INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES
|9 Months Ended|
Sep. 30, 2018
|Equity Method Investments and Joint Ventures [Abstract]|
|INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES||
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES
2018 Joint Venture
During the three months ended September 30, 2018, a wholly owned subsidiary of the Company (the "NSA Member") entered into a limited liability company agreement (the "JV Agreement") of NSA HHF JV, LLC (the "2018 Joint Venture") with an affiliate of Heitman America Real Estate REIT LLC (the "JV Investor" and, together with the NSA Member, the "Members") and the 2018 Joint Venture acquired from Simply Self Storage, which is a portfolio company of a private real estate fund managed by Brookfield Asset Management, two REITs that own a portfolio of self storage properties (the "Portfolio") for an aggregate purchase price of approximately $1.325 billion in cash consisting of 112 self storage properties containing approximately 8.2 million rentable square feet, configured in over 68,000 storage units and located across 17 states and Puerto Rico.
In September, the 2018 Joint Venture completed its acquisition of the Portfolio. Immediately following the acquisition, the 2018 Joint Venture distributed the six self storage properties in the Portfolio located in Puerto Rico and a single self storage property in the Portfolio located in Ohio to the Company in exchange for a $64.2 million cash contribution from the Company. The 103 properties from the Portfolio that remain in the 2018 Joint Venture post-closing (two of the properties acquired in the Portfolio were combined with other properties in the Portfolio for operational efficiency) contain approximately 7.6 million rentable square feet configured in approximately 63,000 storage units.
The 2018 Joint Venture was capitalized with approximately $639.7 million in equity (approximately $159.9 million from the NSA Member in exchange for a 25% ownership interest in the 2018 Joint Venture and approximately $479.8 million from the JV Investor in exchange for a 75% ownership interest in the 2018 Joint Venture) and proceeds from a $643.0 million interest-only debt financing with an interest rate of 4.34% per annum and a maturity of 10 years secured by a first mortgage lien on each property currently held by the 2018 Joint Venture.
A subsidiary of the Company is acting as the non-member manager of the 2018 Joint Venture (the "NSA Manager"). The NSA Manager directs, manages and controls the day-to-day operations and affairs of the 2018 Joint Venture but may not cause the 2018 Joint Venture to make certain major decisions involving the business of the 2018 Joint Venture without the consent of both Members, including the approval of annual budgets, sales and acquisitions of properties, financings, and certain actions relating to bankruptcy.
The Company's investment in the 2018 Joint Venture is accounted for using the equity method of accounting and is included in investment in unconsolidated real estate ventures in the Company’s condensed consolidated balance sheets. The Company’s earnings from its investment in the 2018 Joint Venture are presented in equity in earnings (losses) of unconsolidated real estate ventures on the Company’s condensed consolidated statements of operations.
2016 Joint Venture
As of September 30, 2018, the Company's unconsolidated real estate venture, formed in September 2016 with a state pension fund advised by Heitman Capital Management LLC (the "2016 Joint Venture"), owned and operated a portfolio of 73 properties containing approximately 4.9 million rentable square feet, configured in approximately 40,000 storage units and located across 14 states.
The 2016 Joint Venture acquired three self storage properties and an expansion project at an existing property for $28.5 million during the nine months ended September 30, 2018. The 2016 Joint Venture financed these acquisitions with capital contributions from the 2016 Joint Venture members, of which the Company contributed $7.3 million for its 25% proportionate share. During the nine months ended September 30, 2018, the 2016 Joint Venture also sold to an unrelated third party one self storage property for a gross sales price of $9.3 million.
The following table presents the combined condensed financial position of the Company's unconsolidated real estate ventures as of September 30, 2018 and December 31, 2017 (in thousands):
The following table presents the combined condensed operating information of the Company's unconsolidated real estate ventures for the three and nine months ended September 30, 2018 and 2017 (in thousands):
The combined condensed operating information in the table above only includes information for the 2018 Joint Venture following the acquisition of the Portfolio in September 2018.
The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Reference 1: http://www.xbrl.org/2003/role/presentationRef