Extra Space Storage Spends $12.7 Billion to Acquire Life Storage

The acquisition transforms the Cottonwood Heights firm into the largest self-storage company in the United States (by number of locations) and the 6th largest REIT in the U.S.

And just like that, Extra Space Storage (NYSE:EXR) becomes the largest self-storage operator in the U.S. courtesy of a $12.7 billion all-stock transaction to acquire Life Storage (NYSE:LSI).

According to the EXR news release announcing the deal, once the acquisition is completed (likely in the second half of 2023), the combined entity will have more U.S. locations than any other self-storage firm, become the 6th largest Real Estate Investment Trust (REIT) in the country, and have nearly 264 million square feet of rental space parsed out across over 3,500 locations in 43 states.

Post-acquisition, Cottonwood Heights, Utah-based Extra Space Storage expects to lower the combined annual operating costs of the two firms by over $100 million and boast a valuation (aka, market capitalization) of ~$36 billion.

"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."  (Joe Margolis, CEO of Extra Space Storage)

From the news release:

"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."

{NOTE: The boards of both EXR and Life Storage have approved the deal.)

UPDATE:

Response to this acquisition has been fairly positive across both #RealEstate and #Investor media outlets since the transaction was announced.

Several of the news reports and commentary I found most informative about this deal include:

• The Wall Street Journal (subscription required),
• The Motley Fool,
• Investor Place, and
• The Real Deal.