S&P eyes Extra Space positively

S&P said it placed its Extra Space Storage Inc. ratings, including its BBB issuer rating, on CreditWatch with positive implications.

The placement follows Extra Space reporting it agreed to buy Life Storage, Inc. in a stock-for-stock transaction valued at about $12.7 billion, plus the assumption of about $3.4 billion in debt.

“We expect Extra Space to benefit from enhanced scale and cost efficiencies after the transaction closes. Following the acquisition of Life Storage, Extra Space will become the largest self-storage operator in the U.S. by property count and square footage (including the third-party management platform), with a pro-forma market capitalization of $36 billion and a total enterprise value of $47 billion. It will also become the sixth-largest REIT by equity market cap, behind Simon Properties,” S&P said in a press release.

The agency noted the deal, expected to close in the second half of 2023, is leverage neutral for Extra Space.

S&P said it plans to resolve the CreditWatch when the deal closes and it has more information on the combined company’s financial policy.

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