Extra Space Storage Bolsters Capital Structure with $350 Million Senior Notes Offering
Thursday, Jan 16, 2025 5:52 pm ET
2min read Extra Space Storage Inc. (NYSE: EXR), a leading self-storage real estate investment trust (REIT), has announced the pricing of a $350 million add-on offering of 5.500% senior notes due 2030. This offering is an addition to the initial issuance of $450 million of 5.500% senior notes due 2030, which was priced at 101.509% of the principal amount and will mature on July 1, 2030. The net proceeds from this offering will be used by the operating partnership to repay amounts outstanding from time to time under its lines of credit and its commercial paper program, and for other general corporate and working capital purposes, including funding potential acquisition opportunities.
The offering was priced at 101.509% of the principal amount, indicating a strong demand for the notes and a positive reception from investors. The 5.500% interest rate is higher than the 2.350% rate offered in a 2021 offering but lower than the 5.700% rate in a 2024 offering. The maturity date of July 1, 2030, is later than the 2028 maturity in the 2024 offering but earlier than the 2032 maturity in the 2021 offering.
The proceeds from this offering will help Extra Space Storage improve its financial health and flexibility by reducing its debt obligations. By repaying amounts outstanding from its lines of credit and commercial paper program, the company can free up capital to invest in other areas of its business, such as acquisitions and strategic initiatives. This offering also provides the company with the opportunity to fund potential acquisition opportunities, which can help expand its footprint and increase its revenue.
Extra Space Storage's strong fundamentals and ability to execute on its growth strategies demonstrate the potential for the net proceeds from this offering to positively impact the company's growth prospects. In 2022, the company had a record-setting year with very strong occupancy, driven by elevated demand and sophisticated customer acquisition strategies, peaking at 96% and averaging 95% for the year. This resulted in exceptional average rent per square foot growth of 18.4% for the year. Strong fundamentals coupled with the Extra Space team's outstanding execution resulted in same-store revenue growth of 17.4%, the highest in the company's history. Same-store net operating income growth was 20.3%, the highest in the self-storage sector.
In conclusion, Extra Space Storage's $350 million add-on offering of 5.500% senior notes due 2030 is a strategic move to optimize its capital structure and improve its financial health and flexibility. The offering provides the company with the opportunity to repay debt, fund acquisitions, and invest in strategic initiatives. With strong fundamentals and a proven track record of executing on growth strategies, Extra Space Storage is well-positioned to continue its growth trajectory and create value for shareholders.
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