Quarterly report pursuant to Section 13 or 15(d)

SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS

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SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
9 Months Ended
Sep. 30, 2017
Business Combinations [Abstract]  
SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
SELF STORAGE PROPERTY ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company acquired 34 self storage properties with an estimated fair value of $225.8 million during the nine months ended September 30, 2017. Of these acquisitions, seven self storage properties with an estimated fair value of $40.9 million were acquired by the Company from its PROs. As a result of the Company's adoption of ASU 2017-01 during the nine months ended September 30, 2017, the 34 self storage property acquisitions were accounted for as asset acquisitions and accordingly, $2.5 million of acquisition costs related to the acquisitions were capitalized as part of the basis of the acquired properties. The Company recognized the estimated fair value of the acquired assets and assumed liabilities on the respective dates of such acquisitions. The Company allocated the total purchase price to the estimated fair value of tangible and intangible assets acquired, and liabilities assumed. The Company allocated a portion of the purchase price to identifiable intangible assets consisting of customer in-place leases which were recorded at estimated fair value of $5.5 million, resulting in a total fair value of $220.3 million allocated to real estate.
The following table summarizes the investment in self storage property acquisitions completed by the Company during the nine months ended September 30, 2017 (dollars in thousands):
Acquisitions Closed During the Three Months Ended:
 
Number of Properties
 
Summary of Investment
 
 
Cash and Acquisition Costs
 
Value of OP Equity(1)
 
Other Liabilities
 
Total
 
 
 
 
March 31, 2017
 
5
 
$
26,780

 
$
4,964

 
$
183

 
$
31,927

June 30, 2017
 
10
 
60,672

 
8,931

 
387

 
69,990

September 30, 2017
 
19
 
122,742

 
267

 
826

 
123,835

Total
 
34
 
$
210,194

 
$
14,162

 
$
1,396

 
$
225,752

(1) 
Value of OP equity represents the fair value of OP units, subordinated performance units and LTIP units. 
Pro Forma Financial Information For 2016 Business Combinations
The Company acquired 107 self storage properties during the year ended December 31, 2016 that were accounted for as business combinations. On a pro forma basis, after giving effect to the acquisition of 100 of the 107 self storage properties as if they were acquired on January 1, 2015 (pro forma financial information is not presented for seven of the self storage properties acquired during the year ended December 31, 2016 since the information required is not available to the Company), the Company would have recorded incremental additional revenue and net income of $6.2 million and $1.7 million, respectively, for the three months ended September 30, 2016 and $31.7 million and $6.6 million for the nine months ended September 30, 2016, respectively. This pro forma information was prepared using the following significant assumptions: (i) for the cash portion of the purchase price, the Company assumed borrowings under the Company's revolving line of credit with interest computed based on the effective interest rate of 1.93% as of September 30, 2016; (ii) for assumed debt financing directly associated with the acquisition of specific self storage properties, interest was computed for the entirety of the periods presented using the effective interest rates under such financings; and (iii) for acquisition costs of $1.7 million and $4.7 million incurred during the three and nine months ended September 30, 2016, pro forma adjustments give effect to these costs as if they were incurred on January 1, 2015.
The pro forma information presented in the paragraph above does not purport to represent what the actual results of operations would have been for the periods indicated, nor does it purport to represent the Company's future results of operations. As described in greater detail above, given that certain information with respect to the business combinations is not available to the Company, readers of this Form 10-Q and investors are cautioned not to place undue reliance on the Company's pro forma financial information.
Dispositions
During the nine months ended September 30, 2017, the Company sold to unrelated third parties three self storage properties and excess land parcels adjacent to its self storage properties. The gross sales price was $17.8 million and the Company recognized $5.7 million of gain on the sales.