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Extra Space Storage Inc. Reports Second Quarter 2009 Results
Obtains $97 Million of Debt Financing, Repurchases Exchangeable Senior Notes and Announces New Joint Venture
SALT LAKE CITY, UT, Aug 03, 2009 (MARKETWIRE via COMTEX) -- Extra Space Storage Inc. (NYSE: EXR), the second largest owner and operator of self-storage properties in the United States, announced today operating results for the three and six months ended June 30, 2009.

Highlights for the Three Months Ended June 30, 2009:

--  Achieved funds from operations ("FFO") of $0.07 per diluted share
    including development dilution of $0.02 per share. FFO was $0.24 per
    diluted share after adjusting to exclude a $0.06 per share gain on
    repurchase of exchangeable senior notes, a $0.22 per share charge
    attributable to the wind down of the Company's development program and
    $0.01 per share of non-cash interest charges related to the Company's
    exchangeable senior notes.

--  Same-store revenue and net operating income ("NOI") at the Company's
    252 same-stores decreased by 3.0% and 2.8%, respectively, when compared to
    the three months ended June 30, 2008.

--  Closed $96.6 million of debt financing during the quarter and an
    additional $48.3 million subsequent to quarter end. With the closing of
    these loans the Company currently has the capacity to satisfy all debt
    maturities through 2011.

--  Repurchased $43.0 million principal amount of exchangeable senior
    notes resulting in a gain on early extinguishment of debt of approximately
    $5.1 million, or $0.06 per share. The gain includes $0.03 per share of non-
    cash charges related to the write-off of the discount associated with the
    repurchased exchangeable senior notes.

--  Announced a new joint venture with an affiliate of Harrison Street
    Real Estate Capital, LLC ("HSRE") in which the Company will contribute 42
    properties and receive $62.4 million in cash and a 20% interest in the
    joint venture. The joint venture is subject to customary closing conditions
    and is currently expected to close late in the third quarter or in the
    fourth quarter of 2009.

--  Initiated the wind down of the Company's development program. As a
    result of the decision, the Company incurred charges totaling $20.2
    million, or $0.22 per share.


Spencer F. Kirk, Chairman and CEO of Extra Space Storage Inc., stated: "Extra Space has improved its capital position appreciably, with the announcement of the new joint venture with Harrison Street, the winding down of our development program and significant progress in obtaining debt financing to satisfy our upcoming debt maturities through 2011. The operating environment remains challenging but we remain steadfast in our efforts to retain occupancy, optimize revenue and control expenses."

FFO Per Share:

On January 1, 2009, the Company adopted FASB Staff Position No. APB 14-1 ("APB 14-1"), which requires companies to expense certain implied costs of the option value related to convertible debt. Retrospective adoption of this accounting standard has resulted in the restatement of certain prior period numbers.

The Company's FFO for the three months ended June 30, 2009 was $0.07 per diluted share including development dilution of $0.02 per share. FFO was $0.24 per diluted share after adjusting to exclude a $0.06 per share gain on repurchase of exchangeable senior notes, a $0.22 per share charge attributable to the wind down of the Company's development program and $0.01 per share of non-cash interest charges related to the Company's exchangeable senior notes. This compares to FFO per diluted share for the three months ended June 30, 2008, including development dilution of $0.01 per share, of $0.24 per diluted share. After adjusting to exclude a $0.02 per share charge from unrecovered acquisition costs and $0.01 per share of non-cash interest charges related to the Company's exchangeable senior notes, FFO was $0.27 per diluted share for the three months ended June 30, 2008.

FFO for the six months ended June 30, 2009 was $0.54 per diluted share including development dilution of $0.04 per share. FFO was $0.47 per diluted share after adjusting to exclude a $0.30 per share gain on repurchase of exchangeable senior notes, a $0.22 per share charge attributable to the wind down of the Company's development program and $0.01 per share of non-cash interest charges related to the Company's exchangeable senior notes. This compares to FFO per diluted share for the six months ended June 30, 2008, including development dilution of $0.04 per share, of $0.48 per diluted share. After adjusting to exclude a $0.02 per share charge from unrecovered acquisition costs and $0.03 per share of non-cash interest charges related to the Company's exchangeable senior notes, FFO was $0.53 per diluted share.

FFO is a supplemental non-GAAP financial measure used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income attributable to common stockholders to FFO and a definition of FFO are included at the end of this release.

Operating Results:

Total revenues for the three months ended June 30, 2009 were $69.1 million compared to $67.3 million for the three months ended June 30, 2008. Total expenses for the three months ended June 30, 2009 were $66.7 million compared to $45.5 million for the three months ended June 30, 2008. Interest expense, including non-cash interest charges relating to the Company's exchangeable senior notes, was $16.4 million compared to $17.0 million for the three months ended June 30, 2008. Net loss for the three months ended June 30, 2009 was $6.7 million compared to net income of $8.3 million for the three months ended June 30, 2008. Net loss for the three months ended June 30, 2009 was primarily related to the Company's $20.2 million development wind down charge.

Total revenues for the six months ended June 30, 2009 were $138.3 million compared to $133.0 million for the six months ended June 30, 2008. Total expenses for the six months ended June 30, 2009 were $114.0 million compared to $89.0 million for the six months ended June 30, 2008. Interest expense, including non-cash interest charges relating to the Company's exchangeable senior notes, was $33.0 million compared to $34.4 million for the six months ended June 30, 2008. Net income for the six months ended June 30, 2009 was $24.1 million compared to $14.4 million for the six months ended June 30, 2008. Net income for the six months ended June 30, 2009 was decreased due to the Company's $20.3 million development wind down charge.

Same-Store Property Performance:

The Company's same-store stabilized properties for the three and six months ended June 30, 2009 and 2008 consisted of 252 properties that were wholly owned and operated and that were stabilized by the first day of each period. The Company considers a property to be stabilized once it has been open three years or has sustained average square foot occupancy of 80.0% or more for one calendar year. Same-store results provide information relating to property operations without the effects of acquisitions or completed developments and should not be used as a basis for future same-store performance or for the performance of the Company's properties as a whole.

For the three months ended June 30, 2009, the Company's same-store revenue and NOI decreased by 3.0% and 2.8%, respectively, when compared to the three months ended June 30, 2008. The decrease in same-store rental revenue was due to lower occupancy and decreased rental rates to incoming customers. The Company's same-store expenses decreased by 3.2% when compared to the three months ended June 30, 2008 due to lower advertising, insurance and payroll costs.

Balance Sheet:

During the second quarter, the Company obtained $96.6 million of financing consisting of eight loans secured by 17 operating properties totaling $88.6 million and two construction loans totaling $8.0 million. Subsequent to the end of the quarter, the Company completed an additional $48.3 million of debt financing consisting of three loans secured by 10 operating properties totaling $41.2 million and one construction loan of $7.1 million.

As of June 30, 2009, the Company's total debt, including notes payable, notes payable to trusts, exchangeable senior notes and lines of credit, was $1.4 billion, compared to $1.3 billion at June 30, 2008. Total cash as of June 30, 2009 was $131.6 million. The Company's percentage of total fixed rate debt to total debt was 84.4%. The weighted average interest rate was 5.4% for fixed rate debt and 2.1% for variable rate debt with a combined weighted average interest rate of 4.9% as of June 30, 2009.

Repurchase of Exchangeable Senior Notes:

During the second quarter, the Company repurchased $43.0 million principal amount of exchangeable senior notes resulting in a gain on early extinguishment of debt of approximately $5.1 million, or $0.06 per share. The gain includes $2.3 million, or $0.03 per share, of non-cash charges related to the write-off of the discount associated with the repurchased exchangeable senior notes as required by APB 14-1.

Harrison Street Joint Venture:

The Company entered into a definitive agreement to contribute 42 of its wholly owned properties into a newly formed joint venture with HSRE. HSRE will contribute approximately $62.4 million in cash to the joint venture in return for an 80.0% ownership interest in the joint venture. The joint venture will assume approximately $213.0 million of debt which is secured by the properties. The Company will receive approximately $62.4 million in cash and a 20.0% interest in the joint venture for its contribution of the properties and will continue the day-to-day operations of the properties for a 6.0% management fee. The joint venture transaction is subject to the satisfaction of customary closing conditions and is currently expected to close late in the third quarter or in the fourth quarter of 2009.

Development Program Wind Down:

During the quarter, the Company initiated the wind down of its development program due to the scarcity of reasonably priced financing and the Company's need to preserve capital. As a result of the decision, the Company incurred charges of $20.2 million, or $0.22 per share, in the quarter.

Outlook:

The Company currently estimates that fully diluted FFO per share adjusted for the three months ending September 30, 2009 will be between $0.20 and $0.23 including lease-up dilution of $0.02 per share. For the year ending December 31, 2009, the Company currently estimates that fully diluted FFO per share adjusted will be between $0.85 and $0.92 including lease-up dilution of $0.07 per share. FFO estimates for the quarter and the year are fully diluted for an estimated average number of shares and Operating Partnership units ("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, which include the following annual assumptions:

--  Excludes gains on extinguishment of exchangeable senior notes of
    approximately $27.6 million, non-cash charges associated with exchangeable
    senior notes of between $2.6 million and $3.0 million and charges of $20.3
    million attributable to the wind down of the Company's development program.

--  Excludes dilution associated with HSRE joint venture. Upon closing,
    dilution of between $1.8 million and $2.2 million per quarter is expected.

--  Same-store property revenue decline, including tenant reinsurance
    income, between (3.0%) and (5.0%).

--  Same-store property expense growth between 0.0% and 2.0%.

--  Same-store property NOI decline, including tenant reinsurance income,
    between (5.0%) and (7.0%).

--  Net tenant reinsurance income between $13.0 million and $15.0 million.

--  General and administrative expenses, net of development fees, between
    $41.0 million and $42.0 million, including non-cash compensation expense of
    approximately $3.5 million.

--  Average monthly cash balance of approximately $150.0 million.

--  Equity in earnings of between $6.0 million and $8.0 million.

--  Interest expense between $68.0 million and $71.0 million.

--  Weighted average LIBOR of 1.0%.

--  Weighted average number of outstanding shares, including OP units, of
    approximately 91.7 million.

--  Dilution associated with the Company's development program of between
    $6.0 million and $7.0 million.

--  Taxes associated with the Company's taxable REIT subsidiary of between
    $2.4 million and $2.8 million.


Supplemental Financial Information:

Supplemental unaudited financial information regarding the Company's performance can be found on the Company's website at www.extraspace.com. Click on the "Investor Relations" link at the bottom of the home page, then on "Financial Reports," then on the tab "Quarterly and Other Reports" in the middle of the page and the document entitled "Q2 2009 Supplemental Financial Information." This supplemental information provides investors additional detail on items that include property occupancy and financial performance by portfolio and market, debt maturity schedules, and performance and progress of property development.

Conference Call:

Extra Space Storage Inc. will host a conference call at 1:00 p.m. Eastern Time on Tuesday, August 4, 2009 to discuss its financial results for the three and six months ended June 30, 2009. The conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company's website at www.extraspace.com and then by clicking on the "Investor Relations" link at the bottom of the home page. To listen to the live call, please go to the website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. A digital replay will be available on Tuesday, August 4, 2009 at 4:00 p.m. Eastern Time through Tuesday, August 18, 2009 at midnight Eastern Time. To access the replay, dial 888-286-8010 and enter passcode 31907669. International callers should dial 617-801-6888 and enter the same passcode.

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 our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions 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:

--  changes in general economic conditions and in the markets in which we
    operate;

--  the effect of competition from new self-storage facilities or other
    storage alternatives, which could cause rents and occupancy rates to
    decline;

--  potential liability for uninsured losses and environmental
    contamination;

--  difficulties in our ability to evaluate, finance and integrate
    acquired and developed properties into our existing operations and to lease
    up those properties, which could adversely affect our profitability;

--  the impact of the regulatory environment as well as national, state,
    and local laws and regulations including, without limitation, those
    governing REITs, which could increase our expenses and reduce our cash
    available for distribution;

--  recent disruptions in credit and financial markets and resulting
    difficulties in raising capital at reasonable rates or at all, which could
    impede our ability to grow;

--  the possibility that the HSRE joint venture transaction may not close
    on the terms described in this release, or at all, or that the expected
    benefits from the transaction may not be realized;

--  delays in the development and construction process, which could
    adversely affect our profitability;

--  economic uncertainty due to the impact of war or terrorism, which
    could adversely affect our business plan; and

--  our ability to attract and retain qualified personnel and management
    members.


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.

Notes to Financial Information:

The Company operates as a self-managed and self-administered real estate investment trust, or REIT. Readers are encouraged to find further detail regarding Extra Space Storage's organizational structure in its Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the SEC.

Definition of FFO:

FFO provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income (loss) 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 earnings. Net earnings assume 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 (loss) computed in accordance with accounting principles generally accepted in the United States ("GAAP"), excluding gains or losses on sales of operating properties, plus depreciation and amortization 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 (loss) and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements.

For informational purposes, the Company provides FFO adjusted for the exclusion of gains from early extinguishment of debt, non-recurring write-downs and non-cash interest charges related to APB 14-1. Although the Company's calculation of FFO as adjusted 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 gains from early extinguishment of debt, non-recurring write-downs and non-cash charges related to APB 14-1, stockholders and potential investors are presented with an indicator of its operating performance that more closely achieves the objectives of the real estate industry in presenting FFO. FFO as adjusted by the Company should not be considered a replacement of the NAREIT definition of FFO or used as an alternative to net income (loss) 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.

The Company's 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 (loss) 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.

About Extra Space Storage Inc.:

At June 30, 2009, the Company operated or had ownership interests in 738 operating properties, 281 of which were wholly owned and consolidated, four of which were held in joint ventures and consolidated, 343 of which were held in joint ventures and accounted for using the equity method, and 110 of which were managed and in which the Company held no ownership interest. This compares to June 30, 2008, at which time the Company operated or had ownership interests in 673 operating properties, 263 of which were wholly owned and consolidated, two of which were held in joint ventures and consolidated, 345 of which were held in joint ventures and accounted for using the equity method, and 63 of which were managed and in which the Company held no ownership interest. Results for both periods include equity in earnings of real estate joint ventures, management fees, tenant reinsurance and other income.

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a fully integrated, self-administered and self-managed real estate investment trust that owns and/or operates 738 self-storage properties in 33 states and Washington, D.C. The Company's properties comprise approximately 495,000 units and over 53 million square feet of rentable space. The Company is the second largest owner and/or operator of self-storage properties in the United States.

FFO and FFO -- Adjusted for the Three and Six Months Ended June 30, 2009
 -- Unaudited
(In thousands, except share and per share data)
                              Three Months Ended      Six Months Ended
                                   June 30,                June 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Net income (loss)
 attributable to common
 stockholders               $   (7,541) $    6,497  $   20,078  $   10,832
Adjustments:
  Real estate depreciation      11,554       9,975      22,984      19,735
  Amortization of
   intangibles                     725       1,159       1,248       2,437
  Joint venture real estate
   depreciation and
   amortization                  1,414       1,058       2,809       2,110
  Joint venture loss on sale
   of properties                   188           -         188           -
  Distributions paid on
   Preferred Operating
   Partnership units            (1,437)     (1,437)     (2,875)     (2,875)
  Income allocated to
   Operating Partnership
   noncontrolling interests      1,082       1,963       4,473       3,808
                            ----------  ----------  ----------  ----------
Funds from operations       $    5,985  $   19,215  $   48,905  $   36,047
                            ==========  ==========  ==========  ==========
Adjustments:
  Non-cash interest expense
   related to amortization
   of discount on exchangeable
   senior notes             $      563  $    1,059  $    1,404  $    2,088
  Gain on repurchase of
   exchangeable senior notes    (5,093)          -     (27,576)          -
  Unrecovered development
   and acquisition costs        18,801       1,428      18,883       1,592
  Severance costs associated
   with wind-down of
   development program           1,400           -       1,400           -
                            ----------  ----------  ----------  ----------
Funds from operations -
 adjusted                   $   21,656  $   21,702  $   43,016  $   39,727
                            ==========  ==========  ==========  ==========
Diluted funds from
 operations per share       $     0.07  $     0.24  $     0.54  $     0.48
                            ==========  ==========  ==========  ==========
Diluted funds from
 operations per share -
 adjusted                   $     0.24  $     0.27  $     0.47  $     0.53
                            ==========  ==========  ==========  ==========
Weighted average number of
 shares - diluted           91,607,503  79,572,767  91,375,416  75,646,629
Reconciliation of the Company's Calculation of FFO Per Diluted Share to
 GAAP Net Income (Loss) Per Diluted Share for the Three and Six Months
 Ended June 30, 2009 and 2008 -- Unaudited
                                          For the Three     For the Six
                                          Months Ended      Months Ended
                                            June 30,          June 30,
                                        ----------------  ----------------
                                          2009     2008     2009     2008
                                        -------  -------  -------  -------
Net income (loss) attributable to
 common stockholders per diluted share  $ (0.09) $  0.09  $  0.23  $  0.15
Adjustments:
  Real estate depreciation                 0.13     0.13     0.25     0.26
  Amortization of intangibles              0.01     0.01     0.01     0.03
  Joint venture real estate depreciation
   and amortization                        0.02     0.01     0.03     0.03
  Joint venture loss on sale of
   properties                              0.01        -        -        -
  Distributions paid on Preferred
   Operating Partnership units            (0.02)   (0.02)   (0.03)   (0.04)
  Income allocated to Operating
   Partnership noncontrolling interests    0.01     0.02     0.05     0.05
                                        -------  -------  -------  -------
Diluted funds from operations per share $  0.07  $  0.24  $  0.54  $  0.48
                                        =======  =======  =======  =======
Adjustments:
  Non-cash interest expense related to
   amortization of discount on
   exchangeable senior notes            $  0.01  $  0.01  $  0.01  $  0.03
  Gain on repurchase of exchangeable
   senior notes                           (0.06)       -    (0.30)       -
  Unrecovered development and
   acquisition costs                       0.20     0.02     0.21     0.02
  Severance costs associated with
   wind-down of development program        0.02        -     0.01        -
                                        -------  -------  -------  -------
Diluted funds from operations per share
 - adjusted                             $  0.24  $  0.27  $  0.47  $  0.53
                                        =======  =======  =======  =======
252 Same-Store Property Performance for the Three and Six Months Ended
 June 30, 2009 and 2008 -- Unaudited
(In thousands, except occupancy and property counts. Revenues and expenses
 include tenant reinsurance.)
                Three Months Ended             Six Months Ended
                     June 30,                      June 30,
                ------------------   Percent  ------------------   Percent
                  2009      2008     Change     2009      2008     Change
                --------  --------  --------  --------  --------  --------
Same-store
 rental and
 tenant
 reinsurance
 revenues       $ 56,277  $ 57,988    (3.0%)  $113,388  $115,116    (1.5%)
Same-store
 operating and
 tenant
 reinsurance
 expenses         19,357    20,002    (3.2%)    40,001    40,255    (0.6%)
Same-store net
 operating
 income           36,920    37,986    (2.8%)    73,387    74,861    (2.0%)
Non same-store
 rental and
 tenant
 reinsurance
 revenues          7,513     3,877      93.8%   14,430     7,251      99.0%
Non same-store
 operating and
 tenant
 reinsurance
 expenses          3,681     2,231      65.0%    7,165     3,781      89.5%
Total rental
 and tenant
 reinsurance
 revenues         63,790    61,865       3.1%  127,818   122,367       4.5%
Total operating
 and tenant
 reinsurance
 expenses         23,038    22,233       3.6%   47,166    44,036       7.1%
Same-store
 square foot
 occupancy as
 of quarter end     84.3%     87.0%               84.3%     87.0%
Properties
 included in
 same-store          252       252                 252       252
Reconciliation of the Range of Estimated Fully Diluted Net Income Per Share
 to Estimated Fully Diluted FFO Per Share for the Three Months Ending
 September 30, 2009 and the Year Ending December 31, 2009 -- Unaudited
                    For the Three Months Ended      For the Year Ended
                        September 30, 2009          December 31, 2009
                    --------------------------  --------------------------
                      Low End       High End      Low End       High End
                    ------------  ------------  ------------  ------------
Net income          $       0.04  $       0.07  $       0.30  $       0.37
  Income allocated
   to Operating
   Partnership
   minority interest        0.01          0.01          0.05          0.05
                    ------------  ------------  ------------  ------------
Net income
 attributable to
 common stockholders
 per diluted share          0.05          0.08          0.35          0.42
Adjustments:
  Real estate
   depreciation             0.13          0.13          0.50          0.50
  Amortization of
   intangibles              0.01          0.01          0.03          0.03
  Joint venture real
   estate depreciation
   and amortization         0.02          0.02          0.07          0.07
  Joint venture loss
   on sale of
   properties                  -             -          0.01          0.01
  Distributions paid
   on Preferred
   Operating
   Partnership units      (0.02)        (0.02)        (0.06)        (0.06)
                    ------------  ------------  ------------  ------------
Diluted funds from
 operations per
 share              $       0.19  $       0.22  $       0.90  $       0.97
                    ============  ============  ============  ============
Adjustments:
  Non-cash interest
   expense related
   to amortization
   of discount on
   exchangeable
   senior notes     $       0.01  $       0.01  $       0.03  $       0.03
  Gain on repurchase
   of exchangeable
   senior notes                -             -         (0.30)        (0.30)
  Unrecovered
   development and
   acquisition costs           -             -          0.21          0.21
  Severance costs
   associated with
   wind-down of
   development
   program                     -             -          0.01          0.01
                    ------------  ------------  ------------  ------------
Diluted funds from
 operations per
 share - adjusted   $       0.20  $       0.23  $       0.85  $       0.92
                    ============  ============  ============  ============
Consolidated Balance Sheets
(In thousands, except share data)
                                      June 30, 2009     December 31, 2008
                                    ------------------  ------------------
                                        (unaudited)
Assets:
Real estate assets:
  Net operating real estate assets  $        1,940,232  $        1,938,922
  Real estate under development                 89,310              58,734
                                    ------------------  ------------------
    Net real estate assets                   2,029,542           1,997,656
Investments in real estate ventures            132,272             136,791
Cash and cash equivalents                      131,551              63,972
Restricted cash                                 40,927              38,678
Receivables from related parties
 and affiliated real estate joint
 ventures                                        5,666              11,335
Other assets, net                               42,486              42,576
                                    ------------------  ------------------
      Total assets                  $        2,382,444  $        2,291,008
                                    ==================  ==================
Liabilities, Noncontrolling
 Interests and Equity:
Notes payable                       $        1,065,502  $          943,598
Notes payable to trusts                        119,590             119,590
Exchangeable senior notes                       95,163             209,663
Discount on exchangeable senior
 notes                                          (5,070)            (13,031)
Lines of credit                                100,000              27,000
Accounts payable and accrued
 expenses                                       34,462              35,128
Other liabilities                               26,823              22,267
                                    ------------------  ------------------
      Total liabilities                      1,436,470           1,344,215
                                    ------------------  ------------------
Commitments and contingencies
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,
   300,000,000 shares authorized,
   86,432,978 and 85,790,331 shares
   issued and outstanding at June
   30, 2009 and December 31, 2008,
   respectively                                    864                 858
  Paid-in capital                            1,132,073           1,130,964
  Accumulated other comprehensive
   income                                          189                   -
  Accumulated deficit                         (254,500)           (253,052)
                                    ------------------  ------------------
    Total Extra Space Storage Inc.
     stockholders' equity                      878,626             878,770
  Noncontrolling interest
   represented by Preferred
   Operating Partnership units, net
   of $100,000 note receivable                  29,891              29,837
  Noncontrolling interest in
   Operating Partnership                        35,866              36,628
  Other noncontrolling interests                 1,591               1,558
                                    ------------------  ------------------
      Total noncontrolling interests
       and equity                              945,974             946,793
                                    ------------------  ------------------
      Total liabilities,
       noncontrolling interests and
       equity                       $        2,382,444  $        2,291,008
                                    ==================  ==================
Consolidated Statement of Operations for the Three Months Ended June 30,
 2009 and June 30, 2008 -- Unaudited
(In thousands, except share and per share data)
                                                      Three Months Ended
                                                           June 30,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
Revenues:
 Property rental                                    $   58,705  $   57,885
 Management and franchise fees                           5,275       5,343
 Tenant reinsurance                                      5,085       3,980
 Other income                                                3         128
                                                    ----------  ----------
   Total revenues                                       69,068      67,336
                                                    ----------  ----------
Expenses:
 Property operations                                    21,567      20,863
 Tenant reinsurance                                      1,471       1,370
 Unrecovered development and acquisition costs          18,801       1,428
 Severance costs associated with wind-down of
  development program                                    1,400           -
 General and administrative                             10,615      10,183
 Depreciation and amortization                          12,840      11,697
                                                    ----------  ----------
   Total expenses                                       66,694      45,541
                                                    ----------  ----------
Income before interest, equity in earnings of real
 estate ventures, gain on repurchase of
 exchangeable senior notes, and income tax expense       2,374      21,795
Interest expense                                       (15,816)    (15,962)
Non-cash interest expense related to amortization
 of discount on exchangeable senior notes                 (563)     (1,059)
Interest income                                            321         870
Interest income on note receivable from Preferred
 Operating Partnership unit holder                       1,212       1,212
Equity in earnings of real estate ventures               1,641       1,373
Gain on repurchase of exchangeable senior notes          5,093           -
Income tax expense                                        (943)        113
                                                    ----------  ----------
Net income (loss)                                       (6,681)      8,342
                                                    ----------  ----------
Net income allocated to Preferred Operating
 Partnership noncontrolling interests                   (1,369)     (1,539)
Net (income) loss allocated to Operating
 Partnership and other noncontrolling interests            509        (306)
                                                    ----------  ----------
Net income (loss) attributable to common
 stockholders                                       $   (7,541) $    6,497
                                                    ==========  ==========
Net income (loss) per common share
 Basic                                              $    (0.09) $     0.09
 Diluted                                            $    (0.09) $     0.09
Weighted average number of shares
 Basic                                              86,397,618  73,900,524
 Diluted                                            91,607,503  79,572,767
Cash dividends paid per common share                $        -  $     0.25
Consolidated Statement of Operations for the Six Months Ended June 30, 2009
 and June 30, 2008 -- Unaudited
(In thousands, except share and per share data)
                                                       Six Months Ended
                                                           June 30,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
Revenues:
  Property rental                                   $  118,114  $  114,909
  Management and franchise fees                         10,494      10,420
  Tenant reinsurance                                     9,704       7,458
  Other income                                              10         256
                                                    ----------  ----------
    Total revenues                                     138,322     133,043
                                                    ----------  ----------
Expenses:
  Property operations                                   44,434      41,504
  Tenant reinsurance                                     2,732       2,532
  Unrecovered development and acquisition costs         18,883       1,592
  Severance costs associated with wind-down of
   development program                                   1,400           -
  General and administrative                            21,213      20,062
  Depreciation and amortization                         25,363      23,278
                                                    ----------  ----------
    Total expenses                                     114,025      88,968
                                                    ----------  ----------
Income before interest, equity in earnings of real
 estate ventures, gain on repurchase of
 exchangeable senior notes, loss on sale of
 investments available for sale and income tax
 expense                                                24,297      44,075
Interest expense                                       (31,611)    (32,316)
Non-cash interest expense related to amortization
 of discount on exchangeable senior notes               (1,404)     (2,088)
Interest income                                            853       1,295
Interest income on note receivable from Preferred
 Operating Partnership unit holder                       2,425       2,425
Equity in earnings of real estate ventures               3,536       2,595
Gain on repurchase of exchangeable senior notes         27,576           -
Loss on sale of investments available for sale               -      (1,415)
Income tax expense                                      (1,591)       (187)
                                                    ----------  ----------
Net income                                              24,081      14,384
                                                    ----------  ----------
Net income allocated to Preferred Operating
 Partnership noncontrolling interests                   (3,175)     (3,057)
Net income allocated to Operating Partnership and
 other noncontrolling interests                           (828)       (495)
                                                    ----------  ----------
Net income attributable to common stockholders      $   20,078  $   10,832
                                                    ==========  ==========
Net income per common share
  Basic                                             $     0.23  $     0.15
  Diluted                                           $     0.23  $     0.15
Weighted average number of shares
  Basic                                             86,170,270  70,034,123
  Diluted                                           91,375,416  75,646,629
Cash dividends paid per common share                $     0.25  $     0.50

For Information:

James Overturf
Extra Space Storage Inc.
(801) 365-4501

Mark Collinson
CCG Investor Relations
(310) 477-9800


SOURCE: Extra Space Storage Inc.