Extra Space Storage - REIT Juggernaut Announces Latest $1.4 Billion Acquisition

After the market closed on Monday June 15, the second largest U.S. self-storage REIT, Extra Space Storage

announced ~$1.4 billion acquisition of non-traded REIT SmartStop Self Storage Inc. SmartStop is reportedly the seventh-largest U.S. self-storage operator, with 169 flagged properties located in 21 states, and Toronto, Canada. After the SmartStop acquisition closes, the Extra Space portfolio will increase by 121 owned properties, as well as 43 facilities which are operated by SmartStop under management agreements -- net of five SmartStop Toronto properties intended to be sold as part of the deal. Tale Of The Tape - 4 Largest Self-Storage Players The self-storage business is highly fragmented, with most of the 50,000 or so U.S. facilities owned and operated by small independent operators.

The four largest publicly traded self-storage REITs, along with Amerco, Inc.

, and recent REIT IPO National Storage Associates

are estimated to account for less than 15 percent of the market. • http://www.benzinga.com/analyst-ratings/analyst-color/15/05/5521119/analysts-weigh-in-recent-reit-ipo-national-storage-affil Self-Storage Growth - Rewards Shareholders Public Storage

operates over 2,200 facilities in the U.S., and with a $32 billion market cap is larger than the rest of its peers combined. Public Storage also owns and operates over 200 facilities in Western Europe under the Shurgard brand.  http://www.benzinga.com/news/15/06/5585669/reitweek-public-storage-very-serious-about-issuing-debt-to-fund-growth As of March 31, 2015, Extra Space owned and/or operated 1,106 self-storage properties in 35 states, Washington, D.C. and Puerto Rico. Extra Space's properties comprise ~740,000 units containing about 81.8 million square feet of rentable space.

Source: Extra Space - Nov. 2014 presentation Extra Space Storage and Public Storage had been two of the top returning publicly traded REITs during the 10-year period ended Oct. 31, 2104 according to KeyBanc. The Latest "Leaderboard" Fast-forward seven months later to June 2015, and Extra Space storage now sits on top of the same list.

Source: Extra Space REITWeek 2015 presentation EXR - SmartStop Strategic Benefits According to the Extra Space press release:  Extra Space will gain additional physical and digital scale in markets where it already has a strong operating presence.  The portfolio includes well-located, high-quality physical facilities.  The acquired sites provide opportunities for occupancy and rate increases and other income opportunities.  This transaction establishes a new property management relationship with Strategic Storage Trust II, Inc. and Strategic Storage Growth Trust, Inc., entities affiliated with SmartStop. Notably, this acquisition is expected to be accretive to EXR AFFO (adjusted funds from operations), and Extra Space management expects the transaction to close during 2H 2015. EXR - Secondary Offering In conjunction with the announced SmartStop acquisition, Extra Space also announced a 5 million share secondary offering of its common shares, along with an underwriter's 30-day option to purchase up to an additional 750,000 shares. Extra Space intends to use these funds to partially fund the SmartStop acquisition.