Moody’s assigns Extra Space Storage Baa2

Moody’s Investors Service said it assigned a first-time Baa2 issuer rating to Extra Space Storage LP.

“The Baa2 issuer rating reflects Extra Space’s competitive positioning as one of the leading owners and operators of self-storage properties in the United States. The rating also considers the REIT’s strong fixed charge coverage (4.8x at 3Q20), experienced management team that maintains a prudent financial policy with a long track record of operational excellence and demonstrated profitability through real estate cycles.

“These credit strengths are offset by Extra Space’s historical reliance on mortgage financing resulting in higher secured debt levels, modest unencumbered asset base and high effective leverage for the rating category,” Moody’s said in a press release.

The agency assigned a stable outlook that reflects Extra Space’s good scale and proven profitability. “It also incorporates our expectation that the REIT will continue to reduce secured debt levels in addition to continued improvement in operational performance,” Moody’s said.

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