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Extra Space Storage Inc. Reports Results for the Quarter Ended March 31, 2005

SALT LAKE CITY, May 10, 2005 /PRNewswire-FirstCall via COMTEX/ -- Extra Space Storage Inc. (the "Company") (NYSE: EXR) announced today operating results for the quarter ended March 31, 2005. The reported statements of operations and cash flows for the quarter ended March 31, 2004 are the operating results of the Company's predecessor (the "Predecessor") prior to the consummation of the Company's IPO and various formation transactions.

Highlights

  • Continued increases in revenue on a same-store comparison.
  • Increased FFO per share for the first quarter to $.15/share from $.13/share for the quarter ending December 31, 2004.
  • Completed the acquisition of eight self-storage facilities with a purchase price of $62.4 million.
  • Declared and paid a regular quarterly dividend of $0.2275 per share, representing an annualized dividend of $0.91 per share.
  • Appointed Joseph D. Margolis to the Company's Board of Directors, increasing the size of the Board to seven members.
  • Subsequent to quarter end, announced the signing of a definitive agreement for the Company, along with its joint venture partner, Prudential Real Estate Investors, to acquire Storage USA from GE Commercial Finance.

Kenneth M. Woolley, chairman and chief executive officer, stated, "We maintained our consistent property performance in the first quarter with continued year-on-year increases in revenue and net operating income. We also closed on several acquisitions and have grown our publicly held portfolio to 148 properties."

The results for the quarter ended March 31, 2005 include the operations of 148 properties, 130 of which were consolidated and 18 of which were held in joint ventures accounted for using the equity method, compared to the results for the quarter and year ended March 31, 2004, which included the operations of 108 properties, 70 of which were consolidated and 38 of which were in joint ventures accounted for using the equity method. Results for the quarter ended March 31, 2004 include the results of six properties in which the Company did not own any interest and one where the Company sold its joint venture interest in 2004. The properties were consolidated as a result of guarantees and/or puts for which the Company was liable. Five of the six properties were deconsolidated on August 16, 2004 upon the release of all guarantees and puts, and the other property was deconsolidated on December 31, 2004. Results for both periods also include equity in earnings of real estate joint ventures, third-party management fees, acquisition fees and development fees.

Operating Results for the Quarter Ended March 31, 2005:

Revenues for the quarter ended March 31, 2005 were $22.9 million compared to $10.9 million for the quarter ended March 31, 2004. Contributing to the increase in revenues for the first quarter was the acquisition of 52 stabilized properties during 2004 and the first quarter of 2005, the buy-out of various joint venture partners in 2004 and continued occupancy gains from the Company's and the Predecessor's lease-up properties and increased rental revenues from existing customers.

The net loss for the quarter ended March 31, 2005 was $640,000 compared to a net loss for the quarter ended March 31, 2004 of $6.0 million. The decrease in net loss was due to the acquisition of 52 stabilized properties, the buy-out of various joint venture partners, as well as continued occupancy gains in lease-up properties and rental increases from existing customers. These increases were partially offset by additional depreciation and amortization and an increase in repairs and maintenance due to snow removal expenses in New England.

Portfolio Results:

Same store portfolio: Our same-store stabilized portfolio consists of 38 properties wholly owned by the Predecessor or the Company at the beginning and at the end of the applicable periods presented and that had achieved stabilization as of the first day of such period. These results provide information relating to property-level operating changes without the effects of acquisitions or completed developments. The results shown should not be used as a basis for future same-store performance.

Company     Predecessor
                                   Three Months Ending March 31,
                                                                     Percent
                                           2005           2004        Change

     Same-store rental revenues          $6,737          $6,525         3.2%
     Same-store operating expenses        2,365           2,203         7.4%

     Non same-store rental revenues      15,485           3,471       346.1%
     Non same-store operating expenses    6,513           2,207       195.1%

     Total rental revenues               22,222           9,996       122.3%
     Total operating expenses             8,878           4,410       101.3%

     Properties included in same-store       38              38

Same-store stabilized revenues for the quarter ended March 31, 2005, reflecting a portfolio of 38 wholly-owned properties, increased 3.2% compared to the first quarter of 2004. Expenses rose 7.4% in the quarter primarily due to a significant increase in repairs and maintenance, which was caused by abnormally high snow removal costs in New England.

Kenneth M. Woolley stated: "We are pleased with the revenue performance of our same-store properties for the first quarter even though we had an increase in snow removal costs that suppressed our same-store NOI gains. Our stores saw a continuation of the revenue growth from 2004 and we look forward to an active second quarter. I think our internal initiatives continue to position us well."

Common Contingent Share ("CCS") and Common Contingent Unit ("CCU") Property Performance: As described in the Company's Prospectus for its IPO, upon the achievement of certain levels of net operating income with respect to 14 of the Company's pre-stabilized properties, the Company's CCSs and the Company's operating partnership's CCUs will convert into additional shares of common stock and operating partnership units, respectively, beginning, with the quarter ending March 31, 2006. The average occupancy of these 14 properties as of March 31, 2005 was 58.4% compared to 57.5% at December 31, 2004. The table below outlines the performance of these properties for the quarter ended March 31, 2005 and 2004, respectively.

Company      Predecessor
                                  Three Months Ended March 31,
                                                                    Percent
                                         2005            2004        Change

     CCS/CCU rental revenues           $1,852          $1,188        55.9%
     CCS/CCU operating expenses         1,308           1,088        20.2%

     Non CCS/CCU rental revenues       20,370           8,808       131.3%
     Non CCS/CCU operating expenses     7,570           3,322       127.9%

     Total rental revenues             22,222           9,996       122.3%
     Total operating expenses           8,878           4,410       101.3%

     Properties included in CCS/CCU        14              14

Revenues for the quarter ended March 31, 2005 increased 56.0% as compared to the quarter ended March 31, 2004. This increase was due to the continued occupancy gains of the facilities. Expenses for the quarter ended March 31, 2005 increased 20.2%. The increase was primarily due to an increase in repairs and maintenance and property taxes.

Funds from Operations:

Funds from operations ("FFO") provides relevant and meaningful information about the Company's operating performance that is necessary, along with net loss and cash flows, for an understanding of the Company's operating results. 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 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 its performance, FFO should be considered along with the reported net loss and cash flows in accordance with GAAP, as presented in the consolidated financial statements.

The computation of FFO may not be compared 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 activates as a measure of its liquidity, or as an indicator of the Company's ability to make cash distributions.

Funds from operations per share continued to grow from $0.13 for the quarter ending December 31, 2004 to $0.15 for the quarter ending March 31, 2005. FFO per share was slightly lower than expected due to increased snow removal costs in New England, acquisitions occurring later in the quarter than expected and lower than expected development fees recognized in the first quarter of 2005. The Company expects to recognize additional development fees during the second and third quarters that will help recover some of the shortfall experienced in the first quarter. The following table sets forth the calculation of FFO per share:

Three months ended
                                                      March 31, 2005
                                                     (in thousands)
     Net Loss                                            $(640)

     Plus:
          Real estate depreciation                       3,764
          Amortization of intangibles                    1,927
          Joint venture real estate depreciation           101
     Less:
          Gain on sale of real estate assets                --
          Loss allocated to operating partnership          (56)

     Funds from operations                              $5,096
     Funds from operations per share                     $0.15



    First Quarter Property Acquisitions:

The Company acquired eight properties during the quarter ending March 31, 2005. The properties are located in the Company's core markets of California, Florida, Georgia and New Jersey and were purchased for an aggregate of $62.4 million.

Commenting on these acquisitions, Mr. Woolley noted: "We are pleased to complete the purchase of these properties. They complement our existing portfolio of properties located in high-income, high-density population centers."

First Quarter Dividend Declared

On February 22, 2005, the Company announced its first quarter common stock dividend of $0.2275 per share. The dividend was paid on March 31, 2005 to shareholders of record as of March 15, 2005. The dividend payment was calculated based on an annual dividend of $0.91 per share.

Appointment of New Board Member

On February 23, 2005, the Company appointed Joseph D. Margolis to the Company's Board of Directors, increasing the size of the Board to seven members. Mr. Margolis is a co-founding partner of Arsenal Real Estate Funds, a private real estate investment manager. Prior to forming Arsenal, Mr. Margolis held senior positions for twelve years at Prudential Real Estate Investors in portfolio management, capital markets and as General Counsel, and also served on the management and investment committees. Mr. Margolis will serve on the Company's Compensation, Nominating and Governance Committee.

Storage USA Acquisition

On May 5, 2005, the Company and joint venture partner Prudential Real Estate Investors ("PREI"), the real estate investment and advisory business of Prudential Financial, Inc., executed a definitive agreement to acquire Storage USA from General Electric Corp. ("GE") for $2.29 billion in cash. The purchase is subject to customary conditions to closing. Company management expects the acquisition to be completed in July 2005. When completed the transaction will be the largest to date in the self-storage industry.

Ken Woolley added: "The most exciting news at this time for Extra Space Storage is the recent announcement that we, along with our joint venture partner Prudential Real Estate Investors, have signed an agreement to acquire Storage USA from GE. This transaction is what Extra Space Storage is all about. We're acquiring well-located, quality properties, with the majority of them located in our current core markets. Through this transaction, we will become the second largest operator of self-storage properties in the U.S., and positions us as a major player in the industry. We believe that, with our scalable technology systems and operational processes, we will be able to add value throughout this expanded portfolio. The transaction will provide value to our shareholders and is consistent with our strategy to become a major force in the U.S. self storage industry."

Storage USA, based in Memphis, Tennessee, is currently the fourth largest operator of self-storage facilities in the United States, operating 458 self-storage properties in 31 states and Washington, D.C. Storage USA manages over 31 million net rentable square feet, with nearly 250,000 tenants.

The Company will own one hundred percent of 61 Storage USA facilities, and through the PREI joint venture, will have an ownership interest in an additional 259 Storage USA facilities. The Company will also acquire Storage USA's equity interest in 54 joint venture properties, and assume Storage USA's franchise and management business consisting of 84 properties.

Financial Flexibility:

As of March 31, 2005, total fixed rate debt to total debt is approximately 62.2%. The weighted average interest rate was 4.82% for fixed rate loans and 4.64% for variable rate loans. The total weighted average interest rate of all fixed and variable rate loans was 4.76%. The Company had $68.5 million available on its line of credit of which $48.5 million is drawn as of March 31, 2005.

Kent Christensen, senior vice president and chief financial officer noted: "As in previous quarters, we continue to feel that our financing structure positions us well and gives us the flexibility and buying power to execute on our plans for growth."

Outlook

For the quarter ended March 31, 2005, the Company continued to experience year-on-year revenue growth and a consistent level of occupancy at its stabilized properties. California and Florida remained top performing markets, while Pennsylvania and New Jersey lagged. Conditions in most of the Company's markets continued to improve. Because of these conditions, the Company expects year-on-year same store revenue for its current stabilized portfolio to increase during 2005 over the levels achieved in 2004.

With respect to the 25 lease up properties, including the 14 CCS and CCU properties, the Company expects continued growth in revenues and occupancy with a number of these properties achieving full stabilization during 2005. The CCS and CCU properties as a whole are slightly below budgeted performance with six of the properties continuing to under-perform. These six properties are expected to continue this trend. Consequently, the Company still believes it is unlikely that any CCS or CCU's will be converted into common shares or operating partnership units until at a minimum June 30, 2006, or possibly as late as September 30, 2006.

Mr. Woolley stated: "We are pleased with the performance of our lease-up properties, especially with the increases in revenue. We have seen modest growth, and we look forward to executing on several initiatives that will give us greater revenue growth during the remainder of the year."

The following table sets forth additional information regarding the occupancy of stabilized properties by state as of March 31, 2005.

Stabilized Property Data Based on Location

                             Company   Pro forma    Company     Pro forma
                                                       Net         Net
                                                    rentable    rentable
                           Number of   Number of     square      square
                  Number    units at    units at     feet at     feet at
                    of      March 31, December 31,  March 31,  December 31,
      Location  Properties   2005(1)      2004       2005(2)       2004
     Wholly-
      Owned
      Properties

     Arizona         1         481         480        57,830        57,630
     California     20      12,359      12,362     1,327,392     1,328,215
     Colorado        4       1,809       1,809       233,166       233,130
     Florida        18      11,935      11,942     1,258,914     1,258,929
     Georgia         6       3,147       3,470       434,318       433,141
     Louisiana       2       1,411       1,411       147,900       147,900
     Maryland        1         923         923       138,230       138,230
     Massachusetts  20      10,173      10,178     1,103,466     1,105,275
     Missouri        2         811         811        97,817        97,817
     Nevada          1         463         463        57,100        57,100
     New Hampshire   1         623         623        72,600        72,600
     New Jersey     13      10,232      10,233     1,011,671     1,011,691
     New York        1       1,270       1,270        59,000        59,000
     Pennsylvania    7       4,230       4,234       497,228       495,628
     South Carolina  4       2,088       2,088       246,969       246,969
     Texas           7       4,289       4,289       465,269       464,606
     Utah            1         551         551        72,720        72,750
     Virginia        1         551         551        73,350        73,310

     Total Wholly-
      Owned
      Properties   110      67,346      67,688     7,354,940     7,353,921

     Properties
      Held in
      Joint
      Ventures
     California      7       3,853       3,850       400,064       400,064
     New Hampshire   2         801         801        83,675        83,675
     New Jersey      2       1,726       1,726       166,805       166,805
     New York        2       1,519       1,519       137,574       137,574

     Total Properties
      Held in
      Joint
      Ventures      13       7,899       7,896       788,118       788,118

     Total
      Stabilized
      Properties   123      75,245      75,584     8,143,058     8,142,039



                                           Company             Pro forma
                                         Square foot          Square foot
                                         occupancy %           occupancy %
       Location                         March 31, 2005       December 31,2004
     Wholly-Owned Properties

     Arizona                                90.9%                  95.7%
     California                             86.7%                  86.4%
     Colorado                               83.0%                  81.1%
     Florida                                91.4%                  92.3%
     Georgia                                87.1%                  82.2%
     Louisiana                              83.2%                  85.8%
     Maryland                               74.0%                  78.2%
     Massachusetts                          79.3%                  79.5%
     Missouri                               84.7%                  83.7%
     Nevada                                 91.0%                  89.1%
     New Hampshire                          86.4%                  86.9%
     New Jersey                             83.7%                  86.3%
     New York                               76.1%                  77.9%
     Pennsylvania                           79.0%                  81.2%
     South Carolina                         89.4%                  86.9%
     Texas                                  82.2%                  82.0%
     Utah                                   82.0%                  77.7%
     Virginia                               93.3%                  92.8%

     Total Wholly-Owned Properties          84.9%                  85.1%

     Properties Held in Joint Ventures
     California                             90.2%                  88.4%
     New Hampshire                          85.3%                  86.9%
     New Jersey                             78.3%                  81.3%
     New York                               86.7%                  88.4%

     Total Properties Held in Joint
      Ventures                              86.5%                  86.7%

     Total Stabilized Properties            85.0%                  85.3%


     (1)  Represents unit count as of March 31, 2005 which may differ from
          December 31, 2004 unit count due to unit conversions or expansions.
     (2)  Represents net rentable square feet as of March 31, 2005 which may
          differ from December 31, 2004 net rentable square feet due to unit
          conversions or expansions.

The following table sets forth additional information regarding the occupancy of our lease-up properties by state as of March 31, 2005.

Lease-up Property Data Based on Location

                               Company    Pro forma    Company    Pro forma
                                                         Net         Net
                                                      rentable    rentable
                             Number of   Number of     square      square
                    Number   units at    units at     feet at     feet at
                      of     March 31,  December 31,  March 31,  December 31,
     Location     Properties   2005(1)      2004       2005(2)      2004
     Wholly-Owned
      Properties

     California       3        1,737       1,737       202,027      202,027
     Connecticut      2        1,366       1,360       123,715      123,390
     Florida          1          388         388        38,005       38,005
     Illinois         2        1,139       1,133       144,690      144,515
     Massachusetts    5        3,024       2,969       322,255      322,255
     New Jersey       4        3,334       3,335       275,298      275,298
     New York         3        2,522       2,522       198,110      198,110

     Total Wholly
      -Owned
      Properties     20       13,510      13,444     1,304,100    1,303,600

     Properties
      Held in
      Joint
      Ventures
     California       2        1,511       1,412       149,060      151,295
     New Jersey       1          664         664        58,650       58,650
     New York         1          656         656        60,020       60,020
     Pennsylvania     1          916         916        73,125       73,125

     Total
      Properties
      Held in
      Joint
      Ventures        5        3,747       3,648       340,855      343,090

     Total
      Lease-up
      Properties     25       17,257      17,092     1,644,955    1,646,690



                                            Company             Pro forma
                                          Square foot          Square foot
                                          occupancy %          occupancy %
       Location                         March 31, 2005       December 31,2004
     Wholly-Owned Properties

     California                              69.2%                 69.2%
     Connecticut                             59.4%                 60.9%
     Florida                                 63.9%                 69.1%
     Illinois                                57.9%                 56.0%
     Massachusetts                           52.2%                 49.7%
     New Jersey                              71.7%                 72.1%
     New York                                75.7%                 76.1%

     Total Wholly-Owned Properties           62.3%                 61.8%

     Properties Held in Joint Ventures
     California                              85.6%                 86.0%
     New Jersey                              88.4%                 87.1%
     New York                                74.4%                 78.9%
     Pennsylvania                            73.6%                 76.4%

     Total Properties Held in Joint
      Ventures                               81.6%                 82.9%

    Total Lease-up Properties                66.3%                 66.2%

     (1)  Represents unit count as of March 31, 2005 which may differ from
          December 31, 2004 unit count due to unit conversions or expansions.
     (2)  Represents net rentable square feet as of March 31, 2005 which may
          differ from December 31, 2004 net rentable square feet due to unit
          conversions or expansions.



    The following table sets forth pro forma revenue per occupied net rentable
square foot. This table includes all acquisition properties as if they were
purchased January 1, 2004.

                                    Quarter ended            Year ended
                                   March 31, 2004      December 31, 2004 (1)
     Pro forma Total Revenue
      Per Occupied Square Foot
          Stabilized Properties         $13.05                 $13.06
          Lease Up Properties           $13.48                 $12.32

     (1)  Numbers differ from those reported in 12/31/04 year end press
          release due to the classification of certain properties as lease-up,
          rather than stabilized.

Forward Looking Statements:

When used within this document, the words "believes," "anticipates," "projects," "should," "estimates," "expects," and similar expressions are intended to identify "forward-looking statements" within the meaning of Section 27-A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include, but are not limited to, changes in general economic conditions and in the markets in which the Company operates:

  • the effect of competition from new self-storage facilities or other storage alternatives, which would cause rents and occupancy rates to decline;
  • the Company's ability to effectively compete in the industry in which it does business;
  • difficulties in the Company's ability to evaluate, finance and integrate acquired and developed properties into the Company's existing operations and to fill up those properties, which could adversely affect the Company's profitability;
  • 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, which could increase the Company's expense and reduce the Company's cash available for distribution;
  • difficulties in raising capital at reasonable rates, which could impede the Company's ability to grow; and
  • delays in the development and construction process, which could adversely affect the Company's profitability; and economic uncertainty due to the impact of war or terrorism which could adversely affect its business plan.

The Company disclaims any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this report.

Conference Call

Extra Space Storage Inc. will host a conference call at 11:00 a.m. Mountain Time (1:00 p.m. Eastern Time) on Tuesday, May 10, 2005 to discuss first quarter 2005 results.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties Extra Space Storage's website at www.extraspace.com (then click on "Investor Info" tab.) To listen to the live call, please go to either website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on the website. In addition, a replay of the call will be available via telephone for 14 business days, beginning two hours after the call. To listen to the call, in the U.S., please dial 888-286-8010 and international the number is 617-801-6888. Enter access code 81717930.

About Extra Space Storage Inc.

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a real estate investment trust that owns and operates 148 self-storage properties in 20 states. The Company's properties comprise more than 92,500 units, 9.8 million square feet rented by over 75,000 tenants. Additional Extra Space Storage information is available at www.extraspace.com.

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

                                            March 31, 2005   December 31, 2004
                                             (unaudited)
     Assets:
     Real estate assets                        $755,427           $696,899
     Investments in real estate ventures          6,121              6,182
     Cash and cash equivalents                   12,286             24,329
     Restricted cash                              5,510              4,430
     Receivables from related parties             2,254              2,501
     Other assets, net                           15,555             14,143
           Total assets                        $797,153           $748,484
     Liabilities, Minority Interests,
      and Stockholders' Equity:
     Lines of credit                            $48,499            $39,000
     Notes payable                              480,584            433,977
     Accounts payable and accrued expenses        1,619              3,444
     Other liabilities                            9,799              7,003
     Total liabilities                          540,501            483,424
     Minority interest in Operating
      Partnership                                20,776             21,453

    Commitments and contingencies

    Stockholders' equity:
        Preferred stock, $0.01 par value,
         50,000,000 shares authorized, no
         shares issued or outstanding                --                 --
        Common stock, $0.01 par value,
         200,000,000 shares authorized,
         31,169,950 shares issued and
         outstanding at March 31, 2005
         and December 31, 2004                      312                312
        Paid-in capital                         347,883            347,883
        Accumulated deficit                    (112,319)          (104,588)

           Total stockholders' equity           235,876            243,607

           Total liabilities, minority
            interests, and
            stockholders' equity               $797,153           $748,484



     Extra Space Storage Inc.
     Condensed Consolidated Statements of Operations
     (Dollars in thousands, except per share data)

                                                     Company     Predecessor
                                                  Three months ended March 31,
                                                       2005          2004

     Revenues:
          Property rental                             $22,222       $9,996
          Management fees                                 368          548
          Acquisition and development fees                267          265
          Other income                                     61          117

               Total Revenues                          22,918       10,926

     Expenses:
          Property operations                           8,878        4,410
          Unrecovered development/acquisition
           costs and support payments                     107          498
          General and administrative                    2,957        2,970
          Depreciation and amortization                 5,730        2,677
          Other                                            20           --

               Total Expenses                          17,692       10,555

     Income before interest expense, minority
      interests, equity in earnings
      of real estate ventures and loss on
      sale of real estate assets                        5,226          371

     Interest expense                                 ( 6,239)      (6,367)
     Minority interest - Fidelity preferred return         --       (1,096)
     Minority interest - Operating Partnership             56           --
     Loss allocated to other minority interests            --          970
     Equity in earnings of real estate ventures           317          261
     Loss before loss on sale of real estate assets      (640)      (5,861)

     Loss on sale of real estate assets                    --         (171)

     Net loss                                           $(640)     $(6,032)

     Net loss per share:
           Basic (1)                                   $(0.02)      $(2.66)
           Diluted (1)                                 $(0.02)      $(2.66)

     Weighted average number of shares:
           Basic                                   31,169,950    2,268,169
           Diluted                                 31,169,950    2,268,169

     Cash dividends paid per common share             $0.2275          $--


     (1)  The basic and diluted loss per share does not include the potential
          effects of the CCSs and CCUs as such securities would not have
          participated in earnings for any of the periods presented.  These
          securities will not participate in distributions until they are
          converted, which cannot occur prior to March 31, 2006.



     Extra Space Storage Inc.
     Condensed Consolidated Statements of Cash Flows
     (Dollars in thousands, except per share data)

                                                     Company      Predecessor
                                                  Three months ended March 31,
                                                       2005           2004

     Cash flows from operating activities:
       Net loss                                        $(640)       $(6,032)
       Adjustments to reconcile net loss to
        net cash provided by (used in)
        operating activities:
           Depreciation and amortization               5,730          2,677
           Amortization of discount on putable
            preferred interests in consolidated
            joint ventures                                --            538
           Minority interest - Fidelity
            preferred return                              --          1,096
           Income (loss) allocated to other
            minority interests                           (56)          (970)
           (Gain) loss on sale of real estate
            assets                                        --            171
           Distributions of cumulative earnings
            from real estate ventures                     69            194
           Increase (decrease) in cash due to
            changes in:
                Receivables from related parties         247             41
                Other assets                            (716)          (710)
                Accounts payable                      (1,825)           233
                Payables to related parties               --            (83)
                Other liabilities                        447             68
           Net cash provided by (used in)
            operating activities                       3,256         (2,777)

     Cash flows from investing activities:
       Acquisition of real estate assets             (55,327)       (79,250)
       Development and construction of real
        estate assets                                 (1,067)        (6,535)
       Proceeds from sale of real estate assets           --          6,406
       Investments in real estate ventures                (8)           (89)
       Advances to Centershift and Extra
        Space Development                                 --         (2,884)
       Purchase of equipment                            (197)          (456)
       Increase in cash resulting from
        de-consolidation of real estate
        assets and distribution of equity
        ownership in Extra Space
        Development and other properties                  --            471
       Change in restricted cash                      (1,080)        (2,722)
           Net cash used in investing activities     (57,679)       (85,059)

     Cash flows from financing activities:
       Proceeds from line of credit and
        notes payable                                 53,257        188,512
       Payments on line of credit and notes
        payable                                       (2,765)      (123,143)
       Deferred financing costs                         (400)        (5,009)
       Payments on other liabilities                      --             (7)
       Net payments to related parties and
        putable preferred interests in
        consolidated joint ventures                       --         (1,283)
       Member contributions                               --         19,480
       Return paid on Class B, C and E
        member units                                      --           (727)
       Redemption of units                                --           (155)
       Minority interest investments                      --          2,962
       Minority interest distributions                    --           (608)
       Distributions to Operating
        Partnership unit holders                        (621)            --
       Dividends paid on common stock                 (7,091)            --
       Preferred return paid to Fidelity                  --           (350)
           Net cash provided by financing
            activities                                42,380         79,672

     Net decrease in cash and cash
      equivalents                                    (12,043)        (8,164)
     Cash and cash equivalents, beginning
      of the period                                   24,329         11,746
     Cash and cash equivalents, end of the
      period                                         $12,286         $3,582

SOURCE Extra Space Storage Inc.

James Overturf of Extra Space Storage Inc., +1-801-365-4501; or William Coffin of CC Investor Relations, +1-818-789-0100, for Extra Space Storage Inc.