Dear Fellow Shareholders –

2018 was another solid year for Extra Space Storage. Our diversified portfolio and top-tier operating platform maintained very high occupancies, while producing positive rate growth, despite a challenging environment with new supply in many markets. The resilience of our sector and our company particularly stand out during development cycles, like we are facing today. Our consistency is not by happenstance. Our organizational structure, our operating platform, our portfolio, our balance sheet and our deeply talented team have intentionally been built to thrive in the current environment, but also to succeed into the future. Extra Space Storage is built to last.

The Self-Storage Sector

Demand for our product is need based and is driven by life events that occur in all phases of an economic cycle. Utilization and average length of stay continue to increase; both positive long-term trends for the industry. All of the metrics that measure demand, such as storage related keyword searches, website clicks, call center volume, rentals, etc. are steady or increasing. Concerns about millennials not using storage, or other concerns related to valet services and other potential disruptors of the storage industry are proving to be ill founded. Millennials are our fastest growing contingent of tenants, and to date, the impact from competing new services such as valet has been negligible. In short, the fundamentals of the business continue to be solid, and it is still good to be in storage.

The Extra Space Platform & Portfolio

We have a highly diversified portfolio that ended the year with 1,647 stores, all featuring the Extra Space Storage brand. Due to the number of properties in our portfolio, no single location materially impacts overall performance. The portfolio is also highly geographically diverse, with stores in 39 states and in over 100 markets. Such extensive diversification leads to more consistent cash flow and returns for our shareholders.

Our digital marketing platform drives customers to our website, our call center, and our stores at an increasing rate and with greater efficiency. Our revenue management systems optimize the conversion of that traffic into rentals through data driven pricing and promotions. We continue to invest in and augment our already strong technology systems and our processes to maximize revenue, support our growth and to be nimble in a digital landscape that is everchanging. Innovation is one of our core values, and we are never comfortable with the status quo. We will continue to focus on the use of technology to save on costs, improve our execution and enhance the customer experience. Our efforts have positioned Extra Space Storage to navigate the current environment as well as any operator in the sector today, and for many years to come.

The Extra Space Balance Sheet

We continue to strengthen our balance sheet with the goals of laddering our maturities, extending our average debt maturity while minimizing the interest rate, and maintaining access to as many types of capital as possible. We want to maintain a balance sheet which always has capacity to fund future growth and the flexibility to be opportunistic in the market. To accomplish these goals, last year we issued equity through our ATM program, completed a material disposition and issued operating partnership units as currency for acquisitions. We amended and restated our senior unsecured credit facility, which increased total capacity and reduced our interest rate spreads. We grew our unencumbered pool, which has never been larger, and we have access to many sources of capital. Our balance sheet is positioned to withstand the cyclicality of the financial and real estate markets.

The Extra Space Team

I am confident that the quality of our talent has never been stronger at all levels of the company in our 40 plus year history. We have enhanced the diversity of our board of directors adding new skill sets and perspectives to the board room. Our executive team has an average tenure of 17 years with Extra Space Storage, and a track record of success. Recruiting, developing and retaining diverse top talent is part of our strategic vision. Each of the members of our executive and senior management teams have a succession plan in place, and are proactively grooming the leaders of tomorrow. Extra Space provides a career not just a job for our employees, and we invest heavily in the development of our team so we can best serve our customers and support our external growth without compromising execution. As I interact with shareholders and analysts, I am told with regularity that the real differentiator at Extra Space is the people. I couldn’t agree more.

Built to Last

Over the years, Extra Space has operated in strong and in weak economies. During that time, we have faced industry headwinds as we navigated through development cycles and recessions. We have also benefitted from tailwinds such as lack of supply or falling interest rates. We have prospered when cap rates have been climbing as well as when they have been falling, and when the sector has been in or out of favor. We have been disciplined with capital allocation, yet aggressive and opportunistic with the right value creation opportunities. The landscape is always changing, but we have maintained our track record as a top performer in the sector in all operating environments. We have created a company that is built to last.