Extra Space Announces Pricing of $500 Million of 5.400% Senior Notes due 2035

Rhea-AI Summary

Extra Space Storage (NYSE: EXR) has announced the pricing of $500 million in senior notes due 2035 through its operating partnership. The notes carry a 5.400% interest rate, priced at 99.830% of principal amount, and will mature on June 15, 2035.

The offering, expected to close around March 19, 2025, is being managed by multiple financial institutions including BofA Securities, TD Securities, and Truist Securities as joint book-running managers. The notes will be fully guaranteed by Extra Space and certain subsidiaries.

The company plans to use the net proceeds to repay outstanding amounts on its lines of credit and commercial paper program, while also maintaining flexibility for potential acquisition opportunities and general corporate purposes.

Positive

• Successful pricing of $500 million senior notes offering strengthens capital structure
• Long-term debt maturity (2035) provides financial stability
• Opportunity to refinance existing debt and fund potential acquisitions

Negative

• 5.400% interest rate represents new debt servicing costs
• Increased long-term debt obligation on balance sheet

Insights

Financial Analyst

Extra Space Storage's $500 million senior notes offering represents a strategic financial maneuver that enhances the company's debt profile and financial flexibility. Priced at 99.830% of principal with a 5.400% coupon maturing in 2035, this transaction allows EXR to effectively term out shorter-duration debt by repaying amounts on its credit facilities and commercial paper program.

The decade-long tenor of these notes provides Extra Space with locked-in financing at a fixed rate, reducing near-term refinancing risk and interest rate exposure. In the current market environment, the 5.400% coupon rate is relatively competitive for investment-grade REITs, particularly for this duration.

Most notably, management's indication of using proceeds for "potential acquisition opportunities" signals EXR's continued focus on external growth. As one of the largest self-storage REITs with a $34 billion market cap, Extra Space has historically created value through strategic acquisitions, leveraging its scale and operating platform. The successful debt raise demonstrates strong capital markets access with support from 18 financial institutions participating in the offering.

By optimizing its capital structure with this offering, Extra Space maintains financial flexibility while positioning itself for continued expansion in the fragmented self-storage sector. This debt offering effectively extends the company's weighted average debt maturity while keeping its leverage profile manageable, supporting both stability and growth objectives.

Real Estate Investment Strategist

This $500 million senior notes offering enhances Extra Space Storage's financial positioning in the competitive self-storage REIT landscape. By issuing 10-year notes at 5.400%, EXR is making a calculated trade-off: accepting a fixed long-term interest obligation in exchange for immediate financial flexibility and reduced exposure to potential short-term rate volatility.

The company's strategy to replace revolving credit facilities and commercial paper with longer-duration debt demonstrates sophisticated capital management. Short-term facilities provide flexibility but carry refinancing and interest rate risk, while this 10-year issuance locks in rates through 2035, creating stability for long-term planning and investment.

The reference to "funding potential acquisition opportunities" is particularly significant in the self-storage sector, which remains fragmented despite consolidation among major players like Extra Space, Public Storage, and CubeSmart. With this capital raising, EXR positions itself to capitalize on acquisition opportunities that may arise from smaller operators facing financing challenges or seeking exits.

The impressive lineup of 18 financial institutions participating in this offering reflects deep banking relationships and strong capital markets access. The slight discount to par (99.830%) is minimal, indicating solid demand for EXR's debt. This successful execution ultimately strengthens Extra Space's competitive position by enhancing financial flexibility while maintaining a disciplined approach to capital structure management.

SALT LAKE CITY, March 10, 2025 /PRNewswire/ -- Extra Space Storage Inc. ("Extra Space") (NYSE: EXR), a leading owner and operator of self-storage facilities in the United States and a member of the S&P 500, today announced that its operating partnership, Extra Space Storage LP (the "operating partnership"), has priced a public offering of $500 million aggregate principal amount of 5.400% senior notes due 2035 (the "Notes"). The Notes were priced at 99.830% of the principal amount and will mature on June 15, 2035. BofA Securities, TD Securities, Truist Securities, BMO Capital Markets, J.P. Morgan, PNC Capital Markets LLC, Wells Fargo Securities and US Bancorp are acting as the joint book-running managers for the offering. Regions Securities LLC, BOK Financial Securities, Inc., Citigroup, Huntington Capital Markets, Scotiabank, Zions Capital Markets, Fifth Third Securities, Academy Securities and Ramirez & Co., Inc. are acting as the co-managers for the offering.

The offering is expected to close on or about March 19, 2025, subject to the satisfaction of customary closing conditions. The Notes will be fully and unconditionally guaranteed by Extra Space and certain of its subsidiaries.

The operating partnership intends to use the net proceeds from this offering 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 Notes will be issued pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. This release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale is not permitted. The offering will be made only by means of a prospectus supplement and accompanying prospectus, copies of which, when available, may be obtained from BofA Securities, Inc., 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255-0001, Attn: Prospectus Department, email: dg.prospectus_requests@bofa.com, or by telephone: 1-800-294-1322; TD Securities (USA) LLC, 1 Vanderbilt Avenue, 11^th Floor, New York, NY 10017, or by telephone: 855-495-9846; or Truist Securities, Inc., Attn: Prospectus Department, 50 Hudson Yards, 70^th Floor, New York, NY 10001, email: TruistSecurities.prospectus@Truist.com, or by telephone: 1-800-685-4786.

A prospectus supplement related to the offering will also be available free of charge on the SEC's website at http://www.sec.gov.

About Extra Space Storage Inc.:

Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a self-administered and self-managed real estate investment trust, and a member of the S&P 500. As of December 31, 2024, the Company owned and/or operated 4,011 self-storage stores in 42 states and Washington, D.C. The Company's stores comprise approximately 2.8 million units and approximately 308.4 million square feet of rentable space operating under the Extra Space brand. The Company offers customers a wide selection of conveniently located and secure storage units across the country, including boat storage, RV storage and business storage. It is the largest operator of self-storage properties in the United States.

Forward-Looking Statements:

Certain information set forth in this release contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements include statements concerning the terms, timing and completion of the offering of securities by Extra Space and the operating partnership, including the anticipated use of proceeds therefrom. In some cases, forward-looking statements can be identified by terminology such as "believes," "estimates," "expects," "may," "will," "should," "anticipates," or "intends," or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management's expectations, beliefs and projections will result or be achieved. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Such risks and uncertainties include without limitation those associated with market risks and uncertainties and the satisfaction of customary closing conditions for an offering of securities, as well as the risks referenced in the "Risk Factors" section included in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. All forward-looking statements apply only as of the date of this release. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

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SOURCE Extra Space Storage Inc.

FAQ

What is the interest rate and maturity date for Extra Space Storage's (EXR) new senior notes?

The senior notes carry a 5.400% interest rate and will mature on June 15, 2035.

How much did Extra Space Storage (EXR) price in senior notes for March 2025?

Extra Space Storage priced $500 million in aggregate principal amount of senior notes.

What will Extra Space Storage (EXR) use the proceeds from the senior notes for?

The proceeds will be used to repay lines of credit and commercial paper program debt, fund potential acquisitions, and for general corporate purposes.

When is the expected closing date for Extra Space Storage's (EXR) $500M senior notes offering?

The offering is expected to close on or about March 19, 2025.