10-KPeriod: FY2007

Extra Space Storage Inc. Annual Report, Year Ended Dec 31, 2007

Filed February 29, 2008For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) filed its 2007 Form 10-K on February 29, 2008, detailing its operations as a self-administered and self-managed real estate investment trust focused on self-storage facilities. As of December 31, 2007, the company owned or managed 651 properties across 33 states and Washington D.C., comprising approximately 44 million square feet of rentable space and serving around 300,000 customers. The company's strategy centers on maximizing property performance through efficient management, strategic acquisitions, new property development, and expanding its management business, aiming to deliver sustainable long-term growth in cash flow per share. The report highlights a robust growth trajectory, driven significantly by the 2005 acquisition of Storage USA, which positioned EXR as the second-largest self-storage operator in the U.S. The company utilizes a proprietary technology called "STORE" for yield management, enabling real-time rental rate adjustments. Despite facing increased competition and economic uncertainties, EXR expressed confidence in its market position, property portfolio quality, and experienced management team to navigate the competitive landscape and achieve continued growth. The company also reported on its financial position, including $1.3 billion in debt, and its commitment to REIT distribution requirements.

Key Highlights

  • 1Extra Space Storage Inc. operated 651 self-storage properties across 33 states and Washington D.C. as of December 31, 2007.
  • 2The company's portfolio spanned approximately 44 million square feet of rentable space, serving about 300,000 customers.
  • 3Key growth strategies include maximizing property performance, strategic acquisitions, new development, and expanding the management business.
  • 4The 2005 acquisition of Storage USA significantly increased EXR's scale, making it the second-largest self-storage operator in the U.S.
  • 5EXR utilizes proprietary "STORE" technology for yield management and real-time rental rate adjustments.
  • 6The company reported approximately $1.3 billion in total debt as of December 31, 2007, with a debt-to-capitalization ratio of 56.6%.
  • 7The company confirmed compliance with REIT distribution requirements, a key factor for its tax structure.

Frequently Asked Questions

Extra Space Storage Inc. is a self-administered and self-managed real estate investment trust (REIT) that owns, operates, acquires, develops, and redevelops professionally managed self-storage facilities.

The Storage USA acquisition in July 2005 was a major event for Extra Space Storage, significantly increasing its scale and making it the second-largest self-storage operator in the United States. It provided a national platform and created an acquisition pipeline through various partnerships.

Key risks identified include adverse changes in general economic conditions, increased competition leading to pricing pressure, difficulties in financing and integrating acquisitions, potential environmental liabilities, and the impact of regulatory changes. Specific to their operations, they noted risks related to re-leasing units at lower rates and potential difficulties in managing key personnel.

The company employs a proprietary, web-based tracking and yield management technology called "STORE." This system allows them to analyze, set, and adjust rental rates in real-time across their portfolio in response to changing market conditions. They also leverage a revenue management team to optimize strategies.

Extra Space Storage focuses on maximizing property performance, acquiring self-storage properties from strategic partners and third parties, developing new properties, and expanding its management business. Financing for these strategies is expected to come from a combination of borrowings under its credit line, traditional secured mortgage financing, additional equity offerings, joint venture partnerships, and internally generated cash flow.