Extra Space Storage Inc. bought properties and operating systems of Storage Express for $590 million, a move that gives the firm an entry into new markets and smaller sites as the pandemic has increased demand for the industry.
The acquisition includes all the assets of Indianapolis-based Storage Express, including 107 self-storage properties across Indiana, Ohio, Illinois and Kentucky, and 14 future development sites. It also included the purchase of E-Tracker, a storage software operating platform that supports Storage Express locations.
"In addition to increased scale, this acquisition provides a new growth channel for Extra Space Storage to add smaller, remote-managed stores in both new and existing markets through acquisition and third-party management,” Joe Margolis, CEO of Salt Lake City-based Extra Space Storage, said in a statement.
Ronald Camden, REIT analyst for Morgan Stanley Research, views the acquisition as supportive to growth for Extra Space Storage.
“External growth, gaining more scale and improving the technology on the platform is positive,” Camden wrote in a note to clients. Extra Space Storage "has been adding multiple growth channels via third party management, bridge lending and the recent creative storage acquisition such as Storage Express [with its] smaller remote-managed stores.”
Occupancy at self-storage facilities has been near long-term highs since the pandemic. Demand has come from households downsizing and moving, and people who are working or running businesses from home and need to declutter to create space to work.
Jefferson Shreve, founder and owner of Storage Express, will join the board of Extra Space Storage.
Extra Space Storage funded the transaction in part by the issuance of $125 million in operating partnership units, with the balance in cash drawn from its credit facilities.