Extra Space acquisition brings its enterprise value to near $47B
Extra Space Storage Inc., a Salt Lake City-based real estate investment trust that owns and operates 2,338 self-storage properties across the U.S., has acquired Life Storage Inc. of Buffalo, New York, in an all-stock transaction. The combined company is expected to have a pro forma equity market capitalization of approximately $36 billion and total enterprise value of approximately $47 billion.
Under the terms of the agreement, Life Storage shareholders will receive 89.5 percent of an Extra Space share for each Life Storage share they own, representing a total consideration of approximately $145.82 per share based on Extra Space’s share price close on March 31. At closing, Extra Space and Life Storage shareholders are expected to own approximately 65 percent and 35 percent of the combined company, respectively. The respective boards of directors of both Extra Space and Life Storage have unanimously approved the transaction.
“We are impressed with the management team’s strategic repositioning of the Life Storage portfolio over the last seven years, creating a highly diversified portfolio of quality storage assets in strong growth markets,” said Extra Space CEO Joe Margolis. “The business combination is highly synergistic, creating an even stronger combined company that will drive long-term, outsized operational and external growth opportunities through scale efficiencies, higher retained cash flow, data analytics, third-party management relationships and more. We look forward to welcoming the Life Storage family to Team Extra Space and bringing our organizations together to drive enhanced growth.”
Margolis said the transaction will increase the size of Extra Space’s portfolio by more than 50 percent by store count with the addition of Life Storage’s 1,198 properties, including 758 wholly owned, 141 joint-venture and 299 third-party managed stores. In total, the transaction adds over 88 million square feet to the portfolio. The combined portfolio represents the largest storage operation in the country, with over 3,500 locations and over 264 million square feet serving over 2 million customers.
“Following a deliberate and comprehensive review, the Life Storage Board unanimously concluded that the pending transaction with Extra Space maximizes value today and is the transaction most likely to deliver superior long-term returns for our shareholders,” said Joseph Saffire, CEO of Life Storage said. “Together with Extra Space, we expect to accelerate growth while maintaining our customer-centric focus and commitment to continued innovation. We are also pleased that Life Storage shareholders will participate in the tremendous upside of the combined Extra Space and Life Storage platform through a significant ownership stake in the combined company. I want to thank the Life Storage team for their continued unrelenting dedication and commitment to our business and customers.”
When the merger closes — expected to be later this year — Extra Space will retain its name and continue to trade on the NYSE under the ticker symbol “EXR.” Kenneth W. Woolley will remain chairman of the board and Margolis will remain as CEO and director. The Extra Space board will be expanded from 10 to 12 directors and will consist of nine directors from Extra Space’s board and three directors from Life Storage.