8-KLeadership ChangesMaterial AgreementsSecurities & Listing+4

Extra Space Storage Inc. 8-K Report, Material Agreement (Aug 29, 2013)

Filed August 29, 2013For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) filed this Form 8-K on August 29, 2013, to report several significant corporate events. The most notable is the closing of the acquisition of 19 self-storage facilities from entities affiliated with All Aboard Mini Storage, with one additional property expected to close by year-end 2013. This acquisition adds approximately 1.5 million square feet of net rentable space across California. The company financed a substantial portion of this acquisition through the issuance of Series B Redeemable Preferred Units and Common Units of its operating partnership subsidiary, Extra Space Storage LP. Additionally, the filing announces the retirement of Executive Vice President and Chief Operating Officer Karl Haas, effective December 31, 2013, with Samrat Sondhi slated to take over Senior Vice President of Operations. Board of Directors member Hugh W. Horne also announced his resignation, effective December 31, 2013. The company also made administrative amendments to its charter concerning its stock structure. Overall, this filing highlights EXR's strategic expansion in its property portfolio and key executive transitions.

Key Highlights

  • 1Acquisition of 19 self-storage facilities (with one more pending) from All Aboard Mini Storage, adding approximately 1.5 million sq ft of rentable space in California.
  • 2Financing of the acquisition involved the issuance of 1,257,519 Series B Redeemable Preferred Units and 1,356,209 Common Units of Extra Space Storage LP.
  • 3The Partnership Agreement was amended to establish the Series B Preferred Units, which rank senior to other partnership interests (except Series A Preferred Units) and carry a 6.0% fixed priority return.
  • 4Retirement of Karl Haas, EVP and COO, effective December 31, 2013; he is expected to join the Board.
  • 5Appointment of Samrat Sondhi as Senior Vice President Operations, effective December 31, 2013, to succeed Mr. Haas.
  • 6Resignation of Board member Hugh W. Horne, effective December 31, 2013.
  • 7Administrative amendments to the company's charter to adjust authorized shares of Contingent Conversion Shares and Common Stock.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report the closing of a material definitive agreement, specifically the acquisition of 19 self-storage facilities from entities affiliated with All Aboard Mini Storage. It also disclosed executive changes and administrative amendments to the company's charter.

The acquisition was financed through a combination of newly issued Series B Redeemable Preferred Units and Common Units of Extra Space Storage LP, the company's operating partnership subsidiary. The total value of these units issued as consideration was approximately $31.4 million for the preferred units and $58.4 million for the common units.

The Series B Redeemable Preferred Units have a fixed priority return of 6.0% and a liquidation value of $25.00 per unit. These units rank junior to Series A Participating Redeemable Preferred Units but senior to all other partnership interests in distributions and liquidation. Holders can redeem these units after one year, with Extra Space Storage having the option to satisfy the redemption in cash or common stock.

Yes, the filing announces the retirement of Karl Haas, Executive Vice President and Chief Operating Officer, effective December 31, 2013. Samrat Sondhi is slated to become the Senior Vice President of Operations upon Mr. Haas's retirement. Additionally, Board member Hugh W. Horne is resigning from the Board of Directors, also effective December 31, 2013.