RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| 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 provide leasing, operating, supervisory and administrative services related to its self storage properties. 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, 2017, 2016 and 2015, the Company incurred $14.4 million, $11.0 million and $7.6 million, respectively, for supervisory and administrative fees to the PROs. Such fees are included in general and administrative expenses in the accompanying statements of operations.
Payroll Services
The employees responsible for operation of the self storage properties are generally employees of the PROs who charge the Company for the costs associated with the respective employees. For the years ended December 31, 2017, 2016 and 2015, the Company incurred $24.6 million, $19.4 million and $13.4 million, respectively, for payroll and related costs reimbursable to these PROs. Such costs are included in property operating expenses in the accompanying statements of operations.
Due Diligence Costs
During the years ended December 31, 2017, 2016 and 2015, the Company incurred $0.7 million, $1.1 million and $0.6 million, respectively, of expenses payable to certain PROs related to self storage property acquisitions sourced by the PROs. These expenses, which are based on the volume of transactions sourced by the PROs, are intended to reimburse the PROs for due diligence costs incurred in the sourcing and underwriting process. For the year ended December 31, 2017, these due diligence costs are capitalized as part of the basis of the acquired self storage properties and for the years ended December 31, 2016 and 2015, these due diligence costs are included in acquisition costs in the accompanying statements of operations.
Notes Receivable
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 years ended December 31, 2017 and 2016, the Company received above-market interest reimbursements from the sellers totaling $1.3 million and $1.4 million, respectively.
In addition, in exchange for $1.3 million and $1.4 million of principal payment reimbursements received related to these assumed mortgages during the years ended December 31, 2017 and 2016, the Company issued 47,339 and 67,832 OP units to the sellers during the year ended December 31, 2017 and 2016.
Self Storage Property Acquisitions
During the year ended December 31, 2017, the Company issued 44,917 subordinated performance units as partial consideration for the acquisition of a self storage property to SA-SCMI LLC, an affiliate of SecurCare and Move It. At the time of the issuance, SA-SCMI LLC was an affiliate of Arlen D. Nordhagen, the Company's chairman and chief executive officer. In addition, during the year ended December 31, 2017, the Company issued 26,049 OP units as partial consideration for the acquisition of a self storage property to Nordhagen LLLP, an affiliate of Mr. Nordhagen, and 22,214 subordinated performance units as partial consideration for the acquisition of a self storage property to SecurCare, an affiliate Mr. Nordhagen.
During the year ended December 31, 2017, the Company issued 101,270 OP units and 88,435 subordinated performance units as partial consideration for the acquisition of self storage properties to Howard Family Limited Partnership I, an affiliate of Northwest and an affiliate of Kevin Howard, a member of the Company's board of trustees.
During the year ended December 31, 2017, the Company issued 10,766 OP units as partial consideration for the acquisition of a self storage property to Van Mourick Diversified, LP, an affiliate of Optivest and an affiliate of Mark Van Mourick, a member of the Company's board of trustees.
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