INVESTMENTS IN UNCONSOLIDATED REAL ESTATE VENTURES

Investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:



	Number of Stores	Equity Ownership %	Excess Profit %	December 31,
	Number of Stores	Equity Ownership %	Excess Profit %	2018			2017
WICNN JV LLC	7	10%	25%	$	26,885		$	—
VRS Self Storage, LLC	16	45%	54%	18,281			19,467
PRISA Self Storage LLC	85	4%	4%	9,334			9,638
Alan Jathoo JV LLC	9	10%	10%	8,180			—
Extra Space West Two LLC ⁽¹⁾	5	5%	40%	3,818			3,939
ESS Bristol Investments LLC	7	10%	28%	2,331			1,258
WCOT Self Storage LLC	—	5%	20%	—			(357		)
Extra Space West One LLC ⁽¹⁾	7	5%	40%	(1,038		)	(900		)
Extra Space Northern Properties Six LLC	10	10%	35%	(1,700		)	(1,279		)
Storage Portfolio II JV LLC	36	10%	30%	(4,233		)	(3,140		)
Storage Portfolio I LLC	24	34%	49%	(38,129		)	11,495
Other minority owned stores (17 joint ventures)	23	10-50%	19-50%	56,400			29,970
Net Investments in and Cash distributions in unconsolidated real estate ventures	229			$	80,129		$	70,091


(1)	Subsequent to year end, the Company acquired its joint venture partner's interests in Extra Space West One LLC and Extra Space West Two LLC joint ventures. The 12 stores owned by these joint ventures became wholly-owned by the Company subsequent to this acquisition. The Company paid cash of $172,515 and assumed an existing loan of $17,157.

In these joint ventures, the Company and the joint venture partner generally receive a preferred return on their invested capital. To the extent that cash or profits in excess of these preferred returns are generated through operations or capital transactions, the Company would receive a higher percentage of the excess cash or profits, as applicable, than its equity interest.

In accordance with ASC 810, the Company reviews all of its joint venture relationships annually to ensure that there are no entities that require consolidation. As of December 31, 2018, there were no previously unconsolidated entities that were required to be consolidated as a result of this review.

The Company has entered into several new unconsolidated real estate ventures. The Company accounts for its investment in the following ventures under the equity method of accounting. Information about these real estate ventures is summarized as follows:



	Number of Stores	Equity ownership %	Investment in new stores
For the Year Ended December 31, 2018⁽¹⁾	28	10.0% -50.0%	$	63,723
For the Year Ended December 31, 2017	39	10.0% - 25.0%	$	13,341
For the Year Ended December 31, 2016	8	20.0% - 50.0%	$	26,387


(1)	Included in the new unconsolidated joint ventures for the year ended December 31, 2018 were two new joint ventures (WICNN JV LLC and GFV JV, LLC), in which the Company has $22,734 and $8,720 of preferred equity, respectively. The Company earns an 8.0% return on its preferred equity in these joint ventures, which has priority over other distributions.

On April 30, 2018, the Company acquired its partner's interest in the WCOT Self Storage LLC joint venture. The Company paid cash of $115,797 and assumed a loan of $87,500. The 14 properties owned by this joint venture became wholly-owned properties of the Company subsequent to this acquisition.

On November 17, 2016, the Company acquired 11 stores from its ESS WCOT LLC joint venture ("WCOT") in a step acquisition. The Company owned 5.0% of WCOT, with the other 95.0% owned by affiliates of Prudential Global Investment Management ("Prudential"). WCOT created a new subsidiary, Extra Space Properties 132 LLC ("ESP 132") and transferred 11 stores into ESP 132. WCOT then distributed ESP 132 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $68,814. Immediately after the distribution, the Company acquired Prudential's 95.0% interest in ESP 132 for $153,304, resulting in 100% ownership of ESP 132 and the related 11 stores. Based on the purchase price of Prudential's share of ESP 132, the Company determined that the fair value of its investment in ESP 132 immediately prior to the acquisition of Prudential's share was $8,119, and the Company recorded a gain of $4,651 as a result of remeasuring to fair value its existing equity interest in ESP 132. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations. The fair value of the stores purchased was recorded at $161,072.

On September 16, 2016, the Company acquired 23 stores from its ESS PRISA II LLC joint venture ("PRISA II") in a step acquisition. The Company owned 4.4% of PRISA II, with the other 95.6% owned by affiliates of Prudential. PRISA II created a new subsidiary, Extra Space Properties 131 LLC ("ESP 131"), and transferred 23 stores into ESP 131. PRISA II then distributed ESP 131 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $4,326. Immediately after the distribution, the Company acquired Prudential's 95.6% interest in ESP 131 for $238,679, resulting in 100% ownership of ESP 131 and the related 23 stores. Based on the purchase price of Prudential's share of ESP 131, the Company determined that the fair value of its investment in ESP 131 immediately prior to the acquisition of Prudential's share was $10,988, and the Company recorded a gain of $6,778 as a result of re-measuring to fair value its existing equity interest in ESP 131. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations. The fair value of the stores purchased was recorded at $248,530. Subsequent to these transactions, PRISA II owned 42 stores.

On September 16, 2016, subsequent to its acquisition of 23 properties as outlined above, the Company sold its 4.42% interest in PRISA II to Prudential for $34,758 in cash. The carrying value of the Company's investment prior to the acquisition was $3,912, and the Company recorded a gain on the sale of $30,846. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners' interests on the Company's consolidated statements of operations.

On April 25, 2016, the Company and Prudential entered into the “Second Amendment to Amended and Restated Operating Agreement of ESS PRISA LLC” and the “First Amendment to Amended and Restated Operating Agreement of ESS PRISA II LLC” (the “Amendments”). The Amendments are deemed effective as of April 1, 2016. Under the Amendments, the Company gave up any future rights to receive distributions from these joint ventures at the higher “excess profit participation” percentage of 17.0% in exchange for a higher equity ownership percentage. The Company’s equity ownership in ESS PRISA LLC increased from 2.0% to 4.0%, and the Company’s equity ownership in ESS PRISA II LLC increased from 2.0% to 4.4%. The Company continues to account for its investment in PRISA under the equity method of accounting. The Company subsequently sold its interest in PRISA II as noted above.

On February 2, 2016, the Company acquired six stores from its VRS Self Storage LLC joint venture (“VRS”) in a step acquisition. The Company owns 45.0% of VRS, with the other 55.0% owned by affiliates of Prudential. VRS created a new subsidiary, Extra Space Properties 122 LLC (“ESP 122”) and transferred six stores into ESP 122. VRS then distributed ESP 122 to the Company and Prudential on a pro rata basis. This distribution was accounted for as a spinoff, and was therefore recorded at the net carrying amount of the properties of $17,261. Immediately after the distribution, the Company acquired Prudential’s 55.0% interest in ESP 122 for $53,940, resulting in 100% ownership of ESP 122 and the related six stores. Based on the purchase price of Prudential’s share of ESP 122, the Company determined that the fair value of its investment in ESP 122 immediately prior to the acquisition of Prudential’s share was $44,184, and the Company recorded a gain of $26,923 as a result of re-measuring to fair value its existing equity interest in ESP 122. This gain is included in equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partners’ interests on the Company’s consolidated statements of operations. The fair value of the stores purchased was recorded at $98,082.

Equity in earnings of unconsolidated real estate ventures consists of the following:



	For the Year Ended December 31,
	2018			2017		2016
Equity in earnings of WICNN JV LLC	$	622		$	—	$	—
Equity in earnings of VRS Self Storage, LLC	3,640			3,562		2,919
Equity in earnings of PRISA Self Storage LLC	2,338			2,430		1,912
Equity in earnings of Alan Jathoo JV LLC	(12		)	—		—
Equity in earnings of Extra Space West Two LLC	1,042			1,210		174
Equity in earnings of ESS Bristol Investments LLC	(152		)	—		—
Equity in earnings of Extra Space West One LLC	2,526			2,502		2,269
Equity in earnings of WCOT Self Storage LLC	359			1,033		614
Equity in earnings of Extra Space Northern Properties Six LLC	1,014			918		823
Equity in earnings of Storage Portfolio I LLC	1,886			2,684		2,380
Equity in earnings of Storage Portfolio II JV LLC	79			33		—
Equity in earnings of other minority owned stores	1,110			959		1,804
	$	14,452		$	15,331	$	12,895

Equity in earnings of certain of our joint ventures includes the amortization of the Company’s excess purchase price of $27,867 of these equity investments over its original basis. The excess basis is amortized over 40 years.