RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 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 the self storage properties that were managed by the Company's former PROs, the Company entered into asset management agreements with 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. For the six months ended June 30, 2024, the Company incurred $10.2 million for supervisory and administrative fees to the Company's former PROs under the prior asset management agreements. During the years ended December 31, 2023 and 2022, the Company incurred $21.2 million and $22.6 million, respectively, for supervisory and administrative fees to its former PROs. Such fees are included in general and administrative expenses in the accompanying consolidated statements of operations.

Payroll Services

For the self storage properties that were managed by the Company's former PROs, the employees responsible for operations were employees of the Company's former PROs who charged the Company for the costs associated with the respective employees. For the six months ended June 30, 2024, the Company incurred $13.7 million for payroll and related costs reimbursable to its former PROs under the prior asset management agreements. For the years ended December 31, 2023 and 2022, the Company incurred $26.7 million and $29.3 million, respectively, for payroll and related costs reimbursable to these former PROs. Such costs are included in property operating expenses in the accompanying consolidated statements of operations.

Due Diligence Costs

During the years ended December 31, 2024, 2023 and 2022, the Company incurred $0, $25,000 and $0.4 million, respectively, of expenses payable to certain of the Company's former PROs related to self storage property acquisitions sourced by the Company's former PROs. These expenses, which were based on the volume of transactions sourced by the Company's former PROs, were intended to reimburse the Company's former PROs for due diligence costs incurred in the sourcing and underwriting process. For the years ended December 31, 2024, 2023 and 2022 these due diligence costs were capitalized as part of the basis of the acquired self storage properties.

PRO Retirement and Internalization of PRO Structure

In connection with the retirement of Move It as a PRO, effective as of January 1, 2023, 926,623 Series MI subordinated performance units converted into 2,545,063 OP units as a non-voluntary conversion. Of these, (i) Mr. Nordhagen, our vice chairperson, received 448,047 OP units with a value of $9.8 million upon conversion of 163,128 Series MI subordinated performance units and (ii) Mr. Cramer, our president and chief executive officer, received 204,943 OP units with a value of $4.5 million upon the conversion of 74,617 Series MI subordinated performance units.

In connection with the internalization of the PRO structure, effective July 1, 2024, 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 Allan 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 Company's former PROs' affiliates.