10-QPeriod: Q2 FY2008

Extra Space Storage Inc. Quarterly Report for Q2 Ended Jun 30, 2008

Filed August 8, 2008For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported its financial results for the second quarter and first six months of 2008. The company experienced revenue growth, primarily driven by an increase in property rental revenue, bolstered by recent acquisitions and rental rate increases. While property operations expenses also rose, largely due to expansion, overall revenue growth outpaced expense increases, leading to improved net income. Despite a challenging economic environment, EXR demonstrated resilience, with same-store rental revenues showing a modest increase. The company also highlighted strategic initiatives including property acquisitions, development projects, and expansion of its management business, aiming to maximize shareholder value. The balance sheet shows a significant increase in cash and cash equivalents, largely due to a recent common stock offering, positioning the company to pursue future growth opportunities.

Key Highlights

  • 1Total revenues increased by 19.1% for the quarter and 20.6% for the six-month period ended June 30, 2008, compared to the prior year, primarily driven by a 19.6% and 21.4% increase in property rental revenue, respectively.
  • 2Same-store rental revenues saw a modest increase of 1.4% for the quarter and 1.9% for the six-month period, indicating steady performance in existing properties.
  • 3Net income for the second quarter was $8.9 million, a slight increase from $8.7 million in the same quarter of 2007, while net income for the first six months was $15.6 million, up from $15.2 million in the prior year.
  • 4The company significantly increased its cash and cash equivalents to $185.8 million as of June 30, 2008, up from $17.4 million at the end of 2007, largely due to a $232.7 million common stock offering completed in May 2008.
  • 5Total assets grew to $2.25 billion as of June 30, 2008, compared to $2.05 billion at December 31, 2007, with real estate assets forming the largest portion of the balance sheet.
  • 6The company maintained a strong occupancy rate in its stabilized properties, with overall square foot occupancy at 86.9% as of June 30, 2008, compared to 86.4% in the prior year.
  • 7Debt-to-total capitalization ratio stood at 49.3% as of June 30, 2008, indicating a balanced approach to leverage.

Frequently Asked Questions

Extra Space Storage Inc. reported a 19.1% increase in total revenues for the second quarter ended June 30, 2008, reaching $67.3 million, compared to $56.5 million in the same period of 2007. This growth was primarily driven by property rental revenue, which increased by 19.6%.

The company's cash and cash equivalents significantly increased to $185.8 million as of June 30, 2008, from $17.4 million at December 31, 2007. This substantial increase is attributed to the net proceeds from a public offering of common stock completed in May 2008.

As of June 30, 2008, Extra Space Storage Inc. had $1.3 billion in total debt, resulting in a debt-to-total capitalization ratio of 49.3%. The company continues to employ leverage, considering factors such as interest rates, flexibility, and cash flow generation to manage its debt. The majority of its debt (91.5%) was fixed-rate at the time.

Extra Space Storage Inc. is focused on several growth strategies, including maximizing property performance through efficient management, acquiring self-storage properties from strategic partners and third parties, developing new self-storage properties, and expanding its management business to create future acquisition pipelines.