Operator: Joining us and welcome to the Extra Space Storage Inc. Q3 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Jared Conley, VP of Investor Relations. Jared, please go ahead.
Jared Conley: Thank you, Connor. Welcome to Extra Space Storage's Q3 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 estimates as of today, 28 October 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.
Jared Conley: I would now like to turn the call over to Joe Margolis, Chief Executive Officer.
Joe Margolis: 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.
Joe Margolis: 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.
Joe Margolis: 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.
Joe Margolis: 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.
Noah Springer: 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.
Noah Springer: 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.
Noah Springer: 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. I've walked a lot of stores along the way. The one thing has become very clear.
Noah Springer: 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 will 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.
Noah Springer: 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 does not mean doing more deals. It means having more choices.
Noah Springer: 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 do not need every one of these channels to be open at the same time. Every dollar competes, and the objective is not growth for growth's sake. It is 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.
Noah Springer: Now, I will turn it over to our CFO, Jeff Norman.
Jeff Norman: Thanks, Noah. We delivered Core FFO of $2.17 per share, a 4.3% increase year over year, which was ahead of our internal projections. The outperformance relative to our estimates was driven by same-store NOI, higher tenant insurance, and lower G&A expense. Focusing on operations, we continue to see the impact of moderating new supply, and we have capitalized on these improving fundamentals. In Q3 2025, only 12 of our top 30 markets experienced positive same-store revenue growth. In Q3 2026, that has improved to 27 out of 30 markets. In the quarter, same-store revenue grew 2.7%, accelerating 290 basis points from a year ago. Same-store expenses declined for the second quarter in a row and were down 1.8%. The savings were broad-based. Payroll was down 4.6%, marketing was down 6.8%, insurance was down 16.5%, and repairs and maintenance was down 20%.
Jeff Norman: We have focused on leveraging our scale and technology advantage to create efficiencies in our business, and those efficiencies are translating to financial results. While we have been very focused on operations, we have also continued to be active on the external growth front. During the quarter, we added 78 gross stores to our third-party management platform. We invested $64 million in acquisitions and developments. We originated $20 million in bridge loans, and in the last 12 months, we repurchased $491 million of our shares at an average price of $134.38, which we view as a strong use of capital in the current environment. We still have robust pipelines for each of these growth channels and will continue to be active in Q4.
Jeff Norman: We also continue to find strong redevelopment opportunities in our portfolio, and we expect to deliver close to $600 million in redevelopment projects by 2028 at projected average returns of over 9%. Turning to the balance sheet, we have satisfied all of our 2026 debt maturities, and we have no material maturities until July of 2027. We ended the quarter with net debt to EBITDA of 5.2x, with 89% of our debt at fixed rates after accounting for our variable rate receivables. We continue to create interest savings through the strategic use of our commercial paper program, and we have over $1.7 billion in capacity on our revolving lines of credit. This positions us to invest aggressively when we find accretive opportunities, most of which we expect to be through off-market transactions.
Jeff Norman: Due to our year-to-date outperformance and improved Q4 outlook, we are raising our full year Core FFO guidance for the second time in 2026, currently to $8.40 to $8.50 per share from $8.25 to $8.40 a share, an increase of 1.5% at the midpoint. We have also adjusted each of our same-store ranges. We have increased our same-store revenue growth 75 basis points, and we have decreased expense growth by 125 basis points, resulting in a 150 basis point increase in same store NOI, all at the midpoints. We have also increased our acquisitions guidance to $400 million from $300 million at our share. In summary, the storage sector as a whole is recovering, and Extra Space is leading that recovery.
Jeff Norman: We are generating the most traffic, which is allowing us to achieve the highest rates to new customers while maintaining the industry's highest occupancy, which is driving our accelerating financial results. With that, let's open the call up for questions.
Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Michael Goldsmith of UBS. Your line is now open. Please go ahead.
Michael Goldsmith: Good afternoon. Thanks a lot for taking my question, Joe, congratulations on an exceptional run. My first question is, can you just talk a little bit about how things trended through Q3 from an occupancy and rate perspective? Then if you could touch on how things have played out so far in October.
Jeff Norman: Sure, Michael. The trends through Q3 were really pretty stable. We saw flattish rate growth to new customers throughout the quarter, and we had a positive occupancy delta throughout the quarter. We have seen that same trend continue in October, and so we are optimistic about where we are heading in Q4. In Q3, that led to revenue above and beyond our budgets in the quarter, and so far we are seeing a similar trend in October.
Michael Goldsmith: Then maybe taking it to the upcoming quarter, the full year guidance implies that same-store revenue kind of hangs out around the same level as Q3 would, while same-store NOI decelerates. I recognize you have been conservative with setting expectations through the year, but just wanted to get a sense of your thought process on what is implied by the guidance. I know you have included some maybe draconian macro scenarios in your guidance, if that is still kind of in place. Thank you.
Jeff Norman: Michael, we couldn't say it any better. You hit all the right points. If you think of same-store revenue through the first three quarters, it's 2.3% positive year over year. That puts you pretty close to the midpoint of the range. The midpoint assumes flattish growth. At the upper end of the range, it would imply additional acceleration from where we ended the Q3. At the low end of the range, it would imply some decel. All of those options are on the table. That range includes the possibility of macro headwinds that could rear their heads, but so far we haven't seen those this year, which has led to some of the outperformance. From an expense standpoint, I think there's been opportunities. We've done very well with expense savings throughout the year.
Jeff Norman: We're always watching some of those large line items like property taxes, and a lot of those final numbers come in in the Q4, so we'll keep an eye on that. But so far, we're really encouraged with what we see and hope to continue to outperform our range as we have year to date, which has allowed us to raise twice.
Michael Goldsmith: Thanks for that. Good luck in the Q4.
Jeff Norman: Thanks, Michael.
Operator: The next question is from the line of Todd Thomas of KeyBanc Capital Markets. Your line is now open. Please go ahead.
Todd Thomas: Hi. Thanks. Good afternoon. Joe, I will echo those comments. Congrats, and best of luck. Joe or maybe Noah, if I compare your results with Public Storage, the strategies look quite different at the moment. PSA pushed move-in rents higher during Q3 but gave up some volume. You were higher on move-ins for almost 15 straight months up until July, and then you flipped to protect volume and occupancy. I am just curious, you are both large operators broadly targeting the same customer. Why is the output from revenue management systems so different today? Any thoughts?
Noah Springer: Yeah. Thanks, Todd. I do not think we want to look, and I am not sure what our competitors are doing, but I know what we are doing. I think the focus, again, as we have echoed so many times, is on we are driving for revenue and NOI. You are going to see us continue to use both of those levers of occupancy and rate, and we are going to move those back and forth. While you might see rate go up or down a tiny bit as you have seen in the past, that is moving every single property every single day up and down a little bit so that we can maximize our performance on the revenue side. What others do, that is up to them, but I know what Extra Space is doing is making sure that we focus on that top-line revenue number, and we will use both of those.
Todd Thomas: Okay. How should we think about the revenue benefit carrying the higher occupancy into the off-peak rental season in 2027? Does protecting occupancy today and the larger customer base, does that more than offset the lower starting move-in rate as you make your way into the new year?
Noah Springer: Yeah, there is a reason why we continue to maintain the highest occupancy in the industry. I think that is because we have a better mousetrap than anyone else out there. We can capture more than our fair share through all the marketing that we do, through the AI that we have recently seen come in that has been strong for us, and through everything we do in our operations. So we continue to hold that. I think we will continue to hold that high. But again, it is a lever that if we need to drop that and push on rate a little more, we will use that where we see it fit.
Jeff Norman: Todd, I will just add to that. One thing that I think we have done a really good job of in the last several years is learn to identify the most valuable customers. We have seen lengths of stay increase. We are nimble between different channels and how we price and promote within channels. And I think it shows in the results. That has led to the strongest revenue growth in the sector, and that is really the metric we are paying attention to.
Todd Thomas: All right. Thank you.
Noah Springer: Thanks, Todd.
Operator: The next question is from the line of Eric Luebchow of Wells Fargo. Your line is now open. Please go ahead.
Eric Luebchow: Great. Appreciate the question, and obviously, congrats to Joe on the transition, and Noah. Maybe real quick, you could touch a little bit on what is going on in Southern California. I know the rent restrictions in LA rolled off a few months ago. There are some new restrictions put in place as a result of the hurricanes. Maybe just kind of remind us how those are impacting your results, and what we could expect into Q4.
Jeff Norman: Thanks, Eric. Just for context for anybody listening, for much of 2025 as well as H1 2026, many of our properties in Los Angeles County were subject to pricing restrictions related to state of emergency orders that were in place, which led to exceptionally high occupancies in that market, but at suppressed rates. That was lifted effectively, call it 1 July, and we began to move those customers, both new and existing customers, up to market-level rates gradually in the portfolio. As we have done that over the last few months, we have worked through approximately half of the customers and gotten them up to what are rates more indicative of market conditions. As was indicated in the question, an additional state of emergency order has been recently put in place. So we will pause on those increases.
Jeff Norman: We will comply with that mandate, and we will continue to evaluate that for the rest of 2026 and into 2027 to see if it remains in place. As far as the impact of this second order being put into place, there is no material impact in 2026, given how late in the year we are. That is already factored into our 2026 guidance. We will continue to evaluate it to see if it has any impact in 2027 or if it is lifted soon enough that it does not continue to really factor in.
Eric Luebchow: Great. Thanks. Just one follow-up. Maybe you could just kind of touch on broadly capital allocation. You have obviously leaned a little more into the buyback recently versus acquisitions. Have you seen any change in seller expectations on cap rates given the recent move in interest rates and where are you kind of finding the best risk reward today? Thank you.
Noah Springer: Thanks, Eric. Good question. Obviously, we are looking across everything that we can do on the growth side, right? Between management, buybacks, loans, acquisitions, we look at every single one of these things, and no channel is mutually exclusive of the others. We look at all of them together in every single time, at every single opportunity. This last quarter and this year, we have done quite a few buybacks. That has been beneficial to us. We have continued to push on the management side. We are about 107 net properties so far this year. Loans, $165 million that we have closed so far this year with a $60 million pipeline going forward. We feel very strong on the growth side. As you indicated, rates have gone up tremendously in the last year and probably more than people anticipated.
Noah Springer: Because of that, I am sure there have been deals that have been more difficult to do for others. But I do not think that we can look and say on a monthly basis that people have moved cap rates relative to where they were previously. As we underwrite deals, we are not looking to say we are so tight in every deal that we underwrite is one that is a move in interest rate is going to stop us from doing that deal. We will look at those. We will continue to watch it and continue to look at interest rates as it comes up. But I have not seen anything right now that says things have changed dramatically.
Eric Luebchow: Great. Thank you both.
Noah Springer: Thanks, Eric.
Operator: The next question is from the line of Ravi Vaidya of Mizuho. Your line is now open. Please go ahead.
Ravi Vaidya: Hi there. Thanks for taking my question. Congrats to Joe for retiring, congrats to Noah for the new role here. I wanted to ask about ECRIs, especially when considering that length of stay is increasing. How are you tweaking ECRIs and how does that lever drive the acceleration here in same-store revenue?
Noah Springer: Ravi, thanks for the question. Really no change in ECRI, continues to be a growth lever. We want to make sure that it keeps going forward with our customers and that we are good to our customers on that. But there has not really been any modification in how we have done it, nor has there been any modification in how customers have received it.
Ravi Vaidya: Got it. That is helpful. Just one more here. Can you discuss any of the early implications that Muse might have had on customer acquisition or action? Has it impacted pricing, move-outs, or occupancy in any way?
Noah Springer: Yeah. There has been a lot of talk recently on Muse and other agents. It has actually been a fun thing to look at, see. It is an exciting thing. I am actually using it a lot in my personal life and kind of seeing what customers are looking at and using this and how they are using it. I will say a couple of things that are important on this. Our customers are sticky because we provide them a great service. The things that they put in their units are because they need them, and when they are done with the use of our product, they will move out. We want to make sure we attract the right customers, keep them for the length of stay that is long and appropriate to their needs. Then eventually when they move out, they are done with that product.
Noah Springer: There are a couple good things about storage that we need to remember. Number 1, we have physical and actual locations. Number 2, we have customers' goods and provide the service to them to protect those goods for the time that they are renting with us. When they are done, they move out. The difference of what happens with an agent, I think, is de minimis on the move-out side. I think on the finding side or when they rent with us for Extra Space, it could be a big advantage. The data that we have, the search engine optimization that we have and utilize is going to position us way better than almost everyone else out there because we have done this for so many years.
Noah Springer: We have found that AI and search engine optimization have a direct correlation, and the stronger we are with that, the stronger we will continue to be with AI. While some people look at this and say it could be a negative, I look at it and say it is a positive for Extra Space.
Ravi Vaidya: Got it. Thank you. Congrats on the quarter.
Noah Springer: Thanks.
Operator: Thanks, Ravi. The next question is from Linda Tsai of Truist Securities. Your line is open. Please go ahead.
Linda Tsai: Hi, good afternoon. When you think about the recovery, is it underlying customer demand taking hold, or does the recovery primarily reflect lower supply and market share gains?
Jeff Norman: Thanks. Good question, Linda. I think it is more the latter. I would describe demand over the last few years as just steady. We haven't seen it really get worse, but we haven't seen a significant improvement either. I think most of the fundamental recovery that we are experiencing as a sector is due to the moderation and the absorption of new supply. Our reason for that is we look across our own portfolio and see what were the markets that recovered most quickly and had the quickest and most pronounced revenue acceleration. It was those markets that either didn't have a lot of new supply ever or that had it earlier in the cycle. As we look at some of our markets that are still at the bottom of our performance level, they are the ones still navigating new supply.
Jeff Norman: It really seems to be more of a supply moderation story than a demand recovery story. I think the positive for all of us in the sector
Jeff Norman: is that when and if we see more of a demand recovery, that is just an additional tailwind. We have been able to accelerate revenue growth absent any improvement in demand.
Linda Tsai: Appreciate that context. On expenses with repairs down 20%, insurance down 17%, and payroll down 5%, which savings are structural versus timing or favorable comparisons?
Jeff Norman: Great question, Linda. R&M, I would describe as one line item where we had a higher run rate in 2024 and 2025 as we were doing a lot of Life Storage related cleanup and investing some extra capital into those properties. We are done with that. We finished that last year, and now as we lap that easier comp, you see the significant savings of 20%. What I will tell you is that run rate is sustainable. This is the new run rate. We do not expect it necessarily to pop back up, but we do not expect it to decline another 20% either. You mentioned insurance. We had a mid-year renewal approximately. This is the first full quarter where we see the full benefit of that renewal, and that will last well into 2027 because we will not renew until June of 2027.
Jeff Norman: And then if you look at other savings across the board, all of these are structural. This is really us leveraging our scale, implementing additional technology, and trying to find ways to be efficient across the board. I think that is something we can continue to do. I do not necessarily predict that it will remain at -1.8%, but we think we can control those expenses really well.
Linda Tsai: Thank you, and best of luck.
Jeff Norman: Thank you.
Noah Springer: Thank you.
Operator: The next question is from the line of Brad Heffern of RBC. Your line is open. Please go ahead.
Brad Heffern: Yeah. Hey, everybody. Thanks. Just big picture, it sort of feels like an inflection or at least a change in storage this quarter between your results and PSA's. At the same time, we've sort of seen false starts in storage before. I am wondering how you think we should perceive the results this quarter. Is there something that's changed that's fundamentally improved the business, or is this just sort of quarter-to-quarter variability as part of a broader gradual recovery?
Noah Springer: Yeah. I think as you look at this throughout the year, we've continued to get better and better, and that trajectory continues to be very solid for us. Us versus others, I am not going to comment on, but us versus us, we continue to be very strong. Again, as Jeff pointed out earlier, our demand continues to be steady, vacates continue to be low. The existing customer continues to be very strong. Bad debt continues to be historically low. We're continuing to push forward, and with supply continuing to go down, we have some wind at our back, and it's been very strong for us, and I think it'll continue to be that way.
Jeff Norman: Brad, I think it's been that way for a while. I really don't think this is a Q3 event. As Noah had mentioned in his opening remarks, this is five quarters in a row that we've seen revenue accelerate. It is in line with this slow and steady recovery that I think we expected given the moderation of new supply and our ability to be the first movers to benefit from those improving fundamentals. I think we look at this as a recovering sector and Extra Space in front of that recovery.
Brad Heffern: Okay, great. Appreciate that color. For my follow-up, Life Storage obviously is not separately disclosed anymore, but I am wondering if you can just give an update now that you have had a couple of years with those stores and if they have generally moved in line with the legacy portfolio in terms of performance.
Jeff Norman: Thanks, Brad. Yes. We continue to see strong performance from the Life Storage properties. They had reached parity from an occupancy perspective at like-for-like locations all the way back in 2024, and we have continued to bring rates up to parity since that time. That, for the most part, took place in 2025. We still have some unit mix optimization opportunities at those properties, which have given them a little bit of additional growth above and beyond what we are seeing in the portfolio as a whole. I think a good way to look at it is if you look at our various vintages of same-store pool, you can see the contribution. While there is a positive benefit between our 2026 and our 2025 pool, it is only 20 basis points.
Jeff Norman: This is not just a Life Storage property change in pool benefit, but really sustained acceleration and improvement across the whole portfolio.
Noah Springer: Hey, Brad, let me bring something else up on Life Storage. One of the main thesis for buying that portfolio was because of where the properties were located, which was outweighed in the Sun Belt markets. As Jeff said initially, that was probably more of a headwind. Now coming out of that with supply waning in those areas, that will be and continues to be a tailwind for us with those Life Storage properties.
Brad Heffern: Okay. Appreciate it.
Noah Springer: Thanks, Brad.
Operator: The next question is from the line of Spencer Glimcher of Green Street. Your line is now open. Please go ahead.
Spencer Glimcher: Thank you. Maybe just going back to the transaction market for a second. Can you just talk about what types of deals you are seeing in the market today, just in terms of the mix between stabilized versus potentially any deals that are still in lease-up? Have you guys started to see anything retrade in the market yet?
Noah Springer: So let me take that in kind of two different chunks, Spencer. Upfront, obviously, the deals that are not there are development deals. Those have kind of gone away. There are not many C of O opportunities out there. I would say the things that are popping up are people that need or have to sell because of some situation. Those are typically deals that are in a family or in a spot with a partner that needs to change out. So we are taking advantage of those because we have such a strong pipeline between joint ventures and third-party management. So I would say that is the majority that we are seeing out there. Then on the other side of the equation that you were thinking about with the deals.
Jeff Norman: We have not seen a lot of retrading, Spencer. That might be just that it is too early to tell. Some of these real estate transactions have longer tails. So it may be that we see some of that shakeout with the change in interest rates, but I would say we have not necessarily seen much of it yet, and it may just be a matter of time. So we will keep watching that. Going back to Noah's point about the different types of deals we see out there. One of the things that is great about our structure is regards to the situation of the owner that is contemplating selling. We can offer potentially different solutions. We can acquire that property outright. If maybe they are in a position where they need more time, we can offer a bridge loan.
Jeff Norman: Usually it starts with a partnership and a discussion about what do you need and what are your goals, and how can we help participate in that. We are in this for the long game, and we are happy to be patient and work with partners in any way that we can, which includes prospective sellers.
Noah Springer: Spencer, there is a lot of talk out there about retrades and will that happen, and a lot of our deals are coming from those pipelines with relationships we have had for a long time. I want to make sure that those people know and understand that when Extra Space says we are going to buy a property, we are going to buy a property, and we are going to close, and we are going to do what we said we are going to do. On our side, while there might be repricing on deals going forward, things that we have looked at and things that we have that we have already committed to sellers on, we are going to make sure we take care of those.
Spencer Glimcher: Okay, great. Thanks for all of that color. Sorry if I missed it, but are you guys able to share the going-in cap rate on the acquisitions made during the quarter? Just for context, given this discussion around potentially changing bid-ask spreads and such, how long ago were those negotiated in terms of pricing?
Noah Springer: These deals have been worked on some time, and I would not say there is anything that we have looked at over the last 30 or 60 days and made major modifications based on that, Spencer. I would think for most of the deals that we look at, I would say right now, going in, they are probably in the mid-fives and stabilizing in the mid-sixes.
Spencer Glimcher: Okay. Thank you very much.
Operator: The next question is from the line of Juan Sanabria of BMO Capital Markets. Your line is open. Please go ahead.
Juan Sanabria: Hi, Joe. Congratulations. Great run, obviously. I just wanted to follow up on the question at the top of the call with regards to the implied same-store revenue guidance for Q4. The kind of five straight quarters of it improving or accelerating growth. Does Q4 at the midpoint assume a change in the business that maybe it is impacted by tough comps, or is it just some level of conservatism which you talked about last quarter?
Jeff Norman: Thanks, Juan. We do lap more difficult comps in Q4. That is on the table. That is included in our thinking process. But as I had mentioned, there still is an opportunity within the range to have continued acceleration if you are looking at the top end. The full range is always in play. We always want to make sure we are giving room to consider some of the macro factors that we see out there. But much like we have seen throughout the year, the customer health, customer behavior has continued to be very consistent. A lot of those concerns and macro risks that we have been factoring in have not come to fruition. To the extent that continues, I think we are well positioned to perform well within the range, and there is always the opportunity to exceed the range.
Juan Sanabria: Thanks. With regards to redevelopment, you mentioned, I think, $600 million by 2028. Just hoping you could expand a little bit on that in terms of how that builds over time and what types of opportunities are we thinking about there. Is it unit mix or is it land that has been underutilized and the kind of identification opportunity? Is it mainly with the Life Storage portfolio? If you could just add a little bit more color, that would be helpful.
Noah Springer: Yeah. Thanks, Juan. It is more of the latter, like you said. There is a lot of opportunities in our portfolio. A lot of that is coming from the Life Storage properties that we have. As you look at that right now, in 2026, we have about $112 million. That goes up to around $140 million and then pushes in 2028 to about $330 million. Those deals are a mix of different things. It could be acquisitions that we purchase that have an opportunity there. It could also be anything from the Life Storage portfolio or an existing portfolio that we have had in the Extra Space side where rates, occupancy, and returns have increased to a point, or maybe supply has decreased to a point that now those opportunities provide or are proved to be more viable for us.
Noah Springer: And we can layer those in and move forward. I think we will continue to push on those and harvest that. They are great returns for us in the mid-9s. We are happy to have those and happy to find those when we can come across them.
Juan Sanabria: Thank you.
Operator: The next question is from the line of Michael Griffin of Evercore ISI. Your line is open. Please go ahead.
Michael Griffin: Great. Thanks. Congrats all around to Joe and Noah. Maybe to ask the demand question another way, do you think storage fundamentals and top-line growth can get back to that long-term inflationary plus growth model absent a recovery in the housing market? Maybe to cut it a different way, if there is a long-term impairment in terms of a traditional cohort of storage users that is not back in the market, does that imply a different pricing and top-line growth paradigm, or do you think we can get back to what everybody knew and loves as it related to top-line growth in the storage space?
Noah Springer: I think we eventually get back to what everybody knew and loves. We love the storage space, Griff. One of the things that I have to point to on this is it is a little bit of a tale of two cities, and you can see this pretty quickly as you explore in the supplementals, kind of see where we are from the Sun Belt and then look kind of more through the Midwest. If you take Phoenix all the way across the South to the Carolinas, that is where the supply has hurt the most and the most supply added. When you look anywhere from DC north to Boston, and then especially throughout the Midwest, it has been very, very strong on revenue growth. Those housing markets are not any different.
Noah Springer: One could say that throughout the Southeast, the housing market is even stronger, with more moving and more population coming in. So I would say it continues to be on the supply side, and that continues to go down, and those areas continue to improve as that diminishes. From a moving customer, I wanted to just think back a few years. We attributed about 63% of our customers to moving a handful of years ago. Now we are at about 55% that we attribute to moving customers. That has held for some time. In fact, multiple years that we have been about 55% of our customers continue to be moving customers. So I think we have taken that initial hit, and I do not think that there is much more that is going to happen there that we need to be worried about.
Noah Springer: In fact, when and if interest rates do come down, we are not planning on that, we are not budgeting on that, but when that happens and people start moving more home to home, we will see that increase, and that will be a tailwind for us. But right now, we will continue to say it is supply because it is.
Michael Griffin: Great. That is super helpful, Noah. Maybe just one more for you. As you look ahead to your opportunity with the top job, you have worn many hats in your time at Extra Space. Are there any sort of key priorities that you feel you really want to focus on right out of the gate? Is it investment in the stores, the customer service aspect, technology? What are your priorities really as you step into this new role?
Noah Springer: Yeah. Thanks, Griff. I want to thank Joe. I mean, we are on a great trajectory, and I follow a few CEOs that have done a great job, and Joe is one of those, and I have been there with him pretty much every day for 12 years. I have been at this company for 20 years, so my fingerprints are on a lot of the strategy and the things that we have done for some time. So I am not going to sit back and say, "Hey, I am going to bring some magic trick that is special that I have not thought of in the last little bit, and then we are going to start using that on 1 January." As I said in the opening remarks, some of the things that we are going to focus on, continue to focus on property level NOI. It is number one.
Noah Springer: That is the biggest lever. The stores matter. We will continue to focus on growth. Almost my entire time at Extra Space, I focused on growth, whether that is acquisitions, joint ventures, bridge loans, third-party management. Those are kind of babies to me, and we will continue to push on those. Extra Space, for its entire existence, has been a tech leader and has been an innovator. We will continue to push on that. AI is a new opportunity for us, and that I think we can see on the customer side, and we will see it in a lot of efficiencies on the operating side. I think one of the biggest things that we need to make sure that we remember and keep, is to retain the best team in the industry, and keep our culture at Extra Space.
Noah Springer: That is the thing that keeps people here, and keeps people wanting to work and keeps driving this company. Between all of those, Griff, there is nothing that you are going to see on 1 January that we say, "Oh my gosh, this is a huge difference now that Noah is at the helm." That said, the industry, this company, other things will change and modify. When those things come up, then we will take advantage of it the way we always have done. But there is nothing now to say the ship changes its direction because it is on a great trajectory.
Michael Griffin: Great. Thanks so much.
Noah Springer: Thanks, Griff.
Operator: Thanks, Griff. Next question is from the line of Nick Joseph of Citi. Your line is open. Please go ahead.
[Analyst] (Citi): Hey, it's Eric here with Nick. If I look at your move-in rate growth since Q4 of last year, it's been decelerating against tougher comps, but your same-store revenue has accelerated over that same timeframe. I'm just curious, what's the reason why that relationship has broken down? I know it takes some time to work its way through, but I would've thought you'd see that impact a bit more this quarter, especially with occupancy stable. Just curious why it's not as good a predictor of where same-store revenue growth is going.
Jeff Norman: Thanks, Eric. Noah mentioned it earlier in the Q&A, but as we've always said, we always look at revenue holistically. So it is all of the levers. I think perhaps the pendulum swung too far in terms of, I think we were the ones pointing out new customer rate as a promising forward-looking green shoot back when we weren't seeing revenue growth, and as a good leading indicator of that we were getting more traction and the fundamentals were improving, and that we were seeing some of that positive pricing movement. But I think people have kind of run with that maybe a little too far, thinking it's the only lever or the only indicator. That's clear in the results to your point. Maybe to give the opposite.
Jeff Norman: If we think of performance in 2024 and 2025 for a sector, really even going back to 2023 as a sector, you had almost 3 consecutive years of negative new customer rate growth or decreases. Yet revenue never was nearly as negative, and in most cases, in our case, stayed basically flat for 3 years despite negative new customer rate growth. It is not the only lever. We are using all of the levers. As we mentioned before, hopefully everyone is seeing that in the results that the goal is revenue growth, and we have different ways to generate it.
[Analyst] (Citi): That is helpful. I guess along those same lines, it looks like you are guiding to around 3% same-store revenue growth in Q4 at the high end of guidance. You mentioned that October was running ahead. I think that is what you said. If you continue to see these October-like trends, would that be enough to hit the high end, or do you think you need to see the fundamentals improve even more than that?
Jeff Norman: Thanks, Eric. We will keep you in suspense a little bit without saying too much. We are excited about what we are seeing. I do not think we can emphasize enough how happy we are with customer behavior and customer performance. It has been really durable despite everything that you hear and read in the headlines. The customers continue to perform well. Our customer acquisition platform is, we are convinced, capturing a disproportionate share of demand that is in the market, which has still given us strong pricing at the highest occupancy levels in the industry. Everything is really working well, and we will keep trying to do that so we can keep growing revenue.
[Analyst] (Citi): Good. Thank you.
Jeff Norman: Thank you.
Operator: Next question is from the line of Brendan Lynch at Barclays. Your line is now open. Please go ahead.
[Analyst] (Barclays): Hi. Thank you for taking the question. This is Annabel on for Brendan. Is there anything you can give us to kind of quantify or frame the magnitude of a potential benefit from less new supply in 2027?
Jeff Norman: I wish, Annabel, we could give you a real direct one-to-one relationship. We certainly see this roll out not only at different times in different markets, but even within properties or even unit types within properties. While we can always see that general trend that as absorption takes place, the fundamentals improve and we get more pricing power, we get more rental volume, more occupancy upside. It is tough to quantify that at the portfolio level and, for example, say if X square feet or X million square feet are absorbed, the output is Y in terms of revenue acceleration. We are confident in the trend. We have seen it rolling out over the last couple of years, but I could not give you a specific one-to-one correlation there.
Noah Springer: I was excited there. I thought Jeff was going to give 2027 guidance before we have even finished our budgets. Glad we are. Great answer, Jeff.
[Analyst] (Barclays): Okay. Thank you. Can you discuss demand for your third-party management platform? I think attrition was a little bit elevated this quarter.
Noah Springer: Yeah. Demand continues to be very strong. It is obviously the largest one in the industry. Again, something that is close to me that I have worked on. In fact, I kind of started the program many years ago and continues to be very strong. Net, this year we have done 107 properties that we have added. There was one portfolio that was about 59 properties that sold. That sale, that is a big chunk to get over. We will be back positive in Q4. There is, I would say, a kind of blip with something that happens on one of those things where people continue to add stores, 78 added this quarter, and we will continue to be very strong in that. In fact, I think the last time that we had a negative quarterly number was in Q4 of 2017. So almost 10 years of every single quarter adding to that.
Noah Springer: Every year it has been positive. While you have a little bit of ups and downs sometimes, overall that business is very strong.
[Analyst] (Barclays): Great. Thank you.
Operator: Next question is from the line of Viktor Fediv of Scotiabank. Your line is open. Please go ahead.
Viktor Fediv: Thank you. Earlier today you mentioned that AI is becoming a meaningful source of traffic. Are you seeing any differences in how these AI-sourced customers behave after moving, including length of stay, sensitivity to ECRIs, or overall customer value?
Noah Springer: Yeah. Still a pretty small percent of our customers, so I do not know that we have great data on that yet. The thing that we do know is the correlation between the search engine optimization and the AI sources. That is definitely pulled. I think we will continue to be a leader in that, and as the tides change a little bit where we could get customers from, we will really lead that charge. But right now, I think it is really premature and too small of a number to be able to say what we are exactly looking at.
Viktor Fediv: Got it. Then as a follow-up on your bridge lending platform. In September, you mentioned that semi-stabilized properties owners are becoming a bigger chunk of your customers on that front. Are you seeing more leads on that side of things as a partial offset to slower development activity? If you think about 2027 and your new origination activity, how do you think about that versus this year?
Noah Springer: Yeah. Thanks, Viktor. We definitely have seen a shift in the types of requests that we have been getting over the last year or so with fewer and fewer newly developed properties. We see fewer situations where we are lending on a recently completed property that is a full lease-up. We are seeing more activity in the semi-stabilized property types, where they may have pretty good occupancy, but still need to stabilize their rates and want a little more time. That is true both in terms of new origination, getting those types of opportunities, as well as we are seeing a lot of our borrowers exercise their extension options at maturity or as they are approaching maturity, where the properties are debt servicing, but they still feel like there is room to grow.
Noah Springer: Rather than going and terming out with a CMBS loan or selling their property, they would rather exercise their option for another year or 2 of our bridge loan, so that they can fully stabilize the property. So that is a pretty common occurrence in what we are seeing today, and we are seeing a lot of those maturities stay in the portfolio because they are choosing to extend.
Viktor Fediv: Thank you.
Noah Springer: Thanks, Viktor.
Operator: The next question is from the line of Michael Mueller of JPMorgan. Your line is now open. Please go ahead.
Michael Mueller: Thanks. Joe, we would also like to pass on our congrats and best wishes as well. EXR has historically participated in ground-up development using the C of O acquisitions. When development comes back in more full force, whenever that is, would anything cause the strategy for this to change on a go-forward basis, maybe where you are doing it on balance sheet?
Noah Springer: Well, we will look at all of those options. Extra Space historically has been a public developer. While we pulled that in recent years and we are focusing in different areas, that does not mean we could not and should not get back into it. We will look at that and see what the opportunities are, what the ability is for us to do that, and see where we want to allocate the capital. If that is the best area to do it, then we will go forward. Nothing we are worried about or scared of. It is more about where we can find the best opportunities.
Michael Mueller: Got it. Okay. That was it. Thank you.
Noah Springer: Thank you.
Noah Springer: Thanks, Mike.
Operator: The next question is from the line of Caitlin Burrows of Goldman Sachs. Your line is open. Please go ahead.
Caitlin Burrows: Hi, everyone. Just a couple of follow-ups. Maybe first on the acquisition volume side, given volatile interest rates, I guess it is somewhat surprising that you increased your full-year guidance volume. Just wondering if you can talk about that, the types of deals that you are looking at, and is it just the reason why those sellers are transacting that you are still finding those deals? How that volume is progressing.
Noah Springer: Yeah. Thank you, Caitlin. I do not think it is super surprising. I think you might see those deals fall out with broker deals or areas where people say they were looking to sell and now not. But the relationships that we have are strong and deep. What we have been able to do through those relationships has been the majority of our deals this year, and I think will probably continue to be. So those are deals that we have been working on for some time. It is nothing that is a quick change. Those quick change deals where someone just decides they are going to sell, while those might fall out, the deals and the properties and the families or the owners that have decided that is their strategy and they are moving on that strategy, then I think they will continue to move forward.
Caitlin Burrows: Got it. Okay. Then just a quick one on the buyback program, I guess, given the amount that you used in Q3 and then exhausted it after the quarter end. Curious why you reestablished it for the same $500 million again, versus perhaps something larger.
Noah Springer: Yeah. That is a board decision, and the $500 million has been something we have had for some time. It is quick and easy to get a hold of board. They work with us well. We are supported by them. They do a great job for us. Not something that is too difficult to put back in place if we need to. So it is an appropriate number. I guess we could look at it and make a change if we needed to. It is a board decision, but right now I think it is fair and working for us.
Caitlin Burrows: Thanks.
Noah Springer: Thank you, Caitlin.
Operator: The next question is from the line of Ronald Kamdem of Morgan Stanley. Your line is open. Please go ahead.
Ronald Kamdem: Hey, great. Just two quick ones. I want to go back to customer acquisitions. I think we touched on some of the different channels that customers are coming to EXR, and you all have always been willing to meet the customer wherever. I am curious if you could just remind us, how customers are coming and importantly, as AI proliferates, how do you anticipate that shifting and how do you prepare for it? Thanks.
Jeff Norman: Yeah. Thanks, Ron. We have started to see some shift and some changes in terms of how customers approach us. The one that is probably most noteworthy that I can point out is that customers seem better educated by the time they land on our website. I think with these AI models, some of the FAQ type answers have already been resolved. They have already done their research, and by the time they get to our website, they are ready to transact. So we have seen really strong shopping behaviors from customers once they arrive on our website. So that is just one anecdotal example of a trend that we have seen. I think we will continue to see that evolve over time as more and more people are using the variety of models that exist out there.
Jeff Norman: As Noah mentioned earlier in the call, we are hyper-focused on and have found a lot of success in making sure that we are still highly visible in those additional channels that are being created and evolving.
Noah Springer: Ron, another thing I would like to bring up, it is important that we are not making decisions for the customer, but that we are showing up where the customer wants to transact. I look at it and say, "No customer left behind." Whether that is walking into a store, whether that is them renting on their phone at the call center, at a kiosk, wherever that may be. I want to make sure that when a customer wants to rent with us, we are visible, we are there, we have an appropriate price, and we are there to take care of them. So it is not a matter of pushing the customer, it is being there to accept the customer.
Ronald Kamdem: Great. That is helpful. I do want to go back to the expense discussion, just because the same store guide is 25 basis points for this year. I think historically we have talked about property taxes maybe 4% to 5% every year. I am curious when you think about the other expense line items, which ones is there opportunity to grow slower than inflation, and which one is there opportunity to actually have negative growth, year over year. I am trying to understand your comments there. Thanks.
Jeff Norman: You bet, Ron. In terms of the controllable expense line items, as we continue to increase our scale and implement more and more technology, as we focus on asset efficiency within the portfolio, as you think of utilities, use of solar, some of these other things we have done for a long time. We have the ability to, I think, outperform the market from an expense standpoint as a whole. You brought up the big line item, property taxes. There is always going to be pressure from a property tax standpoint. Our job is to mitigate that the best way that we can through appeals. We have found some success doing that, and we will continue to do so. But that one is, as you can imagine, a little less within our control. We will remain hyper-focused on keeping that in check, as well as tackling all of these controllable line items.
Jeff Norman: And I think 2026 is a good example of leveraging those efficiencies, we will look to do more of the same going forward.
Ronald Kamdem: Great. Thanks so much.
Jeff Norman: Thanks, Ron.
Operator: The next question is from the line of Omotayo Okusanya of Deutsche Bank. Your line is now open. Please go ahead.
Omotayo Okusanya: Yes. Good afternoon, everyone. Joe, all the best to you as well. It's definitely been a pleasure. My question is around the move-in rates for the quarter. I guess when I compare your move-in rates versus PSA, this is probably one of the first quarters I've seen such a huge, big difference between the two numbers. I'm just curious if there's any insight there in regards to why such a big performance difference between the two portfolios, and also how you guys are thinking about where move-in rates could go into Q4 and into 2027.
Jeff Norman: Yeah. Tayo, certainly I'm not qualified to comment on what is driving changes in any of our competitors' numbers or what their strategic decisions are. But a few things that may bring some clarity. Our same store disclosure related to new customer rates excludes Los Angeles, which is intentional because we know this is a stat people are looking for as kind of a barometer of new customer rate health. So we've tried to give an apples to apples comparison. We could certainly inflate that number pretty easily if we wanted to include our LA stores, but feel like this is a more genuine disclosure of what we're seeing across the board for customers. I think the other thing that we've tried to emphasize throughout the call, and we'll continue to do so, is we really are focused on revenue holistically.
Jeff Norman: We're not worried about a specific lever. I think you'll see some quarters where that shows up more in the form of new customer rate. In other quarters, it might show up in occupancy, in others, it might be existing customer rate. We're using all of those levers the best way we can to maximize revenue as a whole. Another thing that I think is noteworthy is we enjoy about a 400 basis point occupancy gap over Public Storage. So that one lever in isolation's missing a big piece of the puzzle if that's all you're looking at.
Omotayo Okusanya: Thank you.
Operator: The next question is from the line of Ronald Kamdem of Morgan Stanley. Your line is open. Go ahead.
Ronald Kamdem: Great. Just wanted to say congrats to Joe. I know I can't remember if I said it. Thanks so much.
Joe Margolis: Best question we've had all day.
Joe Margolis: Thanks, Ron.
Operator: There are no further questions at this time. I will now turn the call back to Joe Margolis, CEO, for closing remarks.
Joe Margolis: Thank you. Thank you everyone for your interest in Extra Space, and thank you also for your kind comments during the call. Our interactions over the last 10 years on these calls and in various meetings have really helped me think about the company and the issues and opportunities that we faced. I believe our discussions have helped make me a better CEO and helped make Extra Space a better company. I have enjoyed and appreciated working with all of you, and I want to thank you for that. As I close out my final earnings call, I leave with full confidence in the future of Extra Space. Our recent performance demonstrates the strength of this platform and team. Same-store results are accelerating, Core FFO per share is growing, and the operating environment is improving. We have tremendous momentum heading into the next chapter.
Joe Margolis: I have complete confidence in Noah, our leadership team, and our people to build on that momentum. We have the platform, the capabilities, and the culture to continue doing what Extra Space has done for a long time: lead the industry, innovate, outperform, and create long-term value for our shareholders. I am incredibly proud of what we have accomplished together and even more excited about where Noah and the team will take this company from here. Thank you.
Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: This event has now concluded. Access the Extra Space Storage Inc. IR website for more information. This line will now disconnect.
