Extra Space Storage (EXR) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• VP of Investor Relations - Jared Conley
• Chief Executive Officer - Joseph Margolis
• President - Noah Springer
• Chief Financial Officer - Jeff Norman

TAKEAWAYS

• Net Income -- $247.8 million or $1.17 per diluted share, representing a 50.0% increase compared to the third quarter of 2025.
• Core FFO -- $2.17 per diluted share, an increase of 4.3% year over year driven by same-store net operating income (NOI) outperformance.
• Same-Store Revenue Growth -- 2.7% for the quarter, marking the fifth consecutive quarter of sequential improvement.
• Same-Store NOI -- increasing 4.6% as revenue growth combined with a decrease in operating expenses.
• Same-Store Occupancy -- 94.0% at quarter end, representing a 30 basis point increase versus the prior year.
• Operating Expenses -- declining 1.8% for the quarter, reflecting structural efficiencies and the use of technology.
• Payroll and Marketing -- falling 4.6% and 6.8%, respectively, due to the implementation of operational efficiencies.
• Repairs and Insurance -- decreasing 20.0% and 16.5%, respectively, as the company moved past Life Storage-related property cleanup costs.
• Core FFO Guidance -- raised to a range of $8.40 to $8.50 per share, representing a 1.5% increase at the midpoint from previous projections.
• Market Performance -- improving with 27 out of the top 30 markets experiencing positive same-store revenue growth, compared to 12 markets a year ago.
• Share Repurchases -- totaling $327.1 million during the third quarter at an average price of $136.85 per share.
• Third-Party Management -- adding 78 gross stores in the quarter, bringing the total managed portfolio to 2,371 stores.
• Bridge Loan Originations -- totaling $19.5 million in the third quarter, with the program's outstanding balance reaching $1.4 billion.
• Acquisition Guidance -- increased to $400 million for the full year, up from the previous estimate of $300 million.
• Redevelopment Pipeline -- projected to deliver $600 million in projects by 2028 with expected average returns exceeding 9%.
• Net Debt-to-EBITDA -- 5.2x at quarter end, with 89% of debt at fixed rates after accounting for variable rate receivables.
• Property Taxes -- increasing 4.9% during the quarter, which remained the largest area of expense pressure.
• Senior Notes Issuance -- totaling $550 million aggregate principal amount of 4.90% unsecured senior notes due 2032.
• Non-cash Interest Expense -- $9.7 million for the quarter, relating to the amortization of discounts on unsecured senior notes.

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RISKS

• Norman stated, "an additional state of emergency order has been recently put in place... we'll pause on those increases," referring to new pricing restrictions in Los Angeles County.

SUMMARY

Extra Space Storage Inc. (NYSE:EXR) reported a significant increase in net income and raised its full-year guidance for the second time in 2026. Management reported that the self-storage sector is in a recovery phase, supported by five consecutive quarters of sequential improvement in same-store revenue. The company stated it is prioritizing property-level net operating income through technology-driven efficiencies and data analytics while maintaining sector-leading occupancy levels. Strategic focus remains on the company's integrated platform, which combines third-party management, joint ventures, and bridge lending to generate off-market acquisition opportunities and drive per-share value growth.

• On the call, management announced that Noah Springer will succeed Joseph Margolis as Chief Executive Officer effective Jan. 1, 2027.
• CFO Norman noted that the company had transitioned approximately half of its Los Angeles County customers to market rates before a new state of emergency order limited further increases.
• President Springer indicated that AI and search engine optimization are driving higher quality traffic, stating, "our customer acquisition platform is we're convinced capturing a disproportionate share of demand that's in the market."
• CFO Norman attributed the current fundamental recovery to the moderation of new supply absorption rather than an increase in consumer demand.
• Management reported that a significant portion of the $600 million redevelopment pipeline is focused on densifying sites within the Life Storage portfolio acquired in 2023.
• Springer noted that moving-related customers now account for approximately 55% of the tenant base, a figure that has stabilized despite housing market volatility.

INDUSTRY GLOSSARY

• Existing Customer Rent Increase (ECRI): A revenue management strategy that adjusts rental rates for tenants currently occupying units.
• Certificate of Occupancy (C of O): A document certifying that a newly developed building is ready for use and occupancy.
• Secured Overnight Financing Rate (SOFR): A benchmark interest rate for dollar-denominated loans and derivatives based on transactions in the Treasury repurchase market.
• Funds From Operations (FFO): An industry-standard measure of REIT operating performance that excludes real estate depreciation and gains or losses from property sales.
• Net Operating Income (NOI): Total property revenue minus property operating expenses, used to measure organic portfolio performance.
• Bridge Loan: Short-term financing provided to property owners, often used during the lease-up or stabilization phase of a development.
• Same-Store: A pool of properties owned and operated for a consistent period to allow for comparable analysis of organic growth.
• Redevelopment: The process of expanding or upgrading existing properties to increase rentable square footage or optimize unit mix.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Extra Space Storage, Inc. Q3 2026 Earnings Conference Call. [Operator Instructions] 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 Third Quarter 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, October 28, 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. I would now like to turn the call over to Joe Margolis, Chief Executive Officer.

Joseph 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 3x 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. 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. 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. And 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 I'm 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. 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. Now this transition doesn't call for a new direction. It calls for taking an exceptional company and making it better. So 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. 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. And with 3 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. Our executive team averages 19 years at Extra Space. To my knowledge, the longest tenured leadership team in the sector. And 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 1 of our 25 divisional vice presidents and nearly all of our 244 district managers, and I've walked a lot of stores along the way. The one thing has become very clear. Our biggest lever is within the portfolio we already own. Driving property level NOI is our #1 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 we'll 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. 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 long-time 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 opportunity is to begin with a phone call from someone you've known for 15 years. We've earned the right to receive those calls, and we intend to use them. Now a deeper pipeline doesn't mean doing more deals. It means having more choices. The best use of our capital may be an acquisition, a loan, an expansion and investment alongside a partner or buying back our own stock. We don't need every one of these channels to be open at the same time. Every dollar competes and the objective isn't growth for growth's sake, it's growth in FFO per share. I've 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. Now I'll 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 the third quarter of 2025, only 12 of our top 30 markets experienced positive same-store revenue growth. In the third quarter of 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%. 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 the fourth quarter. 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. Due to our year-to-date outperformance and improved fourth quarter 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 midpoint. 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. 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: [Operator Instructions] Your first question is from the line of Michael Goldsmith of UBS.

Michael Goldsmith: Joe, congratulations on an exceptional run. My first question is, can you just talk a little bit about how things trended through the third quarter from an occupancy and rate perspective? And then if you could touch on how things have played out so far in the month of October.

Jeff Norman: Sure, Michael. The trends through the third quarter were really pretty stable. We saw flattish revenue -- excuse me, rate growth to new customers throughout the quarter, and we had a positive occupancy delta throughout the quarter. We've seen that same trend continue in October. And so we're optimistic about where we're heading in the fourth quarter. And in the third quarter, that led to revenue above and beyond our budgets in the quarter. And so far, we're seeing a similar trend in October.

Michael Goldsmith: And 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 the third quarter would while same-store NOI decelerate. I recognize you've been conservative with setting expectations through the year, but just wanted to get a sense of your thought process on what's implied by the guidance and just the -- I know you've included some maybe draconian macro scenarios in your guidance if that's still kind of in place.

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 3 quarters, it's 2.3% positive year-over-year. That puts you pretty close to the midpoint of the range. So at the midpoint, it assumes flattish growth. At the upper end of the range, it would imply additional acceleration from where we ended the third quarter. And at the low end of the range, it would imply some decel. So all those options are on the table. It does -- 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.

And from an expense standpoint, I think there's been opportunities. We've done very well with expense savings throughout the year. We're always watching some of those large line items like property taxes and a lot of those final numbers come in, in the fourth quarter. 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.

Operator: The next question is from the line of Todd Thomas of KeyBanc Capital Markets.

Todd Thomas: And Joe, I'll 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 the third quarter, 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'm just curious, you're both large operators broadly targeting the same customer. Why is the output from revenue management systems so different today? Any thoughts?

Noah Springer: Thanks, Todd. So I don't think we want to look in -- I'm not sure what our competitors are doing, but I know what we're doing. And I think the focus, again, as we've echoed so many times is on we're driving for revenue and NOI. And you're going to see us continue to use both of those levers of occupancy and rate, and we're going to move those back and forth. And while you might see rate go up or down a tiny bit as you've seen in the past, that's 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's 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'll use both of those.

Todd Thomas: Okay. How should we think about the revenue benefit of carrying the higher occupancy into the off-peak rental season and 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: Yes. I mean there's a reason why we continue to maintain the highest occupancy in the industry. I think that's 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've recently seen come in that's been strong for us and through everything we do in our operations. So we continue to hold that. I think we'll continue to hold that high. But again, it's a lever that if we need to drop that and push on rate a little more, we'll use that where we see it fit.

Jeff Norman: Todd, I'll just add to that. One thing that I think we've done a really good job over the last several years has learned to identify the most valuable customers. We have seen length of stay increase. We're nimble between different channels and how we price and promote within channels. And I think it shows in the results. That's led to the strongest revenue growth in the sector. And that's really the metric we're paying attention to.

Operator: The next question is from the line of Eric Luebchow of Wells Fargo.

Eric Luebchow: Great. I appreciate the question. And obviously, congrats to Joe on the transition in Noah. Maybe real quick, you could touch a little bit on the -- what's going on in Southern California. I know the rent restrictions in L.A. rolled off a few months ago. There's 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 the fourth quarter.

Jeff Norman: Thanks, Eric. So just for context for anybody listening for much of 2025 as well as the first half of 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, July 1. And we began to move those customers, both new and existing customers, up to market level rates gradually in the portfolio. As we've done that over the last few months, we've worked through approximately half of the customers and gotten them up to what are rates more indicative of market conditions.

And as was indicated in the question, an additional state of emergency order has been recently put in place. So we'll pause on those increases. We'll comply with that mandate. And we'll continue to evaluate that for the rest of '26 and into '27 to see if it remains in place. As far as the impact of the second order being put into place, there's no material impact in 2026, given how late in the year we are. That's already factored into our 2026 guidance. We'll continue to evaluate to see if it has any impact in 2027 or if it's lifted soon enough that it doesn't continue to really factor in.

Eric Luebchow: Great. And just one follow-up. Maybe if you could just kind of touch on broadly capital allocation. You've obviously leaned a little more into the buyback recently versus acquisitions. Have you seen kind of 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?

Noah Springer: Thanks, Eric. So good question. Obviously, we're 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 and every single opportunity. So this last quarter and this year, we've done quite a few buybacks. That's been beneficial to us. We've continued to push on the management side. We're about 107 net properties so far this year. Loans, $165 million that we've closed so far this year with a $60 million pipeline going forward. So we feel very strong on the growth side.

Now as you indicated, rates have gone up tremendously in the last year and probably more than people anticipated. Because of that, I'm sure there have been deals that have been more difficult to do for others. But I don't think that we can look and say on a monthly basis that people have moved cap rates relative to where they were previously. And as we underwrite deals, we're not looking to say we are so tight in every deal that we underwrite is one that is a move in interest rates is going to stop us from doing that deal. So we will look at those.

We'll continue to watch it and continue to look at interest rates as it comes up. But I haven't seen anything right now that says things have changed dramatically.

Operator: The next question is from the line of Ravi Vaidya of Mizuho.

Ravi Vaidya: Congrats to Joe for retiring and congrats to Noah for the new role here. I wanted to ask about ECRIs, especially when considering that length of stay increasing, how are you tweaking ECRIs? And how does that lever drive the acceleration here in same-store revenue?

Noah Springer: So 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're good to our customers on that, but there hasn't really been any modification in how we've done it, nor has there been any modification in how customers have received it.

Ravi Vaidya: Got it. That's helpful. Just one more here. Can you discuss any of the early implications that you might have had on customer acquisition interaction? Has it impacted pricing, move-outs or occupancy in any way?

Noah Springer: Yes. There's been -- a lot of talk recently on news and other agents. It's actually been a fun thing to look at, see. It's an exciting thing. I'm actually using it a lot in my personal life and kind of seeing what customers are looking at and using this and how they're 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. And the things that they put in their units are because they need them. And when they're done with the use of our product, they'll move out.

We want to make sure we attract the right customers, keep them for the length of stay that's long and appropriate to their needs. And eventually, when they move out, they're done with that product. There's a couple of good things about storage that we need to remember. Number one, we have physical and actual locations. And number two, we have customers' goods and provide the service to them to protect those goods for the time that they're renting with us. And when they're done, they move out. The difference of what happens with an agent, I think, is de minimis on the move-out side.

And I think on the finding side or when they rent with us for Extra Space 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've done this for so many years. We've found that AI and search engine optimization have a direct correlation. And the stronger we are with that, the stronger we'll continue to be with AI. So while some people looking at us and saying it could be a negative, I look at it and say it's a positive for Extra Space.

Operator: The next question is from Linda Tsai of Truist Securities.

Linda Tsai: 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 for the question, Linda. I think it's more the latter. I would describe demand over the last few years is just steady. We haven't seen it really get worse, but we haven't seen a significant improvement either. So I think most of the fundamental recovery that we're experiencing as a sector is due to the moderation in the absorption of new supply. And our reason for that is as 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 were those markets that either didn't have a lot of new supply ever or that had it earlier in the cycle.

And as we look at some of our markets that are still at the bottom of our performance level, they're the ones still navigating new supply. So it really seems to be more of a supply moderation story than a demand recovery story. And I think the positive for all of us in the sector is that when and if we see more of a demand recovery, that's just an additional tailwind. We've been able to accelerate revenue growth absent any improvement in demand.

Linda Tsai: Appreciate that context. And then on expenses with repairs down to 20%, insurance down 17% and payroll down 5%, which savings are structural versus timing or favorable comparisons?

Jeff Norman: Great question, Linda. So 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%. But what I'll tell you is that, that run rate is sustainable. This is the new run rate. We don't expect it necessarily to pop back up, but we don't expect it to decline another 20% either. You mentioned insurance. We had a midyear 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 won't renew until June of 2027. 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. And I think that's something we can continue to do. I don't necessarily predict that it will remain at negative 1.8%, but we think we can control those expenses really well.

Operator: The next question is from the line of Brad Heffern of RBC.

Brad Heffern: 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. So I'm 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: Yes. So 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. So us versus others, I'm 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. So 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 will continue to be that way.

Jeff Norman: And Brad, I think it's been that way for a while. I really don't think this is a third quarter event. As Noah mentioned in his opening remarks, this is 5 quarters in a row that we've seen revenue accelerate and 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. So 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. And then for my follow-up, Life Storage, obviously, isn't separately disclosed anymore, but I'm wondering if you can just give an update now that you've had a couple of years with those stores and if they've 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 then we've 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're seeing in the portfolio as a whole. But I think a good way to look at it is as you look at sort of our various vintages of same-store pool, you can see the contribution.

And while there is a positive benefit between our '26 and our '25 pool, it's only 20 basis points. So this isn't just a Life Storage property change in pool benefit, but really sustained acceleration and improvement across the whole portfolio.

Noah Springer: Brad, let me bring something else up on Life Storage. One of the main theses for buying that portfolio was because of where the properties are located, which was outweighted in the Sunbelt markets. And as Jeff said, initially, that was probably more of a headwind and 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.

Operator: The next question is from the line of Spenser Glimcher of Green Street.

Spenser Allaway: Maybe just going back to the transaction market for a second. Can you just talk about what types of deals you're seeing in the market today, just in terms of the mix between stabilized versus potentially any deals that are still in lease-up? And then have you guys started to see anything retrade in the market yet?

Noah Springer: So let me take that in kind of 2 different chunks, Spenser. So upfront, obviously, the deals that aren't there are development deals. Those are kind of gone away. There's 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. And those are typically deals that are in a family or in a spot with a partner that needs to change out. And so we're taking advantage of those because we have such a strong pipeline between joint ventures and third-party management. So I would say that's the majority that we're seeing out there.

And then on the other side of the equation that you were thinking about with the deals?

Jeff Norman: We haven't seen a lot of retrading, Spenser. That might be just that it's too early to tell. These -- some of these real estate transactions have longer tails. So it may be that we see some of that shake out of the change in interest rates. But I would say we haven't necessarily seen much of it yet, and it may just be a matter of time. So we'll keep watching that. Going back to Noah's point about the different types of deals we see out there, one of the things that's great about our structure is, in regards to the situation of the owner that's 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. So 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're in this for the long game, and we're happy to be patient and work with partners in any way that we can, which includes prospective sellers.

Noah Springer: Spenser, there's a lot of talk out there about retrades and will that happen? And a lot of our deals are coming from those pipelines, which relationships we've had for a long time. And I want to make sure those people know and understand that when Extra Space says, we're going to buy a property, we're going to buy a property. And we're going to close, and we're going to do what we said we're going to do. So there -- on our side, while there might be repricing on deals going forward, things that we've looked at and things that we have that we've already committed to sellers on, we're going to make sure we take care of those.

Spenser Allaway: Okay. Great. And then sorry if I missed it, but are you guys able to share the going-in cap rate on the acquisitions made during the quarter? And then 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 wouldn't say there's anything that we've looked at over the last 30 or 60 days and major modifications based on that, Spenser. But I would think, for most of the deals that we look at, I would say, right now, going in, they're probably in the mid-5s and stabilizing in the mid-6s.

Operator: The next question is from the line of Juan Sanabria of BMO Capital Markets.

Juan Sanabria: 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 the fourth quarter, kind of 5 straight quarters of it improving or accelerating growth. So does the fourth quarter at the midpoint assume a change in the business that maybe it's 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 a more difficult comp in the fourth quarter. So 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're looking at the top end. So the full range is always in play. We always want to make sure we're giving room to consider some of the macro factors that we see out there. But much like we've 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.

And to the extent that continues, I think we're well positioned to perform well within the range. And there's always the opportunity to exceed the range.

Juan Sanabria: And then 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 those? Is it unit mix? Or is it land that has been underutilized and kind of a densification opportunities? Is it mainly with the Life portfolio. So if you could just add a little bit more color, that would be helpful.

Noah Springer: Yes. Thanks, Juan. It's more of the latter, like you said. So there's a lot of opportunities in our portfolio, but a lot of that is coming from the Life properties that we have. So 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. So those deals are a mix of different things. It could be acquisitions that we purchased that have an opportunity there.

It could also be anything from the Life portfolio or an existing portfolio that we've 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 -- proved to be more viable for us and we can layer those in and move forward. So I think we'll continue to push on those and harvest that. They're great returns for us in the mid-9s. So we're happy to have those and happy to find those and we can come across them.

Operator: The next question is from the line of Michael Griffin of Evercore ISI.

Michael Griffin: Great. And 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's a long-term impairment in terms of a traditional cohort of storage users that's not back in the market. Does that imply a different pricing and top line growth paradigm? Or do you think we can go back to what everybody knew and loved 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. And we love the storage space, Griff. And one of the things that I've got to point to on this is, it's a little bit of a tale of 2 cities, and you can see this pretty quickly as you explore in the supplementals kind of see where we are from the Sunbelt and then look kind of more through the Midwest. So if you take Phoenix, all the way across the South to the Carolinas, that's where the supply has hurt the most, and there's been -- and the most supply added.

When you look anywhere from D.C. north to Boston and then especially throughout the Midwest, it's been very, very strong on revenue growth. Those housing markets aren't any different. And 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 that -- on the supply side, and that continues to go down, and those areas continue to improve as that diminishes. Now 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.

And now we're at about 55% that we attribute to moving customers. That's held for some time. In fact, multiple years that we've been about 55% of our customers continue to be moving customers. So I think we've taken that initial hit. And I don't think that there's much more that's going to happen there that we need to be worried about. In fact, when and if interest rates do come down, we're not planning on that. We're not budgeting on that. But when that happens, and people start moving more home to home, we'll see that increase, and that will be a tailwind for us. But right now, we'll continue to say it's supply because of this.

Michael Griffin: Great. That's super helpful, Noah. And maybe just one more for you. As you look ahead to your opportunity with the top job, you've 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? Like what are your priorities really as you step into this new role?

Noah Springer: Yes. Thanks, Griff. So number one, I want to thank Joe, right? I mean we're on a great trajectory. And I follow a few CEOs that have done a great job and Joe is one of those, and I've been there with him pretty much every day for 12 years. I've been at this company for 20 years. And so my fingerprints are on a lot of the strategy and the things that we've done for some time. So I'm not going to sit back and say, "Hey, I'm going to bring some magic trick that is special that I haven't thought of in the last little bit, and then we're going to start using that in January 1.

Now as I said in the opening remarks, some of the things that we're going to focus on, continue to focus on property level NOI. It's #1, that's the biggest lever. The stores matter. And we'll continue to focus on growth. Almost my entire time at Extra Space, I focused on growth, whether that's acquisitions, joint ventures, bridge loans, third-party management. Those are kind of babies to me, and we'll continue to push on those. Extra Space for its entire existence, has been a tech leader and has been an innovator. We'll 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'll see it in a lot of efficiencies on the operating side. And 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. That's the thing that keeps people here and keeps people wanting to work and keeps driving this company.

So between all of those, Griff, nothing that you're going to see Jan 1 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. And when those things come up, then we'll take advantage of it the way we always have done. But there's nothing now to say the ship changes its direction because it's on a great trajectory.

Operator: Next question is from the line of Nick Joseph of Citi.

Eric Wolfe: It's Eric here with Nick. If I look at your move-in rate growth since the fourth quarter of last year, it's been decelerating against tougher comps, but your same-store revenue has accelerated over that same time frame. 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 have thought you'd see that impact a bit more this quarter, especially with occupancy stable. So just curious why it's not as sort of a good predictor of where same-store revenue growth is going.

Jeff Norman: 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 is a good leading indicator of that we were getting more traction and the fundamentals were improving, and we're seeing some of that positive pricing movement. But I think you have kind of run with that maybe a little too far, thinking it's the only lever, or the only indicator.

And that's clear in the results to your point. Maybe to give the opposite, if we think of performance in 2024 and 2025 for 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. So it's not the only lever. We're using all of the levers. And 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.

Eric Wolfe: That's helpful. And then I guess along those same lines, it looks like you're guiding to around 3% same-store revenue growth in the fourth quarter at the high end of guidance. You mentioned that October was running ahead. I think that's what you said. So if you continue to see sort of 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'll keep you in suspense a little bit without saying too much. But we're excited about what we're seeing. I don't think we can emphasize enough how happy we are with customer behavior and customer performance. It's been really durable despite everything that you hear and read in the headlines. So the customers continue to perform well. Our customer acquisition platform is we're convinced capturing a disproportionate share of demand that's in the market, which is still giving us strong pricing at the highest occupancy levels in the industry. So everything is really working well, and we'll keep trying to do that so we can keep growing revenue.

Operator: Next question is from the line of Brendan Lynch at Barclays.

Annabelle Ayer: This is Annabelle 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, Annabelle, 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. And while we can always see that general trend that as absorption takes place, the fundamentals improve, we get more pricing power, we get more rental volume, more occupancy upside. It's 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. So we are confident in the trend.

We've seen it rolling out over the last couple of years, but I couldn't give you a specific one-to-one correlation there.

Noah Springer: I was excited. I thought Jeff was going to give '27 guidance before we've even finished our budgets. So great answer, Jeff.

Annabelle Ayer: And then can you discuss demand for your third-party management platform? I think attrition was a little bit elevated this quarter.

Noah Springer: Yes. So demand continues to be very strong. It's obviously the largest one in the industry. Again, something that's close to me that I have worked on, in fact, kind of started the program many, many years ago and continues to be very, very strong. Net this year, we've done 107 properties that we've added. There was one portfolio that was about 59 properties that's sold. And that sale, that's a big chunk to get over. And we'll be back positive in Q4. But there's, I would say, a kind of blip with something happens on one of those things where people continue to add stores, 78 added this quarter, and we'll 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. And every year, it has been positive. So while you have a little bit of ups and downs sometimes, overall, that business is very strong.

Operator: Next question is from the line of Viktor Fediv of Scotiabank.

Viktor Fediv: 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 move-in, including length of stay, sensitivity to ECRI for overall customer value?

Noah Springer: Yes. Still a pretty small percent of our customers. So I don't 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's definitely pulled. So I think we'll continue to be a leader in that. And as the tides change a little bit where we could get customers from, we'll really lead that charge. But right now, I think it's really premature and too small of a number to be able to say what we're exactly looking at.

Viktor Fediv: Got it. And then as a follow-up on your bridge lending platform. So 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? And if you think about 2027 and your new origination activity, how do you think about that versus this year?

Jeff Norman: Yes. Thanks, Viktor. We definitely have seen a shift in the types of requests that we've been getting over the last year or so with fewer and fewer newly developed properties, we see fewer situations where we're lending on a recently completed property that's a full lease-up. And we're 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.

And that's true both in terms of new origination, getting those types of opportunities as well as we're seeing a lot of our borrowers exercise their extension options at maturity or as they're approaching maturity, where the properties are debt servicing, but they still feel like there's room to grow. And rather than going and terming out with a 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's a pretty common occurrence in what we're seeing today, and we're seeing a lot of those maturities stay in the portfolio because they're choosing to extend.

Operator: The next question is from the line of Michael Mueller of JPMorgan.

Michael Mueller: Joe, we'd also like to pass on our congrats and best wishes as well. So EXR is historically participating 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're doing it on balance sheet?

Noah Springer: Yes. So we'll look at all of those options. Extra Space historically has been a prolific developer. While we pulled back in recent years, and we're focusing in different areas, that doesn't mean we couldn't and shouldn't get back into it. We'll 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. And if that's the best area to do it, then we will go for it. Nothing we're worried about or scared of. It's more about where we can find the best opportunities.

Operator: The next question is from the line of Caitlin Burrows of Goldman Sachs.

Caitlin Burrows: Just a couple of follow-ups. Maybe first on the acquisition volume side, given the volatile interest rates, I guess it's somewhat surprising that you increased your full year guidance volume. So just wondering if you can talk about the types of deals that you're looking at it -- and is it looking at? And is it just the reason why those sellers are transacting that you're still finding those deals, but yes, how that volume is progressing?

Noah Springer: Yes. Thank you, Caitlin. I don't think it's super surprising. I think it's -- 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. And what we've been able to do through those relationships has been the majority of our deals this year and anything will probably continue to be. So those are deals that we've been working on for some time. It's nothing that is a quick change.

Those quick change deals where someone just decides they're going to sell while those might fall out, the deals and the properties that -- and the families or the owners that have decided that's their strategy, and they're moving on that strategy, then I think they'll continue to move forward.

Caitlin Burrows: Got it. Okay. And then just a quick one on the buyback program, I guess, given the amount that you used in 3Q 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: Yes. I mean that's a Board decision. And the $500 million has been something we've had for some time. It's quick and easy to get a hold of the Board. They work with us well. We're supported by them. They do a great job for us. And not something that is too difficult to put back in place if we need to. So it's an appropriate number. I guess we could look at and make a change if we needed to. It's a board decision. But right now, I think it's fair and working for us.

Operator: The next question is from the line of Ronald Kamdem of Morgan Stanley.

Ronald Kamdem: Great. Just 2 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 sort of willing to meet the customer wherever. But I'm curious if you could just remind us like how customers are coming and importantly, as AI sort of proliferate, how do you anticipate that shifting? And how do you prepare for it?

Jeff Norman: Yes. Thanks, Ron. We have started to see some shift in some changes in terms of how customers approach us. The one that's 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've already done their research. And by the time they get to our website, they're ready to transact. So we have seen really strong shopping behaviors from customers once they arrive on our website. So that's just one anecdotal example of the trend that we've seen.

And I think we'll continue to see that evolve over time as more and more people are using the variety of models that exist out there. And as Noah mentioned earlier in the call, we are hyper focused on and found a lot of success in making sure that we're still highly visible in those additional channels that are being created and evolving.

Noah Springer: Ron, another thing I'd like to bring up is it's important that we're not making decisions for the customer, but that we are showing up where the customer wants to transact. And I look at it and say, no customer left behind, whether that's walking into a store, whether that's 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're there to take care of. So it's not a matter of pushing the customer. It's being there to accept the customer.

Ronald Kamdem: Great. That's helpful. And I do want to go back to the expense discussion just because the same-store guide is 25 basis points for this year. And I think historically, we've talked about property taxes, maybe 4% to 5% every year. I guess I'm curious when you think about the other expense line items, which ones is there opportunity to grow slower than inflation? And which one is your opportunity you actually have negative growth rate year-over-year? Like I guess I'm trying to understand your comments there.

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've done for a long time. We have the ability to, I think, outperform the market from an expense standpoint as a whole. Now you brought up the big line item, property taxes that one -- there's 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'll continue to do so.

But that one is, as you can imagine, is a little less within our control. We'll remain hyper focused on keeping that in check as well as tackling all of these controllable line items. And I think 2026 is a good example of leveraging those efficiencies, and we'll look to do more of the same going forward.

Operator: The next question is from the line of Omotayo Okusanya of Deutsche Bank.

Omotayo Okusanya: 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 quarter I've seen such a huge big difference between the 2 numbers. I'm just curious if there's any insight there in regards to why such a big performance difference between the 2 portfolios? And also how you guys are thinking about where moving rates could go into fourth quarter and into 2027?

Jeff Norman: Tayo, certainly, I am 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 California -- or excludes Los Angeles, excuse me, which is intentional because we know this is a stat people are looking for as kind of a barometer of customer -- new customer rate health. And 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 our customers. And I think the other thing that we've tried to emphasize throughout the call, and we'll continue to do so, we really are focused on revenue holistically. We're not worried about a specific lever. And 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 and 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 it's that one lever in isolation is missing a big piece of the puzzle, if that's all you're looking at.

Operator: The next question is from the line of Ronald Kamdem of Morgan Stanley.

Ronald Kamdem: Great. Just want to say congrats to Joe and Noah. I can't remember if I said it.

Noah Springer: Best question we've had all day.

Operator: There are no further questions at this time. I will now turn the call back to Joe Margolis, CEO, for closing remarks.

Joseph 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, really help me think about the company and the issues and opportunities that we faced. And I believe our discussions have helped make me a better CEO and help make Extra Space a better company. I've 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. 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'm incredibly proud of what we've accomplished together, 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.

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