8-KAcquisitions & DispositionsExhibits & Filings

Extra Space Storage Inc. 8-K Report, Acquisition Completed (Mar 14, 2008)

Filed March 14, 2008For Securities:EXR

Summary

This Form 8-K filing by Extra Space Storage Inc. (EXR) reports the completion of an acquisition on December 31, 2007, of three self-storage properties from Extra Space Development ("ESD"), a related party. The filing includes unaudited pro forma condensed consolidated financial information for the year ended December 31, 2007, reflecting the acquisition as if it occurred at the beginning of the year. It also provides audited historical financial statements for the three acquired properties. For investors, the key takeaway is the strategic expansion of EXR's portfolio through this related-party transaction. While the pro forma statements offer a forward-looking view, it's crucial to note that they are based on available information and may not perfectly represent future actual results. The filing also highlights the separation of management fees from property operations post-acquisition and provides detailed insights into the historical performance of the acquired assets under specific accounting rules.

Key Highlights

  • 1Extra Space Storage Inc. (EXR) acquired three self-storage properties from Extra Space Development (ESD) on December 31, 2007.
  • 2The acquisition involved a related party, ESD, which is owned by certain members of EXR's management and a director.
  • 3The filing includes unaudited pro forma consolidated statements of operations for the year ended December 31, 2007, treating the acquisition as if it occurred on January 1, 2007.
  • 4Audited historical financial statements for the three acquired properties (Jamaica Plain, LLC; Culver City, LLC; and Middletown, LLC) are provided.
  • 5Pro forma adjustments show the elimination of management fees paid by ESD to EXR for managing these properties prior to acquisition, indicating a shift to self-management.
  • 6The pro forma impact on net income attributable to common stockholders for the year ended December 31, 2007, was a decrease of approximately $2,425,000, from $34,584,000 to $32,159,000.
  • 7The filing details pro forma adjustments for depreciation and amortization, and interest expense related to assumed debt on the acquired properties.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report the completion of Extra Space Storage Inc.'s (EXR) acquisition of three self-storage properties from Extra Space Development (ESD), a related party, on December 31, 2007. It also provided pro forma financial information reflecting this acquisition.

Pro forma financial statements are included to show investors how the acquisition of the three properties would have impacted EXR's financial results for the year ended December 31, 2007, if the acquisition had occurred at the beginning of that period (January 1, 2007). This provides a more comparable view of the company's performance with the newly acquired assets.

The acquisition from Extra Space Development (ESD), owned by EXR's management and a director, is significant because related-party transactions require careful scrutiny to ensure they are conducted on arm's-length terms and are fair to all shareholders. The filing includes audits of operating information for these properties as required by SEC regulations.

The pro forma statements indicate that the acquisition slightly reduced net income attributable to common stockholders for the year ended December 31, 2007, from approximately $34.6 million to $32.2 million. This decrease is attributed to adjustments such as increased depreciation and amortization, and interest expense, which more than offset the property revenues and eliminated management fees paid by ESD to EXR.