Extra Space Storage Acquires Life Storage for $12.4B

Life Storage, which rejected an $11B takeover bid from Public Storage in February, has agreed to be acquired by Extra Space Storage for $12.4B in an all-stock transaction.

The deal creates an industry leader with an estimated $47B in assets, including more than 3,500 self-storage facilities encompassing more than 264M SF.

Life Storage shareholders will receive 0.8950 of an Extra Space share for every share they own. When the deal closes, Extra Space and Life Storage investors will own 65% and 35% of the merged company, respectively, the companies said, in a statement.

Citigroup and JPMorgan Chase acted as financial advisors to Extra Space in the transaction, with Citigroup taking the lead. Wells Fargo and Bank of America provided advice to Life Storage.

The transaction will increase the size of Salt Lake City-based 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 88M SF 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.

The merged companies also have become the sixth-largest REIT in all sectors.

“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,” Extra Space CEO Joe Margolis said, in a statement.

“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, [and] third-party management relationships, Margolis said.

Joseph Saffire, CEO of Life Storage, said in a statement that the company’s 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.”

When it rejected Public Storage’s $11B hostile takeover bid in February, Life Storage said the Public Storage bid significantly undervalued the company and discounted its prospects for further growth.

The transaction is expected to generate at least $100M 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, the companies said.