Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 30, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Extra Space Storage Inc. | ' |
Entity Central Index Key | '0001289490 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 115,942,427 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Real estate assets, net | $3,862,679 | $3,636,544 |
Investments in unconsolidated real estate ventures | 89,326 | 88,125 |
Cash and cash equivalents | 47,015 | 126,723 |
Restricted cash | 20,026 | 21,451 |
Receivables from related parties and affiliated real estate joint ventures | 8,966 | 7,542 |
Other assets, net | 95,479 | 96,755 |
Total assets | 4,123,491 | 3,977,140 |
Liabilities, Noncontrolling Interests and Equity: | ' | ' |
Notes payable | 1,664,872 | 1,588,596 |
Premium on notes payable | 4,053 | 4,948 |
Exchangeable senior notes | 250,000 | 250,000 |
Discount on exchangeable senior notes | -15,637 | -16,487 |
Notes payable to trusts | 119,590 | 119,590 |
Lines of credit | 87,000 | ' |
Accounts payable and accrued expenses | 52,886 | 60,601 |
Other liabilities | 37,543 | 37,997 |
Total liabilities | 2,200,307 | 2,045,245 |
Commitments and contingencies | ' | ' |
Extra Space Storage Inc. stockholders' equity: | ' | ' |
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued or outstanding | ' | ' |
Common stock, $0.01 par value, 300,000,000 shares authorized, 115,869,909 and 115,755,527 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 1,158 | 1,157 |
Paid-in capital | 1,976,597 | 1,973,159 |
Accumulated other comprehensive income | 7,528 | 10,156 |
Accumulated deficit | -235,009 | -226,002 |
Total Extra Space Storage Inc. stockholders' equity | 1,750,274 | 1,758,470 |
Noncontrolling interest represented by Preferred Operating Partnership units, net of $100,000 note receivable | 80,843 | 80,947 |
Noncontrolling interests in Operating Partnership | 91,042 | 91,453 |
Other noncontrolling interests | 1,025 | 1,025 |
Total noncontrolling interests and equity | 1,923,184 | 1,931,895 |
Total liabilities, noncontrolling interests and equity | $4,123,491 | $3,977,140 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheets | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 115,869,909 | 115,755,527 |
Common stock, shares outstanding | 115,869,909 | 115,755,527 |
Note receivable from noncontrolling interest represented by Preferred Operating Partnership units (in dollars) | $100,000 | $100,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenues: | ' | ' |
Property rental | $132,001 | $102,923 |
Tenant reinsurance | 13,463 | 10,221 |
Management fees | 6,716 | 6,178 |
Total revenues | 152,180 | 119,322 |
Expenses: | ' | ' |
Property operations | 43,482 | 34,437 |
Tenant reinsurance | 2,567 | 1,910 |
Acquisition related costs | 2,056 | 452 |
General and administrative | 15,302 | 12,769 |
Depreciation and amortization | 28,375 | 23,025 |
Total expenses | 91,782 | 72,593 |
Income from operations | 60,398 | 46,729 |
Interest expense | -19,598 | -17,366 |
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes | -662 | ' |
Interest income | 269 | 184 |
Interest income on note receivable from Preferred Operating Partnership unit holder | 1,213 | 1,213 |
Income before equity in earnings of unconsolidated real estate ventures and income tax expense | 41,620 | 30,760 |
Equity in earnings of unconsolidated real estate ventures | 2,419 | 2,623 |
Equity in earnings of unconsolidated real estate ventures - purchase of joint venture partners' interests | ' | 2,556 |
Income tax expense | -2,830 | -2,008 |
Net income | 41,209 | 33,931 |
Net income allocated to Preferred Operating Partnership noncontrolling interests | -2,492 | -1,717 |
Net income allocated to Operating Partnership and other noncontrolling interests | -1,377 | -789 |
Net income attributable to common stockholders | $37,340 | $31,425 |
Earnings per common share | ' | ' |
Basic (in dollars per share) | $0.32 | $0.28 |
Diluted (in dollars per share) | $0.32 | $0.28 |
Weighted average number of shares | ' | ' |
Basic (in shares) | 115,438,325 | 110,314,668 |
Diluted (in shares) | 121,062,845 | 114,967,087 |
Cash dividends paid per common share (in dollars per share) | $0.40 | $0.25 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Condensed Consolidated Statements of Comprehensive Income | ' | ' |
Net income | $41,209 | $33,931 |
Other comprehensive income (loss): | ' | ' |
Change in fair value of interest rate swaps | -2,747 | 1,571 |
Total comprehensive income | 38,462 | 35,502 |
Less: comprehensive income attributable to noncontrolling interests | 3,750 | 2,563 |
Comprehensive income attributable to common stockholders | $34,712 | $32,939 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Equity (USD $) | Total | Series A | Series B | Series C | Operating Partnership | Other | Par Value | Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit |
In Thousands, except Share data, unless otherwise specified | ||||||||||
Balances at Dec. 31, 2013 | $1,931,895 | $30,202 | $33,568 | $17,177 | $91,453 | $1,025 | $1,157 | $1,973,159 | $10,156 | ($226,002) |
Balances (in shares) at Dec. 31, 2013 | 115,755,527 | ' | ' | ' | ' | ' | 115,755,527 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock upon the exercise of options | 1,056 | ' | ' | ' | ' | ' | 1 | 1,055 | ' | ' |
Issuance of common stock upon the exercise of options (in shares) | ' | ' | ' | ' | ' | ' | 69,265 | ' | ' | ' |
Restricted stock grants issued (in shares) | ' | ' | ' | ' | ' | ' | 47,000 | ' | ' | ' |
Restricted stock grants cancelled (in shares) | ' | ' | ' | ' | ' | ' | -1,883 | ' | ' | ' |
Compensation expense related to stock-based awards | 1,121 | ' | ' | ' | ' | ' | ' | 1,121 | ' | ' |
Net income | 41,209 | 1,751 | 504 | 237 | 1,377 | ' | ' | ' | ' | 37,340 |
Other comprehensive income | -2,747 | -22 | ' | ' | -97 | ' | ' | ' | -2,628 | ' |
Tax effect from vesting of restricted stock grants and stock option exercises | 1,262 | ' | ' | ' | ' | ' | ' | 1,262 | ' | ' |
Distributions to Operating Partnership units held by noncontrolling interests | -4,265 | -1,833 | -504 | -237 | -1,691 | ' | ' | ' | ' | ' |
Dividends paid on common stock at $0.40 per share | -46,347 | ' | ' | ' | ' | ' | ' | ' | ' | -46,347 |
Balances at Mar. 31, 2014 | $1,923,184 | $30,098 | $33,568 | $17,177 | $91,042 | $1,025 | $1,158 | $1,976,597 | $7,528 | ($235,009) |
Balances (in shares) at Mar. 31, 2014 | 115,869,909 | ' | ' | ' | ' | ' | 115,869,909 | ' | ' | ' |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statement of Equity (Parenthetical) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Condensed Consolidated Statement of Equity | ' | ' |
Dividends paid on common stock, per share | $0.40 | $0.25 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $41,209 | $33,931 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 28,375 | 23,025 |
Amortization of deferred financing costs | 1,641 | 1,510 |
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes | 662 | ' |
Non-cash interest expense related to amortization of premium on notes payable | -895 | -565 |
Compensation expense related to stock-based awards | 1,121 | 1,023 |
Gain on purchase of joint venture partners' interests | ' | -2,556 |
Distributions from unconsolidated real estate ventures in excess of earnings | 1,024 | 1,154 |
Changes in operating assets and liabilities: | ' | ' |
Receivables from related parties and affiliated real estate joint ventures | -1,424 | -277 |
Other assets | 1,448 | 1,051 |
Accounts payable and accrued expenses | -7,715 | -6,864 |
Other liabilities | -874 | -316 |
Net cash provided by operating activities | 64,572 | 51,116 |
Cash flows from investing activities: | ' | ' |
Acquisition, development and redevelopment of real estate assets | -256,759 | -18,754 |
Investments in unconsolidated real estate ventures | ' | -589 |
Change in restricted cash | 1,425 | -3,181 |
Purchase of equipment and fixtures | -1,274 | -821 |
Net cash used in investing activities | -256,608 | -23,345 |
Cash flows from financing activities: | ' | ' |
Proceeds from notes payable and lines of credit | 291,157 | 81,776 |
Principal payments on notes payable and lines of credit | -127,881 | -74,912 |
Deferred financing costs | -1,392 | -1,340 |
Redemption of Operating Partnership units held by noncontrolling interest | ' | -20 |
Net proceeds from exercise of stock options | 1,056 | 1,635 |
Dividends paid on common stock | -46,347 | -27,730 |
Distributions to noncontrolling interests | -4,265 | -2,390 |
Net cash provided by (used in) financing activities | 112,328 | -22,981 |
Net (decrease) increase in cash and cash equivalents | -79,708 | 4,790 |
Cash and cash equivalents, beginning of the period | 126,723 | 30,785 |
Cash and cash equivalents, end of the period | 47,015 | 35,575 |
Supplemental schedule of cash flow information | ' | ' |
Interest paid, net of amounts capitalized | 16,445 | 15,909 |
Income taxes paid | 1,244 | 589 |
Tax effect from vesting of restricted stock grants and option exercises | ' | ' |
Other assets | 1,262 | ' |
Paid-in capital | -1,262 | ' |
Acquisitions of real estate assets | ' | ' |
Real estate assets, net | ' | 2,251 |
Receivables from related parties and affiliated real estate joint ventures | ' | ($2,251) |
ORGANIZATION
ORGANIZATION | 3 Months Ended |
Mar. 31, 2014 | |
ORGANIZATION | ' |
ORGANIZATION | ' |
1. ORGANIZATION | |
Extra Space Storage Inc. (the “Company”) is a fully-integrated, self-administered and self-managed real estate investment trust (“REIT”), formed as a Maryland corporation on April 30, 2004, to own, operate, manage, acquire, develop and redevelop professionally managed self-storage facilities located throughout the United States. The Company continues the business of Extra Space Storage LLC and its subsidiaries, which had engaged in the self-storage business since 1977. The Company’s interest in its properties is held through its operating partnership, Extra Space Storage LP (the “Operating Partnership”), which was formed on May 5, 2004. The Company’s primary assets are general partner and limited partner interests in the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT, (“UPREIT”). The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To the extent the Company continues to qualify as a REIT, it will not be subject to tax, with certain limited exceptions, on the taxable income that is distributed to its stockholders. | |
The Company invests in self-storage facilities by acquiring wholly-owned facilities or by acquiring an equity interest in real estate entities. At March 31, 2014, the Company had direct and indirect equity interests in 800 operating storage facilities. In addition, the Company managed 252 properties for third parties, bringing the total number of operating properties which it owns and/or manages to 1,052. These properties are located in 35 states, Washington, D.C. and Puerto Rico. | |
The Company operates in three distinct segments: (1) rental operations; (2) tenant reinsurance; and (3) property management, acquisition and development. The rental operations activities include rental operations of self-storage facilities in which we have an ownership interest. No single tenant accounts for more than 5% of rental income. Tenant reinsurance activities include the reinsurance of risks relating to the loss of goods stored by tenants in the Company’s self-storage facilities. The Company’s property management, acquisition and development activities include managing, acquiring, developing and selling self-storage facilities. |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2014 | |
BASIS OF PRESENTATION | ' |
BASIS OF PRESENTATION | ' |
2. BASIS OF PRESENTATION | |
The accompanying unaudited condensed consolidated financial statements of the Company are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014, are not necessarily indicative of results that may be expected for the year ending December 31, 2014. The condensed consolidated balance sheet as of December 31, 2013 has been derived from the Company’s audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission. | |
Certain amounts in the Company’s 2013 consolidated financial statements and supporting note disclosures have been reclassified to conform to the current period presentation. Such reclassifications did not impact previously reported net income or accumulated deficit. |
FAIR_VALUE_DISCLOSURES
FAIR VALUE DISCLOSURES | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
FAIR VALUE DISCLOSURES | ' | |||||||||||||
FAIR VALUE DISCLOSURES | ' | |||||||||||||
3. FAIR VALUE DISCLOSURES | ||||||||||||||
Derivative Financial Instruments | ||||||||||||||
Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves. | ||||||||||||||
The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. In conjunction with the Financial Accounting Standards Board’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. | ||||||||||||||
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of March 31, 2014, the Company had assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. | ||||||||||||||
The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2014, aggregated by the level in the fair value hierarchy within which those measurements fall. | ||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||
Description | March 31, 2014 | Quoted Prices in Active | Significant Other | Significant | ||||||||||
Markets for Identical | Observable Inputs | Unobservable Inputs | ||||||||||||
Assets (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Other assets - Cash Flow Hedge Swap Agreements | $ | 10,281 | $ | — | $ | 10,281 | $ | — | ||||||
Other liabilities - Cash Flow Hedge Swap Agreements | $ | (3,083 | ) | $ | — | $ | (3,083 | ) | $ | — | ||||
There were no transfers of assets and liabilities between Level 1 and Level 2 during the three months ended March 31, 2014. The Company did not have any significant assets or liabilities that are re-measured on a recurring basis using significant unobservable inputs as of March 31, 2014 or December 31, 2013. | ||||||||||||||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | ||||||||||||||
Long-lived assets held for use are evaluated for impairment when events or circumstances indicate there may be impairment. The Company reviews each self-storage facility at least annually to determine if any such events or circumstances have occurred or exist. The Company focuses on facilities where occupancy and/or rental income have decreased by a significant amount. For these facilities, the Company determines whether the decrease is temporary or permanent, and whether the facility will likely recover the lost occupancy and/or revenue in the short term. In addition, the Company carefully reviews facilities in the lease-up stage and compares actual operating results to original projections. | ||||||||||||||
When the Company determines that an event that may indicate impairment has occurred, the Company compares the carrying value of the related long-lived assets to the undiscounted future net operating cash flows attributable to the assets. An impairment loss is recorded if the net carrying value of the assets exceeds the undiscounted future net operating cash flows attributable to the assets. The impairment loss recognized equals the excess of net carrying value over the related fair value of the assets. | ||||||||||||||
When real estate assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the fair value of the assets, net of selling costs. If the estimated fair value, net of selling costs, of the assets that have been identified as held for sale is less than the net carrying value of the assets, then a valuation allowance is established. The operations of assets held for sale or sold during the period are generally presented as discontinued operations for all periods presented. | ||||||||||||||
The Company assesses whether there are any indicators that the value of its investments in unconsolidated real estate ventures may be impaired annually and when events or circumstances indicate there may be impairment. An investment is impaired if management’s estimate of the fair value of the investment is less than its carrying value. To the extent impairment has occurred, and is considered to be other than temporary, the loss is measured as the excess of the carrying amount over the fair value of the investment. | ||||||||||||||
In connection with the Company’s acquisition of self-storage facilities, the purchase price is allocated to the tangible and intangible assets and liabilities acquired based on their fair values, which are estimated using significant unobservable inputs. The value of the tangible assets, consisting of land and buildings, is determined as if vacant. Intangible assets, which represent the value of existing tenant relationships, are recorded at their fair values based on the avoided cost to replace the current leases. The Company measures the value of tenant relationships based on the rent lost due to the amount of time required to replace existing customers, which is based on the Company’s historical experience with turnover in its facilities. Debt assumed as part of an acquisition is recorded at fair value based on current interest rates compared to contractual rates. Acquisition-related transaction costs are expensed as incurred. | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
The carrying values of cash and cash equivalents, restricted cash, receivables, other financial instruments included in other assets, accounts payable and accrued expenses, variable-rate notes payable, lines of credit and other liabilities reflected in the condensed consolidated balance sheets at March 31, 2014 and December 31, 2013 approximate fair value. | ||||||||||||||
The fair value of the Company’s note receivable from Preferred Operating Partnership unit holders was based on the discounted estimated future cash flows of the note (categorized within Level 3 of the fair value hierarchy); the discount rate used approximated the current market rate for loans with similar maturities and credit quality. The fair values of the Company’s fixed-rate notes payable and notes payable to trusts were estimated using the discounted estimated future cash payments to be made on such debt (categorized within Level 3 of the fair value hierarchy); the discount rates used approximated current market rates for loans, or groups of loans, with similar maturities and credit quality. The fair value of the Company’s exchangeable senior notes was estimated using an average market price for similar securities obtained from a third party. | ||||||||||||||
The fair values of the Company’s fixed-rate assets and liabilities were as follows for the periods indicated: | ||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Fair | Carrying | Fair | Carrying | |||||||||||
Value | Value | Value | Value | |||||||||||
Note receivable from Preferred Operating Partnership unit holders | $ | 100,497 | $ | 100,000 | $ | 103,491 | $ | 100,000 | ||||||
Fixed rate notes payable and notes payable to trusts | $ | 1,334,941 | $ | 1,325,113 | $ | 1,365,290 | $ | 1,368,885 | ||||||
Exchangeable senior notes | $ | 262,343 | $ | 250,000 | $ | 251,103 | $ | 250,000 | ||||||
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EARNINGS PER COMMON SHARE | ' | |||||||
EARNINGS PER COMMON SHARE | ' | |||||||
4. EARNINGS PER COMMON SHARE | ||||||||
Basic earnings per common share is computed using the two-class method by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. All outstanding unvested restricted stock awards contain rights to non-forfeitable dividends and participate in undistributed earnings with common stockholders; accordingly, they are considered participating securities that are included in the two-class method. Diluted earnings per common share measures the performance of the Company over the reporting period while giving effect to all potential common shares that were dilutive and outstanding during the period. The denominator includes the weighted average number of basic shares and the number of additional common shares that would have been outstanding if the potential common shares that were dilutive had been issued, and is calculated using either the two-class, treasury stock or as if-converted method, whichever is most dilutive. Potential common shares are securities (such as options, convertible debt, exchangeable Series A Participating Redeemable Preferred Units (“Series A Units”) and Series B Redeemable Preferred Units (“Series B Units”), redeemable and convertible Series C Convertible Redeemable Preferred Units (“Series C Units”) and redeemable common Operating Partnership units (“OP Units”)) that do not have a current right to participate in earnings of the Company but could do so in the future by virtue of their option, redemption or conversion right. In computing the dilutive effect of convertible securities, net income is adjusted to add back any changes in earnings in the period associated with the convertible security. The numerator also is adjusted for the effects of any other non-discretionary changes in income or loss that would result from the assumed conversion of those potential common shares. In computing diluted earnings per common share, only potential common shares that are dilutive (those that reduce earnings per share) are included. For the three months ended March 31, 2014 and 2013, options to purchase approximately 18,100 and 24,950 shares, respectively, were excluded from the computation of earnings per share as their effect would have been anti-dilutive. | ||||||||
The Operating Partnership had $250,000 of its 2.375% Exchangeable Senior Notes due 2033 (the “Notes”) issued and outstanding as of March 31, 2014. The Notes could potentially have a dilutive effect on the Company’s earnings per common share calculations. The Notes are exchangeable by holders into shares of the Company’s common stock under certain circumstances per the terms of the indenture governing the Notes. The exchange price of the Notes was $55.69 per share as of March 31, 2014, and could change over time as described in the indenture. The Company has irrevocably agreed to pay only cash for the accreted principal amount of the Notes relative to its exchange obligations, but retained the right to satisfy the exchange obligation in excess of the accreted principal amount in cash and/or common stock. Though the Company has retained that right, Accounting Standards Codification (“ASC”) 260, “Earnings per Share,” requires an assumption that shares would be used to pay the exchange obligation in excess of the accreted principal amount, and requires that those shares be included in the Company’s calculation of weighted average common shares outstanding for the diluted earnings per share computation. For the three months ended March 31, 2014, no shares related to the Notes were included in the computation for diluted earnings per common share as the per share price of the Company’s common stock during this period did not exceed the exchange price. | ||||||||
For the purposes of computing the diluted impact on earnings per common share of the potential exchange of Series A Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the positive intent and ability to settle at least $115,000 of the instrument in cash (or net settle a portion of the Series A Units against the related outstanding note receivable), only the amount of the instrument in excess of $115,000 is considered in the calculation of shares contingently issuable for the purposes of computing diluted earnings per common share as allowed by ASC 260-10-45-46. | ||||||||
For the purposes of computing the diluted impact on earnings per common share of the potential exchange of Series B Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the ability to settle the redemption in shares, the Company divided the total value of the Series B Units outstanding as of March 31, 2014 of $33,568 by the average closing price of the Company’s common stock for the three months ended March 31, 2014 of $46.35 per share. Assuming full exchange for common shares as of March 31, 2014, 724,232 shares would have been issued to holders of the Series B Units. These shares were excluded from the computation of earnings per share as their effect would have been anti-dilutive. | ||||||||
For the purposes of computing the diluted impact on earnings per common share of the potential exchange of Series C Units for common shares upon redemption, where the Company has the option to redeem in cash or shares and where the Company has stated the ability to settle the redemption in shares, the Company divided the total value of the Series C Units outstanding as of March 31, 2014 of $17,177 by the average closing price of the Company’s common stock for the three months ended March 31, 2014 of $46.35 per share. Assuming full exchange for common shares as of March 31, 2014, 370,585 shares would have been issued to holders of the Series C Units. These shares were excluded from the computation of earnings per share as their effect would have been anti-dilutive. | ||||||||
The computation of earnings per common share was as follows for the periods presented: | ||||||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Net income attributable to common stockholders | $ | 37,340 | $ | 31,425 | ||||
Earnings and dividends allocated to participating securities | (117 | ) | (120 | ) | ||||
Earnings for basic computations | 37,223 | 31,305 | ||||||
Earnings and dividends allocated to participating securities | — | 120 | ||||||
Add: Income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) and Operating Partnership | 3,128 | 2,494 | ||||||
Subtract: Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) | (1,438 | ) | (1,438 | ) | ||||
Net income for diluted computations | $ | 38,913 | $ | 32,481 | ||||
Weighted average common shares outstanding: | ||||||||
Average number of common shares outstanding - basic | 115,438,325 | 110,314,668 | ||||||
Series A Units | 989,980 | 989,980 | ||||||
Common OP Units | 4,334,118 | 2,755,650 | ||||||
Unvested restricted stock awards included for treasury stock method | — | 495,256 | ||||||
Dilutive stock options | 300,422 | 411,533 | ||||||
Average number of common shares outstanding - diluted | 121,062,845 | 114,967,087 | ||||||
Earnings per common share | ||||||||
Basic | $ | 0.32 | $ | 0.28 | ||||
Diluted | $ | 0.32 | $ | 0.28 | ||||
PROPERTY_ACQUISITIONS
PROPERTY ACQUISITIONS | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||
PROPERTY ACQUISITIONS | ' | ||||||||||||||||||||||||||||
PROPERTY ACQUISITIONS | ' | ||||||||||||||||||||||||||||
5. PROPERTY ACQUISITIONS | |||||||||||||||||||||||||||||
The following table summarizes the Company’s acquisitions of operating properties for the three months ended March 31, 2014, and does not include purchases of raw land or improvements made to existing assets: | |||||||||||||||||||||||||||||
Consideration Paid | Acquisition Date Fair Value | ||||||||||||||||||||||||||||
Property | Number of | Date of | Total | Cash Paid | Net | Land | Building | Intangible | Closing costs - | Notes | |||||||||||||||||||
Location | Properties | Acquisition | Liabilities/ | expensed | |||||||||||||||||||||||||
(Assets) | |||||||||||||||||||||||||||||
Assumed | |||||||||||||||||||||||||||||
Virginia | 17 | 1/7/14 | $ | 200,588 | $ | 200,525 | $ | 63 | $ | 53,878 | $ | 142,840 | $ | 2,973 | $ | 897 | |||||||||||||
Texas | 1 | 2/5/14 | 14,191 | 14,152 | 39 | 1,767 | 12,368 | 38 | 18 | ||||||||||||||||||||
California | 1 | 3/4/14 | 7,000 | 6,974 | 26 | 2,150 | 4,734 | 113 | 3 | -1 | |||||||||||||||||||
Connecticut | 1 | 3/17/14 | 15,138 | 15,169 | (31 | ) | 1,072 | 14,028 | — | 38 | |||||||||||||||||||
Alabama | 1 | 3/20/14 | 13,813 | 13,752 | 61 | 2,381 | 11,224 | 200 | 8 | ||||||||||||||||||||
2014 Totals | 21 | $ | 250,730 | $ | 250,572 | $ | 158 | $ | 61,248 | $ | 185,194 | $ | 3,324 | $ | 964 | ||||||||||||||
(1) This property was owned by Spencer F. Kirk, the Company’s Chief Executive Officer, and Kenneth M. Woolley, the Company’s Executive Chairman. The Company acquired the building on March 4, 2014. In a separate transaction on March 5, 2014, the Company acquired the land for $2,150 from a third party unrelated to the Company’s executives and terminated the existing ground lease. |
VARIABLE_INTERESTS
VARIABLE INTERESTS | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
VARIABLE INTERESTS | ' | ||||||||||||||||
VARIABLE INTERESTS | ' | ||||||||||||||||
6. VARIABLE INTERESTS | |||||||||||||||||
The Company has an interest in one unconsolidated joint venture with an unrelated third party which is a variable interest entity (“VIE”). The Company holds an 18% equity interest and a 50% profit interest in the VIE joint venture (“VIE JV”), and has 50% of the voting rights in the VIE JV. Qualification as a VIE was based on the determination that the equity investment at risk for this joint venture was not sufficient based on a qualitative and quantitative analysis performed by the Company. The Company performed a qualitative analysis for the joint venture to determine which party was the primary beneficiary. The Company determined that since the powers to direct the activities most significant to the economic performance of the entity are shared equally by the Company and its joint venture partner, there is no primary beneficiary. Accordingly, the interest is recorded using the equity method. | |||||||||||||||||
The VIE JV owns a single self-storage property. This joint venture is financed through a combination of (1) equity contributions from the Company and its joint venture partner and (2) amounts payable to the Company. The amounts payable to the Company consist of expenses paid on behalf of the joint venture by the Company as manager and mortgage notes payable to the Company. The Company performs management services for the VIE JV in exchange for a management fee of approximately 6% of cash collected by the property. Except as disclosed, the Company has not provided financial or other support during the periods presented to the VIE JV that it was not previously contractually obligated to provide. | |||||||||||||||||
The Company’s maximum exposure to loss for this joint venture as of March 31, 2014 is the total of the amounts payable to the Company and the Company’s investment balance in the joint venture. The Company believes that the risk of incurring a material loss as a result of its investment in the property is unlikely and, therefore, no liability has been recorded. Also, repossessing and/or selling the self-storage facility and land that collateralize the amounts payable to the Company could provide funds sufficient to reimburse the Company. | |||||||||||||||||
The following table compares the liability balance and the maximum exposure to loss related to the Company’s VIE JV as of March 31, 2014: | |||||||||||||||||
Amounts | Maximum | ||||||||||||||||
Liability | Investment | Payable to the | Exposure | ||||||||||||||
Balance | Balance | Company | to Loss | Difference | |||||||||||||
Extra Space of Sacramento One LLC | $ | — | $ | (1,107 | ) | $ | 10,547 | $ | 9,440 | $ | (9,440 | ) | |||||
The Operating Partnership has three wholly-owned unconsolidated subsidiaries (“Trust,” “Trust II” and “Trust III,” together, the “Trusts”) that have issued trust preferred securities to third parties and common securities to the Operating Partnership. The proceeds from the sale of the preferred and common securities were loaned in the form of notes to the Operating Partnership. The Trusts are VIEs because the holders of the equity investment at risk (the trust preferred securities) do not have the power to direct the activities of the entities that most significantly affect the entities’ economic performance because of their lack of voting or similar rights. Because the Operating Partnership’s investment in the Trusts’ common securities was financed directly by the Trusts as a result of its loan of the proceeds to the Operating Partnership, that investment is not considered an equity investment at risk. The Operating Partnership’s investment in the Trusts is not a variable interest because equity interests are variable interests only to the extent that the investment is considered to be at risk, and therefore the Operating Partnership cannot be the primary beneficiary of the Trusts. Since the Company is not the primary beneficiary of the Trusts, they have not been consolidated. A debt obligation has been recorded in the form of notes for the proceeds as discussed above, which are owed to the Trusts. The Company has also included its investment in the Trusts’ common securities in other assets on the condensed consolidated balance sheets. | |||||||||||||||||
The Company has not provided financing or other support during the periods presented to the Trusts that it was not previously contractually obligated to provide. The Company’s maximum exposure to loss as a result of its involvement with the Trusts is equal to the total amount of the notes discussed above less the amounts of the Company’s investments in the Trusts’ common securities. The net amount is the notes payable that the Trusts owe to third parties for their investments in the Trusts’ preferred securities. | |||||||||||||||||
Following is a tabular comparison of the liabilities the Company has recorded as a result of its involvement with the Trusts to the maximum exposure to loss the Company is subject to as a result of such involvement as of March 31, 2014: | |||||||||||||||||
Notes payable | Investment | Maximum | |||||||||||||||
to Trusts | Balance | exposure to loss | Difference | ||||||||||||||
Trust | $ | 36,083 | $ | 1,083 | $ | 35,000 | $ | — | |||||||||
Trust II | 42,269 | 1,269 | 41,000 | — | |||||||||||||
Trust III | 41,238 | 1,238 | 40,000 | — | |||||||||||||
$ | 119,590 | $ | 3,590 | $ | 116,000 | $ | — | ||||||||||
The Company had no consolidated VIEs during the three months ended March 31, 2014. |
DERIVATIVES
DERIVATIVES | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
DERIVATIVES | ' | |||||||||||
DERIVATIVES | ' | |||||||||||
7. DERIVATIVES | ||||||||||||
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposure that arises from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. | ||||||||||||
Cash Flow Hedges of Interest Rate Risk | ||||||||||||
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. | ||||||||||||
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (“OCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. A portion of these changes is excluded from accumulated other comprehensive income as it is allocated to noncontrolling interests. During the three months ended March 31, 2014 and 2013, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. | ||||||||||||
The following table summarizes the terms of the Company’s 22 derivative financial instruments as of March 31, 2014: | ||||||||||||
Hedge Product | Current Notional | Strike | Effective Dates | Maturity Dates | ||||||||
Amounts | ||||||||||||
Swap Agreements | $4,749 - $95,739 | 2.79% - 6.32% | 7/1/2009 - 1/1/2014 | 7/1/2014 - 4/1/2021 | ||||||||
Fair Values of Derivative Instruments | ||||||||||||
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheets: | ||||||||||||
Asset (Liability) Derivatives | ||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||
Derivatives designated as | Balance Sheet | Fair | Balance Sheet | Fair | ||||||||
hedging instruments: | Location | Value | Location | Value | ||||||||
Swap Agreements | Other assets | $ | 10,281 | Other assets | $ | 13,630 | ||||||
Swap Agreements | Other liabilities | $ | (3,083 | ) | Other liabilities | $ | (3,684 | ) | ||||
Effect of Derivative Instruments | ||||||||||||
The tables below present the effect of the Company’s derivative financial instruments on the condensed consolidated statements of operations for the periods presented. No tax effect has been presented as the derivative instruments are held by the Company: | ||||||||||||
Classification of | For the Three Months Ended March 31, | |||||||||||
Type | Income (Expense) | 2014 | 2013 | |||||||||
Swap Agreements | Interest expense | $ | (2,293 | ) | $ | (2,153 | ) | |||||
Gain (loss) | Location of amounts | Gain (loss) reclassified | ||||||||||
from OCI | ||||||||||||
recognized in OCI | reclassified from OCI | For the Three Months | ||||||||||
Type | March 31, 2014 | into income | Ended March 31, 2014 | |||||||||
Swap Agreements | $ | (5,040 | ) | Interest expense | $ | (2,293 | ) | |||||
Gain (loss) | Location of amounts | Gain (loss) reclassified | ||||||||||
from OCI | ||||||||||||
recognized in OCI | reclassified from OCI | For the Three Months | ||||||||||
Type | March 31, 2013 | into income | Ended March 31, 2013 | |||||||||
Swap Agreements | $ | (582 | ) | Interest expense | $ | (2,153 | ) | |||||
Credit-risk-related Contingent Features | ||||||||||||
The Company has agreements with some of its derivative counterparties that contain provisions pursuant to which, the Company could be declared in default of its derivative obligations if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender. | ||||||||||||
The Company also has an agreement with some of its derivative counterparties that incorporates the loan covenant provisions of the Company’s indebtedness with a lender affiliate of the derivative counterparty. Failure to comply with the loan covenant provisions would result in the Company being in default on any derivative instrument obligations covered by the agreement. | ||||||||||||
As of March 31, 2014, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, was $3,083. As of March 31, 2014, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of March 31, 2014, it could have been required to settle its obligations under the agreements at their termination value of $3,374. |
EXCHANGEABLE_SENIOR_NOTES
EXCHANGEABLE SENIOR NOTES | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EXCHANGEABLE SENIOR NOTES | ' | |||||||
EXCHANGEABLE SENIOR NOTES | ' | |||||||
8. EXCHANGEABLE SENIOR NOTES | ||||||||
On June 21, 2013, the Operating Partnership issued $250,000 of its 2.375% Exchangeable Senior Notes due 2033 at a 1.5% discount, or $3,750. Costs incurred to issue the Notes were approximately $1,672. These costs are being amortized as an adjustment to interest expense over five years, which represents the estimated term based on the first available redemption date, and are included in other assets in the condensed consolidated balance sheets. The Notes are general unsecured senior obligations of the Operating Partnership and are fully guaranteed by the Company. Interest is payable on January 1 and July 1 of each year beginning January 1, 2014, until the maturity date of July 1, 2033. The Notes bear interest at 2.375% per annum and contain an exchange settlement feature, which provides that the Notes may, under certain circumstances, be exchangeable for cash (for the principal amount of the Notes) and, with respect to any excess exchange value, for cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial exchange rate of the Notes is approximately 17.96 shares of the Company’s common stock per $1,000 principal amount of the Notes. | ||||||||
The Operating Partnership may redeem the Notes at any time to preserve the Company’s status as a REIT. In addition, on or after July 5, 2018, the Operating Partnership may redeem the Notes for cash, in whole or in part, at 100% of the principal amount plus accrued and unpaid interest, upon at least 30 days but not more than 60 days prior written notice to the holders of the Notes. The holders of the Notes have the right to require the Operating Partnership to repurchase the Notes for cash, in whole or in part, on July 1 of the years 2018, 2023, and 2028, and upon the occurrence of certain designated events, in each case for a repurchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest. Certain events are considered “Events of Default,” as defined in the indenture governing the Notes, which may result in the accelerated maturity of the Notes. | ||||||||
GAAP requires entities with convertible debt instruments that may be settled entirely or partially in cash upon conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s economic interest cost. The Company therefore accounts for the liability and equity components of the Notes separately. The equity component is included in paid-in capital in stockholders’ equity in the condensed consolidated balance sheets, and the value of the equity component is treated as original issue discount for purposes of accounting for the debt component. The discount is being amortized as interest expense over the remaining period of the debt through its first redemption date, July 1, 2018. The effective interest rate on the liability component is 4.0%. | ||||||||
Information about the carrying amount of the equity component, the principal amount of the liability component, its unamortized discount and its net carrying amount for the Notes was as follows for the periods indicated: | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Carrying amount of equity component | $ | (14,496 | ) | $ | (14,496 | ) | ||
Principal amount of liability component | $ | 250,000 | $ | 250,000 | ||||
Unamortized discount - equity component | (12,469 | ) | (13,131 | ) | ||||
Unamortized cash discount | (3,168 | ) | (3,356 | ) | ||||
Net carrying amount of liability component | $ | 234,363 | $ | 233,513 | ||||
The amount of interest cost recognized relating to the contractual interest rate and the amortization of the discount on the liability component of the Notes were as follows for the periods indicated: | ||||||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Contractual interest | $ | 1,484 | $ | — | ||||
Amortization of discount | 662 | — | ||||||
Total interest expense recognized | $ | 2,146 | $ | — | ||||
NONCONTROLLING_INTEREST_REPRES
NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS | 3 Months Ended |
Mar. 31, 2014 | |
NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS | ' |
NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS | ' |
9. NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS | |
Classification of Noncontrolling Interests | |
GAAP requires a company to present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section, but separate from the company’s equity. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity. | |
The Company has evaluated the terms of the Operating Partnership’s preferred units and classifies the noncontrolling interest represented by such preferred units as stockholders’ equity in the accompanying condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling interest as permanent equity in the condensed consolidated balance sheets. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount and (2) the redemption value as of the end of the period in which the determination is made. | |
Series A Participating Redeemable Preferred Units | |
On June 15, 2007, the Operating Partnership entered into a Contribution Agreement with various limited partnerships affiliated with AAAAA Rent-A-Space to acquire ten self-storage facilities in exchange for 989,980 Series A Units of the Operating Partnership. The self-storage facilities are located in California and Hawaii. | |
On June 25, 2007, the Operating Partnership loaned the holders of the Series A Units $100,000. The note receivable bears interest at 4.85% and is due September 1, 2020. The loan is secured by the borrower’s Series A Units. The holders of the Series A Units can redeem up to 114,500 Series A Units prior to the maturity date of the loan. If any redemption in excess of 114,500 Series A Units occurs prior to the maturity date, the holder of the Series A Units is required to repay the loan as of the date of that redemption. The Series A Units are shown on the condensed consolidated balance sheets net of the $100,000 loan because the borrower under the loan receivable is also the holder of the Series A Units. | |
The partnership agreement of the Operating Partnership (as amended, the “Partnership Agreement”) provides for the designation and issuance of the Series A Units. The Series A Units will have priority over all other partnership interests of the Operating Partnership with respect to distributions and liquidation. | |
Under the Partnership Agreement, Series A Units in the amount of $115,000 bear a fixed priority return of 5% and have a fixed liquidation value of $115,000. The remaining balance participates in distributions with, and has a liquidation value equal to, that of the OP Units. The Series A Units are redeemable at the option of the holder, which redemption obligation may be satisfied, at the Company’s option, in cash or shares of its common stock. | |
Series B Redeemable Preferred Units | |
On August 29, 2013, the Operating Partnership completed the purchase of 19 out of 20 self-storage facilities affiliated with All Aboard Mini Storage, all of which are located in California. On September 26, 2013, the Operating Partnership completed the purchase of the remaining facility. These properties were acquired in exchange for $100,876 in cash (including $98,960 of debt assumed and immediately defeased at closing), 1,342,727 Series B Units valued at $33,568, and 1,448,108 OP Units valued at $62,341. | |
The Partnership Agreement provides for the designation and issuance of the Series B Units. The Series B Units rank junior to the Series A Units, on parity with the Series C Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation. | |
The Series B Units have a liquidation value of $25.00 per unit for a fixed liquidation value of $33,568. Holders of the Series B Units receive distributions at an annual rate of 6%. These distributions are cumulative and accrue each quarter regardless of the declaration of dividends or distributions. The Series B Units will become redeemable at the option of the holder on the first anniversary of the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock. | |
Series C Convertible Redeemable Preferred Units | |
On December 2, 2013, the Operating Partnership completed the purchase of six of eight self-storage facilities affiliated with Grupe Properties Co. Inc. (“Grupe”), all of which are located in California. On December 3, 2013, the Operating Partnership completed the purchase of the remaining two facilities. The Company previously held 35% interests in five of these eight properties through separate joint ventures with Grupe. These properties were acquired in exchange for $42,702 of cash, the assumption of $4,342 in existing debt, and the issuance of 407,996 Series C Units valued at $17,177. | |
The Partnership Agreement provides for the designation and issuance of the Series C Units. The Series C Units rank junior to the Series A Units, on parity with the Series B Units, and senior to all other partnership interests of the Operating Partnership with respect to distributions and liquidation. | |
The Series C Units have a liquidation value of $42.10 per unit for a fixed liquidation value of $17,177. From issuance to the fifth anniversary of issuance, each Series C Unit holder will receive quarterly distributions equal to the quarterly distribution per OP Unit plus $0.18. Beginning on the fifth anniversary of issuance, each Series C Unit holder will receive a fixed quarterly distribution equal to the aggregate quarterly distribution payable in respect of such Series C Unit during the four quarters immediately preceding the fifth anniversary of issuance, divided by four. These distributions are cumulative. The Series C Units will become redeemable at the option of the holder one year from the date of issuance, which redemption obligation may be satisfied at the Company’s option in cash or shares of its common stock. The Series C Units will also become convertible into OP Units at the option of the holder one year from the date of issuance, at a rate of 0.9145 OP Units per Series C Unit converted. This conversion option expires upon the fifth anniversary of the date of issuance. |
NONCONTROLLING_INTEREST_IN_OPE
NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP | 3 Months Ended |
Mar. 31, 2014 | |
NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP | ' |
NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP | ' |
10. NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP | |
The Company’s interest in its properties is held through the Operating Partnership. ESS Holding Business Trust I, a wholly-owned subsidiary of the Company, is the sole general partner of the Operating Partnership. ESS Holding Business Trust II, also a wholly-owned subsidiary of the Company, is a limited partner of the Operating Partnership. Between its general partner and limited partner interests, the Company held a 94.2% ownership interest in the Operating Partnership as of March 31, 2014. The remaining ownership interests in the Operating Partnership (including Preferred Operating Partnership units) of 5.8% are held by certain former owners of assets acquired by the Operating Partnership. | |
The noncontrolling interest in the Operating Partnership represents OP Units that are not owned by the Company. In conjunction with the formation of the Company, and as a result of subsequent acquisitions, certain persons and entities contributing interests in properties to the Operating Partnership received limited partnership interests in the form of OP Units. Limited partners who received OP Units in the formation transactions or in exchange for contributions for interests in properties have the right to require the Operating Partnership to redeem part or all of their OP Units for cash based upon the fair market value of an equivalent number of shares of the Company’s common stock (based on the ten-day average trading price) at the time of the redemption. Alternatively, the Company may, in its sole discretion, elect to acquire those OP Units in exchange for shares of its common stock on a one-for-one basis, subject to anti-dilution adjustments provided in the Partnership Agreement. The ten-day average closing stock price at March 31, 2014 was $47.87 and there were 4,334,118 OP Units outstanding. Assuming that all of the OP Unit holders exercised their right to redeem all of their OP Units on March 31, 2014 and the Company elected to pay the OP Unit holders cash, the Company would have paid $207,474 in cash consideration to redeem the units. | |
GAAP requires a company to present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section, but separate from the company’s equity. It also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest to be clearly identified and presented on the face of the consolidated statement of operations, and requires changes in ownership interest to be accounted for similarly as equity transactions. If noncontrolling interests are determined to be redeemable, they are to be carried at their redemption value as of the balance sheet date and reported as temporary equity. | |
The Company has evaluated the terms of the OP Units and classifies the noncontrolling interest represented by the OP Units as stockholders’ equity in the accompanying condensed consolidated balance sheets. The Company will periodically evaluate individual noncontrolling interests for the ability to continue to recognize the noncontrolling amount as permanent equity in the condensed consolidated balance sheets. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount and (2) the redemption value as of the end of the period in which the determination is made. |
OTHER_NONCONTROLLING_INTERESTS
OTHER NONCONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2014 | |
OTHER NONCONTROLLING INTERESTS | ' |
OTHER NONCONTROLLING INTERESTS | ' |
11. OTHER NONCONTROLLING INTERESTS | |
Other noncontrolling interests represent the ownership interests of various third parties in two consolidated joint ventures as of March 31, 2014. One of these consolidated joint ventures owns one property which was under construction at March 31, 2014. The second consolidated joint venture owns 19 operating properties. The ownership interests of the third party owners range from 1.0% to 3.3%. Other noncontrolling interests are included in the stockholders’ equity section of the Company’s condensed consolidated balance sheets. The income or losses attributable to these third party owners based on their ownership percentages are reflected in net income allocated to Operating Partnership and other noncontrolling interests in the condensed consolidated statements of operations. | |
In February 2013, the Company purchased one of its joint venture partner’s 1.7% capital interest and 17% profit interest in one of these consolidated joint ventures for $200. As a result, the Company’s capital interest percentage in this joint venture increased from 95% to 96.7%. Since the Company retained its controlling financial interest in the subsidiary, this transaction was accounted for as an equity transaction. The carrying amount of the noncontrolling interest was reduced to reflect the purchase and the difference between the price paid by the Company and the adjustment to the carrying value of the noncontrolling interest was recorded as an adjustment to equity attributable to the parent. |
EQUITY_IN_EARNINGS_OF_UNCONSOL
EQUITY IN EARNINGS OF UNCONSOLIDATED REAL ESTATE VENTURES - PURCHASE OF JOINT VENTURE PARTNERS' INTERESTS | 3 Months Ended |
Mar. 31, 2014 | |
EQUITY IN EARNINGS OF UNCONSOLIDATED REAL ESTATE VENTURES - PURCHASE OF JOINT VENTURE PARTNERS' INTERESTS | ' |
EQUITY IN EARNINGS OF UNCONSOLIDATED REAL ESTATE VENTURES - PURCHASE OF JOINT VENTURE PARTNERS' INTERESTS | ' |
12. EQUITY IN EARNINGS OF UNCONSOLIDATED REAL ESTATE VENTURES — PURCHASE OF JOINT VENTURE PARTNERS’ INTERESTS | |
On February 13, 2013, the Company acquired its joint venture partner’s 48% equity interest in Extra Space of Eastern Avenue LLC (“Eastern Avenue”), which owned one self-storage property located in Maryland, for approximately $5,979. Prior to the acquisition, the remaining 52% interest was owned by the Company, which accounted for its investment in Eastern Avenue using the equity method. The Company recorded a non-cash gain of $2,215 related to this transaction, which represents the increase in fair value of the Company’s interest in Eastern Avenue from its formation to the acquisition date. | |
On February 13, 2013, the Company acquired its joint venture partner’s 61% equity interest in Extra Space of Montrose Avenue LLC (“Montrose”), which owned one self-storage property located in Illinois, for approximately $6,878. Prior to the acquisition, the remaining 39% interest was owned by the Company, which accounted for its investment in Montrose using the equity method. The Company recorded a non-cash gain of $341 related to this transaction, which represents the increase in fair value of the Company’s interest in the joint venture from its formation to the acquisition date. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
SEGMENT INFORMATION | ' | |||||||
SEGMENT INFORMATION | ' | |||||||
13. SEGMENT INFORMATION | ||||||||
The Company operates in three distinct segments: (1) rental operations; (2) tenant reinsurance; and (3) property management, acquisition and development. Management fees collected for wholly-owned properties are eliminated in consolidation. Financial information for the Company’s business segments is presented below: | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Balance Sheet | ||||||||
Investment in unconsolidated real estate ventures | ||||||||
Rental operations | $ | 89,326 | $ | 88,125 | ||||
Total assets | ||||||||
Rental operations | $ | 3,873,654 | $ | 3,641,746 | ||||
Tenant reinsurance | 31,628 | 34,393 | ||||||
Property management, acquisition and development | 218,209 | 301,001 | ||||||
$ | 4,123,491 | $ | 3,977,140 | |||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Statement of Operations | ||||||||
Total revenues | ||||||||
Rental operations | $ | 132,001 | $ | 102,923 | ||||
Tenant reinsurance | 13,463 | 10,221 | ||||||
Property management, acquisition and development | 6,716 | 6,178 | ||||||
152,180 | 119,322 | |||||||
Operating expenses, including depreciation and amortization | ||||||||
Rental operations | 69,942 | 55,968 | ||||||
Tenant reinsurance | 2,567 | 1,910 | ||||||
Property management, acquisition and development | 19,273 | 14,715 | ||||||
91,782 | 72,593 | |||||||
Income (loss) from operations | ||||||||
Rental operations | 62,059 | 46,955 | ||||||
Tenant reinsurance | 10,896 | 8,311 | ||||||
Property management, acquisition and development | (12,557 | ) | (8,537 | ) | ||||
60,398 | 46,729 | |||||||
Interest expense | ||||||||
Rental operations | (19,310 | ) | (16,980 | ) | ||||
Property management, acquisition and development | (288 | ) | (386 | ) | ||||
(19,598 | ) | (17,366 | ) | |||||
Non-cash interest expense related to the amortization of discount on equity component of exchangeable senior notes | ||||||||
Property management, acquisition and development | (662 | ) | — | |||||
Interest income | ||||||||
Tenant reinsurance | 4 | 4 | ||||||
Property management, acquisition and development | 265 | 180 | ||||||
269 | 184 | |||||||
Interest income on note receivable from Preferred Operating Partnership unit holder | ||||||||
Property management, acquisition and development | 1,213 | 1,213 | ||||||
Equity in earnings of unconsolidated real estate ventures | ||||||||
Rental operations | 2,419 | 2,623 | ||||||
Equity in earnings of unconsolidated real estate ventures - purchase of partners’ interests | ||||||||
Rental operations | — | 2,556 | ||||||
Income tax expense | ||||||||
Rental operations | 1,419 | 1,009 | ||||||
Tenant reinsurance | (3,815 | ) | (2,866 | ) | ||||
Property management, acquisition and development | (434 | ) | (151 | ) | ||||
(2,830 | ) | (2,008 | ) | |||||
Net income (loss) | ||||||||
Rental operations | 46,587 | 36,163 | ||||||
Tenant reinsurance | 7,085 | 5,449 | ||||||
Property management, acquisition and development | (12,463 | ) | (7,681 | ) | ||||
$ | 41,209 | $ | 33,931 | |||||
Depreciation and amortization expense | ||||||||
Rental operations | $ | 26,460 | $ | 21,531 | ||||
Property management, acquisition and development | 1,915 | 1,494 | ||||||
$ | 28,375 | $ | 23,025 | |||||
Statement of Cash Flows | ||||||||
Acquisition of real estate assets | ||||||||
Property management, acquisition and development | $ | (256,759 | ) | $ | (18,754 | ) | ||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
14. COMMITMENTS AND CONTINGENCIES | |
As of March 31, 2014, the Company was not involved in any material litigation nor, to its knowledge, was any material litigation threatened against it which, in the opinion of management, is expected to have a material adverse effect on the Company’s financial condition or results of operations. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
15. SUBSEQUENT EVENTS | |
On April 3, 2014, the Company acquired a single self-storage facility located in Georgia for approximately $15,158 in cash and Series B Units valued at approximately $8,334. | |
On April 15, 2014, the Company acquired a single self-storage facility located in Florida for approximately $10,077 in cash. | |
On April 25, 2014, the Company acquired three self-storage facilities located in California for approximately $2,671 in cash, the assumption of approximately $18,419 of debt and Series C Units valued at approximately $9,527. The Company previously had a 40% interest in one of these three properties, and acquired our joint venture partner’s 60% interest in the acquisition. | |
On April 30, 2014, the Company acquired a single self-storage facility located in Washington for approximately $4,350 in cash. |
FAIR_VALUE_DISCLOSURES_Tables
FAIR VALUE DISCLOSURES (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
FAIR VALUE DISCLOSURES | ' | |||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | ' | |||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||
Description | March 31, 2014 | Quoted Prices in Active | Significant Other | Significant | ||||||||||
Markets for Identical | Observable Inputs | Unobservable Inputs | ||||||||||||
Assets (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Other assets - Cash Flow Hedge Swap Agreements | $ | 10,281 | $ | — | $ | 10,281 | $ | — | ||||||
Other liabilities - Cash Flow Hedge Swap Agreements | $ | (3,083 | ) | $ | — | $ | (3,083 | ) | $ | — | ||||
Schedule of fair value of financial instruments | ' | |||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Fair | Carrying | Fair | Carrying | |||||||||||
Value | Value | Value | Value | |||||||||||
Note receivable from Preferred Operating Partnership unit holders | $ | 100,497 | $ | 100,000 | $ | 103,491 | $ | 100,000 | ||||||
Fixed rate notes payable and notes payable to trusts | $ | 1,334,941 | $ | 1,325,113 | $ | 1,365,290 | $ | 1,368,885 | ||||||
Exchangeable senior notes | $ | 262,343 | $ | 250,000 | $ | 251,103 | $ | 250,000 |
EARNINGS_PER_COMMON_SHARE_Tabl
EARNINGS PER COMMON SHARE (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EARNINGS PER COMMON SHARE | ' | |||||||
Schedule of computation of earnings per common share | ' | |||||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Net income attributable to common stockholders | $ | 37,340 | $ | 31,425 | ||||
Earnings and dividends allocated to participating securities | (117 | ) | (120 | ) | ||||
Earnings for basic computations | 37,223 | 31,305 | ||||||
Earnings and dividends allocated to participating securities | — | 120 | ||||||
Add: Income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) and Operating Partnership | 3,128 | 2,494 | ||||||
Subtract: Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) | (1,438 | ) | (1,438 | ) | ||||
Net income for diluted computations | $ | 38,913 | $ | 32,481 | ||||
Weighted average common shares outstanding: | ||||||||
Average number of common shares outstanding - basic | 115,438,325 | 110,314,668 | ||||||
Series A Units | 989,980 | 989,980 | ||||||
Common OP Units | 4,334,118 | 2,755,650 | ||||||
Unvested restricted stock awards included for treasury stock method | — | 495,256 | ||||||
Dilutive stock options | 300,422 | 411,533 | ||||||
Average number of common shares outstanding - diluted | 121,062,845 | 114,967,087 | ||||||
Earnings per common share | ||||||||
Basic | $ | 0.32 | $ | 0.28 | ||||
Diluted | $ | 0.32 | $ | 0.28 |
PROPERTY_ACQUISITIONS_Tables
PROPERTY ACQUISITIONS (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||
PROPERTY ACQUISITIONS | ' | ||||||||||||||||||||||||||||
Schedule of operating properties acquired | ' | ||||||||||||||||||||||||||||
Consideration Paid | Acquisition Date Fair Value | ||||||||||||||||||||||||||||
Property | Number of | Date of | Total | Cash Paid | Net | Land | Building | Intangible | Closing costs - | Notes | |||||||||||||||||||
Location | Properties | Acquisition | Liabilities/ | expensed | |||||||||||||||||||||||||
(Assets) | |||||||||||||||||||||||||||||
Assumed | |||||||||||||||||||||||||||||
Virginia | 17 | 1/7/14 | $ | 200,588 | $ | 200,525 | $ | 63 | $ | 53,878 | $ | 142,840 | $ | 2,973 | $ | 897 | |||||||||||||
Texas | 1 | 2/5/14 | 14,191 | 14,152 | 39 | 1,767 | 12,368 | 38 | 18 | ||||||||||||||||||||
California | 1 | 3/4/14 | 7,000 | 6,974 | 26 | 2,150 | 4,734 | 113 | 3 | -1 | |||||||||||||||||||
Connecticut | 1 | 3/17/14 | 15,138 | 15,169 | (31 | ) | 1,072 | 14,028 | — | 38 | |||||||||||||||||||
Alabama | 1 | 3/20/14 | 13,813 | 13,752 | 61 | 2,381 | 11,224 | 200 | 8 | ||||||||||||||||||||
2014 Totals | 21 | $ | 250,730 | $ | 250,572 | $ | 158 | $ | 61,248 | $ | 185,194 | $ | 3,324 | $ | 964 | ||||||||||||||
(1) This property was owned by Spencer F. Kirk, the Company’s Chief Executive Officer, and Kenneth M. Woolley, the Company’s Executive Chairman. The Company acquired the building on March 4, 2014. In a separate transaction on March 5, 2014, the Company acquired the land for $2,150 from a third party unrelated to the Company’s executives and terminated the existing ground lease. |
VARIABLE_INTERESTS_Tables
VARIABLE INTERESTS (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
VARIABLE INTERESTS | ' | ||||||||||||||||
Schedule of the comparison of the liability balance and the maximum exposure to loss related to the Company's each VIE | ' | ||||||||||||||||
The following table compares the liability balance and the maximum exposure to loss related to the Company’s VIE JV as of March 31, 2014: | |||||||||||||||||
Amounts | Maximum | ||||||||||||||||
Liability | Investment | Payable to the | Exposure | ||||||||||||||
Balance | Balance | Company | to Loss | Difference | |||||||||||||
Extra Space of Sacramento One LLC | $ | — | $ | (1,107 | ) | $ | 10,547 | $ | 9,440 | $ | (9,440 | ) | |||||
Schedule of the liabilities and the maximum exposure to loss related to the trusts | ' | ||||||||||||||||
Following is a tabular comparison of the liabilities the Company has recorded as a result of its involvement with the Trusts to the maximum exposure to loss the Company is subject to as a result of such involvement as of March 31, 2014: | |||||||||||||||||
Notes payable | Investment | Maximum | |||||||||||||||
to Trusts | Balance | exposure to loss | Difference | ||||||||||||||
Trust | $ | 36,083 | $ | 1,083 | $ | 35,000 | $ | — | |||||||||
Trust II | 42,269 | 1,269 | 41,000 | — | |||||||||||||
Trust III | 41,238 | 1,238 | 40,000 | — | |||||||||||||
$ | 119,590 | $ | 3,590 | $ | 116,000 | $ | — |
DERIVATIVES_Tables
DERIVATIVES (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
DERIVATIVES | ' | |||||||||||
Schedule summarizing the terms of entity's derivative financial instruments | ' | |||||||||||
The following table summarizes the terms of the Company’s 22 derivative financial instruments as of March 31, 2014: | ||||||||||||
Hedge Product | Current Notional | Strike | Effective Dates | Maturity Dates | ||||||||
Amounts | ||||||||||||
Swap Agreements | $4,749 - $95,739 | 2.79% - 6.32% | 7/1/2009 - 1/1/2014 | 7/1/2014 - 4/1/2021 | ||||||||
Schedule of balance sheet classification and fair value of the entity's derivative financial instruments | ' | |||||||||||
Asset (Liability) Derivatives | ||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||
Derivatives designated as | Balance Sheet | Fair | Balance Sheet | Fair | ||||||||
hedging instruments: | Location | Value | Location | Value | ||||||||
Swap Agreements | Other assets | $ | 10,281 | Other assets | $ | 13,630 | ||||||
Swap Agreements | Other liabilities | $ | (3,083 | ) | Other liabilities | $ | (3,684 | ) | ||||
Interest payments recognized as an increase or decrease in interest expense | ' | |||||||||||
Classification of | For the Three Months Ended March 31, | |||||||||||
Type | Income (Expense) | 2014 | 2013 | |||||||||
Swap Agreements | Interest expense | $ | (2,293 | ) | $ | (2,153 | ) | |||||
Schedule of information relating to the gain (loss) recognized on the swap agreements | ' | |||||||||||
Gain (loss) | Location of amounts | Gain (loss) reclassified | ||||||||||
from OCI | ||||||||||||
recognized in OCI | reclassified from OCI | For the Three Months | ||||||||||
Type | March 31, 2014 | into income | Ended March 31, 2014 | |||||||||
Swap Agreements | $ | (5,040 | ) | Interest expense | $ | (2,293 | ) | |||||
Gain (loss) | Location of amounts | Gain (loss) reclassified | ||||||||||
from OCI | ||||||||||||
recognized in OCI | reclassified from OCI | For the Three Months | ||||||||||
Type | March 31, 2013 | into income | Ended March 31, 2013 | |||||||||
Swap Agreements | $ | (582 | ) | Interest expense | $ | (2,153 | ) | |||||
EXCHANGEABLE_SENIOR_NOTES_Tabl
EXCHANGEABLE SENIOR NOTES (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EXCHANGEABLE SENIOR NOTES | ' | |||||||
Schedule of Information about the carrying amount of the equity component, the principal amount of the liability component, unamortized discount and net carrying amount for the Notes | ' | |||||||
March 31, 2014 | December 31, 2013 | |||||||
Carrying amount of equity component | $ | (14,496 | ) | $ | (14,496 | ) | ||
Principal amount of liability component | $ | 250,000 | $ | 250,000 | ||||
Unamortized discount - equity component | (12,469 | ) | (13,131 | ) | ||||
Unamortized cash discount | (3,168 | ) | (3,356 | ) | ||||
Net carrying amount of liability component | $ | 234,363 | $ | 233,513 | ||||
Schedule of amount of interest cost recognized relating to the contractual interest rate and the amortization of the discount on the liability component | ' | |||||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Contractual interest | $ | 1,484 | $ | — | ||||
Amortization of discount | 662 | — | ||||||
Total interest expense recognized | $ | 2,146 | $ | — |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
SEGMENT INFORMATION | ' | |||||||
Schedule of financial information of business segments | ' | |||||||
March 31, 2014 | December 31, 2013 | |||||||
Balance Sheet | ||||||||
Investment in unconsolidated real estate ventures | ||||||||
Rental operations | $ | 89,326 | $ | 88,125 | ||||
Total assets | ||||||||
Rental operations | $ | 3,873,654 | $ | 3,641,746 | ||||
Tenant reinsurance | 31,628 | 34,393 | ||||||
Property management, acquisition and development | 218,209 | 301,001 | ||||||
$ | 4,123,491 | $ | 3,977,140 | |||||
For the Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Statement of Operations | ||||||||
Total revenues | ||||||||
Rental operations | $ | 132,001 | $ | 102,923 | ||||
Tenant reinsurance | 13,463 | 10,221 | ||||||
Property management, acquisition and development | 6,716 | 6,178 | ||||||
152,180 | 119,322 | |||||||
Operating expenses, including depreciation and amortization | ||||||||
Rental operations | 69,942 | 55,968 | ||||||
Tenant reinsurance | 2,567 | 1,910 | ||||||
Property management, acquisition and development | 19,273 | 14,715 | ||||||
91,782 | 72,593 | |||||||
Income (loss) from operations | ||||||||
Rental operations | 62,059 | 46,955 | ||||||
Tenant reinsurance | 10,896 | 8,311 | ||||||
Property management, acquisition and development | (12,557 | ) | (8,537 | ) | ||||
60,398 | 46,729 | |||||||
Interest expense | ||||||||
Rental operations | (19,310 | ) | (16,980 | ) | ||||
Property management, acquisition and development | (288 | ) | (386 | ) | ||||
(19,598 | ) | (17,366 | ) | |||||
Non-cash interest expense related to the amortization of discount on equity component of exchangeable senior notes | ||||||||
Property management, acquisition and development | (662 | ) | — | |||||
Interest income | ||||||||
Tenant reinsurance | 4 | 4 | ||||||
Property management, acquisition and development | 265 | 180 | ||||||
269 | 184 | |||||||
Interest income on note receivable from Preferred Operating Partnership unit holder | ||||||||
Property management, acquisition and development | 1,213 | 1,213 | ||||||
Equity in earnings of unconsolidated real estate ventures | ||||||||
Rental operations | 2,419 | 2,623 | ||||||
Equity in earnings of unconsolidated real estate ventures - purchase of partners’ interests | ||||||||
Rental operations | — | 2,556 | ||||||
Income tax expense | ||||||||
Rental operations | 1,419 | 1,009 | ||||||
Tenant reinsurance | (3,815 | ) | (2,866 | ) | ||||
Property management, acquisition and development | (434 | ) | (151 | ) | ||||
(2,830 | ) | (2,008 | ) | |||||
Net income (loss) | ||||||||
Rental operations | 46,587 | 36,163 | ||||||
Tenant reinsurance | 7,085 | 5,449 | ||||||
Property management, acquisition and development | (12,463 | ) | (7,681 | ) | ||||
$ | 41,209 | $ | 33,931 | |||||
Depreciation and amortization expense | ||||||||
Rental operations | $ | 26,460 | $ | 21,531 | ||||
Property management, acquisition and development | 1,915 | 1,494 | ||||||
$ | 28,375 | $ | 23,025 | |||||
Statement of Cash Flows | ||||||||
Acquisition of real estate assets | ||||||||
Property management, acquisition and development | $ | (256,759 | ) | $ | (18,754 | ) |
ORGANIZATION_Details
ORGANIZATION (Details) | 3 Months Ended |
Mar. 31, 2014 | |
segment | |
property | |
state | |
ORGANIZATION | ' |
Number of operating storage facilities in which the entity has equity interests (in properties) | 800 |
Number of properties owned by franchisees and third parties | 252 |
Number of operating properties owned and/or managed | 1,052 |
Number of states in which operating storage facilities are located | 35 |
Number of reportable segments | 3 |
Maximum percentage of rental income accounted for by any single tenant | 5.00% |
FAIR_VALUE_DISCLOSURES_Details
FAIR VALUE DISCLOSURES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Other assets - Cash Flow Hedge Swap Agreements | $10,281 | $13,630 |
Other liabilities - Cash Flow Hedge Swap Agreements | -3,083 | -3,684 |
Transfers of assets and liabilities between Level 1 and Level 2 | 0 | ' |
Recurring basis | Estimated Fair Value | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Other assets - Cash Flow Hedge Swap Agreements | 10,281 | ' |
Other liabilities - Cash Flow Hedge Swap Agreements | -3,083 | ' |
Recurring basis | Significant Other Observable Inputs (Level 2) | ' | ' |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ' |
Other assets - Cash Flow Hedge Swap Agreements | 10,281 | ' |
Other liabilities - Cash Flow Hedge Swap Agreements | ($3,083) | ' |
FAIR_VALUE_DISCLOSURES_Details1
FAIR VALUE DISCLOSURES (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value of Financial Instruments | ' | ' |
Note receivable from Preferred Operating Partnership unit holders | $100,000 | $100,000 |
Fair Value | ' | ' |
Fair Value of Financial Instruments | ' | ' |
Note receivable from Preferred Operating Partnership unit holders | 100,497 | 103,491 |
Fixed rate notes payable and notes payable to trusts | 1,334,941 | 1,365,290 |
Exchangeable senior notes | 262,343 | 251,103 |
Carrying Value | ' | ' |
Fair Value of Financial Instruments | ' | ' |
Note receivable from Preferred Operating Partnership unit holders | 100,000 | 100,000 |
Fixed rate notes payable and notes payable to trusts | 1,325,113 | 1,368,885 |
Exchangeable senior notes | $250,000 | $250,000 |
EARNINGS_PER_COMMON_SHARE_Deta
EARNINGS PER COMMON SHARE (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Stock options | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | 18,100 | 24,950 |
Series B Units | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | 724,232 | ' |
Series C Units | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | ' | ' |
Anti-dilutive securities excluded from computation of earnings per share | 354,084 | ' |
EARNINGS_PER_COMMON_SHARE_Deta1
EARNINGS PER COMMON SHARE (Details 2) (USD $) | 3 Months Ended | 3 Months Ended | |||||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 21, 2013 |
Series A Units | Series B Units | Series C Units | Operating Partnership | Operating Partnership | |||
2.375% Exchangeable Senior Notes | 2.375% Exchangeable Senior Notes | ||||||
Earnings Per Common Share | ' | ' | ' | ' | ' | ' | ' |
Principal amount of notes | ' | ' | ' | ' | ' | $250,000 | $250,000 |
Interest rate (as a percent) | ' | ' | ' | ' | ' | 2.38% | 2.38% |
Exchange price (in dollars per share) | ' | ' | ' | ' | ' | $55.69 | ' |
Shares related to the Notes included in the computation for diluted earnings per share | 0 | ' | ' | ' | ' | ' | ' |
Exchangeable preferred operating partnership units settled in cash, minimum | ' | ' | 115,000 | ' | ' | ' | ' |
Units outstanding (in dollars) | ' | ' | ' | $33,568 | $17,177 | ' | ' |
Average closing price of common stock (in dollars per share) | $46.35 | ' | ' | ' | ' | ' | ' |
Number of shares which would have been issued upon assuming full exchange | 989,980 | 989,980 | ' | 724,232 | 370,585 | ' | ' |
EARNINGS_PER_COMMON_SHARE_Deta2
EARNINGS PER COMMON SHARE (Details 3) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Computation of earnings per share | ' | ' |
Net income attributable to common stockholders | $37,340 | $31,425 |
Earnings and dividends allocated to participating securities | -117 | -120 |
Earnings for basic computations | 37,223 | 31,305 |
Earnings and dividends allocated to participating securities | ' | 120 |
Add: Income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) and Operating Partnership | 3,128 | 2,494 |
Subtract: Fixed component of income allocated to noncontrolling interest - Preferred Operating Partnership (Series A Units) | -1,438 | -1,438 |
Net income for diluted computations | $38,913 | $32,481 |
Weighted average common shares outstanding: | ' | ' |
Average number of common shares outstanding - basic | 115,438,325 | 110,314,668 |
Series A Units (in shares) | 989,980 | 989,980 |
Common OP Units (in shares) | 4,334,118 | 2,755,650 |
Unvested restricted stock awards included for treasury stock method (in shares) | ' | 495,256 |
Dilutive stock options (in shares) | 300,422 | 411,533 |
Average number of common shares outstanding - diluted | 121,062,845 | 114,967,087 |
Earnings per common share | ' | ' |
Basic (in dollars per share) | $0.32 | $0.28 |
Diluted (in dollars per share) | $0.32 | $0.28 |
PROPERTY_ACQUISITIONS_Details
PROPERTY ACQUISITIONS (Details) (USD $) | 0 Months Ended | 3 Months Ended |
In Thousands, unless otherwise specified | 5-May-14 | Mar. 31, 2014 |
property | ||
Property Acquisitions | ' | ' |
Number of Properties | ' | 21 |
Total Consideration Paid | ' | $250,730 |
Cash Consideration Paid | ' | 250,572 |
Net Liabilities (Assets) Assumed | ' | 158 |
Acquisition Date Fair Value, Land | ' | 61,248 |
Acquisition Date Fair Value, Building | ' | 185,194 |
Acquisition Date Fair Value, Intangible | ' | 3,324 |
Closing costs - expensed | ' | 964 |
Virginia 17 Properties Acquired 2014/01/07 | ' | ' |
Property Acquisitions | ' | ' |
Number of Properties | ' | 17 |
Total Consideration Paid | ' | 200,588 |
Cash Consideration Paid | ' | 200,525 |
Net Liabilities (Assets) Assumed | ' | 63 |
Acquisition Date Fair Value, Land | ' | 53,878 |
Acquisition Date Fair Value, Building | ' | 142,840 |
Acquisition Date Fair Value, Intangible | ' | 2,973 |
Closing costs - expensed | ' | 897 |
Texas, 1 Property Acquired 2014/02/05 | ' | ' |
Property Acquisitions | ' | ' |
Number of Properties | ' | 1 |
Total Consideration Paid | ' | 14,191 |
Cash Consideration Paid | ' | 14,152 |
Net Liabilities (Assets) Assumed | ' | 39 |
Acquisition Date Fair Value, Land | ' | 1,767 |
Acquisition Date Fair Value, Building | ' | 12,368 |
Acquisition Date Fair Value, Intangible | ' | 38 |
Closing costs - expensed | ' | 18 |
California, 1 Property Acquired 2014/03/04 | ' | ' |
Property Acquisitions | ' | ' |
Number of Properties | ' | 1 |
Total Consideration Paid | ' | 7,000 |
Cash Consideration Paid | ' | 6,974 |
Net Liabilities (Assets) Assumed | ' | 26 |
Acquisition Date Fair Value, Land | ' | 2,150 |
Acquisition Date Fair Value, Building | ' | 4,734 |
Acquisition Date Fair Value, Intangible | ' | 113 |
Closing costs - expensed | ' | 3 |
Amount paid for purchase of fee interest of ground lessor | 2,150 | ' |
Connecticut, 1 Property Acquired 2014/03/17 | ' | ' |
Property Acquisitions | ' | ' |
Number of Properties | ' | 1 |
Total Consideration Paid | ' | 15,138 |
Cash Consideration Paid | ' | 15,169 |
Net Liabilities (Assets) Assumed | ' | -31 |
Acquisition Date Fair Value, Land | ' | 1,072 |
Acquisition Date Fair Value, Building | ' | 14,028 |
Closing costs - expensed | ' | 38 |
Alabama, 1 Property Acquired 2014/03/20 | ' | ' |
Property Acquisitions | ' | ' |
Number of Properties | ' | 1 |
Total Consideration Paid | ' | 13,813 |
Cash Consideration Paid | ' | 13,752 |
Net Liabilities (Assets) Assumed | ' | 61 |
Acquisition Date Fair Value, Land | ' | 2,381 |
Acquisition Date Fair Value, Building | ' | 11,224 |
Acquisition Date Fair Value, Intangible | ' | 200 |
Closing costs - expensed | ' | $8 |
VARIABLE_INTERESTS_Details
VARIABLE INTERESTS (Details) (Variable Interest Entity, not primary beneficiary, USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
interest | |
Variable Interests in Unconsolidated Real Estate Joint Ventures: | ' |
Number of interests in unconsolidated VIE joint ventures | 1 |
Equity Ownership (as a percent) | 18.00% |
Profit interest (as a percent) | 50.00% |
Voting rights in unconsolidated VIE joint ventures (as a percent) | 50.00% |
Management fees charged from unconsolidated VIE (as a percent) | 6.00% |
Extra Space of Sacramento One LLC | ' |
Variable Interests in Unconsolidated Real Estate Joint Ventures: | ' |
Investment balance | -1,107 |
Amounts Payable to the Company | 10,547 |
Maximum exposure to loss | 9,440 |
Difference | -9,440 |
VARIABLE_INTERESTS_Details_2
VARIABLE INTERESTS (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | item | |
VARIABLE INTERESTS | ' | ' |
Number of wholly-owned unconsolidated subsidiaries | 3 | ' |
Comparison of the liability balance and the maximum exposure to loss related to trusts | ' | ' |
Notes payable to trusts | $119,590 | $119,590 |
Number of consolidated VIEs | 0 | ' |
Operating Partnership | Variable Interest Entity, not primary beneficiary | Trusts | ' | ' |
Comparison of the liability balance and the maximum exposure to loss related to trusts | ' | ' |
Notes payable to trusts | 119,590 | ' |
Investment Balance | 3,590 | ' |
Maximum exposure to loss | 116,000 | ' |
Operating Partnership | Variable Interest Entity, not primary beneficiary | Trust III | ' | ' |
Comparison of the liability balance and the maximum exposure to loss related to trusts | ' | ' |
Notes payable to trusts | 41,238 | ' |
Investment Balance | 1,238 | ' |
Maximum exposure to loss | 40,000 | ' |
Operating Partnership | Variable Interest Entity, not primary beneficiary | Trust II | ' | ' |
Comparison of the liability balance and the maximum exposure to loss related to trusts | ' | ' |
Notes payable to trusts | 42,269 | ' |
Investment Balance | 1,269 | ' |
Maximum exposure to loss | 41,000 | ' |
Operating Partnership | Variable Interest Entity, not primary beneficiary | Trust | ' | ' |
Comparison of the liability balance and the maximum exposure to loss related to trusts | ' | ' |
Notes payable to trusts | 36,083 | ' |
Investment Balance | 1,083 | ' |
Maximum exposure to loss | $35,000 | ' |
DERIVATIVES_Details
DERIVATIVES (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
item | |||
Derivatives | ' | ' | ' |
Number of derivative financial instruments | 22 | ' | ' |
Strike rate cash flow hedge swap agreements, low end of range (as a percent) | 2.79% | ' | ' |
Strike rate cash flow hedge swap agreements, high end of range (as a percent) | 6.32% | ' | ' |
Other assets - Fair Value of Swap Agreements | $10,281 | ' | $13,630 |
Other liabilities - Fair Value of Swap Agreements | -3,083 | ' | -3,684 |
Swap agreements increase (decrease) in interest expenses due to interest payments | -2,293 | -2,153 | ' |
Swap agreements gain (loss) recognized in OCI | -5,040 | -582 | ' |
Swap agreements gain (loss) reclassified from OCI - Interest expense | -2,293 | -2,153 | ' |
Credit risk derivative, fair value of derivatives in a net liability position | 3,083 | ' | ' |
Estimated termination value on settlement | 3,374 | ' | ' |
Cash flow hedging | Interest rate swap | Low end of range | ' | ' | ' |
Derivatives | ' | ' | ' |
Notional Amounts | 4,749 | ' | ' |
Cash flow hedging | Interest rate swap | High end of range | ' | ' | ' |
Derivatives | ' | ' | ' |
Notional Amounts | $95,739 | ' | ' |
EXCHANGEABLE_SENIOR_NOTES_Deta
EXCHANGEABLE SENIOR NOTES (Details) (USD $) | 3 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | ||||
Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Jun. 21, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Jun. 21, 2013 | Jun. 21, 2013 | |
2033 Notes and 2027 Notes | 2.375% Exchangeable Senior Notes | 2.375% Exchangeable Senior Notes | 2.375% Exchangeable Senior Notes | 2.375% Exchangeable Senior Notes | 2.375% Exchangeable Senior Notes | |||
Operating Partnership | Operating Partnership | Operating Partnership | Minimum | Maximum | ||||
Operating Partnership | Operating Partnership | |||||||
Notes payable | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount of notes issued | ' | ' | ' | $250,000,000 | $250,000,000 | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | 2.38% | 2.38% | ' | ' | ' |
Discount rate (as a percent) | ' | ' | ' | 1.50% | ' | ' | ' | ' |
Issuance cost | ' | ' | ' | 1,672,000 | ' | ' | ' | ' |
Amortization period | ' | ' | ' | '5 years | ' | ' | ' | ' |
Conversion ratio, number of shares per $1,000 principal amount, numerator | ' | ' | ' | 17.96 | ' | ' | ' | ' |
Principal amount used for debt instrument conversion ratio | ' | ' | ' | 1,000 | ' | ' | ' | ' |
Redemption price as percentage of principal amount of notes plus accrued and unpaid interest | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Number of days of written notice to holders of notes required for redemption | ' | ' | ' | ' | ' | ' | '30 days | '60 days |
Redemption price as percentage of principal amount of notes at request of debt holders and upon occurrence of designated event | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Carrying amount of the equity component, the principal amount of the liability component, its unamortized discount and its net carrying amount | ' | ' | ' | ' | ' | ' | ' | ' |
Carrying amount of equity component | ' | ' | ' | ' | -14,496,000 | -14,496,000 | ' | ' |
Principal amount of liability component | 250,000,000 | 250,000,000 | ' | ' | 250,000,000 | 250,000,000 | ' | ' |
Unamortized discount - equity component | ' | ' | ' | ' | -12,469,000 | -13,131,000 | ' | ' |
Unamortized cash discount | -15,637,000 | -16,487,000 | ' | -3,750,000 | -3,168,000 | -3,356,000 | ' | ' |
Net carrying amount of liability component | ' | ' | ' | ' | 234,363,000 | 233,513,000 | ' | ' |
Effective interest rate on the liability component (as a percent) | ' | ' | ' | ' | 4.00% | ' | ' | ' |
Amount of interest cost recognized relating to the contractual interest rate and the amortization of the discount on the liability component | ' | ' | ' | ' | ' | ' | ' | ' |
Contractual interest | ' | ' | 1,484,000 | ' | ' | ' | ' | ' |
Amortization of discount | 662,000 | ' | 662,000 | ' | ' | ' | ' | ' |
Total interest expense recognized | ' | ' | $2,146,000 | ' | ' | ' | ' | ' |
NONCONTROLLING_INTEREST_REPRES1
NONCONTROLLING INTEREST REPRESENTED BY PREFERRED OPERATING PARTNERSHIP UNITS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 30, 2007 | Dec. 02, 2013 | Dec. 03, 2013 | Sep. 26, 2013 | Aug. 29, 2013 | Jun. 30, 2007 | Jun. 30, 2007 | Mar. 31, 2014 | Sep. 26, 2013 | Mar. 31, 2014 | Dec. 03, 2013 | Jun. 30, 2007 | Jun. 25, 2007 |
In Thousands, except Share data, unless otherwise specified | Series B Units | Series C Units | Holders of A units | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | Operating Partnership | ||
item | Series A Units | property | property | property | property | Series A Units | Series A Units | Series B Units | Series B Units | Series C Units | Holders of A units | Holders of A units | |||||
Noncontrolling interest represented by preferred operating partnership units | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of self-storage facilities (properties) acquired | ' | ' | ' | ' | ' | 6 | 2 | ' | 19 | 10 | ' | ' | ' | ' | ' | ' | ' |
Preferred OP units issued as part of the acquisition (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 989,980 | ' | 1,342,727 | ' | 407,996 | ' | ' |
Loan to holders of preferred OP units | $100,000 | $100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $100,000 |
Note receivable interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.85% | ' |
Maximum number of preferred OP units converted prior to the maturity date of the loan (in shares) | ' | ' | ' | ' | 114,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed priority return on preferred OP units, amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,000 | ' | ' | ' | ' | ' |
Fixed priority return on preferred OP units, stated return rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | ' |
Fixed priority return on preferred OP units, liquidation value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 115,000 | ' | ' | ' | ' | ' |
Number of self storage properties | ' | ' | ' | ' | ' | 8 | ' | ' | 20 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash portion of payment for acquisition | ' | ' | ' | ' | ' | ' | 42,702 | 100,876 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Assumed | ' | ' | ' | ' | ' | ' | 4,342 | 98,960 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred OP units issued as part of the acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33,568 | ' | 17,177 | ' | ' |
OP units issued as part of the acquisition (in shares) | ' | ' | ' | ' | ' | ' | ' | 1,448,108 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
OP units issued as part of the acquisition | ' | ' | ' | ' | ' | ' | ' | $62,341 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liquidation value (in dollars per share) | ' | ' | $25 | $42.10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual rate of return (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.00% | ' | ' | ' |
Ownership interest in 4 of the 8 properties through joint ventures prior to the acquisition | ' | ' | ' | ' | ' | ' | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of self-storage properties in which ownership interest was held prior to acquisition of remaining properties | ' | ' | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Quarterly distribution per preferred OP unit payable above quarterly distribution for common OP Unit | ' | ' | ' | $0.18 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of quarters immediately preceding the fifth anniversary of issuance for which distribution is payable | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period from date of issuance after which preferred OP units will become redeemable at the option of the holder | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period from date of issuance after which preferred OP units will become convertible into common OP units at the option of the holder | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred OP units conversion ratio | ' | ' | ' | 0.9145 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NONCONTROLLING_INTEREST_IN_OPE1
NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP (Details) (USD $) | 3 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 |
Noncontrolling interest in operating partnership | ' |
Period used as a denomination to determine the average closing price of common stock | '10 days |
OP units conversion basis | 'one-for-one basis |
Ten day average closing stock price (in dollars per share) | $47.87 |
Consideration to be paid on redemption of common OP units | $207,474 |
Operating Partnership | ' |
Noncontrolling interest in operating partnership | ' |
Ownership interest held by entity (as a percent) | 94.20% |
Noncontrolling interest in operating partnership (as a percent) | 5.80% |
OP units outstanding (in shares) | 4,334,118 |
OTHER_NONCONTROLLING_INTERESTS1
OTHER NONCONTROLLING INTERESTS (Details) (USD $) | 1 Months Ended | ||
In Thousands, unless otherwise specified | Feb. 28, 2013 | Mar. 31, 2014 | Feb. 27, 2013 |
property | property | ||
Other Noncontrolling Interests | ' | ' | ' |
Number of properties under construction | ' | 1 | ' |
Number of operating properties owned by consolidated joint venture | ' | 19 | ' |
Number of joint venture partners in a consolidated property in which ownership interest was acquired | 1 | ' | ' |
Purchase of capital interest by entity in a joint venture partner of a consolidated property (as a percent) | 1.70% | ' | ' |
Purchase of profit interest by the entity in a joint venture partner of a consolidated property (as a percent) | 17.00% | ' | ' |
Cash paid for acquiring interest in a joint venture partner of a consolidated property | $200 | ' | ' |
Ownership interest held by entity in joint venture partner of a consolidated property prior to acquisition (as a percent) | ' | ' | 95.00% |
Ownership interest held by entity in joint venture partner of a consolidated property (as a percent) | ' | ' | 96.70% |
Other noncontrolling interests | ' | ' | ' |
Other Noncontrolling Interests | ' | ' | ' |
Number of consolidated joint ventures | ' | 2 | ' |
Other noncontrolling interests | Minimum | ' | ' | ' |
Other Noncontrolling Interests | ' | ' | ' |
Ownership interests of third party owners (as a percent) | ' | 1.00% | ' |
Other noncontrolling interests | Maximum | ' | ' | ' |
Other Noncontrolling Interests | ' | ' | ' |
Ownership interests of third party owners (as a percent) | ' | 3.30% | ' |
EQUITY_IN_EARNINGS_OF_UNCONSOL1
EQUITY IN EARNINGS OF UNCONSOLIDATED REAL ESTATE VENTURES - PURCHASE OF JOINT VENTURE PARTNERS' INTERESTS (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2013 | Mar. 31, 2014 | Feb. 13, 2013 | Feb. 13, 2013 |
property | Extra Space of Eastern Avenue LLC | Extra Space of Montrose Avenue LLC | ||
property | property | |||
Real estate joint ventures of the entity | ' | ' | ' | ' |
Ownership interest acquired in joint venture (as a percent) | ' | ' | 48.00% | 61.00% |
Number of properties owned by joint venture | ' | 19 | 1 | 1 |
Cash paid for acquiring equity interest in the joint venture | ' | ' | $5,979 | $6,878 |
Equity ownership prior to the acquisition (as a percent) | ' | ' | 52.00% | 39.00% |
Non-cash gain | $2,556 | ' | $2,215 | $341 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
segment | |||
SEGMENT INFORMATION | ' | ' | ' |
Number of reportable segments | 3 | ' | ' |
Balance Sheet | ' | ' | ' |
Investment in unconsolidated real estate ventures | $89,326 | ' | $88,125 |
Total assets | 4,123,491 | ' | 3,977,140 |
Statement of Operations | ' | ' | ' |
Total revenues | 152,180 | 119,322 | ' |
Operating expenses, including depreciation and amortization | 91,782 | 72,593 | ' |
Income (loss) from operations | 60,398 | 46,729 | ' |
Interest expense | -19,598 | -17,366 | ' |
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes | -662 | ' | ' |
Interest income | 269 | 184 | ' |
Interest income on note receivable from Preferred Operating Partnership unit holder | 1,213 | 1,213 | ' |
Equity in earnings of unconsolidated real estate ventures | 2,419 | 2,623 | ' |
Equity in earnings of unconsolidated real estate ventures - purchase of partners' interests | ' | 2,556 | ' |
Income tax expense | -2,830 | -2,008 | ' |
Net income (loss) | 41,209 | 33,931 | ' |
Depreciation and amortization expense | ' | ' | ' |
Depreciation and amortization expense | 28,375 | 23,025 | ' |
Statement of Cash Flows | ' | ' | ' |
Acquisition of real estate assets | -256,759 | -18,754 | ' |
Rental operations | ' | ' | ' |
Balance Sheet | ' | ' | ' |
Investment in unconsolidated real estate ventures | 89,326 | ' | 88,125 |
Total assets | 3,873,654 | ' | 3,641,746 |
Statement of Operations | ' | ' | ' |
Total revenues | 132,001 | 102,923 | ' |
Operating expenses, including depreciation and amortization | 69,942 | 55,968 | ' |
Income (loss) from operations | 62,059 | 46,955 | ' |
Interest expense | -19,310 | -16,980 | ' |
Equity in earnings of unconsolidated real estate ventures | 2,419 | 2,623 | ' |
Equity in earnings of unconsolidated real estate ventures - purchase of partners' interests | ' | 2,556 | ' |
Income tax expense | 1,419 | 1,009 | ' |
Net income (loss) | 46,587 | 36,163 | ' |
Depreciation and amortization expense | ' | ' | ' |
Depreciation and amortization expense | 26,460 | 21,531 | ' |
Tenant reinsurance | ' | ' | ' |
Balance Sheet | ' | ' | ' |
Total assets | 31,628 | ' | 34,393 |
Statement of Operations | ' | ' | ' |
Total revenues | 13,463 | 10,221 | ' |
Operating expenses, including depreciation and amortization | 2,567 | 1,910 | ' |
Income (loss) from operations | 10,896 | 8,311 | ' |
Interest income | 4 | 4 | ' |
Income tax expense | -3,815 | -2,866 | ' |
Net income (loss) | 7,085 | 5,449 | ' |
Property management, acquisition and development | ' | ' | ' |
Balance Sheet | ' | ' | ' |
Total assets | 218,209 | ' | 301,001 |
Statement of Operations | ' | ' | ' |
Total revenues | 6,716 | 6,178 | ' |
Operating expenses, including depreciation and amortization | 19,273 | 14,715 | ' |
Income (loss) from operations | -12,557 | -8,537 | ' |
Interest expense | -288 | -386 | ' |
Non-cash interest expense related to amortization of discount on equity component of exchangeable senior notes | -662 | ' | ' |
Interest income | 265 | 180 | ' |
Interest income on note receivable from Preferred Operating Partnership unit holder | 1,213 | 1,213 | ' |
Income tax expense | -434 | -151 | ' |
Net income (loss) | -12,463 | -7,681 | ' |
Depreciation and amortization expense | ' | ' | ' |
Depreciation and amortization expense | 1,915 | 1,494 | ' |
Statement of Cash Flows | ' | ' | ' |
Acquisition of real estate assets | ($256,759) | ($18,754) | ' |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Apr. 03, 2014 | Apr. 03, 2014 | Apr. 15, 2014 | Apr. 25, 2014 | Apr. 25, 2014 | Apr. 30, 2014 |
Subsequent event | Subsequent event | Subsequent event | Subsequent event | Subsequent event | Subsequent event | ||
Georgia 1 property purchased on April 3, 2014 | Georgia 1 property purchased on April 3, 2014 | Florida 1 property purchased on April 15, 2014 | California property purchased on April 25, 2014 | California property purchased on April 25, 2014 | Washington property purchased on April 30, 2014 | ||
Series B Units | property | Series C Units | |||||
SUBSEQUENT EVENTS | ' | ' | ' | ' | ' | ' | ' |
Total Consideration Paid | $250,730 | $15,158 | $8,334 | $10,077 | $2,671 | $9,527 | $4,350 |
Number of self-storage facilities acquired | ' | ' | ' | ' | 3 | ' | ' |
Debt Assumed | ' | ' | ' | ' | $18,419 | ' | ' |
Ownership interest in 1 of the 3 properties prior to the acquisition | ' | ' | ' | ' | 40.00% | ' | ' |
Number of self-storage properties in which ownership interest was held prior to acquisition | ' | ' | ' | ' | 1 | ' | ' |
Acquisition of ownership interest of joint venture partner (as a percent) | ' | ' | ' | ' | 60.00% | ' | ' |