Extra Space Storage Inc., a self-storage real estate investment trust (REIT), has reached an agreement with Prudential Real Estate Investors (PREI) to acquire its 94.9 percent interest in ESS PRISA III LLC for approximately $298 million. The LLC is a joint venture formed in 2005 that currently owns 36 self-storage properties in 18 states. Extra Space currently owns 5.1 percent of the joint venture.
These 36 properties are already operated under the Extra Space brand. They contain about 2.5 million square feet of net rentable space in about 23,400 units, serving an estimated 20,000 tenants. As of March 31, the properties' collective occupancy was approximately 87.8 percent.
The $298 million acquisition cost consists of approximately $160 million of cash consideration to PREI and the assumption of an existing $145 million loan, of which $138 million relates to PREI's self-storage equity. The loan bears interest at a fixed rate of 4.97 percent per year and matures in August 2012. Extra Space is looking to refinance.
Extra Space intends to begin the acquisition in July, but the deal is subject to customary closing conditions.
Headquartered in Salt Lake City, Extra Space owns or operates 882 self-storage properties in 34 states and Washington, D.C. The company's properties comprise approximately 585,000 units and approximately 64 million square feet of rentable space, including boat storage, RV storage and business storage.