Summary
Extra Space Storage Inc. (EXR) filed an 8-K on January 6, 2022, disclosing unregistered sales of equity securities by its Operating Partnership. The company utilized OP Units and Series D preferred units to fund acquisitions of 12 storage properties. These issuances, totaling approximately $276.4 million in value, were conducted through private placements under Section 4(a)(2) of the Securities Act of 1933, indicating they were not registered with the SEC. Of significant interest to investors are the terms governing these newly issued units. The OP Units are redeemable after a one-year lock-up period and can be settled by the company in cash or its common stock at a 1:1 ratio. The Series D preferred units also become redeemable on their first anniversary and can be settled in cash or common stock, with the conversion value tied to a fixed $25.00 per unit. These transactions represent continued strategic growth through accretive acquisitions, financed in part by equity, which will impact the company's capital structure and potential future dilution upon redemption.
Key Highlights
- 1Operating Partnership issued 71,644 OP Units on November 1, 2021, valued at $13.0 million for two store acquisitions.
- 2Operating Partnership issued 826,159 OP Units and 3,522,937 Series D preferred units on December 31, 2021, valued at $175.3 million and $88.1 million respectively, for ten store acquisitions.
- 3Total value of units issued in these transactions is approximately $276.4 million.
- 4Units were issued in private placements under Section 4(a)(2) of the Securities Act of 1933, exempt from SEC registration.
- 5OP Units are redeemable by holders after a one-year lock-up period, with EXR having the option to settle in cash or common stock (1:1 ratio).
- 6Series D preferred units are redeemable by holders on the first anniversary of issuance, with EXR having the option to settle in cash or common stock at $25.00 per unit based on common stock value.