Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, onApril 2, 2023 ,Life Storage, Inc. ("Life Storage") andLife Storage LP ("Life Storage OP" and, together withLife Storage , the "Life Storage Parties") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Extra Space Storage Inc., aMaryland corporation ("Extra Space"),Extra Space LP , aDelaware limited partnership ("Extra Space OP"),Eros Merger Sub, LLC , aDelaware limited liability company and a wholly owned subsidiary of Extra Space ("Extra Space Merger Sub"),Eros OP Merger Sub, LLC , aDelaware limited liability company and a wholly owned subsidiary of Extra Space OP ("Extra Space OP Merger Sub" and, together with Extra Space, Extra Space OP and Extra Space Merger Sub, the "Extra Space Parties"). The Merger Agreement provides for, subject to the terms and conditions thereof, the combination ofLife Storage and Extra Space through a series of transactions including, among others, (i) a merger of Extra Space Merger Sub with and intoLife Storage , withLife Storage continuing as the surviving entity and a wholly owned subsidiary of Extra Space (the "Company Merger") and (ii) a merger of Extra Space OP Merger Sub with and into Life Storage OP, with Life Storage OP continuing as the surviving entity and a wholly owned indirect subsidiary of Extra Space OP (the "Partnership Merger" and, together with the Company Merger, the "Mergers"). The Merger Agreement is filed as Exhibit 2.1 toLife Storage's Form 8-K filed onApril 3, 2023 . OnMay 18, 2023 , the Life Storage Parties and the Extra Space Parties entered into an Amendment to Agreement and Plan of Merger (the "Merger Agreement Amendment") in accordance with Sections 2.5 and 9.5 of the Merger Agreement, to, among other matters, (i) remove the right ofMinority Limited Partners (as defined in the Merger Agreement) to elect to receive shares of Extra Space common stock in lieu of common limited partnership interests of Extra Space OP in the Partnership Merger, (ii) remove the right of holders of 4.5% Series A preferred limited partnership units of Life Storage OP ("Life Storage OP preferred units") to elect to convert their respective Life Storage OP preferred units to common limited partnership interests in Life Storage OP prior to the Partnership Merger effective time or receive a cash payment equal to the liquidation preference upon the consummation of the Partnership Merger, and (iii) replace the top-up cash payment to be paid to certain holders ofLife Storage restricted common stock with top-up grants ofLife Storage performance stock units. With regard to the amendment described in clause (i),Minority Limited Partners will continue to have the right under the limited partnership agreement of Life Storage OP to elect to redeem their common limited partnership interests prior to the Partnership Merger in exchange for cash or common stock ofLife Storage . With respect to the amendment described in clause (ii), all holders of Life Storage OP preferred units have elected to convert their preferred units to common units pursuant to the terms of the preferred units, so the election right described in clause (ii) is no longer necessary. With regard to the amendment described in clause (iii), such holders ofLife Storage restricted stock will be entitled to receive a top-up grant ofLife Storage performance stock units which represents the right to receive a number of shares ofLife Storage common stock with a fair market value substantially equivalent to the top-up cash payment that they otherwise would have been entitled to receive pursuant to the Merger Agreement.
The foregoing summary of the Merger Agreement Amendment does not purport to be a complete description and is qualified in its entirety by the full text of the Merger Agreement Amendment, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Number Description 2.1 Amendment to Agreement and Plan of Merger, dated as ofMay 18, 2023 , by and among Extra Space Storage Inc.,Extra Space Storage LP ,Eros Merger Sub, LLC ,Eros OP Merger Sub, LLC ,Life Storage, Inc. andLife Storage LP . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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Forward Looking Statements
The statements in this communication that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in whichLife Storage and Extra Space operate as well as beliefs and assumptions ofLife Storage and Extra Space. Such statements involve uncertainties that could significantly impactLife Storage's or Extra Space's financial results. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," and "estimates," including variations of such words and similar expressions, are intended to identify such forward-looking statements, which generally are not historical in nature. All statements that address operating performance, events or developments thatLife Storage or Extra Space expects or anticipates will occur in the future - including statements relating to any possible transaction betweenLife Storage and Extra Space, acquisition and development activity, disposition activity, general conditions in the geographic areas whereLife Storage or Extra Space operate, andLife Storage's and Extra Space's respective debt, capital structure and financial position - are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. AlthoughLife Storage and Extra Space believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, neitherLife Storage nor Extra Space can give assurance that its expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i)Life Storage's and Extra Space's ability to complete the proposed transaction on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the proposed transaction; (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement relating to the proposed transaction; (iii) risks related to diverting the attention ofLife Storage and Extra Space management from ongoing business operations; (iv) failure to realize the expected benefits of the proposed transaction; (v) significant transaction costs and/or unknown or inestimable liabilities; (vi) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; (vii) the risk thatLife Storage's business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; (viii) risks related to future opportunities and plans for the combined company, including the uncertainty of expected future financial performance and results of the combined company following completion of the proposed transaction; (ix) the effect of the announcement of the proposed transaction on the ability ofLife Storage and Extra Space to operate their respective businesses and retain and hire key personnel and to maintain favorable business relationships; (x) risks related to the market value of the Extra Space common stock to be issued in the proposed transaction; (xi) other risks related to the completion of the proposed transaction and actions related thereto; (xii) national, international, regional and local economic and political climates and conditions; (xiii) changes in global financial markets and interest rates; (xiv) increased or unanticipated competition forLife Storage's or Extra Space's properties; (xv) risks associated with acquisitions, dispositions and development of properties, including increased development costs due to additional regulatory requirements related to climate change; (xvi) maintenance of Real Estate Investment Trust status, tax structuring and changes in income tax laws and rates; (xvii) availability of financing and capital, the levels of debt thatLife Storage and Extra Space maintain and their credit ratings; (xviii) environmental uncertainties, including risks of natural disasters; (xix) risks related to the coronavirus pandemic; and (xx) those additional factors discussed under Part I, Item 1A. Risk Factors inLife Storage's and Extra Space's respective Annual Reports on Form 10-K for the year endedDecember 31, 2022 . NeitherLife Storage nor Extra Space undertakes any duty to update any forward-looking statements appearing in this communication except as may be required by law.
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Additional Information about the Proposed Transaction and Where to Find It
In connection with the proposed transaction, Extra Space intends to file with theSEC a registration statement on Form S-4, which will include a document that serves as a prospectus of Extra Space and a joint proxy statement of Extra Space andLife Storage (the "joint proxy statement/prospectus"). Each party also plans to file other relevant documents with theSEC regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. A definitive joint proxy statement/prospectus will be sent to Extra Space's stockholders andLife Storage's stockholders. Investors and securityholders may obtain a free copy of the joint proxy statement/prospectus (if and when it becomes available) and other relevant documents filed by Extra Space andLife Storage with theSEC at theSEC's website at www.sec.gov. Copies of the documents filed by Extra Space with theSEC will be available free of charge on Extra Space's website at www.extraspace.com or by contacting Extra Space's Investor Relations at info@extraspace.com. Copies of the documents filed byLife Storage with theSEC will be available free of charge onLife Storage's website at www.lifestorage.com or by contactingBrent Maedl withLife Storage's Investor Relations department at bmaedl@lifestorage.com or by calling (716) 328-9756.
Participants in the Solicitation
No Offer or Sale
This communication and the information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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