Creates the largest storage operator and
one of the largest REITs in the RMZ
SALT
LAKE CITY and BUFFALO,
N.Y., April 3, 2023 /PRNewswire/ -- Extra
Space Storage Inc. (NYSE: EXR) ("Extra Space") and Life Storage,
Inc. (NYSE: LSI) ("Life Storage") announced today that the two
companies have entered into a definitive merger agreement by which
Extra Space will acquire Life Storage in an all-stock transaction.
The transaction brings together two industry-leading
platforms, and 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 0.8950 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,
2023. At closing, Extra Space and Life Storage
shareholders are expected to own approximately 65% and 35% 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."
The transaction will increase the size of Extra Space's
portfolio by more than 50% 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, over 264
million square feet and serving over two million customers.
Joseph Saffire, Chief Executive
Officer of Life Storage said, "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. 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, including:
- Transformative scale: Combines two industry leaders with
long track records of outperformance and creates the largest
storage operator and the 6th largest REIT in the RMZ.
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 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 at least $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. Extra Space will work closely with
the Life Storage team to achieve anticipated synergies and intends
to leverage Life Storage's talented workforce.
- Embedded growth drivers: The combined businesses' 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.
Extra Space will retain its name and continue to trade on the
NYSE under the ticker "EXR". Kenneth
W. Woolley will remain Chairman of the Board and
Joseph D. 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.
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.
Citigroup Global Markets Inc. is acting as lead financial
advisor and Latham & Watkins LLP is serving as legal advisor to
Extra Space. J.P. Morgan Securities LLC is also serving as a
financial advisor to Extra Space. Wells Fargo Securities and
BofA Securities are acting as financial advisors and Hogan Lovells
US LLP and Quinn Emanuel Urquhart
& Sullivan LLP are serving as legal advisors to Life
Storage.
Webcast & Conference Call Information
Extra Space
and Life Storage will host a joint webcast and conference call
today. Joe Margolis, CEO of Extra Space and Joe Saffire, CEO of Life Storage, will discuss
the transaction and take questions. Here are the event
details:
- Monday, April 3, 2023,
at 8:30 a.m. U.S. Eastern time.
- Live webcast at ir.extraspace.com and also at
invest.lifestorage.com/ir-events by clicking Events &
Presentations.
- Participant Toll-Free Dial-In Number: (888) 506-0062;
Conference ID: 721638.
- A telephonic replay will be available from April 3 to
April 17, 2023.
- The webcast replay will be posted when available in the
Investor Relations "Events & Presentations" section at
ir.extraspace.com and also at
invest.lifestorage.com/ir-events.
About Extra Space Storage Inc.
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 December 31,
2022, the Company owned and/or operated 2,338
self-storage properties, which comprise approximately 1.6
million units and approximately 176.1 million square feet of
rentable storage space offering customers conveniently located
and secure storage units across the country, including boat
storage, RV storage and business storage. The Company is the
second largest owner and/or operator of self-storage properties in
the United States and is the
largest self-storage management company in the United States. For more information,
please visit www.extraspace.com.
About Life Storage, Inc.
Life Storage, Inc. is a
self-administered and self-managed equity REIT that is in the
business of acquiring and managing self-storage facilities.
Located in Buffalo, New
York, the Company operates more than 1,150 storage
facilities in 37 states and the District
of Columbia. The Company serves both residential and
commercial storage customers with storage units rented by month.
Life Storage consistently provides responsive service to more
than 675,000 customers, making it a leader in the industry.
For more information
visit http://invest.lifestorage.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 Life Storage
and Extra Space operate as well as beliefs and assumptions of Life
Storage and Extra Space. Such statements involve
uncertainties that could significantly impact Life Storage's or
Extra Space'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 Life Storage or Extra Space expects or
anticipates will occur in the future — including statements
relating to any possible transaction between Life Storage and Extra
Space, acquisition and development activity, disposition activity,
general conditions in the geographic areas where Life Storage or
Extra Space operate, and Life Storage's and Extra Space's
respective 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 Life Storage and Extra Space believe the
expectations reflected in any forward-looking statements are based
on reasonable assumptions, neither Life Storage nor Extra Space 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) Life Storage's and Extra
Space's ability to complete the proposed transaction on the
proposed terms or on the anticipated timeline, or at all, including
risks and uncertainties related to securing the necessary
stockholder approvals and satisfaction of other closing conditions
to consummate the proposed transaction; (ii) the occurrence of
any event, change or other circumstance that could give rise to the
termination of the merger agreement relating to the proposed
transaction; (iii) risks related to diverting the attention of
Life Storage and Extra Space management from ongoing business
operations; (iv) failure to realize the expected benefits of
the proposed transaction; (v) significant transaction costs
and/or unknown or inestimable liabilities; (vi) the risk of
shareholder litigation in connection with the proposed transaction,
including resulting expense or delay; (vii) 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; (viii) 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 proposed transaction;
(ix) the effect of the announcement of the proposed
transaction on the ability of Life Storage and Extra Space to
operate their respective businesses and retain and hire key
personnel and to maintain favorable business relationships;
(x) risks related to the market value of the Extra Space
common stock to be issued in the proposed transaction;
(xi) other risks related to the completion of the proposed
transaction and actions related thereto; (xii) national,
international, regional and local economic and political climates
and conditions; (xiii) changes in global financial markets and
interest rates; (xiv) increased or unanticipated competition
for Life Storage's or Extra Space's properties; (xv) risks
associated with acquisitions, dispositions and development of
properties, including increased development costs due to additional
regulatory requirements related to climate change;
(xvi) maintenance of Real Estate Investment Trust status, tax
structuring and changes in income tax laws and rates;
(xvii) availability of financing and capital, the levels of
debt that Life Storage and Extra Space maintain and their credit
ratings; (xviii) environmental uncertainties, including risks
of natural disasters; (xix) risks related to the coronavirus
pandemic; and (xx) those additional factors discussed under
Part I, Item 1A. Risk Factors in Life Storage's and Extra Space's
respective Annual Reports on Form 10-K for the year ended
December 31, 2022. 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.
Additional Information About the Proposed Transaction and
Where to Find It
In connection with the proposed transaction, Extra Space intends
to file with the SEC a registration statement on Form S-4, which
will include a document that serves as a prospectus of Extra Space
and a joint proxy statement of Extra Space and Life Storage (the
"joint proxy statement/prospectus"). Each party also plans to
file other relevant documents with the SEC regarding the proposed
transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. A
definitive joint proxy statement/prospectus will be sent to Extra
Space's stockholders and Life Storage's stockholders.
Investors and securityholders may obtain a free copy of the
joint proxy statement/prospectus (if and when it becomes available)
and other relevant documents filed by Extra Space and Life Storage
with the SEC at the SEC's website at www.sec.gov. Copies of
the documents filed by Extra Space with the SEC will be available
free of charge on Extra Space's website at www.extraspace.com or by
contacting Extra Space's Investor Relations at info@extraspace.com.
Copies of the documents filed by Life Storage with the SEC
will be available free of charge on Life Storage's website at
www.lifestorage.com or by contacting Life Storage's Investor
Relations at (716) 633-1850 or bmaedl@lifestorage.com.
Participants in the Solicitation
Extra Space and Life Storage and their respective directors,
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information about
directors and executive officers of Extra Space is available in the
Extra Space proxy statement for its 2022 Annual Meeting, which was
filed with the SEC on April 5, 2022.
Information about directors and executive officers of Life
Storage is available in the Life Storage proxy statement for its
2022 Annual Meeting, which was filed with the SEC on April 14, 2022. Other information regarding
the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials filed with the
SEC regarding the proposed transaction when they become available.
Investors should read the joint proxy statement/prospectus
carefully when it becomes available before making any voting or
investment decisions. Investors may obtain free copies of
these documents from Life Storage and Extra Space as indicated
above.
No Offer or Sale
This communication and the information contained herein shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Extra Space Storage
Investor Contact
Jeff Norman
801-365-1759
info@extraspace.com
Life Storage, Inc.
Investor Contact
Brent Maedl
716-328-9756
bmaedl@lifestorage.com
Media Contact
Andrew Siegel / Dan Moore
Joele Frank
212-355-4449
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SOURCE Extra Space Storage Inc.; Life Storage, Inc.