8-KMaterial AgreementsExhibits & Filings

Extra Space Storage Inc. 8-K Report, Material Agreement (Dec 6, 2013)

Filed December 6, 2013For Securities:EXR

Summary

This 8-K filing by Extra Space Storage Inc. (EXR) on December 6, 2013, primarily concerns a material definitive agreement entered into by its operating partnership subsidiary, Extra Space Storage LP. The agreement, a Fourth Amended and Restated Agreement of Limited Partnership, establishes the terms for the issuance of two new series of preferred units: Series C Convertible Redeemable Preferred Units and Series D Redeemable Preferred Units. These new preferred units will hold a specific ranking relative to existing preferred units, sitting junior to Series A and on parity with Series B, but senior to common partnership interests in terms of distributions and liquidation. Key features include priority quarterly returns, defined liquidation values, and redemption options. Notably, the Series C units offer convertibility into the Company's common stock under certain conditions, providing potential upside for holders and dilution for common shareholders.

Key Highlights

  • 1Extra Space Storage LP entered into a Fourth Amended and Restated Agreement of Limited Partnership on December 2, 2013.
  • 2The agreement authorizes the issuance of Series C Convertible Redeemable Preferred Units and Series D Redeemable Preferred Units.
  • 3Both Series C and Series D Preferred Units rank senior to common partnership interests for distributions and liquidation.
  • 4Series C Preferred Units have a specific priority quarterly return that adjusts after five years and a liquidation value of $42.10 per unit.
  • 5Series C Preferred Units are convertible into approximately 0.9145 common units of Extra Space Storage Inc. per Series C Preferred Unit after the first anniversary of issuance.
  • 6Series D Preferred Units will have a priority return rate to be determined upon issuance and a liquidation value of $25.00 per unit.
  • 7Both Series C and Series D Preferred Units are redeemable at the holders' option after the first anniversary, with redemption potentially satisfied in cash or Company common stock.

Frequently Asked Questions

The main purpose of this 8-K filing is to announce the entry into a material definitive agreement by Extra Space Storage LP, the operating partnership subsidiary. This agreement amends and restates their limited partnership agreement to allow for the issuance of new Series C Convertible Redeemable Preferred Units and Series D Redeemable Preferred Units.

The Series C Preferred Units have a priority quarterly return that is initially set at $0.18 plus the common unit distribution, adjusting after five years. They have a liquidation value of $42.10 per unit and are convertible into approximately 0.9145 shares of Extra Space Storage Inc. common stock under specific conditions, starting one year after issuance.

The Series D Preferred Units will have a priority return rate that will be established at the time of issuance. They have a liquidation value of $25.00 per unit. Like the Series C units, they are redeemable at the holders' option after one year, with redemption potentially settled in cash or common stock.

The Series C and Series D Preferred Units rank junior to the Operating Partnership's Series A Participating Redeemable Preferred Units and on parity with its Series B Redeemable Preferred Units. However, they rank senior to all other partnership interests, including common units, with respect to distributions and liquidation.