Quarterly report pursuant to Section 13 or 15(d)

Investment In Joint Ventures

v2.3.0.15
Investment In Joint Ventures
9 Months Ended
Sep. 30, 2011
Investment In Joint Ventures [Abstract]  
Investment In Joint Ventures
10.

INVESTMENT IN JOINT VENTURES

The Company has a 20% ownership interest in Sovran HHF Storage Holdings LLC ("Sovran HHF"), a joint venture that was formed in May 2008 to acquire self-storage properties that are managed by the Company. The carrying value of the Company's investment at September 30, 2011 was $19.8 million. Twenty five properties were acquired by Sovran HHF in 2008 for approximately $171.5 million and no additional properties have been acquired by Sovran HHF since then. In 2008, the Company contributed $18.6 million to the joint venture as its share of capital required to fund the acquisitions. As of September 30, 2011, 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. This difference is not amortized, it is included in the carrying value of the investment, which is assessed for impairment on a periodic basis.

 

The Company has a 15% ownership interest in Sovran HHF Storage Holdings II LLC ("Sovran HHF II"), a joint venture that was formed in 2011 to acquire self-storage properties that are managed by the Company. The carrying value of the Company's investment at September 30, 2011 was $11.1 million. Nineteen properties were acquired by Sovran HHF II during the three months ended September 30, 2011 for approximately $160.4 million. Sovran HHF II recorded $4.9 million of acquisition related costs as expense during this period. For the three months ended September 30, 2011, the Company contributed $11.8 million to the joint venture as its share of capital required to fund the acquisitions.

As manager of Sovran HHF and Sovran HHF II, the Company earns a management and call center fee of 7% of gross revenues which totaled $1.2 million and $0.9 million for the nine months ended September 30, 2011 and 2010, respectively. The management and call center fees earned by the Company for the three months ended September 30, 2011 and September 30, 2010 totaled $0.6 million and $0.3 million, respectively. The Company also received an acquisition fee of $0.7 million, for securing purchases for Sovran HHF II in 2011.

The Company's share of Sovran HHF and Sovran HHF II's (loss) income for the nine months ended September 30, 2011 and September 30, 2010 was ($497,000) and $146,000, respectively. The Company's share of Sovran HHF and Sovran HHF II's (loss) income for the three months ended September 30, 2011 and September 30, 2010 was ($637,000) and $53,000, respectively. Included in the Company's share of the loss of Sovran HHF Storage Holdings II LLC for the nine months ended September 30, 2011 is the Company's share of property acquisition related costs of $0.7 million.

The Company also has a 49% ownership interest in Iskalo Office Holdings, LLC, which owns the building that houses the Company's headquarters and other tenants. The Company's investment includes a capital contribution of $196,049. The carrying value of the Company's investment is a liability of $0.5 million at September 30, 2011 and $0.6 million at December 31, 2010, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets. The Company's share of Iskalo Office Holdings, LLC's (loss) for the nine months ended September 30, 2011 and September 30, 2010 was ($59,000) and ($22,000), respectively. The Company's share of Iskalo Office Holdings, LLC's (loss) for the three months ended September 30, 2011 and September 30, 2010 was ($4,000) and $(48,000), respectively.

 

A summary of the unconsolidated joint ventures' financial statements as of and for the nine months ended September 30, 2011 is as follows:

 

(dollars in thousands)

   Sovran HHF
Storage
Holdings LLC
     Sovran HHF
Storage
Holdings II LLC
     Iskalo Office
Holdings, LLC
 

Balance Sheet Data:

        

Investment in storage facilities, net

     $  163,449             $  159,481             $            -         

Investment in office building

     -              -              5,366        

Other assets

     4,554             3,893             586        
  

 

 

    

 

 

    

 

 

 

  Total Assets

     $  168,003             $  163,374             $    5,952        
  

 

 

    

 

 

    

 

 

 

Due to the Company

     $         264             $         238             $            -         

Mortgages payable

     74,032             88,455             6,789        

Other liabilities

     3,277             1,313             698        
  

 

 

    

 

 

    

 

 

 

  Total Liabilities

     77,573             90,006             7,487        

Unaffiliated partners' equity (deficiency)

     72,344             62,279             (1,056)       

Company equity (deficiency)

     18,086             11,089             (479)       
  

 

 

    

 

 

    

 

 

 

  Total Liabilities and Partners' Equity (deficiency)

     $  168,003             $  163,374             $    5,952        
  

 

 

    

 

 

    

 

 

 

Income Statement Data:

        

Total revenues

     $     13,747             $      3,888             $       683        

Depreciation and amortization of customer list

     (2,747)            (1,064)            (156)       

Other expenses

     (9,878)            (7,636)            (647)       
  

 

 

    

 

 

    

 

 

 

 Net income (loss)

     $       1,122             $    (4,812)            $        (120)       
  

 

 

    

 

 

    

 

 

 

Included in other expenses of Sovran HHF Storage Holdings II LLC for the nine months ended September 30, 2011 is $4.9 million of property acquisition related costs. The Company does not guarantee the debt of Sovran HHF, Sovran HHF II, or Iskalo Office Holdings, LLC.