Investment in Storage Facilities

3 Months Ended

Mar. 31, 2014

Real Estate [Abstract]

Investment in Storage Facilities

4. INVESTMENT IN STORAGE FACILITIES

The following summarizes our activity in storage facilities during the three months ended March 31, 2014.

(dollars in thousands)
Cost:
Beginning balance	$	1,864,637
Acquisition of storage facilities		93,854
Improvements and equipment additions		2,987
Net increase in construction in progress		1,671
Dispositions and impairments		(90	)
Ending balance	$	1,963,059

Accumulated Depreciation:
Beginning balance	$	366,472
Depreciation expense during the period		11,276
Dispositions		(63	)
Ending balance	$	377,685

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 three months ended March 31, 2014 the Company acquired 7 self-storage facilities, respectively, and the purchase price of the facilities was 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
2014
Florida		2		1/9/2014	$	54,000	$	53,599	$	—	$	401	$	23,309	$	29,867	$	824	$	1,691
Texas		1		1/17/2014		9,000		8,962		—		38		3,999		4,856		145		225
Texas		1		2/10/2014		8,900		8,857		—		43		2,235		6,564		101		212
Maine		2		2/11/2014		14,750		14,601		—		149		2,639		11,824		287		426
Illinois		1		3/31/2014		8,700		8,582		—		118		1,837		6,724		139		224
Total 2014		7			$	95,350	$	94,601	$	—	$	749	$	34,019	$	59,835	$	1,496	$	2,778

All of the properties acquired were purchased from unrelated third parties. The operating results of the acquired facilities have been included in the Company’s operations since the respective acquisition dates. Of the $94.6 million paid at closing for the properties acquired during the quarter ended March 31, 2014, $5.5 million represented deposits that were paid when these properties originally went under contract.

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:

(Dollars in thousands)	Mar. 31, 2014			Dec. 31, 2013
In-place customer leases	$	16,139		$	14,643
Accumulated amortization		(14,217	)		(13,551	)
Net carrying value at the end of period	$	1,922		$	1,092

Amortization expense related to in-place customer leases was $0.7 million and $0.9 million for the three months ended March 31, 2014 and 2013, respectively. The Company expects to record $2.5 million of amortization expense for the year ended December 31, 2014.