Extra Space Storage Inc. Announces Modifications to 2009 Dividend Distributions
Posted in: Finance, By: admin, At: April 7th, 2009
SALT LAKE CITY, UT–(Marketwire – April 6, 2009) – Extra Space Storage Inc. (the “Company”) (NYSE: EXR) announced today that its board of directors has decided, in response to continuing uncertainty in the capital markets, to modify the Company’s dividend distributions for the remainder of fiscal 2009.
At this time, the Company does not expect to distribute a dividend in the second and third quarters of 2009. The Company expects to pay an estimated fourth quarter dividend of between $0.24 and $0.30 per share using a combination of approximately 10% cash and 90% common shares, as allowed by the Internal Revenue Service Revenue Procedure 2009-15, to fully distribute its 2009 net taxable income. The fourth quarter dividend, when combined with the first quarter 2009 cash dividend of $0.25 per share, previously paid on March 31, 2009, is expected to satisfy the real estate investment trust (“REIT”) distribution requirements and generally allow the Company to avoid the payment of corporate income tax for such year. The Company reserves the right to change the percentage of cash payable in the fourth quarter dividend, including paying such dividend entirely in cash if determined to be in the best interest of shareholders.
The Company currently estimates its annual net taxable income for 2009 to be between $45.0 million and $50.0 million and its total annual distributions for 2009 to be between $0.27 and $0.28 per share in cash and between $0.22 and $0.27 per share in stock. The adjustment to the dividend for the remainder of 2009 will enable the Company to retain up to approximately $67.0 million of additional liquidity depending on the amount of stock issued as a dividend in lieu of cash as part of the fourth quarter dividend.
In conjunction with the dividend modifications, the Company announced that it has repurchased approximately $71.5 million principal amount of exchangeable senior notes due in 2012 for approximately $44.5 million. The repurchase will result in a one-time gain of approximately $22.5 million or approximately $0.25 per share on early extinguishment of debt for the quarter ended March 31, 2009. This gain was not previously included in the Company’s earnings guidance for 2009.
Spencer F. Kirk, chairman and chief executive officer of the Company, stated: “Though our balance sheet is in a relatively solid position and we are making progress on refinancing our upcoming loan maturities, the board has decided to adopt a more conservative dividend policy to preserve liquidity. The decision was considered at length because we know how attractive EXR stock has been to many who are looking for a high current yield. At the same time, we believe it is in the best interest of our shareholders that we navigate through these unprecedented financial markets with maximum financial flexibility. Adjusting the dividend gives us an enhanced cushion if capital markets further deteriorate, and also creates the best opportunity to preserve capital for future investments should opportunities arise. Once markets stabilize and lending criteria return to historic norms, we feel that we will have significant additional borrowing capacity and financial flexibility. We believe that preservation of capital and debt reduction is the highest priority during these uncertain economic times and this decision is in the long-term best interest of our shareholders.”
First Quarter Earnings Release and Conference Call
The Company will release financial results for the three months ended March 31, 2009 on Monday, May 4, 2009 after the market closes. The Company will also host a conference call at 1:00 p.m. Eastern Time on Tuesday, May 5, 2009 to discuss its financial results.
Hosting the call will be Spencer F. Kirk. Joining him will be Kent W. Christensen, executive vice president and CFO, and Karl Haas, executive vice president and COO.
The conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company’s website at www.extraspace.com and then by clicking on the “investor relations” link at the bottom of the home page. To listen to the live call, please go to the website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. A digital replay will be available on May 5, 2009 at 4:00 p.m. Eastern Time through May 19, 2009 at midnight Eastern Time. To access the replay, dial 888-286-8010 and enter passcode 45178021. International callers should dial 617-801-6888 and enter the same passcode.
Forward-Looking Statements
Certain information set forth in this release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “estimates,” “expects,” “plans,” “may,” “will,” “should,” “anticipates,” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this release. Any forward-looking statements should be considered in light of the risks referenced in the “Risk Factors” section included in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Such factors include, but are not limited to:
-- changes in general economic conditions and in the markets in which we
operate;
-- the effect of competition from new self-storage facilities or other
storage alternatives, which could cause rents and occupancy rates to
decline;
-- potential liability for uninsured losses and environmental
contamination;
-- difficulties in our ability to evaluate, finance and integrate
acquired and developed properties into our existing operations and to lease
up those properties, which could adversely affect our profitability;
-- the impact of the regulatory environment as well as national, state,
and local laws and regulations including, without limitation, those
governing REITs, which could increase our expenses and reduce our cash
available for distribution;
-- recent disruptions in credit and financial markets and resulting
difficulties in raising capital at reasonable rates, which could impede our
ability to grow;
-- delays in the development and construction process, which could
adversely affect our profitability; and
-- economic uncertainty due to the impact of war or terrorism, which
could adversely affect our business plan.
About Extra Space Storage Inc.
Extra Space Storage Inc., headquartered in Salt Lake City, Utah, is a fully integrated, self-administered and self-managed real estate investment trust that owns and/or operates 694 self-storage properties in 33 states and Washington, D.C. The Company’s properties comprise approximately 475,000 units and over 50 million square feet of rentable space. The Company is the second largest owner and/or operator of self-storage properties in the United States.
