RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Effective July 1, 2024, in connection with the internalization of the PRO structure, the Company purchased the PROs' management contracts and is transitioning the majority of operations in a phased approach, which has begun and is expected to continue over the 12-month period following the Closing Date. The Company has executed new asset management agreements with a number of its former PROs for all or a part of this transitionary period at newly negotiated management fees.

Supervisory and Administrative Fees

For certain of the self storage properties that were managed by the former PROs, the Company entered into asset management agreements with certain of its former PROs prior to the internalization of the PRO structure, to provide leasing, operating, supervisory and administrative services. These asset management agreements generally provided for fees ranging from 5% to 6% of gross revenue for such managed self storage properties. Through June 30, 2024, the Company incurred $10.2 million for supervisory and administrative fees to the former PROs under the prior asset management agreements. For the three and nine months ended September 30, 2023, the Company incurred $5.5 million and $16.1 million, respectively, for supervisory and administrative fees to the former PROs. Such fees are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Payroll Services

For the self storage properties that were managed by the former PROs, the employees responsible for operations were employees of its former PROs who charged the Company for the costs associated with the respective employees. Through June 30, 2024, the Company incurred $13.7 million for payroll and related costs reimbursable to the former PROs under the prior asset management agreements. For the three and nine months ended September 30, 2023, the Company incurred $6.7 million and $19.8 million, respectively, for payroll and related costs reimbursable to these former PROs. Such costs are included in property operating expenses in the accompanying condensed consolidated statements of operations.

In connection with the internalization of the PRO structure, a company owned and controlled by Mark Van Mourick, a former trustee of the Company, received 209,333 OP units with a value of approximately $8.4 million, along with approximately $2.9 million in cash. Prior to becoming a trustee of the Company, Warren Allen and a company owned and controlled by Mr. Allan, collectively received 209,333 OP units with a value of approximately $8.4 million and approximately $2.9 million in cash. Additionally, Arlen Nordhagen, the vice chairperson of the Company's board of trustees, received 64,887 OP units with a value of approximately $2.6 million as a result of a noncontrolling investment in one of the former PRO's affiliates.