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Extra Space Storage Inc. Reports 2012 First Quarter Results
Achieves $0.33 FFO per Share; Same-Store Revenue Increases 6.3%; Same-Store NOI Increases 10.8%

SALT LAKE CITY, UT, Apr 30, 2012 (MARKETWIRE via COMTEX) --Extra Space Storage Inc. (NYSE: EXR) (the "Company"), a leading owner and operator of self-storage properties in the United States, announced operating results for the three months ended March 31, 2012.

Highlights for the Three Months Ended March 31, 2012:

--  Achieved funds from operations ("FFO") of $0.33 per diluted share
    including lease up dilution of $0.01 per share and additional interest
    expense of $0.01 per share associated with the prepayment of debt,
    resulting in 32.0% quarter-over-quarter FFO growth compared to 2011.


--  Increased same-store revenue and net operating income ("NOI") by 6.3%
    and 10.8%, respectively, as compared to the same period in 2011.


--  Grew same-store occupancy by 340 basis points to 87.1% at March 31,
    2012, compared to 83.7% as of March 31, 2011.


--  Acquired two properties for an aggregate purchase price of $15.5
    million and opened one development property.


--  Paid a quarterly dividend of $0.20 per share.



Spencer F. Kirk, Chairman and CEO of Extra Space Storage Inc., commented: "We are pleased with the performance of our properties and our execution on the fundamentals of our business. Our same-store revenue growth and expense control were excellent and we are entering the busiest part of the year in a good position. The previously announced acquisition of 36 assets from Prudential Real Estate Investors will propel our future earnings growth and help provide ongoing returns to our stockholders. We are delighted with the opportunity to grow the Company through our partner relationships."

FFO Per Share:

The following table outlines the Company's FFO and FFO as adjusted for the three months ended March 31, 2012 and 2011. The table also provides a reconciliation to GAAP net income per diluted share for each period presented (amounts shown in thousands, except share data - unaudited):

                                For the Three Months Ended March 31,
                         --------------------------------------------------
                                   2012                      2011
                         ------------------------  ------------------------
                                      (per share)               (per share)
Net income attributable
 to common stockholders  $    20,214  $      0.21  $     8,301  $      0.09
Adjustments:
  Real estate
   depreciation               14,633         0.14       12,365         0.13
  Amortization of
   intangibles                 1,052         0.01          308           --
  Joint venture real
   estate depreciation
   and amortization            1,774         0.01        2,075         0.02
  Joint venture (gain)
   loss on sale of
   properties                 (5,429)       (0.05)          36           --
  Distributions paid on
   Preferred Operating
   Partnership units          (1,438)       (0.01)      (1,438)       (0.01)
  Income allocated to
   Operating Partnership
   noncontrolling
   interests                   2,300         0.02        1,844         0.02
                         -----------  -----------  -----------  -----------
Funds from operations    $    33,106  $      0.33  $    23,491  $      0.25
                         ===========  ===========  ===========  ===========

Adjustments:
  Non-cash interest
   expense related to
   amortization of
   discount on
   exchangeable senior
   notes                         444           --          428         0.01
  Acquisition related
   costs                         609         0.01          249           --
                         -----------  -----------  -----------  -----------
Funds from operations -
 adjusted                $    34,159  $      0.34  $    24,168  $      0.26
                         ===========  ===========  ===========  ===========

Weighted average number
 of shares - diluted      99,927,352                92,812,067


FFO and FFO as adjusted include the dilutive impact from lease-up properties of $0.01 per diluted share for the three months ended March 31, 2012, compared to $0.02 for the same period in 2011. FFO and FFO as adjusted also include additional interest expense of $0.01 per share associated with the prepayment of debt for the three months ended March 31, 2012.

Operating Results and Same-Store Property Performance:

The following table outlines the Company's same-store property performance for the three months ended March 31, 2012 and 2011 (amounts shown in thousands, except property count data - unaudited):

                                             Three Months Ended
                                                  March 31,
                                            --------------------  Percent
                                               2012       2011     Change
                                            ---------  ---------  --------
Same-store rental and tenant reinsurance
 revenues                                   $  66,420  $  62,479       6.3%
Same-store operating and tenant reinsurance
 expenses                                      22,212     22,595      (1.7)%
                                            ---------  ---------  --------
Same-store net operating income             $  44,208  $  39,884      10.8%

Non same-store rental and tenant
 reinsurance revenues                       $  17,981  $   6,035     197.9%
Non same-store operating and tenant
 reinsurance expenses                       $   6,232  $   2,364     163.6%

Total rental and tenant reinsurance
 revenues                                   $  84,401  $  68,514      23.2%
Total operating and tenant reinsurance
 expenses                                   $  28,444  $  24,959      14.0%

Same-store square foot occupancy as of
 quarter end                                     87.1%      83.7%

Properties included in same-store                 282        282


As of March 31, 2012, same-store occupancy increased 340 basis points to 87.1% when compared to occupancy at March 31, 2011. Expenses for the three months ended March 31, 2012, were lower primarily due to reduced utility costs and snow removal expenses.

The Company's major markets with revenue growth above the portfolio average for the three months ended March 31, 2012, were Chicago, San Francisco and Orlando/Tampa. Markets performing below the Company's portfolio average included Houston, Las Vegas, Phoenix and San Diego.

Acquisition, Development and Third-Party Management Activity:

During the quarter, the Company purchased two properties for a total of approximately $15.5 million. The properties are located in Maryland and Texas. In addition, the Company opened its final existing development project located in Los Gatos, California.

Subsequent to the end of the quarter, the Company announced that it will acquire Prudential Real Estate Investors' ("PREI(R)") 94.9% interest in the ESS PRISA III LLC joint venture that was formed in 2005. The Company owns the remaining 5.1% interest. The joint venture owns 36 properties located in 18 states. The Company will pay approximately $298.0 million to acquire PREI's interest in the joint venture, consisting of approximately $160.0 million in cash consideration and the assumption of an existing loan of $145.0 million, of which $138.0 million relates to PREI's interest. It is anticipated that this transaction will close in July 2012.

Including the PREI joint venture, the Company currently has 42 properties under contract for an aggregate purchase price of approximately $332.9 million that are expected to close throughout 2012.

The acquisitions of these properties are subject to due diligence and other customary closing conditions and are currently expected to close by the end of the year. No assurance can be provided that any of these acquisitions will be completed on the terms described, or at all.

As of March 31, 2012, the Company managed a total of 183 properties for third-party owners. Including 340 properties owned and operated in joint ventures, the Company has a total of 523 properties under management. The Company continues to be the largest self-storage management company in the United States.

Public Offering of Common Stock:

On April 20, 2012, the Company issued and sold 8,050,000 shares of common stock in a public offering, including 1,050,000 shares pursuant to the underwriter's full exercise of its option to purchase additional shares of common stock from the Company. Net proceeds of the offering were approximately $226.9 million, after deducting the underwriting discount and estimated expenses, which will be used to fund acquisitions, pay down debt and for general corporate and working capital purposes.

Balance Sheet:

As of March 31, 2012, the Company's percentage of fixed-rate debt to total debt was 79.6%. The weighted average interest rate on the Company's debt was 5.2% for fixed-rate debt and 2.3% for variable-rate debt. The combined weighted average interest rate was 4.6% with a weighted average maturity of approximately five and a half years.

During the quarter, the Company obtained $141.9 million in secured financing consisting of four loans with a weighted average interest rate of 2.9%. The Company currently has five separate lines of credit with a total capacity of $336.0 million. On March 31, 2012, the Company had $135.0 million outstanding on its lines of credit.

Dividends:

The Company paid a first quarter dividend of $0.20 per share on the common stock of the Company on March 31, 2012, to stockholders of record at the close of business on March 15, 2012.

Outlook:

The Company currently estimates that FFO per diluted share for the quarter ending June 30, 2012, will be between $0.33 and $0.35 and will be between $1.40 and $1.46 for the full year ending December 31, 2012. FFO estimates for 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:

--  Same-store property revenue growth, including tenant reinsurance,
    between 3.5% and 5.0%.


--  Same-store property expense increase, including tenant reinsurance,
    between 1.0% and 2.5%.


--  Same-store property NOI growth, including tenant reinsurance, between
    4.0% and 7.0%.


--  Net tenant reinsurance income between $26.0 million and $27.0
    million.


--  General and administrative expenses between $50.0 million and $52.0
    million, including non-cash compensation expense of approximately $5.0
    million.


--  Average monthly cash balance of approximately $40.0 million.


--  Equity in earnings of real estate ventures between $9.0 million and
    $10.0 million.


--  Acquisition activity of approximately $400.0 million including the
    PREI transaction.


--  Interest expense between $73.0 million and $75.0 million.


--  Weighted average LIBOR of 0.35%.


--  Weighted average number of outstanding shares, including OP units, of
    approximately 106.0 million.


--  Dilution associated with the Company's lease-up properties of
    approximately $1.0 million.


--  Taxes associated with the Company's taxable Real Estate Investment
    Trust ("REIT") subsidiary between $3.0 million and $4.0 million,
    inclusive of approximately $6.0 million in solar tax credits.


--  Acquisition related costs of approximately $2.7 million.


--  Non-cash interest charges associated with exchangeable senior notes of
    approximately $0.5 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 & Stock Info," then on "Quarterly Earnings" on the left of the page. This supplemental information provides additional detail on items that include property 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 2:00 p.m. Eastern Time on Tuesday, May 1, 2012, to discuss its financial results. To participate in the conference call, please dial 866-314-9013 or 617-213-8053 for international participants, conference ID: 75181361. The conference call will also be available on the Company's website at www.extraspace.com. To listen to a live broadcast, 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 Company's website in the Investor Relations section.

A replay of the call will also be available by telephone, from 4:00 p.m. Eastern Time on May 1, 2012, until midnight Eastern Time on June 1, 2012. The replay dial-in numbers are 888-286-8010 or 617-801-6888 for international callers, conference ID: 68111867.

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, the real estate industry and
    the markets in which we operate;


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


--  difficulties in our ability to evaluate, finance, complete and
    integrate acquisitions and developments successfully and to lease up
    those properties, which could adversely affect our profitability;


--  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 REITs, which could increase our expenses and reduce our cash
    available for distribution;


--  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;


--  increased interest rates and operating costs;


--  reductions in asset valuations and related impairment charges;


--  the failure of our joint venture partners to fulfill their obligations
    to us or their pursuit of actions that are inconsistent with our
    objectives;


--  the failure to maintain our REIT status for federal income tax
    purposes;


--  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 REIT. Readers are encouraged to find further detail regarding Extra Space Storage's organizational structure in its most recent Annual Report and Form 10-K 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 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 computed in accordance with U.S. generally accepted accounting principles ("GAAP"), excluding gains or losses on sales of operating properties and impairment write downs of depreciable real estate assets, 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 and cash flows in accordance with GAAP, as presented in the Company's consolidated financial statements.

For informational purposes, the Company provides FFO as adjusted for the exclusion of gains from early extinguishment of debt, non-recurring revenues and expenses, acquisition related costs and non-cash interest charges related to the Company's exchangeable senior notes. 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 revenues and expenses, the costs related to acquiring properties and non-cash interest charges from the exchangeable senior notes, 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 and 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 Properties:

The Company's same-store properties for the three months ended March 31, 2012, consisted of 282 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.

About Extra Space Storage Inc.:

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT that owns and/or operates 882 self-storage properties in 34 states and Washington, D.C. The Company's properties comprise approximately 585,000 units and approximately 64 million square feet of rentable space, offering customers a wide selection of conveniently located and secure storage solutions across the country, including boat storage, RV storage and business storage. The Company is the second largest owner and/or operator of self-storage properties in the United States and is the largest self-storage management company in the United States.



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

                                                 March 31,     December 31,
                                                    2012           2011
                                               -------------  -------------
                                                (Unaudited)
Assets:
Real estate assets                             $   2,266,535  $   2,263,795

Investments in real estate ventures                  125,336        130,410
Cash and cash equivalents                             37,575         26,484
Restricted cash                                       24,273         25,768
Receivables from related parties and
 affiliated real estate joint ventures                15,415         18,517
Other assets, net                                     54,002         51,276
                                               -------------  -------------
      Total assets                             $   2,523,136  $   2,516,250
                                               =============  =============

Liabilities, Noncontrolling Interests and
 Equity:
Notes payable                                  $   1,025,923  $     937,001
Notes payable to trusts                              119,590        119,590
Exchangeable senior notes                             87,663         87,663
Premium on notes payable                               4,273          4,402
Lines of credit                                      135,000        215,000
Accounts payable and accrued expenses                 38,029         45,079
Other liabilities                                     32,916         33,754
                                               -------------  -------------
      Total liabilities                            1,443,394      1,442,489
                                               -------------  -------------

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, 95,042,862 and
   94,783,590 shares issued and outstanding at
   March 31, 2012 and December 31, 2011,
   respectively                                          950            948
  Paid-in capital                                  1,294,572      1,290,021
  Accumulated other comprehensive deficit             (8,142)        (7,936)
  Accumulated deficit                               (262,874)      (264,086)
                                               -------------  -------------
    Total Extra Space Storage Inc.
     stockholders' equity                          1,024,506      1,018,947
  Noncontrolling interest represented by
   Preferred Operating Partnership units, net
   of $100,000 note receivable                        29,706         29,695
  Noncontrolling interests in Operating
   Partnership                                        24,425         24,018
  Other noncontrolling interests                       1,105          1,101
                                               -------------  -------------
      Total noncontrolling interests and
       equity                                      1,079,742      1,073,761
                                               -------------  -------------
      Total liabilities, noncontrolling
       interests and equity                    $   2,523,136  $   2,516,250
                                               =============  =============



Consolidated Statement of Operations for the Three Months Ended March 31, 2012 and 2011 -- Unaudited (In thousands, except share data)


                                               Three Months Ended March 31,
                                               ----------------------------
                                                    2012           2011
                                               -------------  -------------
Revenues:
  Property rental                              $      75,844  $      61,490
  Management and franchise fees                        6,586          5,967
  Tenant reinsurance                                   8,557          7,024
                                               -------------  -------------
    Total revenues                                    90,987         74,481
                                               -------------  -------------

Expenses:
  Property operations                                 26,596         23,344
  Tenant reinsurance                                   1,848          1,615
  Acquisition related costs                              609            249
  General and administrative                          12,640         11,658
  Depreciation and amortization                       16,524         13,585
                                               -------------  -------------
    Total expenses                                    58,217         50,451
                                               -------------  -------------

Income from operations                                32,770         24,030

Interest expense                                     (18,071)       (16,414)
Non-cash interest expense related to
 amortization of discount on exchangeable
 senior notes                                           (444)          (428)
Interest income                                          275            182
Interest income on note receivable from
 Preferred Operating Partnership unit holder           1,213          1,213
                                               -------------  -------------
Income before equity in earnings of real
 estate ventures and income tax expense               15,743          8,583

Equity in earnings of real estate ventures             2,296          1,811
Equity in earnings of real estate ventures -
 gain on sale of real estate assets                    5,429             --
Income tax expense                                      (950)          (254)
                                               -------------  -------------
Net income                                            22,518         10,140
Net income allocated to Preferred Operating
 Partnership noncontrolling interests                 (1,649)        (1,532)
Net income allocated to Operating Partnership
 and other noncontrolling interests                     (655)          (307)
                                               -------------  -------------
Net income attributable to common stockholders $      20,214  $       8,301
                                               =============  =============

Net income per common share
  Basic                                        $        0.21  $        0.09
  Diluted                                      $        0.21  $        0.09

Weighted average number of shares
  Basic                                           94,888,078     88,045,951
  Diluted                                         99,927,352     92,812,067

Cash dividends paid per common share                    0.20           0.14



Reconciliation of the Range of Estimated Fully Diluted Net Income Per Share to Estimated Fully Diluted FFO Per Share -- for the Three Months Ending June 30, 2012 and the Year Ending December 31, 2012 -- Unaudited


                                        For the Three       For the Year
                                        Months Ending          Ending
                                        June 30, 2012     December 31, 2012
                                     ------------------  ------------------
                                      Low End  High End   Low End  High End
                                     --------  --------  --------  --------
Net income attributable to common
 stockholders per diluted share      $   0.15  $   0.17  $   0.73  $   0.79
  Income allocated to noncontrolling
   interest - Preferred Operating
   Partnership and Operating
   Partnership                           0.02      0.02      0.10      0.10
  Fixed component of income
   allocated to non-controlling
   interest - Preferred Operating
   Partnership                          (0.01)    (0.01)    (0.05)    (0.05)
                                     --------  --------  --------  --------
Net income for diluted computations      0.16      0.18      0.78      0.84

Adjustments:
  Real estate depreciation               0.14      0.14      0.57      0.57
  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 gain on sale of
   properties                              --        --     (0.05)    (0.05)
                                     --------  --------  --------  --------
Diluted funds from operations per
 share                               $   0.33  $   0.35  $   1.40  $   1.46
                                     ========  ========  ========  ========



SOURCE: Extra Space Storage Inc.