Ken Woolley, CEO for Extra Space Storage.
Extra Space Storage’s growth has been meteoric since 2004, when it went public. Last year, it acquired 416 Storage USA properties for about $2.3 billion, bringing its portfolio to 634 facilities in 34 states and the District of Columbia. The purchase, a joint venture with Prudential Real Estate Investors, was the biggest transaction in self-storage industry.
Now, with more than 415,000 units and 45 million square feet, Extra Space is the second-largest U.S. self-storage operator. The 28-year-old company, which also develops and acquires facilities, was founded by CEO and Chairman Kenneth M. Woolley and Senior Vice President Richard Tanner.
“We want to be as transparent as possible and provide people with an inside look at how we do business,” says Woolley, who directs strategic planning and oversees development and acquisitions.
Although recent mergers and acquisitions within the industry have attracted notice from the investment sector, many are still not familiar with self-storage. To educate institutional investors and analysts about self-storage and Extra Space, the company hosted its first “Investor and Analyst Conference,” March 23-24, at its Salt Lake City headquarters. The seminar included presentations by Woolley, CFO Kent W. Christensen and other members of the executive management team.
Speakers addressed plans to increase shareholder value, and provided an overview of corporate strategy and outlook, revenue management, financial results, operations, integration of Storage USA, management and technology applications. The event was broadcast live on the Extra Space website and archived for 30 days.
The Extra Space Model
Extra Space's Investor Day.
“The company structure is complex because it owns properties in joint venture,” Woolley explains. Most revenue is generated through facilities in Boston, California, Florida, New York and Washington, D.C. “These stores are in better markets so have higher value.”
Extra Space’s focus will remain on the East and West Coasts, where 80 percent of its properties are located, but limited availability of sites makes it harder to develop in these areas, Woolley says. Nevertheless, the company projects better long-term appreciation in coastal regions.
Properties are slated to be purchased in the open market and through strategic relationships with managed properties and joint-venture partners. “The acquisition environment is very competitive right now,” Woolley says.
More than $180 million is dedicated to developing properties scheduled for 2006 to 2007 openings. “Our overall goal is to build the best company in the business—not necessarily the largest—through the best people, properties and processes in the industry,” Woolley says.
Future Looks Good
Having extensively researched the reasons people choose self-storage, Extra Space predicts the industry will continue to flourish. Why? Because Americans will keep buying too much, Woolley says. At any one time, 5 percent to 6 percent of the population uses storage. “I see no reason why that couldn’t be 10 percent,” he says. “Population growth alone will increase consumer need as things get more crowded.”
The industry has emerged from its early days of a concrete-block building surrounded by concertina wire fences into a service truly attractive to the consumer. Clearly, new growth is under way with the development of third-and fourth-generation facilities, and increase in multistory sites, Woolley says. Today’s sites have better-quality construction, and many sport contemporary architectural facades and interior decor, brighter hallways and ceramic tile or carpeted floors. Features such as high-tech security, climate control and upscale apartments for the manager are also the norm.
“Self-storage is becoming more brand centric and people notice the difference,” Woolley says. “Consumers want it to be expedient, secure and, most of all, run by professional companies.”
For more information, visit www.extraspace.com.