLD. This would create a structural cost of capital advantage relative to the other self-storage REITs
CHART OF THE DAY: INVH Leasing Spread Trend Going Parabolic
Prior Notes:
10.28.21 - The Call | REITs | 10.28.21
10.28.21 - REIT RECAP | 10/28/21 | INVH 3Q21 RESULTS
10.28.21 - REIT RECAP | 10/27/21 | AVB 3Q21 RESULTS
10.27.21 - REITS DAILY BRIEF | 10.27.21 | (3Q21 Earnings, AVB, EXR, Office)
10.26.21 - REIT RECAP | 10/26/21 | EXR 3Q21 RESULTS
10.26.21 - REITS DAILY BRIEF | 10.26.21 | (EQR, REXR)
10.25.21 - SUNDAY NIGHT REIT READ | 10.24.21 | (POSITION MONITOR)
10.21.21. - REIT RECAP | 10/21/21 | REXR 3Q21 RESULTS
10.20.21 - REITS DAILY BRIEF | 10.20.21 | (EGP, PLYM, REXR, ILPT)
10.19.21 - VIDEO | American Homes 4 Rent (AMH) Thesis
10.19.21 - REITS DAILY BRIEF | 10.19.21 | (COLD, SLG, VNO, AMH, U.S. Office Utilization)
10.18.21 - REITS DAILY BRIEF | 10.18.21 | (PLD)
10.17.21 - SUNDAY NIGHT REIT READ | 10.17.21 | (PLD, POSITION MONITOR)
10.15.21 - REIT RECAP | 10/15/21 | PLD 3Q21 RESULTS
10.13.21 - REITS DAILY BRIEF | 10.13.21 | (PLD)
10.10.21 - SUNDAY NIGHT REIT READ | 10.10.21 | (POSITION MONITOR UPDATE)
10.8.21 - BLACK BOOK ROUND-UP | AMERCO (UHAL)
10.7.21 - BEST IDEA ROUND-UP | AMERICOLD REALTY TRUST (COLD)
Please e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
