SOURCE: Extra Space Storage Inc.

Extra Space Storage Inc.

November 02, 2009 16:45 ET

Extra Space Storage Inc. Reports Third Quarter 2009 Results

Company Earns $0.23 per Share of FFO and Secures $114.1 Million in Debt Financing

SALT LAKE CITY, UT--(Marketwire - November 2, 2009) - Extra Space Storage Inc. (NYSE: EXR), a leading owner and operator of self-storage properties in the United States, announced today operating results for the three and nine months ended September 30, 2009.

Highlights for the Three Months Ended September 30, 2009:

--  Achieved funds from operations ("FFO") of $0.23 per diluted share
    including development dilution of $0.02 per share.
    
--  Same-store revenue and net operating income ("NOI") at the Company's
    252 same-store properties decreased by 4.5% and 6.2%, respectively, when
    compared to the three months ended September 30, 2008.
    
--  Closed $114.1 million of debt financing during the quarter and an
    additional $3.3 million subsequent to quarter end.
    
--  Completed the development of eight self-storage properties at a total
    cost of approximately $91.0 million.
    

Spencer F. Kirk, Chairman and CEO of Extra Space Storage Inc., stated: "During the third quarter our property operations showed signs of stabilization with an increase in rental activity and a reduction in vacates. As a result of demand stabilization and our dynamic pricing strategies, our incoming rental rates have improved from earlier in the year. We again made strides in solidifying our balance sheet by closing $114 million in new stabilized property and development loans."

FFO Per Share:

The Company's FFO for the three months ended September 30, 2009 was $0.23 per diluted share including development dilution of $0.02 per share. This compares to FFO per diluted share for the three months ended September 30, 2008 of $0.27 per diluted share including development dilution of $0.01 per share. After adjusting to exclude $0.02 per share of non-cash interest charges related to the Company's exchangeable senior notes, FFO was $0.29 per diluted share for the three months ended September 30, 2008.

FFO for the nine months ended September 30, 2009 was $0.76 per diluted share including development dilution of $0.06 per share. FFO was $0.71 per diluted share after adjusting to exclude a $0.30 per share gain on repurchase of exchangeable senior notes, a $0.23 per share charge attributable to the wind down of the Company's development program and $0.02 per share of non-cash interest charges related to the Company's exchangeable senior notes. This compares to FFO for the nine months ended September 30, 2008 of $0.75 per diluted share including development dilution of $0.03 per share. After adjusting to exclude a $0.02 per share charge from unrecovered acquisition costs and $0.04 per share of non-cash interest charges related to the Company's exchangeable senior notes, FFO was $0.81 per diluted share for the nine months ended September 30, 2008.

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. On January 1, 2009, the Company adopted Accounting Standards Codification ("ASC") 470-20 (formerly FASB Staff Position No. 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.

Operating Results:

Total revenues for the three months ended September 30, 2009 were $71.3 million compared to $69.8 million for the three months ended September 30, 2008. Total expenses for the three months ended September 30, 2009 were $48.1 million compared to $45.5 million for the three months ended September 30, 2008. Interest expense, including non-cash interest charges relating to the Company's exchangeable senior notes, was $18.1 million compared to $17.0 million for the three months ended September 30, 2008. Net income for the three months ended September 30, 2009 was $7.6 million compared to $11.9 million for the three months ended September 30, 2008.

Total revenues for the nine months ended September 30, 2009 were $209.6 million compared to $202.9 million for the nine months ended September 30, 2008. Total expenses for the nine months ended September 30, 2009 were $162.1 million compared to $134.5 million for the nine months ended September 30, 2008. Interest expense, including non-cash interest charges relating to the Company's exchangeable senior notes, was $51.1 million compared to $51.4 million for the nine months ended September 30, 2008. Net income for the nine months ended September 30, 2009 was $31.7 million compared to $26.3 million for the nine months ended September 30, 2008.

Same-Store Property Performance:

For the three months ended September 30, 2009, the Company's same-store revenue and NOI decreased by 4.5% and 6.2%, respectively, when compared to the three months ended September 30, 2008. The decrease in same-store rental revenue compared to three months ended September 30, 2008 was due to lower occupancy and decreased rental rates to incoming customers. The Company's same-store expenses decreased by 1.2% when compared to the three months ended September 30, 2008 primarily due to lower payroll and utility costs.

Balance Sheet:

During the third quarter, the Company obtained $114.1 million of financing consisting of four loans secured by 20 operating properties totaling $93.7 million and three construction loans totaling $20.4 million. Subsequent to the end of the quarter, the Company completed an additional $3.3 million of debt financing. The Company has closed $280.8 million in financing to date in 2009.

As of September 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 December 31, 2008. Total cash as of September 30, 2009 was $101.0 million. The Company's percentage of total fixed rate debt to total debt was 80.4%. The weighted average interest rate was 5.5% for fixed rate debt and 3.0% for variable rate debt with a combined weighted average interest rate of 5.0% as of September 30, 2009.

Subsequent to the end of the quarter, the Company repurchased $7.5 million principal amount of exchangeable senior notes which will result in a gain on early extinguishment of debt of approximately $0.4 million in the fourth quarter.

Development Projects Completed:

The Company completed the development of eight projects at a total cost of $91.0 million. The properties are located in California, Florida and Oregon. There are 14 development projects remaining to be completed over the balance of 2009 and 2010.

Harrison Street Joint Venture:

As previously announced, the Company amended its joint venture agreement with an affiliate of Harrison Street Real Estate Capital, LLC ("HSRE"). Under the amended terms, HSRE will contribute approximately $15.0 million in cash to the joint venture in return for a 50.0% ownership interest. The Company will contribute 19 wholly-owned properties and will receive approximately $15.0 million in cash and a 50.0% ownership interest in the joint venture. The joint venture will assume approximately $101.0 million of debt which is secured by the properties. The properties are located in California, Florida, Nevada, Ohio, Pennsylvania, Tennessee, Texas and Virginia. The Company will continue to operate the properties. The transaction is subject to customary closing conditions and debt assumption and is currently anticipated to close by the end of the fourth quarter of 2009.

Outlook:

The Company currently estimates that fully diluted FFO per share-adjusted for the year ending December 31, 2009 will be between $0.89 and $0.92 including lease-up dilution of $0.08 per share. 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:

--  Excludes gains on extinguishment of exchangeable senior notes of
    approximately $27.9 million, non-cash interest charges associated with
    exchangeable senior notes of between $2.4 million and $2.6 million and
    charges of $20.3 million attributable to the wind down of the Company's
    development program.
    
--  Same-store property revenue decrease, including tenant reinsurance
    income, between (4.0%) and (3.0%).
    
--  Same-store property expense growth between (0.5%) and 0.5%.
    
--  Same-store property NOI decrease, including net tenant reinsurance
    income, between (6.0%) and (4.0%).
    
--  Net tenant reinsurance income between $15.0 million and $16.0 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 real estate ventures between $6.0 million and
    $8.0 million.
    
--  Interest expense between $68.0 million and $71.0 million.
    
--  Weighted average LIBOR of 0.4%.
    
--  Weighted average number of outstanding shares, including Operating
    Partnership units, of approximately 91.3 million.
    
--  Dilution associated with the Company's development program of between
    $6.5 million and $7.5 million.
    
--  Taxes associated with the Company's taxable Real Estate Investment
    Trust "REIT" subsidiary of between $2.8 million and $3.0 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 "Quarterly and Other Reports" in the middle of the page and the document entitled "Q3 2009 Supplemental Financial Information." This supplemental information provides 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:

The Company will also host a conference call at 1:00 p.m. Eastern Time on Tuesday, November 3, 2009 to discuss its financial results. A live webcast of the conference call will be available online on the Company's website at www.extraspace.com in the Investor Relations section. The conference call can also be accessed by dialing 877-407-0789 or 201-689-8562 for international participants. A replay of the call will be available from 4:00 p.m. Eastern Time on November 3, 2009, until midnight Eastern Time on November 17, 2009. The replay dial-in numbers are 877-660-6853 or 201-612-7415 for international callers. To access the telephonic replay, please enter account number 3055 along with the conference ID 335083.

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, which could impede our
    ability to grow;
    
--  the possibility that the joint venture transaction with HSRE 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 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 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 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 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 ASC 470-20 (formerly FASB Staff Position No. 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 ASC 470-20 (formerly FASB Staff Position No. 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 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 as an indication of the Company's performance, as an alternative to net cash flow from operating activities, as a measure of liquidity, or as an indicator of the Company's ability to make cash distributions.

Definition of Same-Store:

The Company's same-store stabilized properties for the three and nine months ended September 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.

About Extra Space Storage Inc.:

At September 30, 2009, the Company operated or had ownership interests in 749 operating properties, 286 of which were wholly-owned and consolidated, seven of which were held in joint ventures and consolidated, 342 of which were held in joint ventures and accounted for using the equity method, and 114 of which were managed and in which the Company held no ownership interest. This compares to September 30, 2008, at which time the Company operated or had ownership interests in 684 operating properties, 269 of which were wholly-owned and consolidated, three 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 67 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. is a leading owner and operator of self-storage properties headquartered in Salt Lake City, Utah. The Company owns and/or operates 749 self-storage properties in 33 states and Washington, D.C. The Company's properties comprise approximately 500,000 units and 54 million square feet of rentable space.



FFO and FFO -- Adjusted for the Three and Nine Months Ended September
 30, 2009 and 2008 -- Unaudited
(In thousands, except share data)

                              Three Months Ended      Nine Months Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Net income attributable to
 common stockholders        $    5,967  $    9,916  $   26,045  $   20,748

Adjustments:
  Real estate depreciation      12,959      10,791      35,943      30,526
  Amortization of
   intangibles                     198       1,066       1,446       3,503
  Joint venture real estate
   depreciation and
   amortization                  1,475       1,534       4,284       3,644
  Joint venture (gain) loss
   on sale of properties           (20)          -         168           -
  Distributions paid on
   Preferred Operating
   Partnership units            (1,438)     (1,438)     (4,313)     (4,313)
  Income allocated to
   Operating Partnership
   noncontrolling interests      1,777       2,118       6,250       5,926
                            ----------  ----------  ----------  ----------

Funds from operations       $   20,918  $   23,987  $   69,823  $   60,034
                            ==========  ==========  ==========  ==========

Adjustments:
  Non-cash interest expense
   related to amortization
   of discount on
   exchangeable senior notes       430       1,059       1,834       3,147
  Gain on repurchase of
   exchangeable senior notes         -           -     (27,576)          -
  Unrecovered development
   and acquisition costs            22          39      18,905       1,631
  Severance costs associated
   with wind-down of
   development program               -           -       1,400           -
                            ----------  ----------  ----------  ----------

Funds from operations -
 adjusted                   $   21,370  $   25,085  $   64,386  $   64,812
                            ==========  ==========  ==========  ==========

Diluted funds from
 operations per share       $     0.23  $     0.27  $     0.76  $     0.75
                            ==========  ==========  ==========  ==========
Diluted funds from
 operations per share -
 adjusted                   $     0.23  $     0.29  $     0.71  $     0.81
                            ==========  ==========  ==========  ==========

Weighted average number of
 shares - diluted           91,548,984  87,710,663  91,321,503  79,673,881


Reconciliation of the Company's Calculation of FFO Per Diluted Share and
 FFO Per Diluted Share -- Adjusted to GAAP Net Income Per Diluted Share
 for the Three and Nine Months Ended September 30, 2009 and 2008 --
 Unaudited


                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net income attributable to
 common stockholders per
 diluted share                  $    0.07  $    0.11  $    0.29  $    0.26

Adjustments:
  Real estate depreciation           0.14       0.13       0.39       0.38
  Amortization of intangibles           -       0.01       0.01       0.04
  Joint venture real estate
   depreciation and amortization     0.02       0.02       0.05       0.05
  Distributions paid on
   Preferred Operating
   Partnership units                (0.02)     (0.02)     (0.05)     (0.05)
  Income allocated to Operating
   Partnership noncontrolling
   interests                         0.02       0.02       0.07       0.07
                                ---------  ---------  ---------  ---------
Diluted funds from operations
 per share                      $    0.23  $    0.27  $    0.76  $    0.75
                                =========  =========  =========  =========

Adjustments:
  Non-cash interest expense
   related to amortization of
   discount on exchangeable
   senior notes                 $       -  $    0.01  $    0.02  $    0.04
  Gain on repurchase of
   exchangeable senior notes            -          -      (0.30)         -
  Unrecovered development and
   acquisition costs                    -       0.01       0.21       0.02
  Severance costs associated
   with wind-down of development
   program                              -          -       0.02          -
                                ---------  ---------  ---------  ---------
Diluted funds from operations
 per share - adjusted           $    0.23  $    0.29  $    0.71  $    0.81
                                =========  =========  =========  =========


Same-Store Property Performance for the Three and Nine Months Ended
 September 30, 2009 and 2008 -- Unaudited
(In thousands, except occupancy and property counts.)

              Three Months Ended              Nine Months Ended
                 September 30,                  September 30,
             --------------------  Percent  --------------------  Percent
               2009       2008     Change     2009       2008     Change
             ---------  ---------  ------   ---------  ---------  -------
Same-store
 rental and
 tenant
 reinsurance
 revenues    $  57,013  $  59,703    (4.5%) $ 170,402  $ 174,819     (2.5%)
Same-store
 operating
 and tenant
 reinsurance
 expenses       20,253     20,495    (1.2%)    60,256     60,751     (0.8%)
Same-store
 net
 operating
 income         36,760     39,208    (6.2%)   110,146    114,068     (3.4%)

Non
 same-store
 rental and
 tenant
 reinsurance
 revenues        8,909      4,559    95.4%     23,338     11,810     97.6%
Non
 same-store
 operating
 and tenant
 reinsurance
 expenses        4,033      2,298    75.5%     11,196      6,078     84.2%

Total rental
 and tenant
 reinsurance
 revenues       65,922     64,262     2.6%    193,740    186,629      3.8%
Total
 operating
 and tenant
 reinsurance
 expenses       24,286     22,793     6.6%     71,452     66,829      6.9%

Same-store
 square foot
 occupancy
 as of
 quarter end      84.2%      85.6%               84.2%      85.6%

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 and Fully Diluted FFO Per Share
 -- Adjusted for the Three Months and Year Ending December 31, 2009 --
 Unaudited


                                Three Months Ended      Year Ended
                                December 31, 2009   December 31, 2009
                                ------------------  ------------------
                                Low End   High End  Low End   High End
                                --------  --------  --------  --------
Net income                      $   0.03  $   0.06  $   0.32  $   0.35
  Income allocated to
   Operating Partnership
   minority interest                0.01      0.01      0.07      0.07
                                --------  --------  --------  --------
Net income attributable to
 common stockholders per
 diluted share                      0.04      0.07      0.39      0.42

Adjustments:
  Real estate depreciation          0.14      0.14      0.53      0.53
  Amortization of intangibles          -         -      0.02      0.02
  Joint venture real estate
   depreciation and amortization    0.02      0.02      0.06      0.06
  Distributions paid on
   Preferred Operating
   Partnership units               (0.02)    (0.02)    (0.06)    (0.06)
                                --------  --------  --------  --------
Diluted funds from operations
 per share                      $   0.18  $   0.21  $   0.94  $   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)
  Severance costs associated
   with wind-down of development
   program                             -         -      0.22      0.22
                                --------  --------  --------  --------
Diluted funds from operations
 per share - adjusted           $   0.19  $   0.22  $   0.89  $   0.92
                                ========  ========  ========  ========


Consolidated Balance Sheets
(In thousands, except share data)

                                     September 30, 2009  December 31, 2008
                                     ------------------  -----------------
                                         (unaudited)       (as revised)
Assets:
Real estate assets:
  Net operating real estate assets   $        1,989,675  $       1,938,922
  Real estate under development                  52,942             58,734
                                     ------------------  -----------------
    Net real estate assets                    2,042,617          1,997,656

Investments in real estate ventures             132,356            136,791
Cash and cash equivalents                       100,992             63,972
Restricted cash                                  42,083             38,678
Receivables from related parties and
 affiliated real estate joint
 ventures                                         3,377             11,335
Other assets, net                                47,725             42,576
                                     ------------------  -----------------
      Total assets                   $        2,369,150  $       2,291,008
                                     ==================  =================


Liabilities, Noncontrolling
 Interests and Equity:
Notes payable                        $        1,044,446  $         943,598
Notes payable to trusts                         119,590            119,590
Exchangeable senior notes                        95,163            209,663
Discount on exchangeable senior
 notes                                           (4,639)           (13,031)
Lines of credit                                 100,000             27,000
Accounts payable and accrued
 expenses                                        40,636             35,128
Other liabilities                                25,219             22,267
                                     ------------------  -----------------
      Total liabilities                       1,420,415          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,
   86,435,938 and 85,790,331 shares
   issued and outstanding at
   September 30, 2009 and December
   31, 2008, respectively                           864                858
  Paid-in capital                             1,132,865          1,130,964
  Accumulated other comprehensive
   deficit                                       (1,584)                 -
  Accumulated deficit                          (248,533)          (253,052)
                                     ------------------  -----------------
    Total Extra Space Storage Inc.
     stockholders' equity                       883,612            878,770
  Noncontrolling interest represented
   by Preferred Operating Partnership
   units, net of $100,000 note
   receivable                                    29,941             29,837
  Noncontrolling interest in
   Operating Partnership                         34,153             36,628
  Other noncontrolling interests                  1,029              1,558
                                     ------------------  -----------------
      Total noncontrolling interests
       and equity                               948,735            946,793
                                     ------------------  -----------------
      Total liabilities,
       noncontrolling
       interests and equity          $        2,369,150  $       2,291,008
                                     ==================  =================



Consolidated Statement of Operations for the Three Months Ended September
 30, 2009 and 2008 -- Unaudited
(In thousands, except share and per share data)


                                       Three Months Ended September 30,
                                       --------------------------------
                                             2009             2008
                                       ---------------  ---------------
                                                          (as revised)
Revenues:
  Property rental                      $        60,380  $        59,997
  Management and franchise fees                  5,191            5,417
  Tenant reinsurance                             5,542            4,265
  Other income                                     191              169
                                       ---------------  ---------------
    Total revenues                              71,304           69,848
                                       ---------------  ---------------

Expenses:
  Property operations                           23,022           21,367
  Tenant reinsurance                             1,264            1,426
  Unrecovered development and
   acquisition costs                                22               39
  General and administrative                     9,982           10,316
  Depreciation and amortization                 13,797           12,355
                                       ---------------  ---------------
    Total expenses                              48,087           45,503
                                       ---------------  ---------------

Income before interest, equity in
 earnings of real estate ventures and
 income tax expense                             23,217           24,345

Interest expense                               (17,697)         (15,904)
Non-cash interest expense related to
 amortization of discount on
 exchangeable senior notes                        (430)          (1,059)
Interest income                                    245            1,280
Interest income on note receivable
 from Preferred Operating Partnership
 unit holder                                     1,213            1,213
Equity in earnings of real estate
 ventures                                        1,752            2,015
Income tax expense                                (726)              (3)
                                       ---------------  ---------------
Net income                                       7,574           11,887

Net income allocated to Preferred
 Operating Partnership noncontrolling
 interests                                      (1,506)          (1,570)

Net income allocated to Operating
 Partnership and other noncontrolling
 interests                                        (101)            (401)
                                       ---------------  ---------------
Net income attributable to common
 stockholders                          $         5,967  $         9,916
                                       ===============  ===============

Net income per common share
  Basic                                $          0.07  $          0.13
  Diluted                              $          0.07  $          0.13

Weighted average number of shares
  Basic                                     86,437,877       82,184,631
  Diluted                                   91,548,984       87,710,663

Cash dividends paid per common share   $             -  $          0.25


Consolidated Statement of Operations for the Nine Months Ended September
 30, 2009 and 2008 -- Unaudited
(In thousands, except share and per share data)


                                    Nine Months Ended September 30,
                                    --------------------------------
                                          2009             2008
                                    ---------------  ---------------
                                                       (as revised)
Revenues:
  Property rental                   $       178,494  $       174,906
  Management and franchise fees              15,685           15,837
  Tenant reinsurance                         15,246           11,723
  Other income                                  201              425
                                    ---------------  ---------------
    Total revenues                          209,626          202,891
                                    ---------------  ---------------

Expenses:
  Property operations                        67,456           62,871
  Tenant reinsurance                          3,996            3,958
  Unrecovered development and
   acquisition costs                         18,905            1,631
  Severance costs associated with
   wind-down of development program           1,400                -
  General and administrative                 31,195           30,378
  Depreciation and amortization              39,160           35,633
                                    ---------------  ---------------
    Total expenses                          162,112          134,471
                                    ---------------  ---------------

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                          47,514           68,420

Interest expense                            (49,308)         (48,220)
Non-cash interest expense related
 to amortization of discount on
 exchangeable senior notes                   (1,834)          (3,147)
Interest income                               1,098            2,575
Interest income on note receivable
 from Preferred Operating
 Partnership unit holder                      3,638            3,638
Equity in earnings of real estate
 ventures                                     5,288            4,610
Gain on repurchase of exchangeable
 senior notes                                27,576                -
Loss on sale of investments
 available for sale                               -           (1,415)
Income tax expense                           (2,317)            (190)
                                    ---------------  ---------------
Net income                                   31,655           26,271

Net income allocated to Preferred
 Operating Partnership
 noncontrolling interests                    (4,681)          (4,627)

Net income allocated to Operating
 Partnership and other
 noncontrolling interests                      (929)            (896)
                                    ---------------  ---------------
Net income attributable to common
 stockholders                       $        26,045  $        20,748
                                    ===============  ===============

Net income per common share
  Basic                             $          0.30  $          0.28
  Diluted                           $          0.30  $          0.28

Weighted average number of shares
  Basic                                  86,260,442       74,116,345
  Diluted                                91,321,503       79,673,881

Cash dividends paid per common
 share                              $          0.25  $          0.75

Contact Information

  • For Information:

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