Maryland | 001-32269 | 20-1076777 | ||||||||||||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
Common Stock, $0.01 par value | EXR | New York Stock Exchange |
Emerging growth company | ☐ | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
ITEM 8.01 | Other Events |
ITEM 9.01 | Financial Statements and Exhibits |
Exhibit No. |
Description of Exhibit | ||||
Unaudited consolidated financial statements of Life Storage, Inc. as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022. | |||||
Unaudited pro forma condensed combined financial information of Extra Space Storage Inc. as of and for the six months ended June 30, 2023 and the year ended December 31, 2022. | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
EXTRA SPACE STORAGE INC. | ||||||||||||||
Date: | August 18, 2023 | By | /s/ Gwyn McNeal | |||||||||||
Name: | Gwyn McNeal | |||||||||||||
Title: | Executive Vice President and Chief Legal Officer |
(dollars in thousands, except share data) | June 30, 2023 (unaudited) |
December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Investment in storage facilities: | ||||||||||||||
Land | $ | 1,312,600 | $ | 1,307,425 | ||||||||||
Building, equipment, and construction in progress | 6,908,830 | 6,864,381 | ||||||||||||
8,221,430 | 8,171,806 | |||||||||||||
Less: accumulated depreciation | (1,260,961) | (1,170,520) | ||||||||||||
Investment in storage facilities, net | 6,960,469 | 7,001,286 | ||||||||||||
Cash and cash equivalents | 60,006 | 24,406 | ||||||||||||
Accounts receivable | 23,897 | 24,153 | ||||||||||||
Receivable from unconsolidated joint ventures | 1,479 | 1,562 | ||||||||||||
Investment in unconsolidated joint ventures | 289,808 | 275,190 | ||||||||||||
Prepaid expenses | 12,432 | 10,363 | ||||||||||||
Trade name | 16,500 | 16,500 | ||||||||||||
Other assets | 29,949 | 34,270 | ||||||||||||
Total Assets | $ | 7,394,540 | $ | 7,387,730 | ||||||||||
Liabilities | ||||||||||||||
Line of credit | $ | 654,000 | $ | 595,000 | ||||||||||
Term notes, net | 2,753,527 | 2,751,632 | ||||||||||||
Accounts payable and accrued liabilities | 137,807 | 148,130 | ||||||||||||
Deferred revenue | 35,256 | 33,192 | ||||||||||||
Mortgages payable | 32,296 | 36,258 | ||||||||||||
Total Liabilities | 3,612,886 | 3,564,212 | ||||||||||||
Noncontrolling redeemable Preferred Operating Partnership Units at redemption value | — | 89,077 | ||||||||||||
Noncontrolling redeemable Common Operating Partnership Units (see Note 2) | 243,561 | 107,074 | ||||||||||||
Shareholders’ Equity | ||||||||||||||
Common stock $.01 par value, 200,000,000 shares authorized, 85,102,868 shares outstanding at June 30, 2023 (85,019,884 at December 31, 2022) | 851 | 850 | ||||||||||||
Additional paid-in capital | 3,886,640 | 3,886,317 | ||||||||||||
Dividends in excess of net income | (351,562) | (261,510) | ||||||||||||
Accumulated other comprehensive loss | (2,749) | (3,207) | ||||||||||||
Total Shareholders’ Equity | 3,533,180 | 3,622,450 | ||||||||||||
Noncontrolling interest in consolidated subsidiary | 4,913 | 4,917 | ||||||||||||
Total Equity | 3,538,093 | 3,627,367 | ||||||||||||
Total Liabilities and Equity | $ | 7,394,540 | $ | 7,387,730 |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||
(dollars in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Rental income | $ | 243,024 | $ | 227,239 | $ | 483,507 | $ | 432,748 | ||||||||||||||||||
Tenant reinsurance | 21,214 | 18,257 | 41,505 | 35,525 | ||||||||||||||||||||||
Other operating income | 13,348 | 11,550 | 26,176 | 22,264 | ||||||||||||||||||||||
Total operating revenues | 277,586 | 257,046 | 551,188 | 490,537 | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Property operations and maintenance | 45,255 | 42,458 | 92,561 | 84,827 | ||||||||||||||||||||||
Tenant reinsurance | 8,690 | 6,481 | 17,910 | 13,328 | ||||||||||||||||||||||
Real estate taxes | 27,437 | 25,356 | 54,874 | 49,879 | ||||||||||||||||||||||
General and administrative | 34,594 | 18,636 | 62,412 | 34,502 | ||||||||||||||||||||||
Depreciation and amortization | 47,157 | 48,076 | 94,926 | 94,476 | ||||||||||||||||||||||
Total operating expenses | 163,133 | 141,007 | 322,683 | 277,012 | ||||||||||||||||||||||
Gain on sale of non-real estate assets | 76 | 1,925 | 762 | 1,965 | ||||||||||||||||||||||
Income from operations | 114,529 | 117,964 | 229,267 | 215,490 | ||||||||||||||||||||||
Other income (expenses) | ||||||||||||||||||||||||||
Interest expense | (34,513) | (25,505) | (67,626) | (49,745) | ||||||||||||||||||||||
Interest income | 10 | 4 | 22 | 18 | ||||||||||||||||||||||
Equity in income of joint ventures | 2,159 | 1,914 | 3,788 | 4,032 | ||||||||||||||||||||||
Net income | 82,185 | 94,377 | 165,451 | 169,795 | ||||||||||||||||||||||
Net loss (income) attributable to noncontrolling preferred interests in the Operating Partnership |
330 | (1,007) | — | (2,003) | ||||||||||||||||||||||
Net income attributable to noncontrolling common interests in the Operating Partnership |
(1,741) | (1,106) | (3,074) | (1,953) | ||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests in consolidated subsidiary |
(1) | — | 4 | — | ||||||||||||||||||||||
Net income attributable to common shareholders | $ | 80,773 | $ | 92,264 | $ | 162,381 | $ | 165,839 | ||||||||||||||||||
Earnings per common share attributable to common shareholders – basic |
$ | 0.95 | $ | 1.09 | $ | 1.91 | $ | 1.98 | ||||||||||||||||||
Earnings per common share attributable to common shareholders – diluted |
$ | 0.94 | $ | 1.09 | $ | 1.90 | $ | 1.97 | ||||||||||||||||||
Common shares used in basic earnings per share calculation |
84,977,931 | 84,270,378 | 84,956,896 | 83,957,402 | ||||||||||||||||||||||
Common shares used in diluted earnings per share calculation |
85,165,746 | 84,428,182 | 85,272,079 | 84,132,978 | ||||||||||||||||||||||
Dividends declared per common share | $ | 1.20 | $ | 1.00 | $ | 2.40 | $ | 2.00 |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||
(dollars in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Net income | $ | 82,185 | $ | 94,377 | $ | 165,451 | $ | 169,795 | ||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||
Effective portion of gain on derivatives net of reclassification to interest expense |
229 | 229 | 458 | 458 | ||||||||||||||||||||||
Total comprehensive income | 82,414 | 94,606 | 165,909 | 170,253 | ||||||||||||||||||||||
Comprehensive income attributable to noncontrolling interests in the Operating Partnership |
(1,416) | (2,113) | (3,078) | (3,956) | ||||||||||||||||||||||
Comprehensive income attributable to common shareholders | $ | 80,998 | $ | 92,493 | $ | 162,831 | $ | 166,297 |
(dollars in thousands) | Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
||||||||||||
Operating Activities | ||||||||||||||
Net income | $ | 165,451 | $ | 169,795 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | 94,926 | 94,476 | ||||||||||||
Amortization of debt issuance costs and bond discount | 3,072 | 2,654 | ||||||||||||
Equity in income of joint ventures | (3,788) | (4,032) | ||||||||||||
Distributions from unconsolidated joint ventures | 9,224 | 8,125 | ||||||||||||
Non-vested stock earned | 3,675 | 3,404 | ||||||||||||
Other | (5,253) | (1,977) | ||||||||||||
Changes in assets and liabilities (excluding the effects of acquisitions): | ||||||||||||||
Accounts receivable | 1,649 | (3,344) | ||||||||||||
Prepaid expenses | (2,365) | (2,099) | ||||||||||||
Receipts from (advances to) joint ventures | 83 | (292) | ||||||||||||
Accounts payable and other liabilities | (11,159) | (11,229) | ||||||||||||
Deferred revenue | 2,064 | 3,581 | ||||||||||||
Net cash provided by operating activities | 257,579 | 259,062 | ||||||||||||
Investing Activities | ||||||||||||||
Acquisition of storage facilities, net of cash acquired | — | (571,618) | ||||||||||||
Improvements, equipment additions, and construction in progress | (51,227) | (39,529) | ||||||||||||
Proceeds from sale of non-real estate assets | 1,377 | 2,603 | ||||||||||||
Investment in unconsolidated joint ventures | (19,870) | (23,106) | ||||||||||||
Property deposits | 745 | 2,587 | ||||||||||||
Net cash used in investing activities | (68,975) | (629,063) | ||||||||||||
Financing Activities | ||||||||||||||
Net proceeds from sale of common stock | 1,116 | 100,807 | ||||||||||||
Proceeds from line of credit | 205,000 | 443,000 | ||||||||||||
Repayments of line of credit | (146,000) | (140,000) | ||||||||||||
Dividends paid - common stock | (204,198) | (168,000) | ||||||||||||
Distributions to noncontrolling interest holders | (4,495) | (3,935) | ||||||||||||
Issuance of operating partnership units | 88,674 | — | ||||||||||||
Redemption of operating partnership units | (88,078) | (245) | ||||||||||||
Mortgage principal payments | (3,832) | (255) | ||||||||||||
Net cash (used in) provided by financing activities | (151,813) | 231,372 | ||||||||||||
Net increase (decrease) in cash and restricted cash | 36,791 | (138,629) | ||||||||||||
Cash and restricted cash at beginning of period | 29,461 | 176,434 | ||||||||||||
Cash and restricted cash at end of period | $ | 66,252 | $ | 37,805 | ||||||||||
Supplemental cash flow information | ||||||||||||||
Cash paid for interest, net of interest capitalized | $ | 67,733 | $ | 48,734 | ||||||||||
Cash paid for income taxes, net of refunds | $ | 2,064 | $ | 2,014 |
(dollars in thousands) | Six Months Ended June 30, 2023 |
||||||||||
Beginning balance | $ | 107,074 | |||||||||
Net income attributable to noncontrolling common interests in the Operating Partnership |
3,074 | ||||||||||
Issuance of units | 88,674 | ||||||||||
Distributions | (3,495) | ||||||||||
Adjustment to redemption value | 48,234 | ||||||||||
Ending balance | $ | 243,561 |
(dollars in thousands) | Six Months Ended June 30, 2023 |
|||||||
Beginning balance | $ | 89,077 | ||||||
Redemption of units | (88,078) | |||||||
Distributions | (999) | |||||||
Ending balance | $ | — |
(dollars in thousands) | Three Months Ended June 30, 2023 |
Three Months Ended June 30, 2022 |
Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
||||||||||||||||||||||
Rental income | $ | 243,024 | $ | 227,239 | $ | 483,507 | $ | 432,748 | ||||||||||||||||||
Tenant reinsurance | 21,214 | 18,257 | 41,505 | 35,525 | ||||||||||||||||||||||
Management and acquisition fee income | 7,730 | 6,340 | 14,664 | 12,196 | ||||||||||||||||||||||
Other | 5,618 | 5,210 | 11,512 | 10,068 | ||||||||||||||||||||||
Total operating revenues | $ | 277,586 | $ | 257,046 | $ | 551,188 | $ | 490,537 |
(dollars in thousands) | June 30, 2023 | December 31, 2022 |
June 30, 2022 | |||||||||||||||||
Cash | $ | 60,006 | $ | 24,406 | $ | 32,639 | ||||||||||||||
Restricted cash | 6,246 | 5,055 | 5,166 | |||||||||||||||||
Total cash and restricted cash | $ | 66,252 | $ | 29,461 | $ | 37,805 |
(dollars in thousands) | ||||||||
Cost: | ||||||||
Beginning balance | $ | 8,171,806 | ||||||
Improvements and equipment additions | 40,329 | |||||||
Net increase in construction in progress | 10,999 | |||||||
Dispositions | (1,704) | |||||||
Ending balance | $ | 8,221,430 | ||||||
Accumulated Depreciation: | ||||||||
Beginning balance | $ | 1,170,520 | ||||||
Additions during the period | 91,530 | |||||||
Dispositions | (1,089) | |||||||
Ending balance | $ | 1,260,961 |
(dollars in thousands) | June 30, 2023 | December 31, 2022 |
||||||||||||
In-place customer leases | $ | 118,216 | $ | 118,216 | ||||||||||
Accumulated amortization | (117,411) | (114,005) | ||||||||||||
Net carrying value at the end of period | $ | 805 | $ | 4,211 |
(dollars in thousands) | June 30, 2023 | December 31, 2022 |
||||||||||||
Revolving line of credit borrowings | $ | 654,000 | $ | 595,000 | ||||||||||
Term note due April 8, 2024 | $ | 175,000 | $ | 175,000 | ||||||||||
Senior term note due July 1, 2026 | 600,000 | 600,000 | ||||||||||||
Senior term note due December 15, 2027 | 450,000 | 450,000 | ||||||||||||
Term note due July 21, 2028 | 200,000 | 200,000 | ||||||||||||
Senior term note due June 15, 2029 | 350,000 | 350,000 | ||||||||||||
Senior term note due October 15, 2030 | 400,000 | 400,000 | ||||||||||||
Senior term note due October 15, 2031 | 600,000 | 600,000 | ||||||||||||
Total term note principal balance outstanding | 2,775,000 | 2,775,000 | ||||||||||||
Less: unamortized debt issuance costs | (12,525) | (13,685) | ||||||||||||
Less: unamortized senior term note discount | (8,948) | (9,683) | ||||||||||||
Term notes payable | $ | 2,753,527 | $ | 2,751,632 |
(dollars in thousands) | June 30, 2023 | December 31, 2022 |
||||||||||||
4.065% mortgage note due April 1, 2023, secured by one self- storage facility |
$ | — | $ | 3,620 | ||||||||||
5.26% mortgage note due November 1, 2023, secured by one self-storage facility with an aggregate net book value of $7.8 million, principal and interest paid monthly (effective interest rate 5.58%) |
3,523 | 3,566 | ||||||||||||
4.4625% mortgage notes due December 6, 2024, secured by three self-storage facilities with an aggregate net book value of $53.0 million, principal and interest paid monthly (effective interest rate 3.26%) |
22,040 | 22,169 | ||||||||||||
4.44% mortgage note due July 6, 2025, secured by one self-storage facility with an aggregate net book value of $13.0 million, principal and interest paid monthly (effective interest rate 4.50%) |
6,045 | 6,108 | ||||||||||||
5.99% mortgage note due May 1, 2026, secured by one self- storage facility with an aggregate net book value of $6.1 million, principal and interest paid monthly (effective interest rate 6.68%) |
688 | 795 | ||||||||||||
Total mortgages payable | $ | 32,296 | $ | 36,258 |
Expected Maturity Date Including Discount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | Fair Value |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit - variable rate SOFR + 0.775% (5.97% at June 30, 2023) |
$ | — | $ | — | $ | — | $ | — | $ | 654,000 | $ | — | $ | 654,000 | $ | 654,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 4.533% | — | 175,000 | — | — | — | — | 175,000 | 170,899 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 3.50% | — | — | — | 600,000 | — | — | 600,000 | 555,236 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 3.875% | — | — | — | — | 450,000 | — | 450,000 | 416,455 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 3.67% | — | — | — | — | — | 200,000 | 200,000 | 178,615 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 4.00% | — | — | — | — | — | 350,000 | 350,000 | 318,789 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 2.20% | — | — | — | — | — | 400,000 | 400,000 | 311,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term note - fixed rate 2.40% | — | — | — | — | — | 600,000 | 600,000 | 462,221 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage note - fixed rate 5.26% | 3,523 | — | — | — | — | — | 3,523 | 3,485 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage notes - fixed rate 4.4625% | — | 22,040 | — | — | — | — | 22,040 | 20,639 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage note - fixed rate 4.44% | 63 | 131 | 5,851 | — | — | — | 6,045 | 5,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage note - fixed rate 5.99% | 110 | 229 | 243 | 106 | — | — | 688 | 681 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 3,696 | $ | 197,400 | $ | 6,094 | $ | 600,106 | $ | 1,104,000 | $ | 1,550,000 | $ | 3,461,296 |
(dollars in thousands) | Three Months Ended June 30, 2023 |
Three Months Ended June 30, 2022 |
Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
||||||||||||||||||||||
Accumulated other comprehensive loss beginning of period |
$ | (2,978) | $ | (3,895) | $ | (3,207) | (4,124) | |||||||||||||||||||
Realized loss reclassified from accumulated other comprehensive loss to interest expense |
229 | 229 | 458 | 458 | ||||||||||||||||||||||
Accumulated other comprehensive loss end of period | $ | (2,749) | $ | (3,666) | $ | (2,749) | $ | (3,666) |
Venture | Number of Properties at June 30, 2023 |
Company common ownership interest at June 30, 2023 |
Carrying value of investment at June 30, 2023 |
Carrying value of investment at December 31, 2022 |
||||||||||||||||||||||
Sovran HHF Storage Holdings LLC (“Sovran HHF”)1 |
37 | 20% | $62.7 million | $63.6 million | ||||||||||||||||||||||
Sovran HHF Storage Holdings II LLC (“Sovran HHF II”) | 22 | 15% | ($2.6 million) | ($2.4 million) | ||||||||||||||||||||||
Life Storage-HIERS Storage LLC (“HIERS”) | 17 | 20% | $14.0 million | $13.7 million | ||||||||||||||||||||||
191 V Life Storage Holdings LLC ("191 V") | 17 | 20% | $26.6 million | $27.5 million | ||||||||||||||||||||||
GII Life Storage Holdings LLC (“GII”) | 13 | 35% | $47.7 million | $48.6 million | ||||||||||||||||||||||
LS HF8 ComRef LLC ("HF8")2 |
3 | 20% | $11.7 million | $11.9 million | ||||||||||||||||||||||
LS HF9 ComRef Texas LLC ("HF9")3 |
4 | 20% | $13.5 million | $13.7 million | ||||||||||||||||||||||
Life Storage HHF Wasatch Holdings LLC ("Wasatch")4 |
16 | 20% | $56.0 million | $52.8 million | ||||||||||||||||||||||
Iskalo Office Holdings, LLC (“Iskalo”)5 |
N/A | 49% | ($2.3 million) | ($2.3 million) | ||||||||||||||||||||||
Life Storage Spacemax, LLC ("Spacemax") | 6 | 40% | $13.3 million | $13.7 million | ||||||||||||||||||||||
IRE LSI Clutter JV, LLC ("Clutter")6 |
4 | 10% | $15.0 million | — | ||||||||||||||||||||||
Life Storage ArrowMark Venture LLC ("ArrowMark Venture")7 |
N/A | 50% | $6.0 million | $5.9 million | ||||||||||||||||||||||
Joint ventures with properties in development stage8 |
5 | Various | $16.1 million | $16.1 million | ||||||||||||||||||||||
Other unconsolidated joint ventures | 6 | Various | $7.2 million | $7.6 million |
1 |
As of June 30, 2023, the carrying value of the Company’s investment in Sovran HHF exceeds its share of the underlying equity in net assets of Sovran HHF by approximately $1.7 million as a result of the capitalization of certain acquisition-related costs in 2008. This difference is included in the carrying value of the investment. In June 2022, Sovran HHF acquired one additional self-storage facility for cash consideration of $33.4 million. The Company made an additional contribution of $6.7 million as the Company's share of this transaction. | ||||
2 |
In August 2022, the Company executed a joint venture agreement, LS HF8 ComRef LLC, with an unrelated third-party with the purpose of acquiring and operating self-storage facilities. In October 2022, HF8 acquired three self-storage facilities for a total contractual purchase price of $59.0 million. During 2022, the Company contributed $12.0 million to HF8 as the Company's share of the initial capital investment in the joint venture. | ||||
3 |
In October 2022, the Company executed a joint venture agreement, LS HF9 ComRef Texas LLC, with an unrelated third-party with the purpose of acquiring and operating self-storage facilities. In October 2022, HF9 acquired four self-storage facilities for a total contractual purchase price of $67.5 million. During 2022, the Company contributed $13.8 million to HF9 as the Company's share of the initial capital investment in the joint venture. | ||||
4 |
In July 2022, the Company executed a joint venture agreement, Life Storage HHF Wasatch Holdings LLC, with an unrelated third-party with the purpose of acquiring and operating self-storage facilities. In September 2022, Wasatch acquired 15 self-storage facilities for a total contractual purchase price of $262.0 million. During 2022, the Company contributed $53.4 million to Wasatch as the Company's share of the initial capital investment in the joint venture. In February 2023, Wasatch acquired one additional self-storage facility for a total contractual purchase price of $22.4 million. During 2023, the Company made an additional contribution of $4.1 million as the Company's share of the cash required to fund this acquisition. | ||||
5 |
Iskalo owns the building that houses the Company’s headquarters. The Company paid rent to Iskalo of $0.8 million during each of the six months ended June 30, 2023 and June 30, 2022. | ||||
6 |
In April 2023, the Company executed a joint venture agreement, IRE LSI Clutter JV, LLC, with an unrelated third-party with the purpose of acquiring and operating self-storage facilities. In April 2023, Clutter acquired four self-storage facilities for a total contractual purchase price of $150.0 million. During 2023, the Company contributed $15.1 million as the Company's share of the initial capital investment in the joint venture. |
7 |
In October 2021, the Company executed a joint venture agreement, Life Storage ArrowMark Venture LLC, with the purpose of arranging and originating mortgage loans to owners of self-storage facilities throughout the United States. During 2022, the Company contributed $4.2 million to ArrowMark Venture as the Company's share of the funding of mortgage loans to third-parties. No contributions were made during 2023. | ||||
8 |
The Company has entered into five separate joint ventures, four of which are developing self-storage facilities in the New York City market and one of which is developing a self-storage facility in the Tampa, FL, market. The Company has not made any contributions to these joint ventures during 2023. |
(dollars in thousands) Venture |
Three Months Ended June 30, 2023 |
Three Months Ended June 30, 2022 |
Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
||||||||||||||||||||||||||||||||||
Sovran HHF | $ | 1,033 | $ | 1,044 | $ | 2,048 | $ | 2,004 | ||||||||||||||||||||||||||||||
Sovran HHF II | 561 | 537 | 1,100 | 1,012 | ||||||||||||||||||||||||||||||||||
Other unconsolidated joint ventures | 565 | 333 | 640 | 1,016 | ||||||||||||||||||||||||||||||||||
$ | 2,159 | $ | 1,914 | $ | 3,788 | $ | 4,032 |
(in thousands except per share data) | Three Months Ended June 30, 2023 |
Three Months Ended June 30, 2022 |
Six Months Ended June 30, 2023 |
Six Months Ended June 30, 2022 |
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Numerator: | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders | $ | 80,773 | $ | 92,264 | $ | 162,381 | $ | 165,839 | |||||||||||||||||||||||||||||||||||||||
Net income attributable to Preferred OP Unit distribution | (330) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Net income attributable to outstanding common shares | $ | 80,443 | $ | 92,264 | $ | 162,381 | $ | 165,839 | |||||||||||||||||||||||||||||||||||||||
Denominator: | |||||||||||||||||||||||||||||||||||||||||||||||
Denominator for basic earnings per share – weighted average shares |
84,978 | 84,270 | 84,957 | 83,957 | |||||||||||||||||||||||||||||||||||||||||||
Effect of Dilutive Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
Stock options and non-vested stock | 188 | 158 | 315 | 176 | |||||||||||||||||||||||||||||||||||||||||||
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion |
85,166 | 84,428 | 85,272 | 84,133 | |||||||||||||||||||||||||||||||||||||||||||
Basic earnings per common share attributable to common shareholders |
$ | 0.95 | $ | 1.09 | $ | 1.91 | $ | 1.98 | |||||||||||||||||||||||||||||||||||||||
Diluted earnings per common share attributable to common shareholders |
$ | 0.94 | $ | 1.09 | $ | 1.90 | $ | 1.97 |
(dollars in thousands) | Common Stock |
Additional Paid-in Capital |
Dividends in Excess of Net Income |
Accumulated Other Comprehensive Income (Loss) |
Total Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2022 | $ | 850 | $ | 3,886,317 | $ | (261,510) | $ | (3,207) | $ | 3,622,450 | |||||||||||||||||||||||||||||||||||||
Net impact of restricted stock issued and surrendered for taxes |
1 | (3,221) | — | — | (3,220) | ||||||||||||||||||||||||||||||||||||||||||
Deferred compensation of Directors | — | 30 | — | — | 30 | ||||||||||||||||||||||||||||||||||||||||||
Earned portion of non-vested stock | — | 1,764 | — | — | 1,764 | ||||||||||||||||||||||||||||||||||||||||||
Adjustment to redemption value on noncontrolling redeemable Operating Partnership Units |
— | — | (35,640) | — | (35,640) | ||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
— | — | 81,608 | — | 81,608 | ||||||||||||||||||||||||||||||||||||||||||
Amortization of terminated hedge included in AOCL |
— | — | — | 229 | 229 | ||||||||||||||||||||||||||||||||||||||||||
Dividends | — | — | (102,028) | — | (102,028) | ||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2023 | 851 | 3,884,890 | (317,570) | (2,978) | $ | 3,565,193 | |||||||||||||||||||||||||||||||||||||||||
Net impact of restricted stock issued and surrendered for taxes |
— | (830) | — | — | (830) | ||||||||||||||||||||||||||||||||||||||||||
Deferred compensation of Directors | — | 30 | — | — | 30 | ||||||||||||||||||||||||||||||||||||||||||
Earned portion of non-vested stock | — | 1,911 | — | — | 1,911 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | 1,116 | — | — | 1,116 | ||||||||||||||||||||||||||||||||||||||||||
Net impact of options exercised and surrendered for taxes |
— | (477) | — | — | (477) | ||||||||||||||||||||||||||||||||||||||||||
Adjustment to redemption value on noncontrolling redeemable Operating Partnership units |
— | — | (12,594) | — | (12,594) | ||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
— | — | 80,773 | — | 80,773 | ||||||||||||||||||||||||||||||||||||||||||
Amortization of terminated hedge included in AOCL |
— | — | — | 229 | 229 | ||||||||||||||||||||||||||||||||||||||||||
Dividends | — | — | (102,171) | — | (102,171) | ||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2023 | $ | 851 | $ | 3,886,640 | $ | (351,562) | $ | (2,749) | $ | 3,533,180 |
(dollars in thousands) | Common Stock |
Additional Paid-in Capital |
Dividends in Excess of Net Income |
Accumulated Other Comprehensive Income (Loss) |
Total Shareholders’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2021 | $ | 836 | $ | 3,697,000 | $ | (314,713) | $ | (4,124) | $ | 3,378,999 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds from issuance of common stock | 7 | 92,764 | — | — | 92,771 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | 173 | — | — | 173 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earned portion of non-vested stock | — | 1,661 | — | — | 1,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to redemption value on noncontrolling redeemable Operating Partnership units |
— | — | 10,924 | — | 10,924 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders | — | — | 73,575 | — | 73,575 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of terminated hedge included in AOCL |
— | — | — | 229 | 229 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | — | — | (83,637) | — | (83,637) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2022 | 843 | 3,791,598 | (313,851) | (3,895) | 3,474,695 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net proceeds from issuance of common stock | 1 | 7,864 | — | — | 7,865 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earned portion of non-vested stock | — | 1,743 | — | — | 1,743 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value less than redemption value on redeemed noncontrolling interest |
— | (2) | — | — | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to redemption value on noncontrolling redeemable Operating Partnership units |
— | — | 27,930 | — | 27,930 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders | — | — | 92,264 | — | 92,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of terminated hedge included in AOCL |
— | — | — | 229 | 229 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends | — | — | (84,363) | — | (84,363) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | $ | 844 | $ | 3,801,203 | $ | (278,020) | $ | (3,666) | $ | 3,520,361 |
(in thousands) | |||||||||||
2023 | $ | 1,037 | |||||||||
2024 | 2,584 | ||||||||||
2025 | 2,402 | ||||||||||
2026 | 2,483 | ||||||||||
2027 | 2,524 | ||||||||||
Thereafter | 9,173 | ||||||||||
Total | $ | 20,203 |
Number of shares of EXR Parent common stock and EXR OP common units to be issued upon conversion of shares of LSI common stock and Life Storage OP common units at June 30, 2023(1) |
77,892 | ||||
Multiplied by price of Extra Space common stock on July 19, 2023 | $ | 148.96 | |||
Estimated fair value of shares of Extra Space common stock and EXR OP common units to be issued | 11,602,792 | ||||
Estimated transaction costs(2) |
161,400 | ||||
Estimated aggregate consideration | $ | 11,764,192 |
(1) | LSI stockholders and Life Storage OP unitholders received 0.895 of a newly issued share of EXR Parent common stock or 0.895 of a new EXR OP common unit, respectively, for each share of LSI common stock or Life Storage OP common unit, respectively, that they owned as of immediately prior to consummation of the Mergers. Shares related to the acceleration of unvested LSI equity awards under LSI’s equity incentive plans that become fully vested at closing are included in the estimated shares to be issued. | ||||
(2) | For purposes of the Pro Forma Financial Statements, estimated transaction costs for the Mergers were included in the estimated aggregate consideration. These estimated transaction costs are expected to be approximately $161 million and include the direct costs incurred in acquiring the real estate assets. These costs will be capitalized by Extra Space. |
Historical (A) | Transaction Accounting Adjustments | Pro Forma Combined | |||||||||||||||||||||
Extra Space Storage | Life Storage | ||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Real estate assets, net | $ | 10,017,351 | $ | 6,961,274 | $ | 7,761,949 | (B) | $ | 24,740,574 | ||||||||||||||
Real estate assets - operating lease right-of-use assets | 220,090 | 16,730 | 4,083 | (C) | 240,903 | ||||||||||||||||||
Investments in unconsolidated real estate entities | 747,775 | 289,808 | 57,433 | (D) | 1,095,016 | ||||||||||||||||||
Investments in debt securities and notes receivable | 891,190 | — | — | 891,190 | |||||||||||||||||||
Cash and cash equivalents | 50,644 | 60,006 | — | 110,650 | |||||||||||||||||||
Other assets, net | 438,403 | 66,722 | 114,413 | (E) | 619,538 | ||||||||||||||||||
Total assets | $ | 12,365,453 | $ | 7,394,540 | $ | 7,937,878 | $ | 27,697,871 | |||||||||||||||
Liabilities, Noncontrolling Interests and Equity: | |||||||||||||||||||||||
Debt | $ | 7,217,488 | $ | 2,785,823 | $ | 360,866 | (F) | $ | 10,364,177 | ||||||||||||||
Revolving lines of credit | 275,250 | 654,000 | (654,000) | (F) | 275,250 | ||||||||||||||||||
Operating lease liabilities | 228,343 | 16,126 | — | 244,469 | |||||||||||||||||||
Cash distributions in unconsolidated real estate ventures | 69,183 | — | — | 69,183 | |||||||||||||||||||
Accounts payable and accrued expenses | 212,416 | 121,681 | — | 334,097 | |||||||||||||||||||
Other liabilities | 327,366 | 35,256 | — | 362,622 | |||||||||||||||||||
Total liabilities | 8,330,046 | 3,612,886 | (293,134) | 11,649,798 | |||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||
Noncontrolling Interests and Equity: | |||||||||||||||||||||||
Stockholders' equity: | |||||||||||||||||||||||
Common stock | 1,351 | 851 | (72) | (G) | 2,130 | ||||||||||||||||||
Additional paid-in capital | 3,383,303 | 3,886,640 | 7,876,773 | (G) | 15,146,716 | ||||||||||||||||||
Accumulated other comprehensive income (loss) | 47,065 | (2,749) | 2,749 | (G) | 47,065 | ||||||||||||||||||
Accumulated deficit | (175,941) | (351,562) | 351,562 | (G) | (175,941) | ||||||||||||||||||
Total stockholders' equity | 3,255,778 | 3,533,180 | 8,231,012 | 15,019,970 | |||||||||||||||||||
Noncontrolling interests | 779,629 | 248,474 | — | 1,028,103 | |||||||||||||||||||
Total noncontrolling interests and equity | 4,035,407 | 3,781,654 | 8,231,012 | 16,048,073 | |||||||||||||||||||
Total liabilities, noncontrolling interests and equity | $ | 12,365,453 | $ | 7,394,540 | $ | 7,937,878 | $ | 27,697,871 |
Historical (A) | Transaction Accounting Adjustments | Pro Forma Combined | ||||||||||||||||||||||||
Extra Space Storage | Life Storage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Property rental | $ | 874,709 | $ | 483,507 | $ | — | $ | 1,358,216 | ||||||||||||||||||
Tenant reinsurance | 96,137 | 41,505 | — | 137,642 | ||||||||||||||||||||||
Management fees and other income | 43,590 | 26,176 | — | 69,766 | ||||||||||||||||||||||
Total revenues | 1,014,436 | 551,188 | — | 1,565,624 | ||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Property operations | 231,803 | 147,435 | — | (H) | 379,238 | |||||||||||||||||||||
Tenant reinsurance | 18,571 | 17,910 | — | (H) | 36,481 | |||||||||||||||||||||
General and administrative | 69,605 | 60,432 | — | (H) | 130,037 | |||||||||||||||||||||
Depreciation and amortization | 157,576 | 94,926 | 135,998 | (I) | 388,500 | |||||||||||||||||||||
Total expenses | 477,555 | 320,703 | 135,998 | 934,256 | ||||||||||||||||||||||
Gain on sale of non-real estate assets | — | 1,014 | — | 1,014 | ||||||||||||||||||||||
Income from operations | 536,881 | 231,499 | (135,998) | 632,382 | ||||||||||||||||||||||
Interest expense | (166,471) | (67,626) | (21,204) | (J) | (255,301) | |||||||||||||||||||||
Interest income | 40,515 | 22 | — | 40,537 | ||||||||||||||||||||||
Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense | 410,925 | 163,895 | (157,202) | 417,618 | ||||||||||||||||||||||
Equity in earnings and dividend income from unconsolidated real estate entities | 23,559 | 3,788 | (270) | (K) | 27,077 | |||||||||||||||||||||
Income tax expense | (10,294) | (2,232) | — | (12,526) | ||||||||||||||||||||||
Net income | 424,190 | 165,451 | (157,472) | 432,169 | ||||||||||||||||||||||
Net income allocated to noncontrolling interests | (25,476) | (3,070) | 2,922 | (L) | (25,624) | |||||||||||||||||||||
Net income attributable to common stockholders | $ | 398,714 | $ | 162,381 | $ | (154,550) | $ | 406,545 | ||||||||||||||||||
Earnings per common share | ||||||||||||||||||||||||||
Basic | $ | 2.96 | $ | 1.91 | $ | 1.93 | ||||||||||||||||||||
Diluted | $ | 2.95 | $ | 1.90 | $ | 1.92 | ||||||||||||||||||||
Weighted average number of shares | ||||||||||||||||||||||||||
Basic | 134,672,672 | 84,956,896 | 210,890,337 | (M) | ||||||||||||||||||||||
Diluted | 143,337,522 | 85,272,079 | 221,229,914 | (M) |
Historical (A) | Transaction Accounting Adjustments | Pro Forma Combined | ||||||||||||||||||||||||
Extra Space Storage | Life Storage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Property rental | $ | 1,654,735 | $ | 917,143 | $ | — | $ | 2,571,878 | ||||||||||||||||||
Tenant reinsurance | 185,531 | 73,805 | — | 259,336 | ||||||||||||||||||||||
Management fees and other income | 83,904 | 47,218 | — | 131,122 | ||||||||||||||||||||||
Total revenues | 1,924,170 | 1,038,166 | — | 2,962,336 | ||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Property operations | 435,342 | 279,470 | — | (H) | 714,812 | |||||||||||||||||||||
Tenant reinsurance | 33,560 | 29,280 | — | (H) | 62,840 | |||||||||||||||||||||
Transaction related costs | 1,548 | — | — | 1,548 | ||||||||||||||||||||||
General and administrative | 129,251 | 75,050 | — | (H) | 204,301 | |||||||||||||||||||||
Depreciation and amortization | 288,316 | 192,902 | 268,945 | (I) | 750,163 | |||||||||||||||||||||
Total expenses | 888,017 | 576,702 | 268,945 | 1,733,664 | ||||||||||||||||||||||
Gain on real estate transactions | 14,249 | — | — | 14,249 | ||||||||||||||||||||||
Gain on sale of non-real estate assets | — | 7,385 | — | 7,385 | ||||||||||||||||||||||
Income from operations | 1,050,402 | 468,849 | (268,945) | 1,250,306 | ||||||||||||||||||||||
Interest expense | (219,171) | (109,240) | (42,410) | (J) | (370,821) | |||||||||||||||||||||
Interest income | 69,422 | 32 | — | 69,454 | ||||||||||||||||||||||
Income before equity in earnings and dividend income from unconsolidated real estate entities and income tax expense | 900,653 | 359,641 | (311,355) | 948,939 | ||||||||||||||||||||||
Equity in earnings and dividend income from unconsolidated real estate entities | 41,428 | 9,235 | (1,079) | (K) | 49,584 | |||||||||||||||||||||
Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets | — | 1,572 | — | 1,572 | ||||||||||||||||||||||
Income tax expense | (20,925) | (3,986) | — | (24,911) | ||||||||||||||||||||||
Net income | 921,156 | 366,462 | (312,435) | 975,183 | ||||||||||||||||||||||
Net income allocated to noncontrolling interests | (60,468) | (8,334) | 7,105 | (L) | (61,697) | |||||||||||||||||||||
Net income attributable to common stockholders | $ | 860,688 | $ | 358,128 | $ | (305,329) | $ | 913,487 | ||||||||||||||||||
Earnings per common share | — | |||||||||||||||||||||||||
Basic | $ | 6.41 | $ | 4.25 | $ | 4.34 | ||||||||||||||||||||
Diluted | $ | 6.41 | $ | 4.22 | $ | 4.33 | ||||||||||||||||||||
Weighted average number of shares | — | |||||||||||||||||||||||||
Basic | 134,050,815 | 84,322,043 | 210,268,480 | (M) | ||||||||||||||||||||||
Diluted | 141,681,388 | 84,884,168 | 219,573,780 | (M) |
Investments in real estate properties, net | $14,723,223 | ||||
Investments in real estate – right of use assets | 20,813 | ||||
Investments in and advancements to unconsolidated entities | 347,241 | ||||
Cash and other assets, including intangible assets | 241,141 | ||||
Debt | (3,146,689) | ||||
Accounts payable, accrued expenses and other liabilities, including lease intangible liabilities | (173,063) | ||||
Noncontrolling interests | (248,474) | ||||
Total estimated purchase price, including transaction costs | $11,764,192 |
June 30, 2023 | |||||
Investment in storage facilities, net (historical) | $ | 6,960,469 | |||
Add: in-place customer leases | 805 | ||||
Real estate assets, net as presented | $ | 6,961,274 |
June 30, 2023 | |||||
Other assets, net (historical) | $ | 29,949 | |||
Less: in-place customer leases | (805) | ||||
Less: Operating lease right of use assets, as presented | (16,730) | ||||
Add: Accounts receivable | 23,897 | ||||
Add: Receivable from unconsolidated joint ventures | 1,479 | ||||
Add: Prepaid expenses | 12,432 | ||||
Add: Trade name | 16,500 | ||||
Other assets, net as presented | $ | 66,722 |
For the Six Months Ended June 30, 2023 | For the Year Ended December 31, 2022 | ||||||||||
Property operations and maintenance (historical) | $ | 92,561 | $ | 179,760 | |||||||
Add: Real estate taxes | 54,874 | 99,710 | |||||||||
Property operations, as presented | $ | 147,435 | $ | 279,470 |
For the Six Months Ended June 30, 2023 | For the Year Ended December 31, 2022 | ||||||||||
General and administrative (historical) | $ | 62,412 | $ | 77,201 | |||||||
Less: Income tax portion of G&A | (1,980) | (2,151) | |||||||||
General and administrative, as presented | $ | 60,432 | $ | 75,050 | |||||||
Gain on sale of non-real estate assets (historical) | $ | 762 | $ | 5,550 | |||||||
Add: Income tax portion of Gain on sale of non-real estate assets | 252 | 1,835 | |||||||||
Gain on sale of non-real estate assets, as presented | $ | 1,014 | $ | 7,385 | |||||||
Income tax expense historically categorized as G&A | $ | 1,980 | $ | 2,151 | |||||||
Income tax expense historically categorized as Gain on sale of non-real estate assets: | 252 | 1,835 | |||||||||
Income tax expense, as presented | $ | 2,232 | $ | 3,986 |
Elimination of lease right-of-use assets | $ | (16,730) | |||
Recognition of value of acquired lease right-of-use assets(1) |
20,813 | ||||
Total | $ | 4,083 |
(1) | This adjustment includes the fair value of LSI’s lease right-of-use assets for ground and office space leases, in which LSI is the lessee, as well as the fair value measurement of all associated below-market ground leases as of June 30, 2023. We estimated the value of each lease by calculating the present value of the future minimum rental payments at June 30, 2023 using EXR Parent’s weighted average incremental borrowing rate of 6.4%. The weighted average remaining lease term for these leases was approximately nine years at June 30, 2023. |
Elimination of trade name intangible asset | $ | (16,500) | |||
Recognition of value of trade name intangible assets | 50,772 | ||||
Recognition of value of captive insurance intangible assets | 59,234 | ||||
Recognition of value of management contracts intangible assets | 6,969 | ||||
Recognition of value of assembled workforce intangible assets | 13,938 | ||||
Total | $ | 114,413 |
Six Months Ended June 30, 2023 | Year Ended December 31, 2022 | ||||||||||
Extra Space, Inc. | |||||||||||
Extra Space weighted average common shares outstanding – Basic | 134,672,672 | 134,050,815 | |||||||||
Shares issued to LSI stockholders – pro forma basis(1) |
76,217,665 | 76,217,665 | |||||||||
Weighted average common shares outstanding – Basic | 210,890,337 | 210,268,480 | |||||||||
Extra Space weighted average common shares outstanding – Diluted | 143,337,522 | 141,681,388 | |||||||||
Shares issued to LSI stockholders – pro forma basis(1) |
76,217,665 | 76,217,665 | |||||||||
OP units issued to Life Storage OP unitholders – pro forma basis(1) |
1,674,726 | 1,674,726 | |||||||||
Weighted average common shares outstanding – Diluted | 221,229,914 | 219,573,780 |
(1) | The pro forma weighted average shares or units outstanding assumes the issuance of shares of EXR Parent common stock and EXR OP common units in connection with the Mergers throughout all periods presented. |