Annual report pursuant to Section 13 and 15(d)

RELATED PARTY TRANSACTIONS

v3.3.1.900
RELATED PARTY TRANSACTIONS
12 Months Ended
Dec. 31, 2015
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS
Supervisory and Administrative Fees
The Company has entered into asset management agreements with the PROs to continue providing leasing, operating, supervisory and administrative services related to the self storage properties contributed by and acquired from the PROs. The PROs are the same entities that provided similar services prior to the respective dates that the self storage properties were contributed to or acquired by the Company. The asset management agreements generally provide for fees ranging from 5% to 6% of gross revenue for the managed self storage properties. During the years ended December 31, 2015 and 2014, the Company incurred $7.6 million and $4.5 million, respectively, for supervisory and administrative fees to the PROs. During the nine months ended December 31, 2013, the Company incurred $2.0 million for supervisory and administrative fees to the PROs. Such fees are included in general and administrative expenses in the accompanying statements of operations.
The supervisory and administrative service fees incurred by NSA Predecessor amounted to 6% of gross revenue which totaled $0.4 million for the three months ended March 31, 2013. Such fees incurred by NSA Predecessor are included in general and administrative expenses in the accompanying statement of operations.
Affiliate Payroll Services
The employees responsible for operation of the self storage properties are employees of the PROs who charge the Company for the costs associated with the respective employees. For the years ended December 31, 2015 and 2014, the Company incurred $13.4 million and $8.4 million, respectively, for payroll and related costs reimbursable to these affiliates. For the nine months ended December 31, 2013, the Company incurred an aggregate of $3.6 million for payroll costs and related costs reimbursable to these affiliates. Such costs are included in property operating expenses in the accompanying statements of operations.
For the three months ended March 31, 2013, NSA Predecessor reimbursed the related party $0.9 million for payroll costs. Such costs incurred by NSA Predecessor are included in property operating expenses in the accompanying statement of operations.
Affiliate Call Center Services
On April 1, 2015, the Company acquired a centralized call center for 50,000 OP units from SecurCare, an affiliate of NSA Predecessor. Because the Company and SecurCare are under common control, the assets acquired and liabilities assumed were recorded at SecurCare's historical carrying value, which was a nominal amount as of the acquisition date. SecurCare continues to manage call center services to support self storage property operations and the fees paid to SecurCare for these services for the nine months ended December 31, 2015 are included in the supervisory and administrative fees discussed above. The call center utilizes approximately 1,500 square feet in one of the Company's self storage properties acquired from NSA Predecessor for annual rent of approximately $25,000.
Prior to the acquisition, for the years ended December 31, 2015 and 2014, the Company incurred call center charges of $0.2 million and $0.5 million, respectively. For the nine months ended December 31, 2013, the Company incurred call center charges of $0.3 million. Such call center costs are included in property operating expenses in the accompanying statements of operations.
For the three months ended March 31, 2013, NSA Predecessor incurred call center charges of $0.1 million. Such call center costs incurred by NSA Predecessor are included in property operating expenses in the accompanying statement of operations.
Brokerage Fees
During the years ended December 31, 2015 and 2014, the Company incurred fees of $0.2 million and $0.3 million, respectively, in connection with its acquisition of certain self storage properties which were sourced by the PROs. During the nine months ended December 31, 2013, the Company incurred fees of $0.5 million in connection with its acquisition of certain self storage properties which were sourced by the PROs. These expenses are included in acquisition costs in the accompanying statements of operations.
In connection with self storage properties contributed by NSA Predecessor, during the year ended December 31, 2014 the Company recognized a $2.7 million contractually obligated transaction expense payable to SecurCare, an affiliate of NSA Predecessor. In April 2014, the Company issued subordinated performance units in full payment of this amount.
Due Diligence Costs
During the year ended December 31, 2015, the Company reimbursed certain PROs for $0.6 million of due diligence costs related to certain self storage property acquisitions sourced by the PROs. These expenses are included in acquisition costs in the accompanying statements of operations.
During the year ended December 31, 2014, in connection with the acquisition of certain self storage properties sourced by an affiliate of NSA Predecessor, the Company agreed to reimburse the related party for $0.2 million of due diligence costs related to the acquisitions.
Notes Receivable
In connection with the acquisition of two self storage properties, the Company made a bridge loan of $4.8 million to a PRO on February 28, 2014. This loan provided for interest at 5.16% and was collateralized by self storage properties that were subsequently acquired by the Company on May 30, 2014, at which time the note was repaid.
In connection with the planned acquisition of certain self storage properties, the Company made a bridge loan of approximately $8.0 million to a PRO on July 1, 2014. This loan did not bear interest and was repaid as the related self storage properties were acquired. Through December 31, 2014, 13 of the self storage properties had been acquired and bridge loan advances totaling $6.2 million were applied to offset the acquisition consideration otherwise payable by the Company. As of December 31, 2014, the bridge loan balance of $1.8 million is included in other assets in the accompanying balance sheet. In January 2015, the remaining balance of the bridge loan was applied to offset the acquisition consideration otherwise payable by the Company related to two self storage property acquisitions.
 In connection with the acquisition of 16 self storage properties from PROs during the year ended December 31, 2014, the Company assumed certain mortgages that provided for interest at above-market rates. The sellers of the self storage properties agreed to reimburse the Company for the difference between the fair value and the contractual value of the assumed mortgages which amounted to $5.2 million. Due to the structure of the transaction, the amount owed to the Company was considered a receivable for the issuance of equity and was recorded as an offset against equity. During the year ended December 31, 2015, the Company received above-market interest reimbursements from the sellers totaling $1.6 million. In addition, in exchange for $1.4 million of principal payment reimbursements received related to these assumed mortgages, the Company issued 85,130 OP units to the sellers during the year ended December 31, 2015.
Notes Payable
During the year ended December 31, 2015, in connection with the acquisition of self storage properties owned in DownREIT partnerships, the Company entered into bridge loan agreements for $5.3 million payable to principals of the PRO that contributed the properties. The notes bore interest at a weighted average fixed rate of 3.30% and were fully repaid during the year ended December 31, 2015.