Last week, Extra Space Storage Inc. marked the one-year anniversary of acquiring Storage USA, the acquisition that boosted them to the second largest self-storage operator in the nation. The $2.3 billion transaction still stands as the largest in the self-storage industry to date.
At the time of the purchase, Extra Space Storage Inc. (NYSE: EXR) was incapable of buying all of Storage USA’s facilities. Instead they bought 61 facilities and through a joint venture with Prudential Real Estate Investors, and gained ownership interest in an additional 259 Storage USA facilities.
EXR also acquired Storage USA’s equity interest in 54 joint venture properties and assumed the management of 84 franchised and managed properties.
Most of the transaction was financed with bridge loans, debt and money raised through public markets. The bride loan has been completely repaid either by new equity in total of about $300 million or permanent debt. Prudential financed their part of theon their own.
During the past year, EXR integrated Storage USA. They consolidated the offices to one location by placing accounting,, operations, human resources and other various departments under one roof in Salt Lake City. Districts were set up to manage both sets of property, a centralized database computer system was installed and all properties were given a common philosophy, operating platform and set of rules and instructions to follow.
In the next four or five months, all of the Storage USA signs should display their new name, which has been one of the longest processes of the integration.
“By and large the integration has gone very well and our income growth has been very positive on both the Extra Space properties and the Storage USA properties,” says Kenneth Woolley, chairman and CEO of EXR.