Sovran Self Storage, Inc. ("Sovran" or the “Company”) (NYSE:SSS), a self storage real estate investment trust (REIT), announced today it has entered into a definitive agreement to acquire LifeStorage, LP (“LifeStorage”), a privately-owned self storage operator, for a gross aggregate purchase price of approximately $1.3 billion, payable in cash. Sovran has secured $1.35 billion in bridge financing to provide certainty of closure, but the Company intends to permanently finance the transaction with proceeds from contemplated equity and debt offerings.
LifeStorage, LP based in Roseville, California, is the sixth largest private owner and operator of self storage facilities in the United States, currently operating 92 self storage properties in nine states. Upon completion of the acquisition, Sovran will own 84 LifeStorage stores 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. LifeStorage has built a high-quality national portfolio, and these stores will enhance and complement our physical footprint and digital presence," commented David Rogers, Chief Executive Officer of Sovran.
The newly acquired facilities will strengthen the Company’s strategic position in its existing markets, including the addition of 25 facilities in Chicago, IL, 19 facilities across the Texas major markets including eight in Austin and five in Dallas, and three each in Orlando, FL and Los Angeles, CA.
The acquisition will also mark the Company’s entrance into several new markets that include Northern California (10 facilities) and Las Vegas, Nevada (17 facilities), thereby adding sufficient scale for the Company to perform competitively in these markets while pursuing smaller deals to fuel future growth.
Regarding the growth potential of the properties, Rogers noted, “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 the third quarter of 2016.
Wells Fargo Securities, LLC acted as lead financial advisor and SunTrust Robinson Humphrey also acted as a financial advisor to Sovran Self Storage. Phillips Lytle LLP and Hogan Lovells served as legal counsel in connection with this transaction.
Citgroup Global Markets, Inc. acted as exclusive financial advisor to LifeStorage and Latham & Watkins LLP served as counsel to LifeStorage in connection with the transaction.