8-KFinancial EventsExhibits & Filings

Extra Space Storage Inc. 8-K Report, Exit or Disposal Costs (Jun 2, 2009)

Filed June 2, 2009For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) announced on May 27, 2009, a significant strategic shift by immediately winding down its development program due to current market conditions. This decision involves the termination of 16 employees related to the program and will result in one-time charges for development projects not currently under construction, estimated between $19 million and $23 million. Additionally, severance costs are projected to be between $1 million and $2 million. These charges are expected to be recognized in the second quarter of 2009. Despite the wind-down, the Company plans to complete 18 wholly-owned development properties that are already underway, with an estimated expenditure of $50 million to $55 million. Completion of these remaining projects is anticipated by the third quarter of 2010. Investors should note that the Company does not anticipate further cash outlays related to the broader development program wind-down beyond these identified costs.

Key Highlights

  • 1Extra Space Storage Inc. is immediately ceasing its development program due to adverse market conditions.
  • 2The company anticipates one-time charges between $19 million and $23 million for development projects not currently under construction.
  • 3Severance costs related to the termination of 16 employees are estimated to be between $1 million and $2 million.
  • 4These charges are expected to be recorded in the second quarter of 2009.
  • 5The company will continue to invest approximately $50 million to $55 million to complete 18 remaining wholly-owned development properties.
  • 6Completion of the remaining development projects is targeted for the third quarter of 2010.
  • 7No other cash expenditures are expected in connection with the development program wind-down.

Frequently Asked Questions

The company has decided to wind down its development program due to current unfavorable market conditions affecting its development projects and as a measure to preserve capital.

In the second quarter of 2009, Extra Space Storage expects to incur one-time charges ranging from approximately $19 million to $23 million for projects not under construction, along with $1 million to $2 million in severance costs for terminated employees.

The company is ceasing its development program. However, it intends to complete 18 wholly-owned development properties that are already in progress, with an estimated capital expenditure of $50 million to $55 million, expected to be finished by the third quarter of 2010.

The company does not expect any other cash expenditures in connection with the wind-down of its development program beyond the estimated charges and the completion costs for the remaining 18 properties.