20 May Sovran Self Storage Acquires LifeStorage for $1.35 Billion
By Alex Hassel, Storage.com
You’re about to see a lot more Uncle Bob’s Self Storage locations across the U.S. By the same token, Life Storage, LP is about to be a thing of the past. Sovran Self Storage, which owns the Uncle Bob’s brand, recently announced it has entered into a definitive agreement to acquire LifeStorage for the gross aggregate purchase price of approximately $1.3 billion, payable on cash.
Sovran has secured the funds in bridge financing to provide certainty of closure, but it intends to permanently finance the deal with proceeds from contemplated equity and debt offerings.
To understand how massive this acquisition is, consider that LifeStorage is the sixth largest private owner and operator of self storage facilities in the U.S. with 92 properties in nine states. Sovran is the fourth largest company in the industry with more than 550 facilities in 26 states. Sovran will add 84 out of LifeStorage’s 92 facilities to its portfolio with a purchase contract for three additional certificates of occupancy deals to be delivered late 2016 and early 2017.
“We are delighted to announce this acquisition,” says David Rogers, Chief Executive Officer of Sovran. “LifeStorage has built a high-quality national portfolio, and these stores will enhance and complement our physical footprint and digital presence.”
Newly-acquired facilities will strengthen Sovran’s position in its existing markets with 25 facilities in Chicago, 19 across major Texas markets (including eight in Austin and five in Dallas), and three each in Orlando and Los Angeles.
The deal doesn’t just mean more numbers for Sovran, but it does serve as a gateway into new territories. Sovran will now have a presence in Northern California with ten facilities and Las Vegas with 17. This would mean that Sovran could effectively compete in these areas while still pursuing small deals to fuel future growth.
Regarding the growth potential of the properties, Rogers notes, “LifeStorage was founded in 2011, and its stores were built or purchased in the past five years. While we believe these properties have been well run, we foresee improved operating results as we apply our customer service standards and transition these stores onto our web marketing and Revenue Management platforms.”
The acquisition is subject to customary closing conditions. Sovran management expects the acquisition to close in Q3 of 2016.
With such an ambitious transaction, Sovran is also raising funds to make it all happen. After announcing the deal with LifeStorage, Sovran also shared news about a public offering of 6 million shares of common stock. In connection with the offering, Sovran also granted underwriters a 30-day option to purchase up to 900,000 additional shares of common stock. However, net proceeds from the offering will only be partially used to fund the LifeStorage acquisition.