8-KMaterial AgreementsRegulation FDExhibits & Filings

Extra Space Storage Inc. 8-K Report, Material Agreement (Sep 30, 2009)

Filed September 30, 2009For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) filed an 8-K on September 30, 2009, to disclose an amendment to a material definitive agreement, specifically a joint venture (JV) with an affiliate of Harrison Street Real Estate Capital, LLC (HSRE). Under the amended terms, HSRE will contribute $15.0 million in cash for a 50.0% ownership stake in the JV, while EXR will contribute 19 wholly-owned properties and receive $15.0 million in cash, also holding a 50.0% ownership interest. The JV will assume approximately $101.0 million in debt secured by these properties.

Key Highlights

  • 1Amendment to an existing joint venture agreement with Harrison Street Real Estate Capital, LLC.
  • 2HSRE to contribute $15.0 million cash for a 50% JV stake.
  • 3EXR to contribute 19 properties and receive $15.0 million cash for a 50% JV stake.
  • 4Joint venture to assume approximately $101.0 million of debt secured by the contributed properties.
  • 5EXR will continue to manage the properties for a 6% management fee on revenues.
  • 6Non-competition agreements and a right of first opportunity for EXR are included in the terms.
  • 7The transaction is expected to close by the end of Q4 2009, subject to customary conditions.

Frequently Asked Questions

This 8-K filing announces an amendment to a material definitive agreement, specifically detailing the updated terms of a joint venture between Extra Space Storage Inc. and an affiliate of Harrison Street Real Estate Capital, LLC.

Extra Space Storage will receive $15.0 million in cash and retain a 50% ownership in the joint venture, which will be capitalized with 19 of its properties and assume $101.0 million in debt. The company will also earn a 6% management fee on the revenues generated by the properties it continues to manage.

The joint venture transaction is anticipated to close by the end of the fourth quarter of 2009, subject to customary closing conditions and debt assumption.

Yes, the agreement includes a non-competition clause that prohibits both parties from developing new self-storage projects within a specified distance of JV-owned projects. Additionally, Extra Space Storage has agreed to provide HSRE with a right of first opportunity for potential acquisition or development joint venture projects for up to two years.