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Extra Space Storage Inc. Reports 2022 Second Quarter Results

Extra Space Storage Inc. Reports 2022 Second Quarter Results
PR Newswire
SALT LAKE CITY, Aug. 2, 2022

SALT LAKE CITY, Aug. 2, 2022 /PRNewswire/ — Extra Space Storage Inc. (NYSE: EXR) (the “Company”), a leading owner and operator of self-storage fa…

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Extra Space Storage Inc. Reports 2022 Second Quarter Results

PR Newswire

SALT LAKE CITY, Aug. 2, 2022 /PRNewswire/ -- Extra Space Storage Inc. (NYSE: EXR) (the "Company"), a leading owner and operator of self-storage facilities in the United States and a member of the S&P 500, announced operating results for the three and six months ended June 30, 2022.

Highlights for the three months ended June 30, 2022:

  • Achieved net income attributable to common stockholders of $1.73 per diluted share, representing a 38.4% increase compared to the same period in the prior year.

  • Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of $2.12 per diluted share. FFO, excluding adjustments for transaction related costs ("Core FFO"), was $2.13 per diluted share, representing a 29.9% increase compared to the same period in the prior year.

  • Increased same-store revenue by 21.7% and same-store net operating income ("NOI") by 26.0% compared to the same period in the prior year.

  • Reported same-store occupancy of 95.9% as of June 30, 2022, compared to 96.9% as of June 30, 2021.

  • Acquired 12 operating stores and three stores at completion of construction (a "Certificate of Occupancy store" or "C of O store") and completed one development for a total cost of approximately $231.4 million.

  • In conjunction with joint venture partners, acquired 16 operating stores for a total cost of approximately $332.1 million, of which the Company invested $57.6 million.

  • Originated $70.3 million in mortgage and mezzanine bridge loans and sold $44.7 million in mortgage bridge loans.

  • Added 40 stores (gross) to the Company's third-party management platform. As of June 30, 2022, the Company managed 864 stores for third parties and 304 stores in joint ventures, for a total of 1,168 managed stores.

  • Paid a quarterly dividend of $1.50 per share.

 

Highlights for the six months ended June 30, 2022:

  • Achieved net income attributable to common stockholders of $3.24 per diluted share, representing a 16.1% increase compared to the same period in the prior year.

  • Achieved FFO of $4.13 per diluted share. Core FFO was $4.14 per diluted share, representing a 31.8% increase compared to the same period in the prior year.

  • Increased same-store revenue by 21.7% and same-store net NOI by 26.7% compared to the same period in the prior year.

  • Acquired 23 operating stores and six C of O stores and completed one development for a total cost of approximately $456.4 million.

  • In conjunction with joint venture partners, acquired 18 operating stores for a total cost of approximately $374.6 million, of which the Company invested $61.9 million.

  • Originated $208.0 million in mortgage and mezzanine bridge loans and sold $85.7 million in mortgage bridge loans.

  • Added 77 stores (gross) to the Company's third-party management platform.

 

Joe Margolis, CEO of Extra Space Storage Inc., commented: "We had another strong quarter, matching last quarter's record same-store revenue growth of 21.7% and achieving same-store NOI growth of 26.0%.  We were active in all of our external growth channels. We continue to find accretive investments through our deep industry relationships, and expand our diversified portfolio. We achieved FFO growth of 29.9%, allowing us to increase our annual FFO guidance for the second time this year."

FFO Per Share:
The following table (unaudited) outlines the Company's FFO and Core FFO for the three and six months ended June 30, 2022 and 2021.  The table also provides a reconciliation to GAAP net income attributable to common stockholders and earnings per diluted share for each period presented (amounts shown in thousands, except share and per share data):


For the Three Months Ended June 30,


For the Six Months Ended June 30,


2022


2021


2022


2021




(per
share)1




(per
share)1




(per
share)1




(per
share)1

Net income attributable to
common stockholders

$     232,130


$       1.73


$     167,948


$       1.25


$     435,709


$       3.24


$     370,946


$      2.79

Impact of the difference in
weighted average number of
shares – diluted2



(0.12)




(0.07)




(0.20)




(0.16)

Adjustments:
















Real estate depreciation

63,765


0.45


56,470


0.40


126,457


0.89


112,285


0.80

Amortization of intangibles

2,696


0.02


1,008



5,462


0.04


1,701


0.01

Gain on real estate
transactions

(14,249)


(0.10)




(14,249)


(0.10)


(63,883)


(0.45)

Unconsolidated joint venture
real estate depreciation and
amortization

4,115


0.03


3,079


0.02


7,968


0.06


5,584


0.04

Unconsolidated joint venture
gain on sale of real estate
assets and purchase of
partner's interest



(6,251)


(0.04)




(6,251)


(0.04)

Distributions paid on Series
A Preferred Operating
Partnership units

(572)



(572)



(1,144)


(0.01)


(1,144)


(0.01)

Income allocated to
Operating Partnership and
other noncontrolling interests

15,704


0.11


10,631


0.08


29,842


0.21


23,134


0.16

FFO

$     303,589


$       2.12


$     232,313


$       1.64


$     590,045


$       4.13


$     442,372


$      3.14

















Adjustments:
















Transaction related costs

1,465


0.01




1,465


0.01



CORE FFO

$     305,054


$       2.13


$     232,313


$       1.64


$     591,510


$       4.14


$     442,372


$      3.14

















Weighted average number of
shares – diluted3

142,921,716




141,463,628




142,858,481




140,730,041





(1)

Per share amounts may not recalculate due to rounding.



(2)

Adjustment to account for the difference between the number of shares used to calculate earnings per share and the number of shares used to calculate FFO per share. Earnings per share is calculated using the two-class method, which uses a lower number of shares than the calculation for FFO per share and Core FFO per share, which are calculated assuming full redemption of all OP units as described in note (3).



(3)

Extra Space Storage LP (the "Operating Partnership") has outstanding preferred and common Operating Partnership units ("OP units"). These OP units can be redeemed for cash or, at the Company's election, shares of the Company's common stock. Redemption of all OP units for common stock has been assumed for purposes of calculating the weighted average number of shares — diluted, as presented above. The computation of weighted average number of shares — diluted, for FFO per share and Core FFO per share also includes the effect of share-based compensation plans.

 

 

Operating Results and Same-Store Performance:

The following table (unaudited) outlines the Company's same-store performance for the three and six months ended June 30, 2022 and 2021 (amounts shown in thousands, except store count data)1:


For the Three Months
Ended June 30,


Percent


For the Six Months
Ended June 30,


Percent


2022


2021


Change


2022


2021


Change

Same-store rental revenues2

$   362,192


$   297,601


21.7 %


$   704,081


$   578,591


21.7 %

Same-store operating expenses2

83,471


76,346


9.3 %


168,328


155,825


8.0 %

Same-store net operating income2

$   278,721


$   221,255


26.0 %


$   535,753


$   422,766


26.7 %













Same-store square foot occupancy as of quarter end

95.9 %


96.9 %




95.9 %


96.9 %















Properties included in same-store

870


870




870


870





(1)

A reconciliation of net income to same-store net operating income is provided later in this release, entitled "Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income."



(2)

Same-store revenues, operating expenses and net operating income do not include tenant reinsurance revenue or expense.

 

Same-store revenues for the three and six months ended June 30, 2022 increased compared to the same periods in 2021 due to higher average rates to existing customers and higher other operating income partially offset by lower occupancy. 

Same-store expenses increased for the three and six months ended June 30, 2022 compared to the same periods in 2021 due to increases in payroll, credit card processing fees, repairs and maintenance, utilities and insurance, partially offset by lower property taxes due to successful appeals of prior period taxes.  

Details related to the same-store performance of stores by metropolitan statistical area ("MSA") for the three and six months ended June 30, 2022 are provided in the supplemental financial information published on the Company's Investor Relations website at https://ir.extraspace.com/.

Investment and Property Management Activity:

The following table (unaudited) outlines the Company's acquisitions and developments that are closed, completed or under agreement (dollars in thousands):



Closed through
June 30, 2022


Closed/Completed
Subsequent to
June 30, 2022


Scheduled to Still
Close/Complete in
2022


Total 2022


To Close/Complete
in 2023/2024

Wholly-Owned Investment


Stores


Price


Stores


Price


Stores


Price


Stores


Price


Stores


Price

Operating Stores


23


$  384,602


4


$ 69,700


7


$  118,365


34


$  572,667



$        —

C of O and Development Stores1


7


71,789




1


15,400


8


87,189


9


132,628

EXR Investment in Wholly-
Owned Stores


30


456,391


4


69,700


8


133,765


42


659,856


9


132,628






















Joint Venture Investment





















EXR Investment in JV Acquisition
     of Operating Stores1


18


61,898


9


22,308


3


8,320


30


92,526


1


6,031

EXR Investment in JV
     Development and C of O1






2


11,180


2


11,180


2


26,395

EXR Investment in Joint
Ventures


18


61,898


9


22,308


5


19,500


32


103,706


3


$  32,426

Total EXR Investment


48


$  518,289


13


$ 92,008


13


$  153,265


74


$  763,562


12


$  165,054



(1)

The locations of C of O and development stores and joint venture ownership interest details are included in the supplemental financial information published on the Company's Investor Relations website at https://ir.extraspace.com/.

 

The projected developments and acquisitions under agreement described above are subject to customary closing conditions and no assurance can be provided that these developments and acquisitions will be completed on the terms described, or at all.

Bridge Loans:
During the three months ended June 30, 2022, the Company originated $70.3 million in bridge loans. The Company has an additional $402.9 million in bridge loans that closed subsequent to quarter end or are under agreement to close in 2022.  During the three months ended June 30, 2022, the Company sold $44.7 million in bridge loans.  Additional details related to the Company's loan activity and balances held are included in the supplemental financial information published on the Company's Investor Relations website at https://ir.extraspace.com/.

Other Investments:
On June 1, 2022 the Company completed the acquisition of Bargold Storage Systems, LLC ("Bargold") for a purchase price of approximately $180.0 million.  Bargold leases space in apartment buildings, primarily in New York City and its boroughs, builds out the space as storage units, and subleases the units to resident tenants.  As of June 1, 2022, Bargold had approximately 17,000 storage units.

Dispositions:
The Company disposed of two properties during the three months ended June 30, 2022 for approximately $41.0 million, resulting in a gain of approximately $14.2 million

Property Management:
As of June 30, 2022, the Company managed 864 stores for third-party owners and 304 stores owned in joint ventures, for a total of 1,168 stores under management.  The Company is the largest self-storage management company in the United States.

Balance Sheet:
In conjunction with the Bargold acquisition,  the Company issued 91,743 common OP units at an average price of $174.40 per share (a total value of $16.0 million) and 240,000 preferred OP units at a stated value of $25.00 per share (a total value of $6.0 million).

During the three months ended June 30, 2022, the Company repurchased 381,786 shares of common stock using its stock repurchase program at an average price of $165.01 per share for a total cost of $63.0 million including transaction costs.  As of June 30, 2022, the Company had authorization to purchase up to an additional $337.0 million under the plan. 

As of June 30, 2022, the Company's percentage of fixed-rate debt to total debt was 74.8%. The weighted average interest rates of the Company's fixed and variable-rate debt were 3.1% and 2.9%, respectively. The combined weighted average interest rate was 3.1% with a weighted average maturity of approximately 5.5 years.

Subsequent to quarter end, on July 29, 2022, the Company completed an accordion transaction in its credit facility, and added a $175.0 million unsecured debt tranche maturing January 2028 and a $425.0 million unsecured debt tranche maturing July 2029.  The current interest rates for the tranches are Adjusted Term SOFR/Adjusted Daily Simple SOFR ("SOFR") + 0.95% and SOFR + 1.25%, respectively.

Dividends:
On June 30, 2022, the Company paid a second quarter common stock dividend of $1.50 per share to stockholders of record at the close of business on June 15, 2022.

Outlook:

The following table outlines the Company's current and initial FFO estimates and annual assumptions for the year ending December 31, 20221:


Current Ranges for 2022              

Annual Assumptions


1st Quarter Ranges for
2022  Annual Assumptions


Notes






(May 3, 2022)




Low


High


Low


High



Core FFO

$8.30


$8.50


$8.05


$8.30



Dilution per share from C of O
and value add acquisitions

$0.20


$0.20


$0.20


$0.20



Same-store revenue growth

16.00 %


18.00 %


13.00 %


15.00 %


Same-store pool of 870 stores

Same-store expense growth

7.50 %


9.00 %


6.50 %


8.00 %


Same-store pool of 870 stores

Same-store NOI growth

18.50 %


21.50 %


15.00 %


18.00 %


Same-store pool of 870 stores

Weighted average one-month
LIBOR/SOFR

1.89% / 1.66%


1.89% / 1.66%


1.37% / 1.24%


1.37% / 1.24%













Net tenant reinsurance income

$153,500,000


$155,500,000


$152,500,000


$154,500,000



Management fees and other
income

$82,500,000


$83,500,000


$80,500,000


$81,500,000



Interest income

$60,500,000


$61,500,000


$57,500,000


$58,500,000


Includes dividends from JCAP
preferred investment

General and administrative
expenses

$124,500,000


$125,500,000


$121,500,000


$123,000,000


Includes non-cash compensation

Average monthly cash balance

$70,000,000


$70,000,000


$40,000,000


$40,000,000



Equity in earnings of real estate
ventures

$43,000,000


$44,000,000


$41,500,000


$42,500,000


Includes dividends from
SmartStop preferred investment

Interest expense

$210,000,000


$212,000,000


$  196,500,000


$ 198,500,000



Income Tax Expense

$22,000,000


$23,000,000


$22,000,000


$23,000,000


Taxes associated with the
Company's Taxable REIT
subsidiary

Acquisitions

$1,200,000,000


$1,200,000,000


$  800,000,000


$ 800,000,000


Represents the Company's
investment and includes the
Bargold acquisition

Bridge loans

$200,000,000


$200,000,000


$150,000,000


$150,000,000


Represents the Company's share
of loans net of loan sales

Weighted average share count

143,000,000


143,000,000


143,000,000


143,000,000


Assumes redemption of all OP
units for common stock


(1)  A reconciliation of net income outlook to same-store net operating income outlook is provided later in this release entitled "Reconciliation of Estimated GAAP Net Income to Estimated Same-Store Net Operating Income."  The reconciliation includes details related to same-store revenue and same-store expense outlooks.  A reconciliation of net income per share outlook to funds from operations per share outlook is provided later in this release entitled "Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per Share to Estimated Fully Diluted FFO Per Share." 

 

FFO estimates for the year are fully diluted for an estimated average number of shares and OP units outstanding during the year. The Company's estimates are forward-looking and based on management's view of current and future market conditions. The Company's actual results may differ materially from these estimates.

Supplemental Financial Information:
Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Under the "Company Info" navigation menu on the home page, click on "Investor Relations," then under the "Financials & Stock Information" navigation menu click on "Quarterly Earnings." This supplemental information provides additional detail on items that include store occupancy and financial performance by portfolio and market, debt maturity schedules and performance of lease-up assets.

Conference Call:
The Company will host a conference call at 1:00 p.m. Eastern Time on Wednesday, August 3, 2022, to discuss its financial results. Telephone participants may avoid any delays in joining the conference call by pre-registering for the call using the following link to receive a special dial-in number and PIN:  Pre-registration Link.

A live webcast of the call will also be available on the Company's investor relations website at https://ir.extraspace.com. To listen to the live webcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.

A replay of the call will be available for 30 days on the investor relations section of the Company's website beginning at 5:00 p.m. Eastern Time on August 3, 2022. 

Forward-Looking Statements:
Certain information set forth in this release contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements include statements concerning the benefits of store acquisitions, developments, favorable market conditions, our outlook and estimates for the year and other statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, the competitive landscape, plans or intentions relating to acquisitions and developments and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes," "estimates," "expects," "may," "will," "should," "anticipates," or "intends," or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Any forward-looking statements should be considered in light of the risks referenced in the "Risk Factors" section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:

  • adverse changes in general economic conditions, the real estate industry and the markets in which we operate;
  • failure to close pending acquisitions and developments on expected terms, or at all;
  • the effect of competition from new and existing stores or other storage alternatives, which could cause rents and occupancy rates to decline;
  • potential liability for uninsured losses and environmental contamination;
  • the impact of the regulatory environment as well as national, state and local laws and regulations, including, without limitation, those governing real estate investment trusts ("REITs"), tenant reinsurance and other aspects of our business, which could adversely affect our results;
  • disruptions in credit and financial markets and resulting difficulties in raising capital or obtaining credit at reasonable rates or at all, which could impede our ability to grow;
  • impacts from the COVID-19 pandemic or the future outbreak of other highly infectious or contagious diseases, including reduced demand for self-storage space and ancillary products and services such as tenant reinsurance, and potential decreases in occupancy and rental rates and staffing levels, which could adversely affect our results;
  • our reliance on information technologies, which are vulnerable to, among other things, attack from computer viruses and malware, hacking, cyberattacks and other unauthorized access or misuse, any of which could adversely affect our business and results;
  • increases in interest rates;
  • reductions in asset valuations and related impairment charges;
  • our lack of sole decision-making authority with respect to our joint venture investments;
  • the effect of recent or future changes to U.S. tax laws;
  • the failure to maintain our REIT status for U.S. federal income tax purposes; and
  • economic uncertainty due to the impact of natural disasters, war or terrorism, which could adversely affect our business plan.

All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

Definition of FFO:
FFO provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income and cash flows, for an understanding of the Company's operating results. The Company believes FFO is a meaningful disclosure as a supplement to net income. Net income assumes that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. The values of real estate assets fluctuate due to market conditions and the Company believes FFO more accurately reflects the value of the Company's real estate assets. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income computed in accordance with U.S. generally accepted accounting principles ("GAAP"), excluding gains or losses on sales of operating stores and impairment write downs of depreciable real estate assets, plus depreciation and amortization related to real estate and after adjustments to record unconsolidated partnerships and joint ventures on the same basis. The Company believes that to further understand the Company's performance, FFO should be considered along with the reported net income and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements. FFO should not be considered a replacement of net income computed in accordance with GAAP.

For informational purposes, the Company also presents Core FFO.  Core FFO excludes revenues and expenses not core to our operations and non-cash interest.  Although the Company's calculation of Core FFO differs from NAREIT's definition of FFO and may not be comparable to that of other REITs and real estate companies, the Company believes it provides a meaningful supplemental measure of operating performance. The Company believes that by excluding revenues and expenses not core to our operations and non-cash interest charges, stockholders and potential investors are presented with an indicator of our operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. Core FFO by the Company should not be considered a replacement of the NAREIT definition of FFO. The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income as an indication of the Company's performance, as an alternative to net cash flow from operating activities as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.

Definition of Same-Store:
The Company's same-store pool for the periods presented consists of 870 stores that are wholly-owned and operated and that were stabilized by the first day of the earliest calendar year presented.  The Company considers a store to be stabilized once it has been open for three years or has sustained average square foot occupancy of 80.0% or more for one calendar year. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to occupancy, rental revenue (growth), operating expenses (growth), net operating income (growth), etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions or completed developments.  Same-store results should not be used as a basis for future same-store performance or for the performance of the Company's stores as a whole.

About Extra Space Storage Inc.:
Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500. As of June 30, 2022, the Company owned and/or operated 2,177 self-storage stores in 41 states and Washington, D.C. The Company's stores comprise approximately 1.6 million units and approximately 168.0 million square feet of rentable space. The Company offers customers a wide selection of conveniently located and secure storage units across the country, including boat storage, RV storage and business storage. The Company is the second largest owner and/or operator of self-storage stores in the United States and is the largest self-storage management company in the United States.

 

Extra Space Storage Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)



June 30, 2022


December 31, 2021


(Unaudited)



Assets: 




Real estate assets, net

$              9,135,464


$             8,834,649

Real estate assets - operating lease right-of-use assets

232,045


227,949

Investments in unconsolidated real estate entities

544,771


457,326

Investments in debt securities and notes receivable

702,354


719,187

Cash and cash equivalents

58,729


71,126

Restricted cash

11,437


5,068

Other assets, net

353,967


159,172

Total assets 

$            11,038,767


$          10,474,477

Liabilities, Noncontrolling Interests and Equity:




Notes payable, net

$              1,288,487


$             1,320,755

Unsecured term loans, net

1,742,995


1,741,926

Unsecured senior notes, net

2,757,158


2,360,066

Revolving lines of credit

599,000


535,000

Operating lease liabilities

238,392


233,356

Cash distributions in unconsolidated real estate ventures

65,377


63,582

Accounts payable and accrued expenses

171,918


142,285

Other liabilities

282,200


291,531

Total liabilities 

7,145,527


6,688,501

Commitments and contingencies




Noncontrolling Interests and Equity:




Extra Space Storage Inc. stockholders' equity:




Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued
or outstanding


Common stock, $0.01 par value, 500,000,000 shares authorized, 133,900,184
and 133,922,305 shares issued and outstanding at June 30, 2022 and December
31, 2021, respectively

1,339


1,339

Additional paid-in capital

3,334,317


3,285,948

Accumulated other comprehensive income (loss)

25,555


(42,546)

Accumulated deficit

(159,091)


(128,245)

Total Extra Space Storage Inc. stockholders' equity

3,202,120


3,116,496

Noncontrolling interest represented by Preferred Operating Partnership units,
net

261,231


259,110

Noncontrolling interests in Operating Partnership, net and other noncontrolling
interests

429,889


410,370

Total noncontrolling interests and equity

3,893,240


3,785,976

Total liabilities, noncontrolling interests and equity

$            11,038,767


$          10,474,477

 

Consolidated Statement of Operations for the Three and Six Months Ended June 30, 2022 and 2021
(In thousands, except share and per share data) - Unaudited



For the Three Months
Ended March 31,


For the Six Months Ended
June 30,


2022


2021


2022


2021

Revenues:








Property rental

$       408,044


$       321,500


$      787,852


$      625,093

Tenant reinsurance

46,427


42,334


90,224


81,953

Management fees and other income

20,517


14,796


40,474


30,441

Total revenues

474,988


378,630


918,550


737,487

Expenses:








Property operations

104,252


89,155


207,794


181,522

Tenant reinsurance

7,537


6,735


14,579


13,896

Transaction related costs

1,465



1,465


General and administrative

31,251


26,341


61,013


49,881

Depreciation and amortization

69,067


59,570


136,973


118,169

Total expenses

213,572


181,801


421,824


363,468

Gain on real estate transactions

14,249



14,249


63,883

Income from operations

275,665


196,829


510,975


437,902

Interest expense

(47,466)


(40,240)


(90,004)


(80,935)

Interest income

15,060


12,838


34,049


25,142

Income before equity in earnings and dividend income from
unconsolidated real estate ventures and income tax expense

243,259


169,427


455,020


382,109

Equity in earnings and dividend income from unconsolidated real estate
entities

10,190


8,322


19,287


15,278

Equity in earnings of unconsolidated real estate ventures - gain on sale
of real estate assets and purchase of joint venture partner's interest


6,251



6,251

Income tax expense

(5,615)


(5,421)


(8,756)


(9,558)

Net income

247,834


178,579


465,551


394,080

Net income allocated to Preferred Operating Partnership noncontrolling
interests

(4,491)


(3,438)


(8,824)


(7,118)

Net income allocated to Operating Partnership and other noncontrolling
interests

(11,213)


(7,193)


(21,018)


(16,016)

Net income attributable to common stockholders

$       232,130


$       167,948


$      435,709


$      370,946

Earnings per common share








Basic

$             1.73


$             1.25


$            3.24


$            2.79

Diluted

$             1.73


$             1.25


$            3.24


$            2.79

Weighted average number of shares








Basic

134,192,540


133,756,610


134,186,426


132,886,933

Diluted

142,737,909


140,407,195


141,600,206


140,428,558

Cash dividends paid per common share

$             1.50


$             1.00


$           3.00


$           2.00

 

Reconciliation of GAAP Net Income to Total Same-Store Net Operating Income — for the Three and Six Months Ended
June 30, 2022 and 2021
 (In thousands) - Unaudited  



For the Three Months Ended
June 30,


For the Six Months Ended
June 30,


2022


2021


2022


2021

Net Income

$         247,834


$         178,579


$         465,551


$         394,080

Adjusted to exclude:








Gain on real estate transactions

(14,249)



(14,249)


(63,883)

Equity in earnings and dividend income from
unconsolidated real estate entities

(10,190)


(8,322)


(19,287)


(15,278)

Equity in earnings of unconsolidated real estate ventures
- gain on sale of real estate assets and purchase of joint
venture partner's interest


(6,251)



(6,251)

Interest expense

47,466


40,240


90,004


80,935

Depreciation and amortization

69,067


59,570


136,973


118,169

Income tax expense

5,615


5,421


8,756


9,558

Transaction related costs

1,465



1,465


General and administrative

31,251


26,341


61,013


49,881

Management fees, other income and interest income

(35,577)


(27,634)


(74,523)


(55,583)

Net tenant insurance

(38,890)


(35,599)


(75,645)


(68,057)

Non same-store rental revenue

(45,852)


(23,899)


(83,771)


(46,502)

Non same-store operating expense

20,781


12,809


39,466


25,697

Total same-store net operating income

$         278,721


$         221,255


$         535,753


$         422,766









Same-store rental revenues

362,192


297,601


704,081


578,591

Same-store operating expenses

83,471


76,346


168,328


155,825

Same-store net operating income

$         278,721


$         221,255


$         535,753


$         422,766

 

Reconciliation of the Range of Estimated GAAP Fully Diluted Earnings Per Share to Estimated Fully Diluted FFO Per
Share — for the Year Ending December 31, 2022
 - Unaudited




For the Year Ending December 31, 2022



Low End


High End

Net income attributable to common stockholders per diluted share


$                         6.01


$                         6.21

Income allocated to noncontrolling interest - Preferred Operating
Partnership and Operating Partnership


0.40


0.40

Fixed component of income allocated to non-controlling interest - Preferred
Operating Partnership


(0.02)


(0.02)

Net income attributable to common stockholders for diluted computations


6.39


6.59






Adjustments:





Real estate depreciation


1.83


1.83

Amortization of intangibles


0.06


0.06

Unconsolidated joint venture real estate depreciation and amortization


0.11


0.11

Gain on real estate transactions


(0.10)


(0.10)

Funds from operations attributable to common stockholders


8.29


8.49






Adjustments:





Transaction related costs


0.01


0.01

Core funds from operations attributable to common stockholders


$                         8.30


$                         8.50

 

Reconciliation of Estimated GAAP Net Income to Estimated Same-Store Net Operating Income —
for the Year Ending December 31, 2022 (In thousands) - Unaudited



For the Year Ending December 31, 2022


 Low


 High





Net Income

$                         899,200


$                         937,600

Adjusted to exclude:




Equity in earnings of unconsolidated joint ventures

(43,000)


(44,000)

Interest expense

212,000


210,000

Depreciation and amortization

279,000


279,000

Income tax expense

23,000


22,000

General and administrative

125,500


124,500

Management fees and other income

(82,500)


(83,500)

Interest income

(60,500)


(61,500)

Net tenant reinsurance income

(153,500)


(155,500)

Non same-store rental revenues

(195,000)


(195,000)

Non same-store operating expenses

84,000


84,000

Total same-store net operating income1

$                     1,088,200


$                     1,117,600





Same-store rental revenues1

1,429,500


1,454,000

Same-store operating expenses1

341,300


336,400

Total same-store net operating income1

$                     1,088,200


$                     1,117,600


(1)     Estimated same-store rental revenues, operating expenses and net operating income are for the Company's 2022 same-store pool of 870 stores.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/extra-space-storage-inc-reports-2022-second-quarter-results-301598386.html

SOURCE Extra Space Storage Inc.

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International

IVI starts technology transfer to Biological E. Limited to manufacture oral cholera vaccine for India and global markets

  Credit: IVI IVI will complete the technology transfer by 2025 Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international…

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Credit: IVI

  • IVI will complete the technology transfer by 2025
  • Oral Cholera Vaccine to be manufactured by Biological E. Limited for India and international markets

 

March 20, 2024, SEOUL, Republic of Korea and HYDERABAD, India — The International Vaccine Institute (IVI), an international organization with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health, today announced that it has commenced a technology transfer of simplified Oral Cholera Vaccine (OCV-S) to Biological E. Limited (BE), a leading India-based Vaccines and Pharmaceutical Company.

 

Following the signing of a technology license agreement in November last year, IVI has begun providing the technical information, know-how, and materials to produce OCV-S at BE facilities and will continue to support necessary clinical development and regulatory approvals. IVI and BE entered this partnership during an unprecedented surge of cholera outbreaks worldwide and aim to increase the volume of low-cost cholera vaccine in India as well as the global public market.

 

IVI will complete the technology transfer by 2025 and the oral cholera vaccine will be manufactured for India and international markets by Biological E. Limited.

 

Dr. Jerome Kim, Director General of IVI, said: “In an era of heightened risk of poverty-associated infectious diseases such as cholera, the world needs a sustainable source of high-quality, affordable vaccines and committed manufacturers to supply them. We are pleased to partner with Biological E., a company with a proven history of making life-saving vaccines accessible globally, to address this supply gap and protect communities from this deadly, though preventable, disease.”

 

Ms. Mahima Datla, Managing Director, Biological E. Limited, said: “We are glad to be in collaboration with IVI for the manufacture of simplified Oral Cholera Vaccine. Our efforts are aimed to not only combat the disease but to also be part of a sustained legacy of innovation, collaboration, and health stewardship. Together with IVI, we are happy to be shaping a healthier and more resilient future by making this vaccine accessible globally.”

 

This technology transfer and licensing agreement is the sixth of its kind for IVI, transferring such technology to manufacturers in India, the Republic of Korea, Bangladesh, and South Africa. All these partnerships have led to or seek to achieve, pre-qualification (PQ) from the World Health Organization, a designation that enables global agencies such as UNICEF to procure the vaccine for the global market. BE already has 9 vaccines with WHO PQ in its portfolio, and IVI and BE will pursue WHO PQ for OCV-S as well, following national licensure in India.

 

Dr. Julia Lynch, Director of IVI’s Cholera Program, said: “The cholera situation is dire, and the availability and use of oral cholera vaccine is an essential part of a multifaceted approach to cholera control and prevention, especially as outbreaks increase and the global vaccine supply remains strained. With more manufacturers like BE entering the market, the future supply situation looks strong. IVI remains committed to ensuring the availability of the oral cholera vaccine and to developing new and improved vaccines that are equally safe, effective, and affordable and made around the world, for the world.”

 

OCV-S is a simplified formulation of OCV with the potential to lower production costs while increasing production capacity for current and aspiring OCV manufacturers. IVI’s development of OCV-S and ongoing technology transfers are part of an institutional strategy to confront cholera with 3 main goals: 1) Ensure supply of OCV 2) Improve cholera vaccines 3) Support OCV use and introduction. The Bill & Melinda Gates Foundation has been supporting IVI’s cholera program since 2000 and is funding this latest technology transfer to BE.

 

###

 

About the International Vaccine Institute (IVI)

The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO), and developed a new-generation typhoid conjugate vaccine that also achieved WHO prequalification in early 2024.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, an Africa Regional Office in Rwanda, a Country Office in Austria, and a Country and Project Office in Kenya. IVI additionally co-founded the Hong Kong Jockey Club Global Health Institute in Hong Kong and hosts Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

 

About Biological E. Limited

Biological E. Limited (BE), a Hyderabad-based Pharmaceuticals & Biologics Company founded in 1953, is the first private sector biological products company in India and the first pharmaceutical company in Southern India. BE develops, manufactures and supplies vaccines and therapeutics. BE supplies its vaccines to more than 130 countries and its therapeutic products are sold in India, the USA and Europe. BE currently has 8 WHO-prequalified vaccines and 10 USFDA approved Generic Injectables in its portfolio. Recently, BE has received Emergency Use Listing (EUL) from the WHO for CORBEVAX®, the COVID-19 vaccine. Recently, DCGI has approved BE’S 14-Valent Pneumococcal Conjugate vaccine.

In recent years, BE has embarked on new initiatives for organizational expansion such as developing specialty injectable products for global markets as a means to manufacture APIs sustainably and developing novel vaccines for the global market.

Please follow us on Facebook, LinkedIn and Twitter

 

 

MEDIA CONTACTS

IVI

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

 

Biological E. Limited

K. Vijay Amruth Raj
Email: Vijay.Kammari@biologicale.com
www.biologicale.com/news


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Apartment permits are back to recession lows. Will mortgage rates follow?

If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long.

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In Tuesday’s report, the 5-unit housing permits data hit the same levels we saw in the COVID-19 recession. Once the backlog of apartments is finished, those jobs will be at risk, which traditionally means mortgage rates would fall soon after, as they have in previous economic cycles.

However, this is happening while single-family permits are still rising as the rate of builder buy-downs and the backlog of single-family homes push single-family permits and starts higher. It is a tale of two markets — something I brought up on CNBC earlier this year to explain why this trend matters with housing starts data because the two marketplaces are heading in opposite directions.

The question is: Will the uptick in single-family permits keep mortgage rates higher than usual? As long as jobless claims stay low, the falling 5-unit apartment permit data might not lead to lower mortgage rates as it has in previous cycles.

From Census: Building Permits: Privately‐owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,518,000. This is 1.9 percent above the revised January rate of 1,489,000 and 2.4 percent above the February 2023 rate of 1,482,000.

When people say housing leads us in and out of a recession, it is a valid premise and that is why people carefully track housing permits. However, this housing cycle has been unique. Unfortunately, many people who have tracked this housing cycle are still stuck on 2008, believing that what happened during COVID-19 was rampant demand speculation that would lead to a massive supply of homes once home sales crashed. This would mean the builders couldn’t sell more new homes or have housing permits rise.

Housing permits, starts and new home sales were falling for a while, and in 2022, the data looked recessionary. However, new home sales were never near the 2005 peak, and the builders found a workable bottom in sales by paying down mortgage rates to boost demand. The first level of job loss recessionary data has been averted for now. Below is the chart of the building permits.



On the other hand, the apartment boom and bust has already happened. Permits are already back to the levels of the COVID-19 recession and have legs to move lower. Traditionally, when this data line gets this negative, a recession isn’t far off. But, as you can see in the chart below, there’s a big gap between the housing permit data for single-family and five units. Looking at this chart, the recession would only happen after single-family and 5-unit permits fall together, not when we have a gap like we see today.

From Census: Housing completions: Privately‐owned housing completions in February were at a seasonally adjusted annual rate of 1,729,000.

As we can see in the chart below, we had a solid month of housing completions. This was driven by 5-unit completions, which have been in the works for a while now. Also, this month’s report show a weather impact as progress in building was held up due to bad weather. However, the good news is that more supply of rental units will mean the fight against rent inflation will be positive as more supply is the best way to deal with inflation. In time, that is also good news for mortgage rates.



Housing Starts: Privately‐owned housing starts in February were at a seasonally adjusted annual rate of 1,521,000. This is 10.7 percent (±14.2 percent)* above the revised January estimate of 1,374,000 and is 5.9 percent (±10.0 percent)* above the February 2023 rate of 1,436,000.

Housing starts data beat to the upside, but the real story is that the marketplace has diverged into two different directions. The apartment boom is over and permits are heading below the COVID-19 recession, but as long as the builders can keep rates low enough to sell more new homes, single-family permits and starts can slowly move forward.

If we lose the single-family marketplace, expect the chart below to look like it always does before a recession — meaning residential construction workers lose their jobs. For now, the apartment construction workers are at the most risk once they finish the backlog of apartments under construction.

Overall, the housing starts beat to the upside. Still, the report’s internals show a marketplace with early recessionary data lines, which traditionally mean mortgage rates should go lower soon. If housing leads us into a recession in the near future, that means mortgage rates have stayed too high for too long and restrictive policy by the Fed created a recession as we have seen in previous economic cycles.

The builders have been paying down rates to keep construction workers employed, but if rates go higher, it will get more and more challenging to do this because not all builders have the capacity to buy down rates. Last year, we saw what 8% mortgage rates did to new home sales; they dropped before rates fell. So, this is something to keep track of, especially with a critical Federal Reserve meeting this week.

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Young People Aren’t Nearly Angry Enough About Government Debt

Young People Aren’t Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes…

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Young People Aren't Nearly Angry Enough About Government Debt

Authored by The American Institute for Economic Research,

Young people sometimes seem to wake up in the morning in search of something to be outraged about. We are among the wealthiest and most educated humans in history. But we’re increasingly convinced that we’re worse off than our parents were, that the planet is in crisis, and that it’s probably not worth having kids.

I’ll generalize here about my own cohort (people born after 1981 but before 2010), commonly referred to as Millennials and Gen Z, as that shorthand corresponds to survey and demographic data. Millennials and Gen Z have valid economic complaints, and the conditions of our young adulthood perceptibly weakened traditional bridges to economic independence. We graduated with record amounts of student debt after President Obama nationalized that lending. Housing prices doubled during our household formation years due to zoning impediments and chronic underbuilding. Young Americans say economic issues are important to us, and candidates are courting our votes by promising student debt relief and cheaper housing (which they will never be able to deliver).

Young people, in our idealism and our rational ignorance of the actual appropriations process, typically support more government intervention, more spending programs, and more of every other burden that has landed us in such untenable economic circumstances to begin with. Perhaps not coincidentally, young people who’ve spent the most years in the increasingly partisan bubble of higher education are also the most likely to favor expanded government programs as a “solution” to those complaints.

It’s Your Debt, Boomer 

What most young people don’t yet understand is that we are sacrificing our young adulthood and our financial security to pay for debts run up by Baby Boomers. Part of every Millennial and Gen-Z paycheck is payable to people the same age as the members of Congress currently milking this system and miring us further in debt.

Our government spends more than it can extract from taxpayers. Social Security, which represents 20 percent of government spending, has run an annual deficit for 15 years. Last year Social Security alone overspent by $22.1 billion. To keep sending out checks to retirees, Social Security goes begging to the Treasury Department, and the Treasury borrows from the public by issuing bonds. Bonds allow investors (who are often also taxpayers) to pay for some retirees’ benefits now, and be paid back later. But investors only volunteer to lend Social Security the money it needs to cover its bills because the (younger) taxpayers will eventually repay the debt — with interest.

In other words, both Social Security and Medicare, along with various smaller federal entitlement programs, together comprising almost half of the federal budget, have been operating for a decade on the principle of “give us the money now, and stick the next generation with the check.” We saddle future generations with debt for present-day consumption.

The second largest item in the budget after Social Security is interest on the national debt — largely on Social Security and other entitlements that have already been spent. These mandatory benefits now consume three quarters of the federal budget: even Congress is not answerable for these programs. We never had the chance for our votes to impact that spending (not that older generations were much better represented) and it’s unclear if we ever will.

Young Americans probably don’t think much about the budget deficit (each year’s overspending) or the national debt (many years’ deficits put together, plus interest) much at all. And why should we? For our entire political memory, the federal government, as well as most of our state governments, have been steadily piling “public” debt upon our individual and collective heads. That’s just how it is. We are the frogs trying to make our way in the watery world as the temperature ticks imperceptibly higher. We have been swimming in debt forever, unaware that we’re being economically boiled alive.

Millennials have somewhat modest non-mortgage debt of around $27,000 (some self-reports say twice that much), including car notes, student loans, and credit cards. But we each owe more than $100,000 as a share of the national debt. And we don’t even know it.

When Millennials finally do have babies (and we are!) that infant born in 2024 will enter the world with a newly minted Social Security Number and $78,089 credit card bill for Granddad’s heart surgery and the interest on a benefit check that was mailed when her parents were in middle school. 

Headlines and comments sections love to sneer at “snowflakes” who’ve just hit the “real world,” and can’t figure out how to make ends meet, but the kids are onto something. A full 15 percent of our earnings are confiscated to pay into retirement and healthcare programs that will be insolvent by the time we’re old enough to enjoy them. The Federal Reserve and government debt are eating the economy. The same interest rates that are pushing mortgages out of reach are driving up the cost of interest to maintain the debt going forward. As we learn to save and invest, our dollars are slowly devalued. We’re right to feel trapped.  

Sure, if we’re alive and own a smartphone, we’re among the one percent of the wealthiest humans who’ve ever lived. Older generations could argue (persuasively!) that we have no idea what “poverty” is anymore. But with the state of government spending and debt…we are likely to find out. 

Despite being richer than Rockefeller, Millennials are right to say that the previous ways of building income security have been pushed out of reach. Our earning years are subsidizing not our own economic coming-of-age, but bank bailouts, wars abroad, and retirement and medical benefits for people who navigated a less-challenging wealth-building landscape. 

Redistribution goes both ways. Boomers are expected to pass on tens of trillions in unprecedented wealth to their children (if it isn’t eaten up by medical costs, despite heavy federal subsidies) and older generations’ financial support of the younger has had palpable lifting effects. Half of college costs are paid by families, and the trope of young people moving back home is only possible if mom and dad have the spare room and groceries to make that feasible.

Government “help” during COVID-19 resulted in the worst inflation in 40 years, as the federal government spent $42,000 per citizen on “stimulus” efforts, right around a Millennial’s average salary at that time. An absurd amount of fraud was perpetrated in the stimulus to save an economy from the lockdown that nearly ruined itTrillions in earmarked goodies were rubber stamped, carelessly added to young people’s growing bill. Government lenders deliberately removed fraud controls, fearing they couldn’t hand out $800 billion in young people’s future wages away fast enough. Important lessons were taught by those programs. The importance of self-sufficiency and the dignity of hard work weren’t top of the list.

Boomer Benefits are Stagnating Hiring, Wages, and Investment for Young People

Even if our workplace engagement suffered under government distortions, Millennials continue to work more hours than other generations and invest in side hustles and self employment at higher rates. Working hard and winning higher wages almost doesn’t matter, though, when our purchasing power is eaten from the other side. Buying power has dropped 20 percent in just five years. Life is $11,400/year more expensive than it was two years ago and deficit spending is the reason why

We’re having trouble getting hired for what we’re worth, because it costs employers 30 percent more than just our wages to employ us. The federal tax code both requires and incentivizes our employers to transfer a bunch of what we earned directly to insurance companies and those same Boomer-busted federal benefits, via tax-deductible benefits and payroll taxes. And the regulatory compliance costs of ravenous bureaucratic state. The price paid by each employer to keep each employee continues to rise — but Congress says your boss has to give most of the increase to someone other than you. 

Federal spending programs that many people consider good government, including Social Security, Medicare, Medicaid, and health insurance for children (CHIP) aren’t a small amount of the federal budget. Government spends on these programs because people support and demand them, and because cutting those benefits would be a re-election death sentence. That’s why they call cutting Social Security the “third rail of politics.” If you touch those benefits, you die. Congress is held hostage by Baby Boomers who are running up the bill with no sign of slowing down. 

Young people generally support Social Security and the public health insurance programs, even though a 2021 poll by Nationwide Financial found 47 percent of Millennials agree with the statement “I will not get a dime of the Social Security benefits I have earned.”

In the same survey, Millennials were the most likely of any generation to believe that Social Security benefits should be enough to live on as a sole income, and guessed the retirement age was 52 (it’s 67 for anyone born after 1959 — and that’s likely to rise). Young people are the most likely to see government guarantees as a valid way to live — even though we seem to understand that those promises aren’t guarantees at all.

Healthcare costs tied to an aging population and wonderful-but-expensive growth in medical technologies and medications will balloon over the next few years, and so will the deficits in Boomer benefit programs. Newly developed obesity drugs alone are expected to add $13.6 billion to Medicare spending. By 2030, every single Baby Boomer will be 65, eligible for publicly funded healthcare.

The first Millennial will be eligible to claim Medicare (assuming the program exists and the qualifying age is still 65, both of which are improbable) in 2046. As it happens, that’s also the year that the Boomer benefits programs (which will then be bloated with Gen Xers) and the interest payments we’re incurring to provide those benefits now, are projected to consume 100 percent of federal tax revenue.

Government spending is being transferred to bureaucrats and then to the beneficiaries of government spending who are, in some sense, your diabetic grandma who needs a Medicare-paid dialysis treatment, but in a much more immediate sense, are the insurance companiespharma giants, and hospital corporations who wrote the healthcare legislation. Some percentage of every college graduate’s paycheck buys bullets that get fired at nothing and inflating the private investment portfolios of government contractors, with dubious, wasteful outcomes from the prison-industrial complex to the perpetual war machine.

No bank or nation in the world can lend the kind of money the American government needs to borrow to fulfill its obligations to citizens. Someone will have to bite the bullet. Even some of the co-authors of the current disaster are wrestling with the truth. 

Forget avocado toast and streaming subscriptions. We’re already sensing it, but we haven’t yet seen it. Young people are not well-informed, and often actively misled, about what’s rotten in this economic system. But we are seeing the consequences on store shelves and mortgage contracts and we can sense disaster is coming. We’re about to get stuck with the bill.

Tyler Durden Tue, 03/19/2024 - 20:20

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