Citi Initiates Coverage on Extra Space Storage Inc (EXR) with a Hold, Attractive Long-Term Valuation

February 26, 2009 8:22 AM EST
Get Alerts EXR Hot Sheet
Price: $171.02 -0.55%

Rating Summary:
    11 Buy, 8 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 9 | Down: 13 | New: 33
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Citi initiates coverage on Extra Space Storage Inc (NYSE: EXR) with a Hold. Price target $7

Citi analyst says, "While our long-term fundamental outlook for the self-storage industry is positive, we expect the currently weak overall economy and strained consumer will reduce demand for self-storage and constrain margins. In fact, the economy's toll on EXR is likely not over as the historical trailing four quarter correlation between self-storage same-store net operating income growth (SSNOI) and GDP growth has been rather significant at 0.75. In addition, as EXR's fundamentals moderate, we expect there could be a risk to the dividend of $1/share (currently yielding 15.2%), which remains un-covered by cash flow. We would argue that the company should cut the dividend to relieve funding pressure, but management has recently reiterated that a cut is not likely in the near term."

Extra Space Storage Inc. is a self-administered and self-managed real estate investment trust (REIT) that operates in two segments: property management, acquisition and development, and rental operations.

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