Extra Space Storage Inc. Announces $1 Billion Commercial Paper Note Program

Rhea-AI Summary

Extra Space Storage has established an unsecured commercial paper note program through its operating partnership, allowing for the issuance of up to $1 billion in commercial paper notes. The notes will rank equally with other unsecured senior debt and will be fully guaranteed by the company. The program is expected to provide cost benefits compared to the company's existing $2.0 billion revolving credit facility, which will serve as a liquidity backstop. The proceeds will be used for general corporate purposes.

Positive

• Establishes new $1 billion financing option through commercial paper program
• Expected to reduce borrowing costs compared to existing credit facility
• Maintains $2.0 billion revolving credit facility as backup liquidity source

Negative

• Increases potential debt obligations
• Takes on additional financial leverage

Insights

Financial Analyst

This $1 billion commercial paper program represents a strategic financial move to optimize Extra Space Storage's capital structure. The program provides flexible, short-term financing at potentially lower rates than their existing $2.0 billion revolving credit facility. This dual-layer approach - using commercial paper for immediate funding needs while keeping the revolving facility as a backup - is a sophisticated treasury management strategy that could reduce borrowing costs.

The pari passu ranking with other senior debt maintains the company's straightforward capital structure, while the parent company guarantee adds an extra layer of security for investors. For a REIT with $35 billion market cap, this program size is appropriate and provides ample liquidity for operations and potential growth opportunities.

SALT LAKE CITY, Nov. 20, 2024 /PRNewswire/ -- Extra Space Storage Inc. (the "Company") (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 established an unsecured commercial paper note program in the United States.

Under the terms of the program, the operating partnership may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any one time of $1 billion. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the operating partnership's other unsecured senior indebtedness. The notes will be fully and unconditionally guaranteed by the Company. Note proceeds will be used for general corporate purposes.

The Company expects to realize cost benefits in the commercial paper market versus its $2.0 billion revolving credit facility, and it expects to use its revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program.

The notes to be offered under the commercial paper note program have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the notes under the operating company's commercial paper note program.

About Extra Space Storage Inc.

Extra Space Storage Inc., headquartered in Salt Lake City, is a fully integrated, self-administered and self-managed real estate investment trust, and a member of the S&P 500. As of September 30, 2024, the Company owned and/or operated 3,862 self-storage properties, which comprise approximately 2.7 million units and approximately 296.0 million square feet of rentable storage 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.

For more information, please visit www.extraspace.com.

 

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SOURCE Extra Space Storage Inc.

FAQ

What is the size of Extra Space Storage's (EXR) new commercial paper program?

Extra Space Storage's new commercial paper program allows for issuance of up to $1 billion in unsecured commercial paper notes.

How will Extra Space Storage (EXR) use the commercial paper proceeds?

The proceeds from the commercial paper program will be used for general corporate purposes.

What is backing Extra Space Storage's (EXR) commercial paper program?

The $2.0 billion revolving credit facility will serve as a liquidity backstop for the commercial paper program.

Are Extra Space Storage's (EXR) commercial paper notes registered under the Securities Act?

No, the notes are not registered under the Securities Act of 1933 and cannot be offered or sold in the US without registration or an applicable exemption.