Creates the largest storage operator and one
of the largest REITs in the MSCI U.S. REIT Index
SALT
LAKE CITY, July 20, 2023 /PRNewswire/ -- Extra Space
Storage Inc. (NYSE: EXR) ("Extra Space") and Life Storage, Inc.
("Life Storage") announced today that the companies have completed
their previously announced merger, following approval by the
shareholders of both companies. The combined company is now the
largest storage operator in the country (based on the number of
self-storage locations) with over 3,500 locations, approximately
270 million square feet of rentable storage space, and over two
million customers. The combined entity will be among the
largest REITs in the MSCI U.S. REIT Index, with an enterprise value
of approximately $46 billion.
"We are prepared for the smooth integration of Life Storage, and
we believe this combination gives the combined company an even more
formidable portfolio, team, and platform, with over 3,500 stores
across 43 states," said Extra Space Storage CEO Joe Margolis. "We are confident we will
achieve at least $100 million in
underwritten annual run-rate synergies, and that we will unlock
additional synergies resulting from our increased scale."
Merger Highlights:
The combination of Extra Space and Life Storage is expected to
deliver significant strategic, operational and financial benefits
to shareholders, including:
- Transformative scale: Combines two industry leaders with
long track records of outperformance and creates the largest U.S.
storage operator (based on the number of self-storage locations)
and a top ten REIT by enterprise value in the MSCI U.S. REIT Index.
Uniting Extra Space's and Life Storage's leading technology and
data analytics platforms will also allow the combined company to
continue to drive same-store net operating income growth while
providing exceptional service to customers.
- Enhanced diversification: Creates a highly diversified
portfolio of quality storage assets in markets benefiting from
compelling demand and population demographic trends.
- Significant synergy opportunity: The transaction
is expected to generate $100 million
in annual run-rate operating synergies from G&A and property
operating expense savings as well as improved property operating
revenue and tenant insurance income. Extra Space has a demonstrated
track record of integrating stores onto its platform and delivering
outsized returns to shareholders.
- Embedded growth drivers: The combined business's scaled
and growing third-party management, joint venture and bridge loan
platforms will create a robust pipeline for accelerated external
growth.
- Positive financial impact: The transaction is expected
to be accretive to Core FFO per share within the first year of
closing and be leverage neutral.
In connection with the completion of the merger, the Extra Space
board has expanded from 10 to 13 directors with the addition of
three new directors designated by Life Storage: Mark G. Barberio, Joseph
V. Saffire, and Susan
Harnett.
Citigroup Global Markets Inc. acted as lead financial advisor
and Latham & Watkins LLP served as legal advisor to Extra
Space. J.P. Morgan Securities LLC also served as a financial
advisor to Extra Space. Wells Fargo Securities and BofA
Securities acted as financial advisors and Hogan Lovells US LLP,
Phillips Lytle LLP, and Quinn Emanuel
Urquhart & Sullivan LLP served as legal advisors to Life
Storage.
About Extra Space
Extra Space Storage Inc., headquartered in Salt Lake City, is a fully integrated,
self-administered and self-managed real estate investment trust,
and a member of the S&P 500. As of March 31, 2023, Extra Space owned and/or operated
2,388 self-storage properties, which comprise approximately 1.7
million units and approximately 180.0 million square feet of
rentable storage space. With the completed merger, Extra Space now
has over 3,500 locations under the Extra Space, Life Storage and
Storage Express brands, and it is the largest operator of
self-storage properties in the United States.
For more information, please visit www.extraspace.com.
Forward-Looking Statements
The statements in this
communication that are not historical facts are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements are
based on current expectations, estimates and projections about the
industry and markets in which Extra Space and Life Storage operate
as well as beliefs and assumptions of Extra Space and Life
Storage. Such statements involve uncertainties that could
significantly impact Extra Space's or Life Storage's financial
results. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," and "estimates," including variations
of such words and similar expressions, are intended to identify
such forward-looking statements, which generally are not historical
in nature. All statements that address operating performance,
events or developments that Extra Space or Life Storage expects or
anticipates will occur in the future — including statements
relating to the benefits of the merger between Extra Space and Life
Storage, including anticipated operations, financial position,
prospects, synergies or competitive advantages and future growth,
and Extra Space's debt, capital structure and financial position —
are forward-looking statements. These statements are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict.
Although Extra Space and Life Storage believe the expectations
reflected in any forward-looking statements are based on reasonable
assumptions, neither Extra Space nor Life Storage can give
assurance that its expectations will be attained and, therefore,
actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
Some of the factors that may affect outcomes and results include,
but are not limited to: (i) risks related to diverting the
attention of Extra Space management from ongoing business
operations; (ii) failure to realize the expected benefits of the
merger; (iii) significant transaction costs and/or unknown or
inestimable liabilities; (iv) the risk of shareholder litigation in
connection with the proposed transaction, including resulting
expenses; (v) the risk that Life Storage's business will not be
integrated successfully or that such integration may be more
difficult, time-consuming or costly than expected; (vi) risks
related to future opportunities and plans for the combined company,
including the uncertainty of expected future financial performance
and results of the combined company following completion of the
merger; (vii) the effect of the merger on the ability of Extra
Space to operate its business and retain and hire key personnel and
to maintain favorable business relationships; (viii) risks related
to the market value of the Extra Space common stock issued in the
merger; (ix) national, international, regional and local economic
and political climates and conditions; (x) changes in global
financial markets and interest rates; (xi) increased or
unanticipated competition for Life Storage's or Extra Space's
properties; (xii) risks associated with acquisitions,
dispositions and development of properties, including increased
development costs due to additional regulatory requirements related
to climate change; (xiii) maintenance of Real Estate Investment
Trust status, tax structuring and changes in income tax laws and
rates; (xiv) availability of financing and capital, the levels of
debt that Extra Space maintains and its credit ratings; (xv)
environmental uncertainties, including risks of natural disasters;
and (xvi) those additional factors discussed under Part I, Item 1A.
Risk Factors in Extra Space's and Life Storage's respective Annual
Reports on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form
10-Q for the quarter ended March 31,
2023, as well as the other risks described in their
respective filings. Neither Life Storage nor Extra Space
undertakes any duty to update any forward-looking statements
appearing in this communication except as may be required by
law.
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SOURCE Extra Space Storage Inc.