Quarterly report pursuant to Section 13 or 15(d)

Investment in Joint Ventures (Tables)

v3.20.2
Investment in Joint Ventures (Tables)
6 Months Ended
Jun. 30, 2020
Equity Method Investments And Joint Ventures [Abstract]  
Summary of Company's Unconsolidated Joint Ventures

A summary of the Company’s unconsolidated joint ventures is as follows:

 

Venture

 

Number of

Properties at

June 30,

2020

 

 

Company

common

ownership

interest at

June 30,

2020

 

 

Carrying value

of investment

at June 30,

2020

 

 

Carrying value of

investment at

December 31,

2019

 

Sovran HHF Storage Holdings LLC (“Sovran HHF”)1

 

57

 

 

20%

 

 

$81.6 million

 

 

$83.1 million

 

Sovran HHF Storage Holdings II LLC (“Sovran HHF II”)

 

30

 

 

15%

 

 

$14.0 million

 

 

$13.9 million

 

191 III Life Storage Holdings LLC (“191 III”)2

 

 

 

 

20%

 

 

 

 

 

$8.9   million

 

Life Storage-SERS Storage LLC (“SERS”)

 

3

 

 

20%

 

 

$3.0   million

 

 

$3.2   million

 

Life Storage-HIERS Storage LLC (“HIERS”)3

 

17

 

 

20%

 

 

$14.5 million

 

 

$14.9 million

 

Iskalo Office Holdings, LLC (“Iskalo”)4

 

N/A

 

 

49%

 

 

($0.3   million)

 

 

($0.4   million)

 

Bluebird Sanford Storage LP ("Sanford")5

 

1

 

 

15%

 

 

$0.3   million

 

 

$0.3   million

 

Bluebird Ingram Storage LP ("Ingram")6

 

1

 

 

15%

 

 

$1.1   million

 

 

$1.2   million

 

Life Storage Spacemax, LLC ("Spacemax")7

 

6

 

 

40%

 

 

$16.9 million

 

 

$16.1 million

 

Life Storage Virtus, LLC ("Virtus")8

 

1

 

 

20%

 

 

$1.6   million

 

 

 

 

Joint ventures with properties in development stage9

 

5

 

 

Various

 

 

$2.9   million

 

 

$3.1   million

 

Other unconsolidated joint ventures (6 joint ventures)

 

6

 

 

Various

 

 

$11.8 million

 

 

$10.3 million

 

 

1

As of June 30, 2020, the carrying value of the Company’s investment in Sovran HHF exceeds its share of the underlying equity in net assets of Sovran HHF by approximately $1.7 million as a result of the capitalization of certain acquisition related costs in 2008. This difference is included in the carrying value of the investment.

2

191 III owned six self-storage facilities in California. The Company acquired these six self-storage facilities and related assets from 191 III in March 2020 for total contractual consideration of $124.2 million, which is net of the Company’s share of 191 III’s gain resulting from the transaction. In connection with this transaction, the non-recourse mortgage loan previously entered into by 191 III was settled. See Note 5 for additional information regarding this transaction. As 191 no longer operates any self-storage facilities subsequent to the sale of the six self-storage facilities to the Company, the Company received a distribution of $8.4 million in March 2020 as the Company’s return of its remaining investment in 191 III. 191 III is expected to be dissolved later in 2020.

3

In November 2019, HIERS acquired five self-storage facilities for a total of $56.3 million. In connection with the acquisition of these self-storage facilities, HIERS entered into $27.6 million of mortgage debt which is secured by the self-storage facilities acquired. During 2019, the Company contributed $5.7 million as is its share of capital to fund the acquisition of these five self-storage facilities.

4

Iskalo owns the building that houses the Company’s headquarters. The Company paid rent to Iskalo of $0.6 million during each of the six months ended June 30, 2020 and 2019.

5

In March 2019, the Company executed a joint venture agreement, Bluebird Sanford Storage LP, with an unrelated third-party with the purpose of acquiring and operating a self-storage facility. During 2019, Sanford acquired a self-storage facility for a total of $4.9 million. In connection with this acquisition, Sanford entered into $3.2 million of non-recourse mortgage debt. During 2019, the Company contributed $0.3 million to Sanford as the Company’s share of the initial capital investment in the joint venture.

6

In March 2019, the Company executed a joint venture agreement, Bluebird Ingram Storage, LP, with an unrelated third-party with the purpose of acquiring, further developing, and operating a self-storage facility. During 2019, Ingram acquired a self-storage facility for a total of $20.7 million. In connection with this acquisition, Ingram entered into $17.6 million of non-recourse mortgage debt. During 2019, the Company contributed $1.3 million to Ingram as the Company’s share of the initial capital investment in the joint venture.

7

In August 2019, the Company executed a joint venture agreement, Life Storage Spacemax, LLC, with an unrelated third-party with the purpose of acquiring and operating self-storage facilities. During 2019, Spacemax acquired six self-storage facilities for a total of $82.7 million. In connection with this acquisition, Spacemax entered into $42.0 million of non-recourse mortgage debt. During 2019, the Company contributed $16.3 million to Spacemax as the Company’s share of the initial capital investment in the joint venture.  

8

In February 2020, the Company executed a joint venture agreement, Life Storage Virtus, LLC, with an unrelated third-party with the purpose of acquiring and operating a self-storage facility. During the first quarter of 2020, Virtus acquired a self-storage facility for a total of $21.7 million. In connection with this acquisition, Virtus entered into $14.0 million of non-recourse mortgage debt. During 2020, the Company contributed $1.7 million to Virtus as the Company’s share of the initial capital investment in the joint venture.

9

The Company has entered into five separate joint ventures, two of which are developing self-storage facilities in Ontario, Canada, and three of which are developing self-storage facilities in the New York City market. The Company has contributed an aggregate total of $2.9 million as its share of capital to these joint ventures.

Company's Share of Unconsolidated Joint Ventures' Income (Loss)

The Company’s share of the unconsolidated joint ventures’ income (loss) is as follows:

 

 

(dollars in thousands)

Venture

 

Three Months

Ended

June 30, 2020

 

 

Three Months

Ended

June 30, 2019

 

 

Six Months

Ended

June 30, 2020

 

 

Six Months

Ended

June 30, 2019

 

Sovran HHF

 

$

861

 

 

$

880

 

 

$

1,783

 

 

$

1,709

 

Sovran HHF II

 

 

446

 

 

 

477

 

 

 

901

 

 

 

890

 

Other unconsolidated joint ventures

 

 

(337

)

 

 

(247

)

 

 

(598

)

 

 

(678

)

 

 

$

970

 

 

$

1,110

 

 

$

2,086

 

 

$

1,921

 

Summary of Unconsolidated Joint Ventures' Financial Statements

A summary of the combined unconsolidated joint ventures’ financial statements as of and for the six months ended June 30, 2020 is as follows:

 

(dollars in thousands)

 

 

 

 

Balance Sheet Data:

 

 

 

 

Investment in storage facilities, net

 

$

1,235,973

 

Investment in office building, net

 

 

4,246

 

Other assets

 

 

27,432

 

Total Assets

 

$

1,267,651

 

Due to the Company

 

$

796

 

Mortgages payable

 

 

544,321

 

Other liabilities

 

 

23,068

 

Total Liabilities

 

$

568,185

 

Unaffiliated partners’ equity

 

 

552,062

 

Company equity

 

 

147,404

 

Total Partners’ Equity

 

 

699,466

 

Total Liabilities and Partners’ Equity

 

$

1,267,651

 

Income Statement Data:

 

 

 

 

Total revenues

 

$

66,337

 

Property operating expenses

 

 

(20,367

)

Administrative, management and call center fees

 

 

(5,112

)

Gain on disposal of self-storage facilities

 

 

33,038

 

Depreciation and amortization of customer list

 

 

(15,706

)

Amortization of financing fees

 

 

(402

)

Income tax expense

 

 

(162

)

Interest expense

 

 

(12,055

)

Net income

 

$

45,571