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Extra Space Storage Inc.

Case Study: Extra Space Storage Inc.

 

Masterful Moves to a Great, New Location

 

 

 

 

Text Box: Company Snapshot Company: Extra Space Storage Industry Self Storage REIT Headquarters: Salt Lake City, UT Begin Market Cap: $385 million Market Cap 7/07: $987 million Begin Share Price: $12.50 52-week High (8/07): $20.55 The Challenge:

 

When Extra Space Storage Inc. (NYSE: EXR) filed to complete its Initial Public Offering and list on the NYSE in 2004, the Company was the 10th largest owner and operator of public storage facilties. Extra Space was organized as a REIT and managed 145 self-storage facilities.  In addition to owning its own properties, the Company also managed properties in its own joint ventures or that were owned by third parties. 
Extra Space Storage competed with other more visible, publicly owned self-storage companies whose financial profiles were less complex and easier to analyze.  In addition, capital to acquire properties was drying up as a result of increased competition from other consolidators, driving up purchase prices, and lowering the cap rate.  It was in the context of a difficult market environment and reduced investor interest that the company was attempting to complete a $300 million initial public offering.

 



The CCG Strategy & Implementation:

 

While senior management had considerable industry experience, they lacked expertise in the IPO process and ongoing public company investor relations.  CCG was retained to facilitate all investor communications aspects of the transition from private company status to public company. In that regard, CCG developed and executed a disclosure and investor relations strategy, which included:

  1. A comprehensive employee and corporate disclosure strategy
  2. A long term investor relations program
  3. Public company press release templates and strategy
  4. Road show PowerPoint presentations
  5. Management training for the road show
  6. Development of the corporate investor Web site
  7. Assistance with targeting for appropriate road show investor meetings
  8. Production of an investor kit for institutional and individual investors
  9. Development and execution of a comprehensive NYSE listing program.

 

Upon the completion of the listing on the NYSE, CCG assisted the Company in respect of its conference call strategy, which included a broader range of financial and non-financial metrics, which distinguished the company from its peers, and positioned them as industry leaders.

 

Following the completion of a successful IPO, CCG remained Extra Space Storage’s investor relations advisor.  CCG helped the Company with regular ongoing investor communications including best-practice conference calls to investors, company presentations at key investor conferences, non-deal roadshows and investor targeting.  The agency has provided regular benchmarking studies to enhance best practice IR activities and has conducted investor perception studies to create the most effective messaging and investor clientele targeting possible.

 

Such was Extra Space’s improved standing with the investment community that it was able to finance a pivotal and complex transaction in July 2005, in which it acquired GE’s self-storage business, Storage USA, for $2.3 billion.  Extra Space Storage became the second largest manger of self-storage properties with over 600 facilities under management.   As the second largest owner of public storage facilities in the country it was important that the Company upgrade its investor relations practices to match its status.  CCG worked with Extra Space throughout the process, enhancing everything from employee communications to disclosure practices.  The agency organized one of the self-storage industry’s first two-day on-site conferences in which Extra Space’s enhanced management team and its industry best-practice systems were showcased.  CCG also managed the company’s access to key financial media as the company’s profile increased.

 

 

The Measurable Results:

 

Extra Space Storage’s profile began to improve from day one.  Its highly experienced industry veterans gained significant credibility in the market place. Access to key investment bankers, and the Who’s Who of the REIT institutional investor community became a feature of the Company’s investor relations program. Extra Space began to build a useful retail following that continues to serve its interests well.          

 

Extra Space’s rapid growth and high visibility has been handled flawlessly and the Storage USA transaction was communicated and positioned in such a way with institutions, investors, employees and the media, that management’s superb execution of the integration has been seen as a textbook case in the history of REIT acquisitions.  From its early beginnings at IPO, the Company has assured its access to capital. Two equity offerings of more than $350 million have followed its Storage USA acquisition together with debt refinancings and a successful offering of $250 million of senior notes in March this year.  

 

Following unanimous industry accolades from its first Investor Day, analyst coverage has been enhanced and now nine of the industry’s top analysts cover Extra Space.

 

Extra Space Storage’s disclosure practices have been continually upgraded as befits a company whose enterprise value has risen from about $385 million to $2.1 billion since IPO. The Company is a featured participant in all of the major industry conferences.  It also has a prestigious investor clientele and its liquidity is considerably enhanced with average weekly value of shares traded having increased from approximately $6.6 million at the end of 2004 to $40.4 million today.

 

With CCG’s help Extra Space Storage will continue to upgrade its IR program to reflect its aspirations to define best practices in its industry.  With the potential for wider analyst coverage, XBRL reporting, enhanced disclosure, broadening of its investor clientele, the increase in international operations and, potentially, multinational investors, there is much more to come from the Company.

 

 

For more information, contact Mark Collinson, Partner, (310) 231-8600 x117 or mark.collinson@ccgir.com.