Extra Space Storage Inc. Reports Results for the Three and Six Months Ended June 30, 2006

SALT LAKE CITY, Aug. 3 /PRNewswire-FirstCall/ -- Extra Space Storage Inc. (the "Company") announced today operating results for the three and six months ended June 30, 2006. "Our financial results for the second quarter reflect our strong operating performance and continued demand for self storage in the majority of our markets," said Kenneth M. Woolley, CEO and Chairman of Extra Space Storage Inc.

Second Quarter 2006 Highlights: * Achieved funds from operations ("FFO") of $0.24 per diluted share, an increase of $0.10, or 71.4% compared to the second quarter of 2005. * Posted increases of 6.6% and 7.6%, respectively, in revenue and net operating income ("NOI") on 103 same-store properties compared to the second quarter of 2005. * Completed the acquisition of eight self-storage properties for approximately $58.0 million. * Declared and paid a regular quarterly dividend of $0.2275 per share.

The results for the three and six months ended June 30, 2006 include the operations of 556 properties, 208 of which are consolidated and 348 of which are in joint ventures accounted for using the equity method, compared to the results for the three and six months ended June 30, 2005, which included 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. The increase in properties is primarily due to the acquisition of Storage USA on July 14, 2005. Results for both periods include equity in earnings of real estate joint ventures, third-party management fees and acquisition and development fees.

FFO Per Share:

FFO per fully diluted share for the three months ended June 30, 2006 was $0.24 compared to $0.14 for the three months ended June 30, 2005, an increase of 71.4%. FFO per fully diluted share for the six months ended June 30, 2006 was $0.43 compared to $0.29 for the six months ended June 30, 2005, an increase of 48.3%. FFO available to common shareholders was $13.2 million for the three months ended June 30, 2006, as compared to $4.8 million for the three months ended June 30, 2005, an increase of 175.0%. FFO available to common shareholders was $24.2 million for the six months ended June 30, 2006, as compared to $9.9 million for the six months ended June 30, 2005, an increase of 144.4%. The following table sets forth the calculation of FFO per share (dollars are in thousands, except for per share data):

Three months ended Six months ended June 30, June 30, 2006 2005 2006 2005 Net income (loss) $3,092 $(1,220) $3,830 $(1,860) Plus: Real estate depreciation 6,648 3,902 13,121 7,666 Amortization of intangibles 1,951 2,109 4,504 4,036 Joint venture real estate depreciation 1,247 100 2,447 201 Income allocated to operating partnership minority interest 225 -- 279 -- Less: Loss allocated to operating partnership minority interest -- (110) -- (166) Funds from operations $13,163 $4,781 $24,181 $9,877 Diluted funds from operations per share $0.24 $0.14 $0.43 $0.29 Weighted average number of shares - diluted Common stock 52,165,301 31,858,839 52,157,299 31,514,394 OP units 3,825,787 2,730,050 3,825,787 2,730,050 Total 55,991,088 34,588,889 55,983,086 34,244,444

FFO, a widely accepted measure of Real Estate Investment Trust ("REIT") performance, provides relevant and meaningful information about the Company's operating performance that is necessary, along with net income (loss) and cash flows, for an understanding of the Company's operating results. FFO is defined by the National Association of Real Estate Investment Trusts, Inc. ("NAREIT") as net income (loss) computed in accordance with U.S. generally accepted accounting principles ("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 income (loss) and cash flows in accordance with GAAP, as presented in the condensed consolidated financial statements.

The computation of FFO may not be comparable to FFO reported by other REITs or real estate companies that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to net income (loss) as an indication of the Company's performance, as an alternative to net cash flow from operating activities as a measure of the Company's liquidity, or as an indicator of the Company's ability to make cash distributions.

Operating Results for the Three and Six Months Ended June 30, 2006:

Total revenues for the three and six months ended June 30, 2006, were $48.5 million and $93.9 million, respectively, compared to $24.6 million and $47.5 million, respectively, for the three and six months ended June 30, 2005. Net income for the three and six months ended June 30, 2006 was $3.1 million and $3.8 million, respectively, compared to net losses of $1.2 million and $1.9 million, respectively, for the three and six months ended June 30, 2005. Contributing to the increase in revenues and net income were the following:

* the acquisition of 70 wholly-owned properties, including 61 Storage USA properties on July 14, 2005; * the acquisition of 15 wholly-owned properties during the six months ended June 30, 2006; * the increase in management fees from additional joint-venture and third-party properties under management; * the increase in equity in earnings from joint-venture properties; * and continued revenue gains from the Company's wholly-owned lease-up and stabilized properties.

Total expenses for the three and six months ended June 30, 2006, were $33.7 million and $67.9 million, respectively, compared to $18.7 million and $36.4 million, respectively, for the three and six months ended June 30, 2005.

In addition to the expansion of the Company's total number of properties under management, other factors contributing to the increase in expenses included higher property taxes and utilities.

Interest expense for the three and six months ended June 30, 2006, was $12.8 million and $24.8 million, respectively, compared to $7.5 million and $13.7 million, respectively, for the three and six months ended June 30, 2005. The increases were due to a higher level of debt associated with property acquisitions, increased interest rates and the amortization of loan fees associated with raising additional debt.

Same-Store Portfolio: The Company's same-store stabilized portfolio consists of 103 properties wholly-owned and operated by 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 at these properties without the effects of acquisitions or completed developments. The results shown should not be used as a basis for future same-store performance or for the performance of the Company's properties as a whole (dollars are in thousands, except for property data):

Three Months Ended June 30, Percent 2006 2005 Change Same-store rental revenues $20,774 $19,486 6.6% Same-store operating expenses 7,117 6,790 4.8% Same-store net operating income 13,657 12,696 7.6% Non same-store rental revenues 21,246 4,333 390.3% Non same-store operating expenses 8,131 2,251 261.2% Total rental revenues 42,020 23,819 76.4% Total operating expenses 15,248 9,041 68.7% Same-store square foot occupancy as of quarter end 88.9 87.7 Properties included in same- store 103 103 Six Months Ended June 30, Percent 2006 2005 Change Same-store rental revenues $40,910 $38,405 6.5% Same-store operating expenses 14,369 13,699 4.9% Same-store net operating income 26,541 24,706 7.4% Non same-store rental revenues 40,285 7,636 427.6% Non same-store operating expenses 15,621 4,220 270.2% Total rental revenues 81,195 46,041 76.4% Total operating expenses 29,990 17,919 67.4% Same-store square foot occupancy as of quarter end 88.9 87.7% Properties included in same-store 103 103

Same-store revenues for the three and six months ended June 30, 2006, increased 6.6% and 6.5%, respectively, compared to the three and six months ended June 30, 2005. The increase in revenue was primarily due to increased rental rates and increased occupancy. Occupancy as of June 30, 2006 was 88.9% compared to 87.7% as of June 30, 2005. Same-store expenses for the three and the six months ended June 30, 2005, increased 4.8% and 4.9%, respectively, compared to the three and six months ended June 30, 2005. The increase in expenses was predominantly due to higher property taxes and utilities. As a result, NOI increased 7.6% and 7.4%, respectively, for the three and six months ended June 30, 2006, compared to the three and six months ended June 30, 2005.

Property Acquisitions:

During the three months ended June 30, 2006, the Company acquired eight properties located in Arizona, California, Kansas, Tennessee and Texas for approximately $58.0 million. During the six months ended June 30, 2006, a total of 15 properties were acquired by the Company for approximately $97.9 million.

Subsequent to quarter end, the Company acquired a property located in California for approximately $7.3 million. The Company has acquired 16 properties to date in 2006 for approximately $105.2 million. All of the properties acquired during 2006 are wholly-owned by the Company.

Quarterly Dividend Declared and Paid:

On May 31, 2006, the Company announced its second quarter common stock dividend of $0.2275 per share. The dividend was paid on June 30, 2006, to stockholders of record as of June 15, 2006. The dividend payment was calculated based on an expected annual dividend of $0.91 per share.

Balance Sheet Flexibility:

As of June 30, 2006, the ratio of total fixed rate debt to total debt was approximately 89.1%. The weighted average interest rate was 5.4% for fixed rate loans and 6.7% for variable rate loans. The weighted average interest rate of all fixed and variable rate loans was 5.5%. The Company had $75.7 million of capacity on its line of credit, $25.0 million was outstanding as of June 30, 2006.

Kent Christensen, Chief Financial Officer, stated: "Our strategy is to utilize debt financing to lower our overall cost of capital and increase returns to our shareholders. We believe our mix of equity and predominantly fixed-rate debt positions us to optimize FFO growth and capitalize on opportunities to accretively expand our portfolio."

Outlook:

Wholly-owned same-store and other stabilized properties: For the three months ended June 30, 2006, the Company realized year-on-year revenue and NOI growth at its same-store stabilized and other wholly-owned stabilized store portfolios. Self-storage demand remains positive in the majority of markets we serve and the Company continues to expect same-store revenues for the remainder of 2006 to be higher than revenues achieved in 2005.

Wholly-owned properties acquired from Storage USA: The 61 wholly-owned properties acquired from Storage USA in July 2005, of which 57 are considered stabilized, experienced solid growth in revenues and NOI for the three months ended June 30, 2006, compared to the three months ended June 30, 2005. The Company continues to expect revenues for the remainder of 2006 to be higher than revenues achieved in 2005.

The 337 properties acquired from Storage USA in July 2005 on a joint-venture basis, for which the Company has a minority equity interest and collects management fees, experienced continued growth in revenue and NOI for the three months ended June 30, 2006. The Company continues to expect revenues for the remainder of 2006 to be higher than revenues achieved in 2005 on this group of properties.

Lease-up property portfolio: The Company's 23 wholly-owned lease-up properties are expected to continue to grow occupancy and revenues, with a number of these properties expected to achieve full stabilization during the remainder of 2006.

Earnings Outlook: For the calendar year 2006, the Company estimates diluted FFO to be between $0.97 and $1.01 per share. For the three months ending September 30, 2006, the Company estimates diluted FFO to be between $0.26 and $0.28 per share. The Company's 2006 FFO outlook includes all of the property acquisitions that have occurred to date in 2006.

The Company's full year estimate is based on the following assumptions: * Stabilized property revenue growth of 4%-6% * Stabilized property NOI growth of 4%-6% * Increases in LIBOR of 25 basis points per quarter * General and administrative expenses (net of development fees) of $36 million for the full year. This amount includes non-cash compensation expense of approximately $1.8 million.

Mr. Woolley concluded: "The second quarter showed that the synergies created with the integration of Extra Space Storage and Storage USA and the solid self-storage fundamentals in our markets are capable of supporting strong performance and continued growth. We've developed a fine team and believe we have implemented best practice operational and technology systems that are going a long way toward making us one of the best operated self-storage companies in the industry."

The following table sets forth additional information regarding the square foot occupancy of the Company's stabilized properties organized by state as of June 30, 2006 and June 30, 2005.

Stabilized Property Data Based on Location Company Pro forma Number of Number of Number of Properties Units as of Units as of June 30, June 30, 2006 2005 Location (1) Wholly-Owned Properties Arizona 3 1,680 1,671 California 30 19,635 19,593 Colorado 5 2,394 2,411 Florida 24 16,149 15,912 Georgia 8 4,500 4,437 Illinois 3 2,147 2,138 Kansas 1 503 502 Kentucky 3 1,579 1,574 Louisiana 2 1,410 1,411 Maryland 5 4,514 4,537 Massachusetts 22 12,037 12,020 Michigan 2 1,043 1,040 Missouri 3 1,349 1,335 Nevada 1 462 463 New Hampshire 2 1,006 1,015 New Jersey 19 15,475 15,471 New York 6 6,057 5,958 Ohio 4 2,048 2,074 Oregon 1 767 762 Pennsylvania 8 6,128 5,914 Rhode Island 1 730 713 South Carolina 4 2,068 2,088 Tennessee 5 3,144 3,118 Texas 15 9,622 9,212 Utah 3 1,524 1,520 Virginia 2 1,218 1,222 Washington 3 2,030 2,017 Total Wholly-Owned Stabilized 185 121,219 120,128 Properties Held in Joint-Ventures Alabama 4 2,324 2,318 Arizona 12 7,457 7,399 California 72 51,931 52,076 Colorado 3 1,905 1,906 Connecticut 9 6,515 6,538 Delaware 1 589 589 Florida 24 20,355 20,417 Georgia 3 1,916 1,912 Illinois 5 3,342 3,320 Indiana 9 3,733 3,736 Kansas 3 1,210 1,210 Kentucky 4 2,270 2,234 Maryland 14 10,916 10,912 Massachusetts 17 9,255 9,287 Michigan 10 5,959 5,955 Missouri 5 2,774 2,745 Nevada 7 4,632 4,624 New Hampshire 3 1,330 1,331 New Jersey 18 13,144 13,131 New Mexico 9 4,727 4,473 New York 21 23,598 23,576 Ohio 12 5,586 5,574 Oregon 2 1,286 1,275 Pennsylvania 10 6,816 6,792 Rhode Island 1 611 611 Tennessee 23 12,195 12,166 Texas 20 13,254 13,214 Utah 1 524 518 Virginia 15 10,359 10,344 Washington 1 551 551 Washington, D.C. 1 1,536 1,534 Total Stabilized Joint-Ventures 339 232,600 232,268 Total Stabilized 524 353,819 352,396 Pro Company forma Company Pro forma Square Square Net Rentable Net Rentable Foot Foot Square Feet Square Feet Occupancy Occupancy as of June 30, as of June 30, % % 2006 2005 June 30, June 30, Location (2) 2006 2005 Wholly-Owned Properties Arizona 221,925 220,825 98.2% 96.4% California 2,134,613 2,127,925 89.2% 87.6% Colorado 293,591 302,506 91.6% 86.5% Florida 1,734,711 1,716,856 92.7% 93.2% Georgia 585,573 528,731 90.6% 88.4% Illinois 196,937 197,201 80.8% 85.2% Kansas 49,955 50,340 93.4% 79.2% Kentucky 194,290 194,315 88.6% 84.9% Louisiana 147,490 147,900 95.5% 88.0% Maryland 482,202 488,584 84.7% 80.4% Massachusetts 1,310,966 1,305,921 85.1% 83.9% Michigan 135,312 134,672 84.8% 76.5% Missouri 169,187 167,397 85.2% 81.8% Nevada 56,500 41,100 90.4% 89.8% New Hampshire 125,309 117,268 82.5% 82.1% New Jersey 1,503,812 1,497,770 86.8% 88.2% New York 388,259 388,631 82.6% 84.5% Ohio 276,355 277,002 86.2% 81.1% Oregon 103,610 104,770 94.1% 91.8% Pennsylvania 637,294 610,774 81.8% 83.8% Rhode Island 75,816 75,811 84.0% 85.4% South Carolina 245,684 246,969 94.7% 91.3% Tennessee 409,377 406,832 92.1% 88.4% Texas 1,022,835 987,765 89.2% 86.7% Utah 209,965 209,150 92.8% 88.0% Virginia 125,457 125,989 91.7% 91.1% Washington 244,595 241,895 96.3% 92.1% Total Wholly-Owned Stabilized 13,081,620 12,914,899 88.7% 87.3% Properties Held in Joint-Ventures Alabama 281,628 281,275 86.5% 84.6% Arizona 806,791 807,157 94.3% 92.0% California 5,316,072 5,331,241 89.5% 88.4% Colorado 215,813 216,232 86.0% 87.8% Connecticut 751,679 758,064 76.0% 73.6% Delaware 71,655 71,655 85.5% 84.3% Florida 2,079,353 2,065,559 88.7% 86.1% Georgia 251,530 251,772 82.9% 82.4% Illinois 362,472 357,382 78.7% 73.4% Indiana 468,563 470,029 90.2% 88.1% Kansas 163,950 164,545 85.4% 76.3% Kentucky 268,289 267,307 84.6% 84.9% Maryland 1,076,827 1,077,516 85.1% 83.7% Massachusetts 1,051,512 1,050,252 80.8% 78.6% Michigan 786,252 786,473 79.3% 80.2% Missouri 325,615 324,150 87.6% 83.6% Nevada 621,772 622,880 92.1% 95.6% New Hampshire 138,964 139,229 85.5% 91.8% New Jersey 1,385,396 1,391,326 88.4% 87.9% New Mexico 528,864 519,484 87.1% 93.0% New York 1,741,554 1,750,817 83.8% 79.2% Ohio 826,787 826,151 81.0% 82.2% Oregon 137,140 136,240 95.3% 90.9% Pennsylvania 732,300 726,999 84.6% 84.3% Rhode Island 74,005 74,005 68.3% 69.8% Tennessee 1,586,653 1,589,258 87.7% 85.5% Texas 1,670,795 1,663,100 80.3% 78.9% Utah 59,700 59,300 93.5% 88.7% Virginia 1,106,770 1,106,041 87.1% 86.4% Washington 62,730 62,730 89.8% 95.9% Washington, D.C. 101,990 105,592 86.2% 83.3% Total Stabilized Joint-Ventures 25,053,421 25,053,761 86.2% 84.8% Total Stabilized 38,135,041 37,968,660 87.0% 85.7% (1) Represents unit count as of June 30, 2006, which may differ from June 30, 2005 unit count due to unit conversions or expansions. (2) Represents net rentable square feet as of June 30, 2006, which may differ from June 30, 2005 net rentable square feet due to unit conversions or expansions.

The following table sets forth additional information regarding the occupancy of the Company's lease-up properties organized by state as of June 30, 2006 and June 30, 2005.

Lease-up Property Data Based on Location Company Pro forma Number of Number of Number of Properties Units as of Units as of June 30, 2006 June 30, 2005 Location (1) Wholly-Owned Properties Arizona 1 599 -- California 3 2,204 1,564 Connecticut 2 1,359 1,364 Florida 2 1,017 1,023 Illinois 2 1,132 1,139 Massachusetts 5 3,330 3,340 Nevada 1 780 795 New Jersey 3 2,427 2,542 New York 1 908 912 Pennsylvania 1 425 423 Virginia 1 727 726 Washington 1 529 529 Total Wholly-Owned Lease-up 23 15,437 14,357 Properties Held in Joint-Ventures Illinois 2 1,646 675 Maryland 1 957 -- New Jersey 3 2,550 2,168 New York 1 622 620 Pennsylvania 1 774 780 Virginia 1 878 877 Total Lease-up Joint Ventures 9 7,427 5,120 Total Lease-up Properties 32 22,864 19,477 Pro Company Pro forma Company forma Net Net Square Square Rentable Rentable Foot Foot Square Feet Square Feet Occupancy Occupancy as of as of % % June 30, June 30, June 30, June 30, 2006 2005 2006 2005 Location (2) Wholly-Owned Properties Arizona 67,375 -- 32.5% 0.0% California 237,655 154,255 45.4% 42.9% Connecticut 123,190 123,465 69.2% 63.0% Florida 127,640 126,000 78.5% 73.5% Illinois 144,370 144,690 77.7% 67.2% Massachusetts 318,083 322,335 69.7% 60.5% Nevada 74,635 75,485 83.7% 83.6% New Jersey 223,130 225,677 81.1% 74.5% New York 67,860 69,211 81.5% 69.4% Pennsylvania 47,410 47,680 59.6% 42.5% Virginia 75,700 75,525 83.5% 68.5% Washington 61,250 61,250 80.2% 5.8% Total Wholly-Owned Lease-up 1,568,298 1,425,573 69.4% 62.0% Properties Held in Joint-Ventures Illinois 149,904 72,370 34.8% 68.6% Maryland 73,649 -- 12.3% 0.0% New Jersey 265,185 239,235 81.2% 72.9% New York 64,555 64,430 79.9% 62.1% Pennsylvania 76,773 76,838 80.0% 42.6% Virginia 84,383 85,025 58.4% 38.2% Total Lease-up Joint Ventures 714,449 537,898 61.4% 61.2% Total Lease-up Properties 2,282,747 1,963,471 66.9% 61.8% (1) Represents unit count as of June 30, 2006, which may differ from June 30, 2005 unit count due to unit conversions or expansions. (2) Represents net rentable square feet as of June 30, 2006, which may differ from June 30, 2005 net rentable square feet due to unit conversions or expansions. Forward-Looking Statement

Certain information set forth in this report 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," "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.

All forward-looking statements, including without limitation, management's examination of historical operating trends, 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.

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 report. Any forward-looking statements should be considered in light of the risks referenced in "Part II. Item 1A. Risk Factors" below and in "Part I. Item 1A. Risk Factors" included in our Annual Report on Form 10-K. 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 would cause rents and occupancy rates to decline; * our ability to effectively compete in the industry in which we do business; * 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 Real Estate Investment Trusts, which could increase our expenses and reduce our cash available for distribution; * difficulties in raising capital at reasonable rates, which could impede our ability to grow; * delays in the development and construction process, which could adversely affect our profitability; and * economic uncertainty due to the impact of war or terrorism which could adversely affect our business plan. Supplemental Financial Information

Supplemental unaudited financial information regarding the Company's performance can be found on the Company's web site at http://www.extraspace.com/. Click on the Investor Info section, and then on Financial Reports and the document entitled "Q2 2006 Supplemental Financial Information."

Conference Call

Extra Space Storage Inc. will host a conference call at 11:00 a.m. Eastern Time on Friday, August 4, 2006, to discuss its second quarter 2006 results. The conference call will be broadcast live over the Internet and can be accessed by all interested parties through Extra Space Storage's website at http://www.extraspace.com/ (then click on "Investor Info" tab.) To listen to the live call, please go to the website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. A digital replay will be available on Friday, August 4, 2006 at 1:00 p.m. Eastern Time through Friday, August 18, 2006 at midnight Eastern Time. Dial

888-286-8010 and enter the conference ID number 87647250. International callers should dial 617-801-6888 and enter the same conference ID number.

About Extra Space Storage Inc.

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a fully integrated, self-administered and self-managed real estate investment trust that owns or operates 638 self-storage properties in 34 states and Washington, D.C. The Company's properties comprise more than 425,000 units and 47 million square feet rented by over 340,000 tenants. The Company is the second largest operator of self storage in the United States. Additional Extra Space Storage information is available at http://www.extraspace.com/.

Extra Space Storage Inc. Condensed Consolidated Balance Sheets (Dollars in thousands, except share data) June 30, December 31, 2006 2005 (unaudited) Assets: Real estate assets, net $1,322,527 $1,212,678 Investments in real estate ventures 90,569 90,898 Cash and cash equivalents 4,250 28,653 Restricted cash 18,384 18,373 Receivables from related parties and affiliated real estate joint ventures 11,793 23,683 Notes receivable 1,693 12,109 Other assets, net 28,753 33,798 Total assets $1,477,969 $1,420,192 Liabilities, Minority Interests, and Stockholders' Equity: Notes payable $805,680 $747,193 Notes payable to trusts 119,590 119,590 Line of credit 25,000 -- Accounts payable and accrued expenses 4,486 13,261 Other liabilities 27,326 23,785 Total liabilities 982,082 903,829 Minority interest in Operating Partnership 34,549 36,010 Other minority interests 225 225 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, 51,813,459 and 51,765,795 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively 518 518 Paid-in capital 624,465 626,123 Deferred stock compensation -- (2,374) Accumulated deficit (163,870) (144,139) Total stockholders' equity 461,113 480,128 Total liabilities, minority interests, and stockholders' equity $1,477,969 $1,420,192 Extra Space Storage Inc. Condensed Consolidated Statements of Operations (Dollars in thousands, except share data) Three months ended Six months ended June 30, June 30, 2006 2005 2006 2005 Revenues: Property rental $42,020 $23,819 $81,195 $46,041 Management and franchise fees 5,181 400 10,340 768 Tenant insurance 971 -- 1,892 -- Development fees 175 262 225 529 Other income 184 70 249 121 Total revenues 48,531 24,551 93,901 47,459 Expenses: Property operations 15,248 9,041 29,990 17,919 Tenant insurance 589 -- 1,222 -- Unrecovered development/acquisition costs 24 168 342 275 General and administrative 8,747 3,320 17,992 6,297 Depreciation and amortization 9,057 6,213 18,333 11,943 Total expenses 33,665 18,742 67,879 36,434 Income before interest, minority interest and equity in earnings of real estate ventures 14,866 5,809 26,022 11,025 Interest expense (12,784) (7,493) (24,769) (13,732) Interest income 148 66 630 76 Minority interest - Operating Partnership (225) 110 (279) 166 Equity in earnings of real estate ventures 1,087 288 2,226 605 Net income (loss) $3,092 $(1,220) $3,830 $(1,860) Net income (loss) per common share Basic $0.06 $(0.04) $0.07 $(0.06) Diluted $0.06 $(0.04) $0.07 $(0.06) Weighted average number of shares Basic 51,625,135 31,858,839 $51,606,618 31,514,394 Diluted 55,991,088 31,858,839 55,983,086 31,514,394 Cash dividends paid per common share $0.23 $0.23 $0.46 $0.46 Extra Space Storage Inc. Condensed Consolidated Statements of Cash Flows (Dollars in thousands) Six months ended June 30, 2006 2005 Cash flows from operating activities: Net income (loss) $3,830 $(1,860) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 18,333 11,943 Amortization of deferred stock compensation 383 -- Stock compensation expense 633 -- Gain (loss) allocated to minority interests 279 (166) Distributions from real estate ventures in excess of earnings 2,280 131 Changes in operating assets and liabilities: Receivables from related parties 11,890 (763) Other assets 6,895 (6,743) Accounts payable (8,775) (2,163) Other liabilities 516 4,066 Net cash provided by operating activities 36,264 4,445 Cash flows from investing activities: Acquisition of real estate assets (87,964) (69,961) Development and construction of real estate assets (15,118) (2,873) Proceeds from sale of real estate assets 728 -- Investments in real estate ventures (4,835) (1,722) Change in restricted cash (11) (1,566) Principal payments received on notes receivable 118 -- Purchase of equipment and fixtures (768) (483) Net cash used in investing activities (107,850) (76,605) Cash flows from financing activities: Proceeds from notes payable, notes payable to trusts and line of credit 97,602 122,726 Principal payments on notes payable and line of credit (24,598) (43,299) Deferred financing costs (647) (2,713) Minority interest investments -- 225 Proceeds from issuance of common shares, net -- 81,358 Proceeds from exercise of stock options 127 -- Dividends paid on common stock (23,561) (14,182) Distributions to Operating Partnership units held by minority interests (1,740) (1,242) Net cash provided by financing activities 47,183 142,873 Net increase (decrease) in cash and cash equivalents (24,403) 70,713 Cash and cash equivalents, beginning of the period 28,653 24,329 Cash and cash equivalents, end of the period $4,250 $95,042 Supplemental schedule of cash flow information Interest paid, net of amounts capitalized $23,173 $11,195