The big just keep getting bigger.
Salt Lake City-based Extra Space Storage has acquired Life Storage Inc. in an all-stock transaction that pegs the self-storage giant’s pro forma equity market capitalization at approximately $36 billion and total enterprise value at approximately $47 billion. Life Storage is headquartered in Buffalo, New York.
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 payout of approximately $145.82 per share based on Extra Space’s share price when the market closed on March 31. When the deal closes, Extra Space shareholders are expected to own approximately 65 percent of the combined company while Life Storage owners will hold 35 percent of the stock.
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.”
The transaction will increase the size of Extra Space’s portfolio by more than 50 percent by location 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, over 264 million square feet and 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 Life Storage CEO Joseph Saffire. “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.”
The combination of Extra Space and Life Storage is expected to result in significant strategic, operational and financial benefits to shareholders, Extra Space said in a release. Among the benefits of the deal are a transformative scale which will also allow the combined company to continue to drive same-store net operating income growth while providing exceptional service to customers, a highly diverse portfolio of storage assets in desirable markets and a significant synergy from the integration of the two systems and workforces.
Extra Space will retain its name and continue to trade on the New York Stock exchange. Kenneth W. Woolley will remain as chairman of the board and Margolis will remain as CEO and as a 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.
The transaction is currently expected to close in the second half of 2023, subject to the approval of Extra Space and Life Storage shareholders and satisfaction of other customary closing conditions, Extra Space said.