INVESTMENT IN STORAGE FACILITIES

9 Months Ended

Sep. 30, 2012

INVESTMENT IN STORAGE FACILITIES

4. INVESTMENT IN STORAGE FACILITIES

The following summarizes our activity in storage facilities during the nine months ended September 30, 2012.

(dollars in thousands)
Cost:
Beginning balance	$	1,538,595
Acquisition of storage facilities		104,257
Improvements and equipment additions		24,371
Net decrease in construction in progress		(3,192	)
Dispositions and impairments		(1,118	)
Ending balance	$	1,662,913
Accumulated Depreciation:
Beginning balance	$	292,722
Depreciation expense during the period		27,661
Dispositions		(442	)
Ending balance	$	319,941

The assets and liabilities of the acquired storage facilities, which primarily consist of tangible and intangible assets, are measured at fair value on the date of acquisition in accordance with the principles of FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” During the nine months ended September 30, 2012, the Company acquired 14 self-storage facilities and the purchase price of the facilities has preliminarily been assigned as follows:

(dollars in thousands)							Consideration paid						Acquisition Date Fair Value
State	Number of Properties		Date of Acquisition		Purchase Price		Cash Paid		Loan Assumed		Net Other Liabilities (Assets) Assumed		Land		Building, Equipment, and Improvements		In-Place Customers Leases		Closing Costs Expensed
2012
Florida		1		5/16/2012	$	15,340	$	15,163	$	—	$	177	$	2,960	$	12,077	$	303	$	516
Illinois		2		6/6/2012		20,750		20,304		—		446		3,871		16,486		393		537
Virginia		1		6/20/2012		6,920		6,884		—		36		911		5,862		147		254
Georgia		1		7/18/2012		8,500		8,442		—		58		1,560		6,766		174		40
Florida		3		9/18/2012		15,957		15,749		—		208		2,176		13,461		320		301
Georgia		4		9/18/2012		26,883		26,856		—		27		4,438		22,110		335		452
North Carolina		1		9/19/2012		7,400		7,374		—		26		2,337		4,900		163		213
Illinois		1		9/27/2012		4,435		4,365		—		70		1,213		3,129		93		69
Total 2012		14			$	106,185	$	105,137	$	—	$	1,048	$	19,466	$	84,791	$	1,928	$	2,382

The Company measures the fair value of in-place customer lease intangible assets based on the Company’s experience with customer turnover. The Company amortizes in-place customer leases on a straight-line basis over 12 months (the estimated future benefit period). In-place customer leases are included in other assets on the Company’s balance sheet as follows:

	Sep. 30,			Dec. 31,
(Dollars in thousands)	2012			2011
In-place customer leases	$	11,470		$	9,542
Accumulated amortization		(9,819	)		(7,019	)
Net carrying value at the end of period	$	1,651		$	2,523

Amortization expense related to in-place customer leases was $1.0 million and $0.3 million for the three months ended September 30, 2012 and 2011, respectively. Amortization expense related to in-place customer leases was $2.8 million and $0.6 million for the nine months ended September 30, 2012 and 2011, respectively. The Company expects to record $3.3 million of amortization expense for the year ended December 31, 2012.