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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

Commission File Number: 001-32269

EXTRA SPACE STORAGE INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:

(801) 562-5556

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of November 19, 2004 was 31,169,950.

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EXTRA SPACE STORAGE INC.

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Note that the financial statements covered in this report for the three and nine month periods ended September 30, 2003 and for the period from January 1, 2004 to August 16, 2004 contain the results of operations and financial condition of Extra Space Storage LLC (“the Predecessor”) and its subsidiaries, the predecessor to Extra Space Storage Inc. and its subsidiaries, prior to the consummation of Extra Space Storage Inc.’s initial public offering on August 17, 2004, and various formation transactions. In addition, the financial statements covered in this report contain the results of operations and financial condition of Extra Space Storage Inc. (“the Company”) for the period from August 17, 2004 to September 30, 2004. Due to the timing of the offering and the formation transactions, we do not believe that the results of operations discussion set forth in this document is necessarily indicative of our future operating results as a publicly-held company.

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Extra Space Storage Inc.

Consolidated Balance Sheets (Unaudited) (in thousands, except share and per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Extra Space Storage Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Extra Space Storage Inc.

Condensed Consolidated Statement of Redeemable Units and Members’ and Shareholders’ Equity (Deficit) (Unaudited)

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Extra Space Storage Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

Business

Extra Space Storage Inc. (“ESSI”) (together with its subsidiaries, the “Company”) completed an initial public offering of its common stock on August 17, 2004, pursuant to which it sold 20,200,000 shares of common stock, with proceeds to the Company of approximately $234,825, net of issuance costs of $17,675. As part of the offering, the Company granted the underwriters the right to purchase up to 3,030,000 additional shares within thirty days after the offering to cover any over-allotments. On September 1, 2004, the underwriters exercised their right and purchased an additional 3,030,000 shares of common stock with proceeds to the Company of approximately $35,224, net of issuance costs of $2,651. The Company also paid additional issuance costs of $5,574.

In connection with the closing of the initial public offering, the Company also consummated various formation transactions. These formation transactions are described in detail in this report and in the Company’s Registration Statement on Form S-11 filed with the Securities and Exchange Commission (the “SEC”) in connection with the initial public offering (the “Registration Statement”). The Company succeeded to the business conducted by Extra Space Storage LLC (the “Predecessor”), a Delaware limited liability company. The financial statements covered in this report represent the results of operations and financial condition of the Predecessor for the three and nine months ended September 30, 2003 and the period from January 1, 2004 through August 16, 2004, and the results of operations and financial condition of the Company for the period August 17, 2004 through September 30, 2004.

In connection with the initial public offering, the existing holders of Class A, Class B, Class C and Class E Units in the Predecessor exchanged these Units for an aggregate of 7,939,950 shares of common stock, 1,608,437 Operating Partnership (“OP”) units, 3,888,843 contingent conversion shares (“CCSs”) and 200,046 contingent conversion units (“CCUs”) and $18.9 million in cash. As a result of this exchange, the Predecessor became a wholly-owned subsidiary of Extra Space Storage LP (the “Operating Partnership”), which is a 92.95% subsidiary of ESSI. The transaction did not result in a change in the carrying value of the Predecessor’s assets and liabilities because the exchange was accounted for at historical cost as a transfer of assets between companies under common control.

Basis of presentation

ESSI is a newly organized, self-administered and self-managed real estate investment trust (“REIT”). ESSI was formed as a Maryland corporation on April 30, 2004 to operate, acquire and develop self-storage properties located throughout the United States.

The Company’s interest in its properties is held through its operating partnership, Extra Space Storage LP, a Delaware limited partnership (the “Operating Partnership”). The Company holds the sole 1% general partner interest in the Operating Partnership. As of September 30, 2004, the Company also holds a 91.95% limited partnership interest in the Operating Partnership.

The accompanying unaudited condensed consolidated financial statements of the Company and the the Predecessor have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited annual

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

consolidated financial statements and related notes thereto included in the Company’s Registration Statement.

The accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments and those adjustments resulting from the initial public offering and formation transactions, which are, in the opinion of management, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the condensed consolidated financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the estimates.

The results of operations for the period from August 17, 2004 to September 30, 2004 and January 1, 2004 to August 16, 2004 and the three and nine months ended September 30, 2003 are not necessarily indicative of the results of operations to be expected for any future period or the full year. The consolidated balance sheet at December 31, 2003 was derived from the audited consolidated financial statements contained in the Company’s Registration Statement and does not include all disclosures required by accounting principles generally accepted in the United States of America for annual consolidated financial statements.

Reclassifications

Certain amounts from the prior periods presented have been reclassified to conform to current period presentation. The reclassifications had no impact on total assets, liabilities, members’ and shareholders’ equity or net loss.

Net loss per share

Basic earnings per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net loss by the sum of the weighted average number of common shares and the effect of dilutive unexercised stock options. For the periods prior to the initial public offering on August 17, 2004, the weighted average number of common shares outstanding includes Class A units as if the Class A units had been converted to common stock using the initial public offering conversion ratio of one Class A unit to 0.08 shares of common stock. Options to purchase 1,324,000 shares of common stock at $12.50 per share were outstanding at September 30, 2004. No options were included in the computation of diluted net loss per share for the period ended September 30, 2004, because the effect would have been antidilutive.

The basic and diluted loss per share does not include the potential effects of the CCSs and CCUs as such securities would not have participated in earnings for any of the periods presented. These securities will not participate in distributions until they are converted, which cannot occur prior to March 31, 2006.

A dividend of $0.1113 per share was paid in September 2004.

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

The following summarizes the real estate assets of the Company and the Predecessor as of:

In January 2004, the Predecessor acquired its joint venture partner’s interest in a self-storage facility in Manteca, California for $3,436. The Predecessor issued 778,102 Class C units valued at $778 and 457,706 Class A units valued at $137, assumed existing debt of $2,453 and other liabilities of $68 associated with the property. Also in January, 2004, the Predecessor purchased an office park from members in Worcester, Massachusetts for $2,800. The Predecessor issued 510,000 Class C units valued at $510 and 300,000 Class A units valued at $90, assumed $2,081 of existing debt and issued notes payable of $119.

In February 2004, the Predecessor purchased five self-storage facilities located in Massachusetts for cash totaling $34,150. Also in February 2004, the Predecessor purchased four self-storage facilities located in Maryland, New Jersey and Pennsylvania for cash totaling $45,100. All nine facilities were purchased from third parties.

On March 31, 2004, the Predecessor purchased a self-storage facility in Marshfield, Massachusetts from members and third parties for $5,278. The Predecessor issued 724,544 Class C units valued at $725; 241,513 Class B units valued at $242, and 568,271 Class A units valued at $171. The Predecessor assumed debt of $3,705 and issued notes payable of $436.

On April 1, 2004, the Predecessor acquired its joint venture partner’s interest in two self-storage facilities in Tracy, California for $2,006. The Predecessor issued 455,069 Class C units valued at $455 and 267,688 Class A units valued at $80 and paid cash of $1,471.

On May 4, 2004, the Predecessor acquired its joint venture partner’s interest in Extra Space East One LLC. The Predecessor paid cash of $9,888 and issued a note for $8,400 to its joint venture partner for total consideration of $18,288.

On June 1, 2004, the Predecessor acquired nine self-storage facilities from Extra Space West One LLC a joint venture in which the Predecessor was a member. The facilities are located in California, Florida and Utah. The Predecessor paid cash of $39,264, issued a note for $12,400 to its joint venture partner and assumed other liabilities of $726, for total consideration of $52,390.

On August 17, 2004, the Company completed the acquisition of joint venture interests held by Equibase Mini Warehouse and its affiliates in seven joint ventures, which currently own an aggregate

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

of 30 self-storage properties, for an aggregate of approximately $35.8 million in cash and 114,928 OP Units issued by the Operating Partnership valued at $1,437.

On August 19, 2004, the Company completed its acquisition of one self-storage property located in Mesa, Arizona, and one self-storage property in Riverside, California from a third party. The Company paid cash of $4,314 and assumed debt of $4,386.

On August 23, 2004, the Company completed the acquisition of joint venture interests held by affiliates of the Moss Group in two joint ventures, which currently own two self-storage properties, for approximately $184 in cash and 1,006,684 OP Units valued at $12,584.

On August 26, 2004, the Company completed its acquisition of one self-storage property located in Bronx, New York from a third party for cash of $14,175.

On August 27, 2004, the Company completed its acquisition of 26 self-storage properties from Storage Spot Properties No. 1, L.P. and Storage Spot Properties No. 4, L.P. for cash of approximately $146.5 million. In addition, the seller may be entitled to receive up to an additional $5 million based on the operating performance of the 26 properties for the 12 months ending December 31, 2005. Any additional amounts ultimately payable would represent additional purchase price and would be reflected within the basis of the assets acquired and liabilities assumed.

The following table reflects the unaudited results of the Company’s and the Predecessor’s operations on a pro forma basis as if the acquisitions referred to in the preceding paragraphs had been completed on January 1, 2003. The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisitions been consummated on January 1, 2003, nor is it necessarily indicative of future operating results.

At September 30, 2004, and December 31, 2003, the Company and the Predecessor held minority investments in Extra Space West One LLC (“ESW”), which owns self-storage facilities in California, Florida, and Utah and Extra Space Northern Properties Six, LLC (“ESNPS”), which owns properties in California, Massachusetts, New Hampshire, New Jersey and New York.

At December 31, 2003, the Predecessor held a minority investment in Extra Space East One LLC (ESE), which owns self-storage facilities in Massachusetts, New Jersey, and Pennsylvania. The Predecessor acquired its joint venture partner’s interest in ESE on May 4, 2004.

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

In addition to the Company’s and the Predecessor’s investments in ESE, ESW and ESNPS, the Company and the Predecessor also held 20-50% investments in other entities which own self-storage facilities.

In these joint ventures, the Company, the Predecessor and the joint venture partner generally receive a preferred return on their invested capital. To the extent that cash/profits in excess of these preferred returns are generated through operations or capital transactions, the Company and the Predecessor would receive a higher percentage of the excess cash/profits than its equity interest.

To the extent that properties were sold/transferred into these ventures that did not qualify for sales treatment, those properties are reflected as being owned by the Predecessor in the consolidated financial statements with the joint venture partners’ interests in these properties reflected as minority interests and putable preferred interests in consolidated joint ventures.

On August 12, 2004, the Predecessor sold its minority equity interest in a storage facility in Laguna Hills, California to its joint venture partner for cash of $1,490 and repayment of a $2,000 related party payable, resulting in a gain of $1,920.

Investments in real estate ventures of the Company and the Predecessor consist of the following:

Equity in earnings of real estate ventures of the Company and the Predecessor consists of the following for the periods ended:

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

The following summarizes the other assets of the Company and the Predecessor as of:

The following summarizes the other liabilities of the Company and the Predecessor as of:

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

The following summarizes the borrowings of the Company and the Predecessor as of:

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

Substantially all of the Company’s and the Predecessor’s real estate assets are pledged as collateral for the borrowings detailed above.

During the nine months ended September 30, 2004, the Company and the Predecessor refinanced approximately $148 million of borrowings. Associated with this refinancing, approximately $700 of unamortized deferred financing costs associated with the loans that were repaid were written off, and approximately $3,150 of defeasance costs was paid. The $700 of deferred financing and $2,723 of defeasance costs are included in interest expense in the consolidated statement of operations of the Company and the Predecessor. An additional $427 of defeasance was included in the purchase price of a property acquisition.

On August 26, 2004, the Company closed a $37.0 million variable rate mortgage. This mortgage is collateralized by five properties and bears interest at a variable rate equal to LIBOR plus 1.75% and matures in three years after inception with a two year extension available at the Company’s option.

On August 27, 2004, the Company entered into a new $111.0 million senior 4.65% fixed rate mortgage in conjunction with the purchase of 26 self-storage properties.

On September 9, 2004, the Company, as guarantor, and its Operating Partnership entered into a $100 million revolving line of credit, which includes a $10 million swingline subfacility (the “Credit Facility”). The Credit Facility is initially collateralized by 16 self-storage properties. The Operating Partnership intends to use the proceeds of the Credit Facility for general corporate purposes. As of September 30, 2004, the Credit Facility has approximately $56 million of availability based on the assets collateralizing the Credit Facility.

The Company’s and the Predecessor’s management agreements provide for management fees of 6% of gross rental revenues for the management of operations at the self-storage facilities. The Company and the Predecessor earn interest income during the development period equal to 10% of its net investment in the development property. The Company and the Predecessor earn development fees of 4-5% of budgeted costs on developmental projects and acquisition fees of 1% of the gross purchase price or the completed costs of development of acquired properties.

During the three and nine months ended September 30, 2004 and 2003, the Company and the Predecessor recognized management fee revenues of $89 and $518 and $246 and $799, respectively, relating to ESE and ESW. During the three and nine months ended September 30, 2004 and 2003, the Company and the Predecessor recognized $0 and $161 and $0 and $478, respectively of development fee revenues relating to ESE and ESW.

During the three and nine months ended September 30, 2004 and 2003, the Company and the Predecessor recognized $101 and $283 and $64 and $190 of management fee revenue relating to ESNPS.

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Extra Space Storage Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands)

The Company and the Predecessor recognize revenue on various transactions with properties partially owned by the Company and the Predecessor or by shareholders or members of the Company and the Predecessor. These transactions are in addition to revenues recognized from ESE, ESW and ESNPS. The following summarizes these transactions for the Company and the Predecessor for the three and nine months ended: