4.	INVESTMENT IN STORAGE FACILITIES

The following summarizes our activity in storage facilities during the six months ended June 30, 2015.


(dollars in thousands)
Cost:
Beginning balance	$	2,177,983
Acquisition of storage facilities		207,837
Improvements and equipment additions		12,197
Net increase in construction in progress		165
Dispositions		(1,744	)

Ending balance	$	2,396,438


Accumulated Depreciation:
Beginning balance	$	411,701
Depreciation expense during the period		26,788
Dispositions		(1,023	)

Ending balance	$	437,466

The Company acquired 15 facilities during the six months ended June 30, 2015. The four facilities acquired in Connecticut and New York on February 2, 2015 had been leased by the Company since November 1, 2013. The acquisitions of these four stores and the three stores acquired at certificate of occupancy were accounted for as asset acquisitions. The cost of these seven stores was assigned to their land, building, equipment and improvements components based upon their fair values. The assets and liabilities of the other eight 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.” The purchase price of the 15 facilities has been assigned as follows:


(dollars in thousands)							Consideration paid							Acquisition Date Fair Value
State	Number of Properties		Date of Acquisition		Purchase Price		Cash Paid		Value of Operating Partnership Units Issued		Net Other Liabilities (Assets) Assumed			Land		Building, Equipment, and Improvements		In-Place Customer Leases		Closing Costs Expensed
2015
Connecticut		2		2/2/2015	$	61,116	$	62,377	$	—	$	(1,261	)	$	19,389	$	41,727	$	—	$	—
New York		2		2/2/2015		57,900		59,103		—		(1,203	)		10,084		47,816		—		—
Illinois		1		2/5/2015		6,800		6,652		—		148			2,579		4,066		155		157
Illinois		1		3/9/2015		8,690		6,466		2,148		76			1,719		6,971		—		—
Florida		1		4/1/2015		6,290		6,236		—		54			1,793		4,382		115		370
Texas		1		4/16/2015		8,800		8,713		—		87			3,864		4,777		159		151
Florida		1		4/21/2015		8,750		8,687		—		63			2,118		6,501		131		133
Florida		4		5/1/2015		32,465		32,279		—		186			12,184		19,672		609		558
Arizona		1		6/16/2015		7,904		7,904		—		—			852		7,052		—		—
Massachusetts		1		6/19/2015		10,291		10,286		—		5			2,110		8,181		—		—

Total acquired 2015		15			$	209,006	$	208,703	$	2,148	$	(1,845	)	$	56,692	$	151,145	$	1,169	$	1,369

All of the properties acquired were purchased from unrelated third parties. The operating results of the four facilities which had been leased since November 1, 2013 have been included in the Company’s operations since that date. The operating results of the other 11 facilities have been included in the Company’s operations since the respective acquisition dates. Of the $208.7 million paid at closing for the properties acquired during the six months ended June 30, 2015, $250,000 represented deposits that were paid in 2014 when certain of these properties originally went under contract. Non-cash investing activities during the six months ended June 30, 2015 include the issuance of $2.1 million in Operating Partnership Units, the assumption of $0.6 million of other net liabilities and $2.4 million for the settlement of a straight-line rent liability in connection with the acquisition of self-storage facilities.

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)	Jun. 30, 2015			Dec. 31, 2014
In-place customer leases	$	20,940		$	19,867
Accumulated amortization		(19,618	)		(17,663	)

Net carrying value at the end of period	$	1,322		$	2,204

Amortization expense related to in-place customer leases was $1.0 million and $0.8 million for the three months ended June 30, 2015 and 2014, respectively and was $2.0 million and $1.5 million for the six months ended June 30, 2015 and 2014, respectively. The Company expects to record $3.0 million and $341,000 of amortization expense for the years ended December 31, 2015 and 2016, respectively.

During 2014, the Company acquired 33 properties. The following pro forma information is based on the combined historical financial statements of the Company and the 33 properties acquired, and presents the Company’s results as if the acquisitions had occurred as of January 1, 2013:


	Three months ended June 30, 2014		Six months ended June 30, 2014
Total revenues	$	84,288	$	163,990
Net income attributable to common shareholders	$	22,836	$	42,191
Earnings per common share
Basic	$	0.68	$	1.25
Diluted	$	0.67	$	1.25

Property Dispositions

During the six months ended June 30, 2015 the Company sold a non-strategic property purchased in May 2014 with a carrying value of $698,000 and received cash proceeds of approximately $691,000, resulting in a $7,000 loss on sale. The following table summarizes the revenues and expenses up to the date of sale of the property sold in 2015 that are included in the Company’s consolidated statements of operations for 2015 and 2014.


(Dollars in thousands)	Jan. 1, 2015 to Jun. 30, 2015			Jan. 1, 2014 to Jun. 30, 2014
Total revenues	$	40		$	—
Property operations and maintenance expense		(16	)		—
Real estate tax expense		(5	)		—
Depreciation and amortization expense		(9	)		—
Loss on sale of storage facilities		(7	)		—

	$	3		$	—