Extra Space Storage faces risks from economic downturns, failure to integrate Life Storage acquisitions, competition, insurance losses, credit market disruptions, technology vulnerabilities, rising interest rates, acquisition/development challenges, asset valuation reductions, lack of sole decision-making authority in joint ventures, tax law changes, loss of REIT status, and natural disasters. Potential for losses from litigation and environmental liabilities also exist.
Financial Upside
Extra Space Storage's revenue growth is driven by increased store count from acquisitions, including the Life Storage merger, and higher rental rates. Management fees and other income are also increasing. Positive cash flow from operations is projected, and the company has access to capital markets and credit lines to fund operations and growth. Potential gains from sales of real estate assets and joint ventures are also noted.
