Exchange: LSE | Sector: Real Estate | Industry: Real Estate General
Q3 2025
Published: Oct 31, 2025
Earnings Highlights
Revenue of $777.56M down 9% year-over-year
EPS of $0.78 decreased by 17.9% from previous year
Gross margin of 39.5%
Net income of 169.94M
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Extra Space Storage Inc (0IJV.L) QQ3 2025 Results â Self-Storage Leader Navigates Volatile Financing Environment with Solid Cash Flow Generation
Executive Summary
Extra Space Storage Inc (0IJV.L) delivered a Q3 2025 performance that underscores the stability of the self-storage model even as top-line revenue softened in the quarter. Revenue of $777.6 million declined year-over-year by 9.0% and quarter-over-quarter by 7.6%, while gross profit reached $307.4 million for a gross margin of 39.5%. Operating income was $279.1 million (operating margin 35.9%), and net income was $169.9 million with EPS of $0.78. EBITDA stood at $499.0 million, yielding an EBITDARatio of 0.642, signaling strong earnings before financing and depreciation relative to revenue. The quarter featured a substantial interest burden (interest expense of $749.8 million), resulting in an EBIT coverage of 0.37x, highlighting the leverage risk facing the balance sheet even as ACHIEVING positive bottom-line results helped support free cash flow per share (FCF per share) of $2.20 and operating cash flow per share (OCF per share) of $2.16. Management commentary in the call (where available) typically centers on rate discipline, occupancy stability, and disciplined capital allocation; however, no transcript has been provided in the data, limiting direct quotes. The near-term outlook remains dependent on rent growth, occupancy retention, and refinancing conditions given a debt-heavy capital structure.
Financial highlights for Q3 2025 (USD, all figures approximate):
- Revenue: $777.6 million; YoY: -9.03%; QoQ: -7.61%
- Gross Profit: $307.4 million; Gross Margin: 39.54%; YoY Gross Profit: -51.06%; QoQ: -48.51%
- Operating Income: $279.1 million; Operating Margin: 35.90%; YoY: -7.80%; QoQ: -25.36%
- Net Income: $169.9 million; Net Margin: 21.86%; YoY: -11.86%; QoQ: -31.95%
- EPS: $0.78; EPS Diluted: $0.78; YoY: -17.89%; QoQ: -33.90%
- EBITDA: $499.0 million; EBITDA Margin (EBITDA/Revenue): 64.18%
- Interest Expense: $749.8 million; Depreciation & Amortization: $177.5 million
- Income Before Tax: $124.8 million; Income Tax Benefit: -$53.22 million; Net Income: $169.9 million
- Weighted Avg Shares: 211.9 million; Cash Flow per Share (OCF): $2.16; Free Cash Flow per Share (FCF): $2.20
- Liquidity: Current Ratio 0.203; Quick Ratio 0.203; Cash Ratio 0.203
- Leverage & Coverage: Debt Ratio 0.467; Debt/Capitalization 0.501; Long-Term Debt to Capitalization 0.487; Interest Coverage (EBIT/Interest) 0.37x
- Valuation & Returns: Price/Earnings 43.94x; Price/Book 2.19x; Price/Sales 38.41x; Dividend Yield 1.15%; EV/EBITDA 87.00x; Dividend Payout Ratio 2.02x; Capex Coverage 54.41x; Dividends Paid vs Capex Coverage 1.298x
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
777.56M
-9.03%
-7.61%
Gross Profit
307.45M
-51.06%
-48.51%
Operating Income
279.12M
-7.80%
-25.36%
Net Income
169.94M
-11.86%
-31.95%
EPS
0.78
-17.89%
-33.90%
Key Financial Ratios
currentRatio
0.2
grossProfitMargin
39.5%
operatingProfitMargin
35.9%
netProfitMargin
21.9%
returnOnAssets
0.58%
returnOnEquity
1.25%
debtEquityRatio
1
operatingCashFlowPerShare
$2.16
freeCashFlowPerShare
$2.2
dividendPayoutRatio
202%
priceToBookRatio
2.19
priceEarningsRatio
43.94
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript for QQ3 2025 is not provided in the data set. Consequently, no management quotes or theme-by-theme highlights can be extracted from the transcript. In a typical call, investors monitor guidance on occupancy stability, rate acceleration, and capital allocation (acquisitions vs. buybacks), as well as refinancing cadence and debt maturity profiles. Absent the transcript, the analysis relies on reported metrics and the implied implications of leverage and cash flow.
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Forward Guidance
There is no explicit forward guidance in the supplied data. Given the quarterly performance and leverage footprint, investors should monitor: (1) occupancy trends and same-store NOI momentum in late 2025 into 2026, (2) rent per occupied unit and pricing power in a potentially slower macro environment, (3) refinancing risk and debt maturity schedule, including the ability to optimize the debt mix or pursue asset dispositions, (4) development/expansion plans versus capex discipline, and (5) dividend policy alignment with sustainable free cash flow. Scenarios: (a) favorable rent growth and modest occupancy gains could improve EBITDA and cash generation and support deleveraging, (b) sustained high debt service costs could pressure liquidity despite strong FCF per share, (c) a downturn in demand or accelerated supply could compress occupancy and NOI, heightening coverage risk.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0IJV.L Focus
39.54%
35.90%
1.25%
43.94%
0HVF.L
51.70%
25.30%
2.66%
21.62%
0J5I.L
30.20%
24.90%
-8.52%
36.60%
0HLQ.L
48.50%
17.50%
0.00%
13.29%
0I2P.L
24.80%
9.35%
1.65%
21.15%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Extra Space Storage remains a premier self-storage REIT with robust cash flow characteristics, but the QQ3 2025 results highlight a heavier leverage profile and stressed interest coverage that could temper near-term upside. Valuation reflects a premium multiple relative to peers, suggesting limited upside unless cash flow stability improves or leverage is meaningfully reduced. Investors may view the stock as a core exposure to the self-storage theme but should require visibility on deleveraging trajectory and refinancing stability before upgrading to a higher conviction stance. A cautious Hold with watchful monitoring of occupancy trends, rent growth, and debt maturity profiles is advised.
Key Investment Factors
Growth Potential
The company benefits from a sizable, geographically diversified portfolio in the US self-storage market and a historically resilient cash-flow profile. Potential growth hinges on rate optimization, occupancy stability, and modest new capex-driven expansions or acquisitions that enhance same-store NOI and per-store cash contributions. A disciplined capital allocation framework could sustain cash generation even under elevated interest costs.
Profitability Risk
Key risks include elevated financing costs and high interest expense relative to EBIT (EBIT coverage 0.37x), refinancing risk as debt maturities approach, and liquidity constraints (current ratio ~0.20). Market risk includes weaker demand in macro downturns and competition from new storage supply. Valuation remains demanding (P/E ~44x; EV/EBITDA ~87x), implying limited near-term upside unless cash flow stability improves or multiple compression occurs.
Financial Position
Leveraged balance sheet with debt-to-capitalization around 0.50 and interest-heavy expense, pressuring cash flow metrics. Although free cash flow per share is robust ($2.20), coverage metrics signal sensitivity to interest rate changes. liquidity appears constrained via a low current/quick ratio, underscoring the need for prudent refinancing and potential deleveraging to restore balance-sheet flexibility.
SWOT Analysis
Strengths
Industry-leading scale in the self-storage segment with a diversified US portfolio
Strong EBITDA and free cash flow generation despite revenue fluctuations
resilient recurring revenue model with long-term tenant relationships
Weaknesses
High debt load and fragile interest coverage (EBIT/Interest 0.37x) raise refinancing risk
Very tight liquidity metrics (current/quick/cash ratio ~0.20) signaling potential near-term liquidity pressure
Revenue and gross profit have declined YoY and QoQ, indicating sensitivity to macro or market factors
Opportunities
Rent growth and pricing power in high-demand markets could boost NOI and FCF
Capital allocation flexibility to deleverage, optimize capital structure, or opportunistically acquire assets
Operational efficiencies and portfolio optimization to sustain cash generation
Threats
Rising interest rates and debt servicing costs could compress margins and increase refinancing risk
Competitive dynamics and new supply in select markets may cap occupancy/rate growth
Macro slowdowns or occupancy volatility could impact cash flow resilience
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