Extra Space Storage

Methodology

Extra Space Storage is a REIT where EPS has limited meaning—FFO (Funds From Operations) is the proper earnings metric for self-storage real estate. Depreciation distorts GAAP earnings while FFO better reflects cash generation from storage rental revenue. Investors should use FFO-based valuation methods rather than traditional P/E ratios for this self-storage REIT.

Methodology

PEG ratios based on EPS are inappropriate for Extra Space—FFO growth is the relevant metric for REIT valuation. The self-storage REIT delivers mid-single-digit FFO growth from rate increases and occupancy optimization. Self-storage REITs trade more on implied cap rates and dividend yields than earnings multiples given their income-focused investment characteristics.

Methodology

Extra Space pays a substantial dividend yielding 3-5%, making total return analysis important, though PEGY using EPS is still flawed for REITs. The dividend represents most of FFO from stable self-storage operations with limited capital requirements. Investors should evaluate total return using FFO growth plus dividend yield rather than EPS-based PEGY metrics.