Investments In Unconsolidated Real Estate Entities

6 Months Ended

Jun. 30, 2020

Investments In Unconsolidated Real Estate Entities [Abstract]

Investments In Unconsolidated Real Estate Entities

4.Investments in Unconsolidated Real Estate Entities

The following table sets forth our investments in, and equity in earnings of, the Unconsolidated Real Estate Entities (amounts in thousands):

‎

	Investments in Unconsolidated Real Estate
	Entities at
	June 30, 2020		December 31, 2019
PSB	$	432,466	$	427,875
Shurgard		320,892		339,941
Total	$	753,358	$	767,816

	Equity in Earnings of Unconsolidated Real Estate Entities for the
	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
PSB	$	13,228	$	14,864	$	34,965	$	28,584
Shurgard		4,427		4,050		6,658		8,002
Total	$	17,655	$	18,914	$	41,623	$	36,586

Investment in PSB

Throughout all periods presented, we owned 7,158,354 shares of PSB’s common stock and 7,305,355 limited partnership units in an operating partnership controlled by PSB, representing an approximate 42% common equity interest. The limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one basis into PSB common stock.

Based upon the closing price at June 30, 2020 ($132.40) per share of PSB common stock), the shares and units we owned had a market value of approximately $1.9 billion.

Our equity in earnings of PSB is comprised of our equity share of PSB’s net income, less amortization of the PSB Basis Differential (defined below).

During each of the six month periods ended June 30, 2020 and 2019, we received cash distributions from PSB totaling $30.4 million.

At June 30, 2020, our pro-rata investment in PSB’s real estate assets included in investment in unconsolidated real estate entities exceeds our pro-rata share of the underlying amounts on PSB’s balance sheet by approximately $3.8 million ($4.2 million at December 31, 2019). This differential (the “PSB Basis Differential”) is being amortized as a reduction to equity in earnings of the Unconsolidated Real Estate Entities. Such amortization totaled approximately $0.4 million and $0.4 million during the six months ended June 30, 2020 and 2019, respectively.

PSB is a publicly held entity traded on the New York Stock Exchange under the symbol “PSB”.

Investment in Shurgard

Throughout all periods presented, we effectively owned, directly and indirectly 31,268,459 Shurgard common shares, representing an approximate 35% equity interest in Shurgard.

Based upon the closing price at June 30, 2020 (€33.45 per share of Shurgard common stock, at 1.123 exchange rate of US Dollars to the Euro), the shares we owned had a market value of approximately $1.2 billion.

Our equity in earnings of Shurgard is comprised of our equity share of Shurgard’s net income, plus $0.5 million for each of the six month periods ended June 30, 2020 and 2019, representing our equity share of the trademark license fees that Shurgard pays to us for the use of the “Shurgard” trademark. We classify the remaining license fees we receive from Shurgard as interest and other income on our income statement.

The dividends we receive from Shurgard, combined with our equity share of trademark license fees collected from Shurgard, are reflected on our statements of cash flows as “distributions from cumulative equity in earnings of unconsolidated real estate entities” to the extent of our cumulative equity in earnings, with any excess classified as “distributions in excess of cumulative equity in earnings from unconsolidated real estate entities.” Shurgard paid €0.50 per share and €0.22 per share in dividends to its shareholders during the six months ended June 30, 2020 and 2019, respectively, of which our share totaled $17.0 million and $7.7 million, respectively.

Changes in foreign currency exchange rates decreased our investment in Shurgard by approximately $8.2 million and $3.5 million in the six months ended June 30, 2020 and 2019, respectively.

Shurgard is a publicly held entity trading on Euronext Brussels under the symbol “SHUR”.