Utah storage firm enters isles
Extra Space Storage buys two properties here and wants more
Utah-based Extra Space Storage Inc. this month is acquiring its first two Hawaii properties as part of a $150 million deal that will allow it to expand its portfolio in the islands.
The company, with 650 facilities nationwide, first reached a deal in December to buy the 13 properties in Northern California and Hawaii from AAAAA Rent-A-Space, but has since negotiated a new agreement to purchase the facilities in stock rather than cash.
The new agreement will give the seller $130 million of stock in Extra Space Storage in exchange for the properties, which include the AAAAA Rent-A-Space outlets in Kapolei and in Kahului on Maui.
The company will assume another $20 million in debt -- $12 million to be paid once the sale closes and $8 million to be paid six months after the sale. The deal is expected to close at the end of June.
More significantly, the deal brings an aggressive competitor to the mix of self-storage facilities in the islands. The company plans on acquiring multiple facilities here for operational efficiencies, but didn't specify how many.
"We don't believe in being in a market that marginally. Now we start looking at how we can grow in that market," said Gerald Valle, divisional vice president, adding that the company's growth strategy typically is through the acquisition of existing competitors. "There are a lot of expenses that we can distribute throughout multiple properties."
Valle said the company is still determining how many employees were at the Hawaii properties -- 340 Ala Makani Street in Kahului and 590 Farrington Highway in Kapolei -- and whether they would be retained. An employee who asked not to be named said the Maui and Oahu facilities have about 10 workers.
The Hawaii facilities, along with 11 properties located in the Bay Area of Northern California, include about 14,700 self storage units, with an aggregate of roughly 1.04 million square feet of net rentable space.
In addition to the purchases announced yesterday, Extra Space Storage has reached deals for nine other properties for about $78.1 million since the beginning of the second quarter of 2007. The properties are located in California, Florida, Georgia, Maryland and Virginia. To date this year, the company has acquired 13 properties for a total of approximately $107.1 million.