RU² / April 7, 2023
Extra Space Storage Agrees to Acquire Life Storage for $12.7B
Original Article: Extra Space Storage Agrees to Acquire Life Storage for $12.7B
SALT LAKE CITY AND BUFFALO, N.Y. — Extra Space Storage Inc. (NYSE: EXR), a Salt Lake City-based REIT, has entered into a definitive agreement to acquire Buffalo-based REIT Life Storage (NYSE: LSI) in an all-stock transaction. According to multiple news outlets including The Wall Street Journal and Reuters, the deal is valued at $12.7 billion.
The combined portfolio will yield the largest self-storage operation in the country, with over 3,500 locations spanning over 264 million square feet that serve more than 2 million customers.
In announcing the deal, executives of both REITs noted that combining their respective platforms creates opportunities to maximize value for shareholders via additional scaling of third-party management services and access to elevated levels of joint-venture equity and bridge-loan debt for future developments and acquisitions.
Under the terms of the agreement, Life Storage shareholders will receive roughly nine-tenths of a share of Extra Space common stock for each share of Life Storage stock that they own. At closing, Extra Space and Life Storage shareholders are expected to own approximately 65 percent and 35 percent of the combined company, respectively.
The boards of directors of both companies have unanimously approved the transaction, and the deal is expected to formally close later this year. Extra Space Storage’s board of directors will be expanded from 10 members to 12, inclusive of several members of Life Storage’s existing board.
Extra Space Storage currently owns and/or operates 2,338 facilities nationwide comprising approximately 1.6 million units and 176 million net rentable square feet of space. Life Storage currently operates about 1,200 facilities throughout the country. Of those, the company owns 758 outright, while 141 stores are owned via joint ventures. The company also operates some 300 facilities on a third-party basis.
“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,” says Joseph Saffire, CEO of Life Storage.
“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,” adds Extra Space CEO Joe Margolis.
Citigroup Global Markets Inc. is acting as lead financial advisor to Extra Space, with Latham & Watkins LLP serving as the Utah-based REIT’s legal advisor. J.P. Morgan is also serving as a financial advisor to Extra Space.
Wells Fargo and Bank of America are acting as financial advisors to Life Storage, while and Hogan Lovells US LLP and Quinn Emanuel Urquhart & Sullivan LLP are serving as the REIT’s legal counsel.
The stock price of Extra Space Storage opened at $152.76 per share on Monday, April 3, down from $209.51 per share a year ago. Life Storage’s stock was trading at $133.50 per share at this morning’s opening bell, down from $144.38 at this time in 2022.
— Taylor Williams
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