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Extra Space Set to Grow on Acquisitions Amid Supply Strains

We initiated a research report on Extra Space Storage Inc. EXR on Apr 10. 

Salt Lake City, UT-based real estate investment trust (REIT) offers a wide array of well-located storage units to its customers, including boat storage, recreational vehicle storage and business storage. In February, the company reported fourth-quarter 2016 adjusted funds from operations (FFO) per share of $1.03, which comfortably beat the Zacks Consensus Estimate of 97 cents. The figure also came in 18.4% higher than the prior-year quarter tally. Results reflect an improvement in same-store net operating income (NOI).

Extra Space, the second largest self-storage operator in the U.S., is consistently making efforts to expand its business and attain geographical diversity through accretive acquisitions, partnerships, and third-party management services. In fact, in recent years, the company bolstered its operations in several markets and entered many new markets by virtue of acquisitions.

Shares of Extra Space underperformed the Zacks categorized REIT and Equity Trust – Other industry in the last six months. During this time, while the company’s shares gained 4.2%; the industry recorded a growth of 5.6%. However, given its progress on the fundamentals, the stock should perform well in the quarters ahead. Also, its estimates for the first quarter and full-year 2017 FFO per share moved north in the last 30 days.


However, rising supply in some markets can negatively affect the pricing power of Extra Space. Also, intense competition from several private, regional and local operators limits its power to increase rent. Also, rate hike adds to its woes.

Currently, Extra Space carries a Zacks Rank #3 (Hold).

Investors interested in the REIT space, may consider stocks like Global Net Lease, Inc. GNL, CoreSite Realty Corporation COR and CorEnergy Infrastructure Trust, Inc. CORR, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last 30 days, Global Net Lease’s FFO per share for first-quarter 2017 remained unchanged at 60 cents.

In the last 30 days, CoreSite Realty’s FFO per share for first-quarter 2017 increased 0.9% to $1.06.

CorEnergy Infrastructure Trust’s first-quarter 2017 FFO per share estimates moved up 1.8% to $1.14, in the last 30 days.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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CoreSite Realty Corporation (COR): Free Stock Analysis Report
 
Extra Space Storage Inc (EXR): Free Stock Analysis Report
 
CorEnergy Infrastructure Trust, Inc. (CORR): Free Stock Analysis Report
 
Global Net Lease, Inc. (GNL): Free Stock Analysis Report
 
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