CORRECTED - CORRECTED-UPDATE 1-Extra Space Q4 FFO down 33 pct

Tue Feb 23, 2010 4:35pm EST

(Corrects to remove reference to tenant reinsurance revenue declining in the quarter from paragraphs one and five. It had actually risen by nearly 30 percent)

* Q4 FFO of $0.22 below $0.34/shr year ago

* Q4 net operating income down, occupancy up

* Sees Q1 FFO below Street view

Feb 22 (Reuters) - Real estate investment trust Extra Space Storage Inc (EXR.N) reported a 33 percent drop in quarterly funds from operations, hurt in part by a drop in rental rates and a smaller gain on early repayment of debt, and forecast first-quarter FFO below market expectations.

For the fourth quarter ended Dec 31, the REIT posted FFO of $20.5 million, or 22 cents a share, compared with FFO of $30.8 million, or 34 cents a share, a year earlier.

Excluding severance costs, the company reported FFO of 23 cents a share.

Total operating and tenant reinsurance expenses were $22.9 million, while same-store occupancy climbed to 83.2 percent over the same period.

Same-store net operating income fell nearly 7 percent to $36.7 million.

Analysts on average, were expecting the Salt Lake City, Utah-based REIT to post FFO of 21 cents a share, according to Thomson Reuters I/B/E/S.

Despite the fragile economic recovery gaining momentum, buoyed by an upswing in consumer confidence, storage REITs have been banking on tough cost control measures and customer incentives to beat Wall Street's expectations. [nSGE61E0GA]

Shares of Extra Space closed at $12.00 Monday on the New York Stock Exchange.

(Reporting by Amulya Nagaraj in Bangalore; Editing by Anil D'Silva)

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