New Details About the Extra Space/Life Storage Merger
Following approval of shareholders from both companies, the finalization of the Extra Space and Life Storage merger last week resulted in a new leader when it comes to the title of “largest self storage operator in the country.” This was one of the largest merger and acquisitions (M&A) deals in the United States this year (#3 according to Refinitiv data) and is the largest acquisition by a Utah headquartered company.
Now, the combined company consists of more than 3,500 locations, approximately 270 million square feet of rentable storage space, and over two million customers. The combined entity will be among the largest REITs in the MSCI U.S. REIT Index, with an enterprise value of approximately $46 billion.
MSM reached out to Extra Space to gather some additional details about the merger. According to McKall Morris, Communications and Sustainability Manager, the new entity will continue to operate as “dual brands.” “We’re keeping Life Storage branding and are not planning to rebrand any facilities,” she says. “The plan is to closely monitor the performance and run this year as a test to see if this is the best decision long-term.”
According to the Society of Human Resource Management (SHRM), mergers and acquisitions typically result in layoffs, as overlap in some areas leads to the elimination of positions. Harvard Business Review reports that on average, roughly 30% of employees are deemed redundant after a merger or acquisition in the same industry. Despite this, Morris confirms that 88% of the Life Storage team was retained, undoubtedly welcome news for many employees of the company.
First up for the combined company is the integration of Life Storage’s portfolio, people, and systems into Extra Space. Following that, “We will turn to the external growth opportunities we believe will be available through this merger,” says Joe Margolis, CEO of Extra Space.
Continues Margolis, “This merger should drive long-term value creation for our shareholders. The larger scale of the combined company will lead to opportunities such as a possible rating upgrade, an improved balance sheet, greater diversification in the portfolio and more data to analyze and use to optimize performance. I am thrilled that we closed the merger of two great companies – Life Storage and Extra Space Storage. I am really excited for the future of our company; we are going to great things together.”
The official press release in its entirety is below.
Extra Space Storage (NYSE: EXR) finalized a merger with Life Storage. This deal adds 1,200 new properties to Extra Space, bringing the new combined company store count to 3,500 locations across 43 states. This deal makes Extra Space the largest self-storage operator by store count and square footage managed. The combined entity will be the 8th largest REIT on the MSCI U.S. REIT Index with an enterprise value of approximately $46 billion.
The deal was an all-stock transaction. Under the terms of the agreement, Life Storage shareholders received 0.8950 of an Extra Space share for each Life Storage share they owned, representing a total consideration of approximately [$1X.X] billion dollars.
“We’re growing our company by 50% in one day. It’s very exciting,” said Noah Springer, Extra Space Chief Strategy Officer. “We couldn’t have done it without the hard work of our dedicated team. It’s amazing what the Extra Space team combined with the new team members from Life Storage have already been able to accomplish. I am excited to see all that we can achieve moving forward.”
Extra Space now operates approximately 270 million square feet of rentable space, serving over two million customers. The company has plans to keep growing aggressively. Even as the largest self-storage company, it still only owns 13% of the highly fragmented self-storage market.
“The future is bright for Extra Space Storage,” said Joe Margolis, Extra Space Storage CEO. “This is another great step in our growth history. This business combination creates a very strong company that will have outsized operational and external growth opportunities through scale efficiencies, enhanced diversification, greater data analytics, expanded industry relationship, and more.”
Extra Space Storage plans to continue to operate storage facilities under the Life Storage brand, adding Life Storage to their portfolio of brands that include Storage Express (smaller, remote storage facilities) and Bargold (storage units in apartment complexes).
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 March 31, 2023, Extra Space owned and/or operated 2,388 self-storage properties, which comprise approximately 1.7 million units and approximately 180.0 million square feet of rentable storage space. With the completed merger, Extra Space now has over 3,500 locations under the Extra Space, Life Storage and Storage Express brands, and it is the largest operator of self-storage properties in the United States.