EXHIBIT 99.1
Published on May 25, 2016
Exhibit 99.1
Historical Statements of Revenue and Certain Expenses of Acquisition Properties
National Storage Affiliates Trust
Page |
|
Report of Independent Auditors |
|
Northwest 2013 Properties, Period from January 1, 2013 Through the Respective Acquisition Dates by NSA During the Year Ended December 31, 2013, and for the Years Ended December 31, 2012 and 2011 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Optivest 2013 Properties, Period from January 1, 2013 Through the Respective Acquisition Dates by NSA During the Year Ended December 31, 2013, and for the Years Ended December 31, 2012 and 2011 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Northwest 2014 Properties, Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA or December 16, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Optivest 2014 Properties, Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA or September 30, 2014 (Unaudited), for the Year Ended December 31, 2013, and the Period Commencing upon the Later of January 1, 2012 or Optivest's Respective Acquisition Date Through December 31, 2012 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Guardian 2014 Properties, Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA or October 8, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Guardian 2015 Properties, for the Years Ended December 31, 2014, 2013 and 2012 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
All Stor Properties, for the Period from the Later of January 1, 2014 or All Stor's Respective Acquisition Date Through December 31, 2014, and the Period from the Later of March 14, 2013 or All Stor's Respective Acquisition Dates Through December 31, 2013 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Move It Properties, Interim Period from January 1, 2014 Through September 4, 2014 (Unaudited), and for the Year Ended December 31, 2013 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Hide-Away Properties, for the three months ended March 31, 2016 (Unaudited), and for the Year Ended December 31, 2015 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
SecurCare Oklahoma Properties, for the Years Ended December 31, 2015, 2014 and 2013 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Fondren Self Storage Property, for the Year Ended December 31, 2015 |
|
F-1
Exhibit 99.1
Page |
|
Notes to Statement of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Granite Clover Self Storage Properties, for the Year Ended December 31, 2015 |
|
Notes to Combined Statement of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Gulf Coast Properties, for the three months ended March 31, 2016 (Unaudited), and for the Year Ended December 31, 2015 |
|
Notes to Combined Statements of Revenue and Certain Expenses |
|
Report of Independent Auditors |
|
Storage Central Property, for the three months ended March 31, 2016 (Unaudited), and for the Year Ended December 31, 2015 |
|
Notes to Statements of Revenue and Certain Expenses |
|
F-2
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of Northwest 2013 Properties for the period from January 1, 2013 through the respective acquisition dates (as reflected in Note 3 to the financial statements) during the year ended December 31, 2013, and for the years ended December 31, 2012 and 2011, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of Northwest 2013 Properties for the period from January 1, 2013 through the respective acquisition dates (as reflected in Note 3 to the financial statements) during the year ended December 31, 2013, and for the years ended December 31, 2012 and 2011, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of Northwest 2013 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
November 5, 2014
November 5, 2014
F-3
Northwest 2013 Properties
Combined Statements of Revenue and Certain Expenses
Period from January 1, 2013 Through the Respective Acquisition Dates by NSA During the Year Ended
December 31, 2013, and for the Years Ended December 31, 2012 and 2011
(dollars in thousands)
2013(a)
|
2012 |
2011 |
|||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
5,461 |
$ |
10,615 |
$ |
10,113 |
|||||
Other property-related revenue |
51 |
94 |
68 |
||||||||
Total revenue |
5,512 |
10,709 |
10,181 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
1,264 |
2,378 |
2,402 |
||||||||
Real estate taxes |
451 |
916 |
902 |
||||||||
Supervisory and administrative fees |
328 |
646 |
623 |
||||||||
Total certain expenses |
2,043 |
3,940 |
3,927 |
||||||||
Revenue in excess of certain expenses |
$ |
3,469 |
$ |
6,769 |
$ |
6,254 |
|||||
(a) |
See Note 3 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-4
Northwest 2013 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
During 2013, National Storage Affiliates Trust ("NSA") acquired 31 self-storage properties (the "Northwest 2013 Properties") through Northwest Self Storage ("Northwest"). Two of these properties were not owned or managed by Northwest prior to January 1, 2013, and the remaining 29 properties were owned or managed by Northwest from January 1, 2011 through the respective dates that NSA acquired the properties. Northwest is one of three founding participating regional operators that initiated NSA's formation transactions commencing on April 1, 2013.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Northwest 2013 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Northwest 2013 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Northwest 2013 Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Northwest 2013 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $107 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $152 for the year ended December 31, 2012, and $154 for the year ended December 31, 2011.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Northwest 2013 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $209 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $350 for the year ended December 31, 2012, and $466 for the year ended December 31, 2011.
F-5
Northwest 2013 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. OPERATING RESULTS BY NSA ACQUISITION DATE
Presented below is the revenue and certain expenses for each group of properties for the periods from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013:
NSA Acquisition Date |
|||||||||||||||||||||||
April 1, 2013 |
June 10, 2013(a) |
June 10, 2013 |
June 24, 2013 |
December 30, 2013 |
Total |
||||||||||||||||||
Number of properties |
11 |
2 |
11 |
3 |
4 |
31 |
|||||||||||||||||
Revenue |
|||||||||||||||||||||||
Rental revenue |
$ |
1,057 |
$ |
256 |
$ |
1,842 |
$ |
609 |
$ |
1,697 |
$ |
5,461 |
|||||||||||
Other property-related revenue |
12 |
2 |
30 |
2 |
5 |
51 |
|||||||||||||||||
Total revenue |
1,069 |
258 |
1,872 |
611 |
1,702 |
5,512 |
|||||||||||||||||
Certain Expenses |
|||||||||||||||||||||||
Property operating expenses |
275 |
89 |
362 |
129 |
409 |
1,264 |
|||||||||||||||||
Real estate taxes |
92 |
16 |
127 |
60 |
156 |
451 |
|||||||||||||||||
Supervisory and administrative fees |
63 |
13 |
105 |
37 |
110 |
328 |
|||||||||||||||||
Total certain expenses |
430 |
118 |
594 |
226 |
675 |
2,043 |
|||||||||||||||||
Revenue in excess of certain expenses |
$ |
639 |
$ |
140 |
$ |
1,278 |
$ |
385 |
$ |
1,027 |
$ |
3,469 |
|||||||||||
(a) |
Consists of results for two properties that were not owned or managed by Northwest prior to January 1, 2013. As such, the operating results are included for the period January 1, 2013 through June 1, 2013. The operating results of these two properties are not presented herein for the years ended December 31, 2012 and 2011. |
4. RELATED PARTY TRANSACTIONS
The Northwest 2013 Properties are subject to agreements entered into with Northwest that provide for a fee equal to 6% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Northwest consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Northwest 2013 Properties are employees of Northwest. The amounts charged by Northwest for salaries, wages and benefits for the Northwest 2013 Properties are included in property operating expenses and amounted to $618 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $1,097 for the year ended December 31, 2012, and $1,052 for the year ended December 31, 2011.
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through November 5, 2014, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-6
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of Optivest 2013 Properties for the period from January 1, 2013 through the respective acquisition dates (as reflected in Note 3 to the financial statements) during the year ended December 31, 2013, and for the years ended December 31, 2012 and 2011, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of Optivest 2013 Properties for the period from January 1, 2013 through the respective acquisition dates (as reflected in Note 3 to the financial statements) during the year ended December 31, 2013, and for the years ended December 31, 2012 and 2011, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of Optivest 2013 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
November 5, 2014
November 5, 2014
F-7
Optivest 2013 Properties
Combined Statements of Revenue and Certain Expenses
Period from January 1, 2013 Through the Respective Acquisition Dates by NSA During the
Year Ended December 31, 2013, and for the Years Ended December 31, 2012 and 2011
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
Period from January 1, 2013 Through the Respective Acquisition Dates by NSA During the
Year Ended December 31, 2013, and for the Years Ended December 31, 2012 and 2011
(dollars in thousands)
2013(a)
|
2012 |
2011 |
|||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
2,991 |
$ |
5,762 |
$ |
5,536 |
|||||
Other property-related revenue |
183 |
294 |
288 |
||||||||
Total revenue |
3,174 |
6,056 |
5,824 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
916 |
1,776 |
1,795 |
||||||||
Real estate taxes |
414 |
751 |
747 |
||||||||
Supervisory and administrative fees |
204 |
328 |
298 |
||||||||
Total certain expenses |
1,534 |
2,855 |
2,840 |
||||||||
Revenue in excess of certain expenses |
$ |
1,640 |
$ |
3,201 |
$ |
2,984 |
|||||
(a) |
See Note 3 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-8
Optivest 2013 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
During 2013, National Storage Affiliates Trust ("NSA") acquired 11 self-storage properties (the "Optivest 2013 Properties") through Optivest Properties, LLC ("Optivest"). Optivest is one of three founding participating regional operators that initiated NSA's formation transactions commencing on April 1, 2013.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Optivest 2013 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Optivest 2013 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Optivest 2013 Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Optivest 2013 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $33 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $54 for the year ended December 31, 2012, and $34 for the year ended December 31, 2011.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Optivest 2013 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $82 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $178 for the year ended December 31, 2012, and $164 for the year ended December 31, 2011.
F-9
Optivest 2013 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. OPERATING RESULTS BY NSA ACQUISITION DATE
Presented below is the revenue and certain expenses for each group of acquisitions for the periods from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013:
NSA Acquisition Date |
|||||||||||||||
April 1, 2013 |
June 24, 2013 |
July 25, 2013 |
Total |
||||||||||||
Number of properties |
1 |
5 |
5 |
11 |
|||||||||||
Revenue |
|||||||||||||||
Rental revenue |
$ |
147 |
$ |
1,117 |
$ |
1,727 |
$ |
2,991 |
|||||||
Other property-related revenue |
4 |
157 |
22 |
183 |
|||||||||||
Total revenue |
151 |
1,274 |
1,749 |
3,174 |
|||||||||||
Certain Expenses |
|||||||||||||||
Property operating expenses |
53 |
423 |
440 |
916 |
|||||||||||
Real estate taxes |
14 |
162 |
238 |
414 |
|||||||||||
Supervisory and administrative fees |
12 |
78 |
114 |
204 |
|||||||||||
Total certain expenses |
79 |
663 |
792 |
1,534 |
|||||||||||
Revenue in excess of certain expenses |
$ |
72 |
$ |
611 |
$ |
957 |
$ |
1,640 |
|||||||
4. RELATED PARTY TRANSACTIONS
The Optivest 2013 Properties are subject to agreements entered into with Optivest that generally provide for a fee equal to 6% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Optivest consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Optivest 2013 Properties are employees of Optivest. The amounts charged by Optivest for salaries, wages and benefits for the Optivest 2013 Properties are included in property operating expenses and amounted to $430 for the period from January 1, 2013 through the respective acquisition dates by NSA during the year ended December 31, 2013, $777 for the year ended December 31, 2012, and $783 for the year ended December 31, 2011.
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through November 5, 2014, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-10
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of Northwest 2014 Properties for the years ended December 31, 2013 and 2012, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of Northwest 2014 Properties for the years ended December 31, 2013 and 2012, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of Northwest 2014 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
March 23, 2015
March 23, 2015
F-11
Northwest 2014 Properties
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA
or December 16, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA
or December 16, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012
(dollars in thousands)
2014(a)
|
2013 |
2012 |
|||||||||
(Unaudited) |
|||||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
6,280 |
$ |
11,490 |
$ |
10,212 |
|||||
Other property-related revenue |
160 |
238 |
208 |
||||||||
Total revenue |
6,440 |
11,728 |
10,420 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
1,571 |
3,018 |
2,576 |
||||||||
Real estate taxes |
481 |
867 |
831 |
||||||||
Supervisory and administrative fees |
385 |
680 |
605 |
||||||||
Total certain expenses |
2,437 |
4,565 |
4,012 |
||||||||
Revenue in excess of certain expenses |
$ |
4,003 |
$ |
7,163 |
$ |
6,408 |
|||||
(a) |
See Note 3 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-12
Northwest 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") acquired 27 self-storage properties during the period from January 1, 2014 through December 16, 2014 (collectively, the "Northwest 2014 Properties") through Northwest Self Storage ("Northwest"). Northwest is one of three founding participating regional operators that initiated NSA's formation transactions commencing on April 1, 2013.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Northwest 2014 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Northwest 2014 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Northwest 2014 Properties.
The unaudited combined statement of revenue and certain expenses for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or December 16, 2014 was prepared on the same basis as the combined statements of revenue and certain expenses for the years ended December 31, 2013 and 2012, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Northwest 2014 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $129 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or December 16, 2014, $221 for the year ended December 31, 2013, and $140 for the year ended December 31, 2012.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Northwest 2014 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $234 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or December 16, 2014, $433 for the year ended December 31, 2013, and $426 for the year ended December 31, 2012.
F-13
Northwest 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. UNAUDITED INTERIM OPERATING RESULTS BY ACQUISITION DATE (UNAUDITED)
Presented below is the unaudited revenue and certain expenses for each group of acquisitions for the interim periods from January 1, 2014 through the earlier of the respective acquisition dates by NSA or December 16, 2014:
NSA Acquisition Date |
|||||||||||||||||||||||||||||||||||||||
April 1, 2014 |
May 31, 2014 |
June 30, 2014 |
August 27, 2014 |
October 3, 2014 |
October 20, 2014 |
December 1, 2014 |
December 5, 2014 |
December 16, 2014(a) |
Total |
||||||||||||||||||||||||||||||
Number of properties |
10 |
2 |
5 |
5 |
1 |
1 |
1 |
1 |
1 |
27 |
|||||||||||||||||||||||||||||
Revenue |
|||||||||||||||||||||||||||||||||||||||
Rental revenue |
$ |
1,143 |
$ |
652 |
$ |
1,166 |
$ |
1,407 |
$ |
269 |
$ |
460 |
$ |
278 |
$ |
326 |
$ |
579 |
$ |
6,280 |
|||||||||||||||||||
Other property-related revenue |
46 |
25 |
13 |
41 |
11 |
4 |
3 |
5 |
12 |
160 |
|||||||||||||||||||||||||||||
Total revenue |
1,189 |
677 |
1,179 |
1,448 |
280 |
464 |
281 |
331 |
591 |
6,440 |
|||||||||||||||||||||||||||||
Certain Expenses |
|||||||||||||||||||||||||||||||||||||||
Property operating expenses |
255 |
232 |
291 |
355 |
76 |
102 |
77 |
65 |
118 |
1,571 |
|||||||||||||||||||||||||||||
Real estate taxes |
84 |
24 |
96 |
121 |
23 |
38 |
17 |
26 |
52 |
481 |
|||||||||||||||||||||||||||||
Supervisory and administrative fees |
75 |
38 |
69 |
87 |
16 |
28 |
17 |
20 |
35 |
385 |
|||||||||||||||||||||||||||||
Total certain expenses |
414 |
294 |
456 |
563 |
115 |
168 |
111 |
111 |
205 |
2,437 |
|||||||||||||||||||||||||||||
Revenue in excess of certain expenses |
$ |
775 |
$ |
383 |
$ |
723 |
$ |
885 |
$ |
165 |
$ |
296 |
$ |
170 |
$ |
220 |
$ |
386 |
$ |
4,003 |
|||||||||||||||||||
(a) |
Represents a property that was developed by Northwest during 2012 for which the initial lease-up period commenced in January 2013. |
4. RELATED PARTY TRANSACTIONS
The Northwest 2014 Properties are subject to agreements entered into with Northwest that provide for a fee equal to 6% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Northwest consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Northwest 2014 Properties are employees of Northwest. The amounts charged by Northwest for salaries, wages and benefits for the Northwest 2014 Properties are included in property operating expenses and amounted to $557 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or December 16, 2014, $1,284 for the year ended December 31, 2013, and $1,105 for the year ended December 31, 2012.
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through March 23, 2015, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-14
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of Optivest 2014 Properties for the year ended December 31, 2013, and for the period commencing on the later of January 1, 2012 or Optivest's respective acquisition date (as set forth in Note 4) through December 31, 2012, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of Optivest 2014 Properties for the year ended December 31, 2013, and for the period commencing upon the later of January 1, 2012 or Optivest's respective acquisition date (as set forth in Note 4) through December 31, 2012, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of Optivest 2014 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
December 5, 2014
December 5, 2014
F-15
Optivest 2014 Properties
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA
or September 30, 2014 (Unaudited), for the Year Ended December 31,
2013, and the Period Commencing upon the Later of January 1, 2012 or Optivest's Respective
Acquisition Date Through December 31, 2012
or September 30, 2014 (Unaudited), for the Year Ended December 31,
2013, and the Period Commencing upon the Later of January 1, 2012 or Optivest's Respective
Acquisition Date Through December 31, 2012
(dollars in thousands)
2014(a)
|
2013 |
2012(b)
|
|||||||||
(Unaudited) |
|||||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
3,310 |
$ |
6,156 |
$ |
5,534 |
|||||
Other property-related revenue |
96 |
157 |
157 |
||||||||
Total revenue |
3,406 |
6,313 |
5,691 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
912 |
1,784 |
1,441 |
||||||||
Real estate taxes |
285 |
549 |
555 |
||||||||
Supervisory and administrative fees |
181 |
326 |
317 |
||||||||
Total certain expenses |
1,378 |
2,659 |
2,313 |
||||||||
Revenue in excess of certain expenses |
$ |
2,028 |
$ |
3,654 |
$ |
3,378 |
|||||
(a) |
See Note 3 for the number of properties and the related periods presented. |
(b) |
See Note 4 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-16
Optivest 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") acquired 12 self-storage properties (collectively, the "Optivest 2014 Properties") during the nine months ended September 30, 2014 through Optivest Properties, LLC ("Optivest"). One of these 12 properties was not owned or managed by Optivest prior to August 1, 2012, and the remaining 11 properties were owned or managed by Optivest for the entire interim period from January 1, 2012 through the later of the respective dates that NSA acquired the properties or September 30, 2014. Optivest is one of three founding participating regional operators that initiated NSA's formation transactions commencing on April 1, 2013.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Optivest 2014 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Optivest 2014 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Optivest 2014 Properties.
The unaudited interim combined statement of revenue and certain expenses for the period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or September 30, 2014, was prepared on the same basis as the combined statements of revenue and certain expenses for the year ended December 31, 2013 and for the period commencing upon the later of January 1, 2012 or Optivest's respective acquisition date through December 31, 2012, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Optivest 2014 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $44 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or September 30, 2014, $92 for the year ended December 31, 2013, and $73 for the period commencing upon the later of January 1, 2012 or the respective acquisition date by Optivest through December 31, 2012.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Optivest 2014 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $70 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or September 30, 2014, $122 for the year ended December 31, 2013, and $65 for the period commencing upon the later of January 1, 2012 or the respective acquisition date by Optivest through December 31, 2012.
F-17
Optivest 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. UNAUDITED OPERATING RESULTS FOR 2014 BY NSA ACQUISITION DATE
Presented below is the unaudited revenue and certain expenses for each group of properties for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or September 30, 2014:
NSA Acquisition Date |
|||||||||||||||
April 1, 2014 |
July 1, 2014 |
September 30, 2014 |
Total |
||||||||||||
Number of properties |
3 |
7 |
2 |
12 |
|||||||||||
Revenue |
|||||||||||||||
Rental revenue |
$ |
274 |
$ |
1,856 |
$ |
1,180 |
$ |
3,310 |
|||||||
Other property-related revenue |
9 |
51 |
36 |
96 |
|||||||||||
Total revenue |
283 |
1,907 |
1,216 |
3,406 |
|||||||||||
Certain Expenses |
|||||||||||||||
Property operating expenses |
97 |
533 |
282 |
912 |
|||||||||||
Real estate taxes |
25 |
165 |
95 |
285 |
|||||||||||
Supervisory and administrative fees |
18 |
95 |
68 |
181 |
|||||||||||
Total certain expenses |
140 |
793 |
445 |
1,378 |
|||||||||||
Revenue in excess of certain expenses |
$ |
143 |
$ |
1,114 |
$ |
771 |
$ |
2,028 |
|||||||
F-18
Optivest 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
4. OPERATING RESULTS FOR 2012 BY OPTIVEST ACQUISITION DATE
Presented below is revenue and certain expenses for the group of 12 properties owned by Optivest for the entire year ended December 31, 2012, and one property acquired by Optivest on August 1, 2012 which is presented for the period from Optivest's acquisition date through December 31, 2012:
Optivest Acquisition Date |
|||||||||||
Prior to 2012 |
August 1, 2012 |
Total |
|||||||||
Number of properties |
11 |
1 |
12 |
||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
5,346 |
$ |
188 |
$ |
5,534 |
|||||
Other property-related revenue |
148 |
9 |
157 |
||||||||
Total revenue |
5,494 |
197 |
5,691 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
1,396 |
45 |
1,441 |
||||||||
Real estate taxes |
543 |
12 |
555 |
||||||||
Supervisory and administrative fees |
306 |
11 |
317 |
||||||||
Total certain expenses |
2,245 |
68 |
2,313 |
||||||||
Revenue in excess of certain expenses |
$ |
3,249 |
$ |
129 |
$ |
3,378 |
|||||
5. RELATED PARTY TRANSACTIONS
The Optivest 2014 Properties are subject to agreements entered into with Optivest that provide for a fee equal to 6% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Optivest consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Optivest 2014 Properties are employees of Optivest. The amounts charged by Optivest for salaries, wages and benefits for the Optivest 2014 Properties are included in property operating expenses and amounted to $477 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or September 30, 2014, $886 for the year ended December 31, 2013, and $696 for the period commencing upon the later of January 1, 2012 or the respective acquisition date by Optivest through December 31, 2012.
6. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through December 5, 2014, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-19
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of the Guardian 2014 Properties for the years ended December 31, 2013 and 2012, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of the Guardian 2014 Properties for the years ended December 31, 2013 and 2012, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the Guardian 2014 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
March 23, 2015
Denver, Colorado
March 23, 2015
F-20
Guardian 2014 Properties
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA
or October 8, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through the Earlier of the Respective Acquisition Dates by NSA
or October 8, 2014 (Unaudited), and for the Years Ended December 31, 2013 and 2012
(dollars in thousands)
2014(a)
|
2013 |
2012 |
|||||||||
(Unaudited) |
|||||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
10,261 |
$ |
15,469 |
$ |
14,896 |
|||||
Other property-related revenue |
605 |
828 |
441 |
||||||||
Total revenue |
10,866 |
16,297 |
15,337 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
2,396 |
3,709 |
3,875 |
||||||||
Real estate taxes |
882 |
1,286 |
1,254 |
||||||||
Supervisory and administrative fees |
685 |
911 |
887 |
||||||||
Total certain expenses |
3,963 |
5,906 |
6,016 |
||||||||
Revenue in excess of certain expenses |
$ |
6,903 |
$ |
10,391 |
$ |
9,321 |
|||||
(a) |
See Note 3 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-21
Guardian 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") acquired 19 self-storage properties during the period from January 1, 2014 through October 8, 2014 (collectively, the "Guardian 2014 Properties") through Guardian Storage Centers, LLC ("Guardian"). Guardian is one of NSA's participating regional operators.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Guardian 2014 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Guardian 2014 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Guardian 2014 Properties.
The unaudited interim combined statement of revenue and certain expenses for the period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014, was prepared on the same basis as the combined statements of revenue and certain expenses for the years ended December 31, 2013 and 2012, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Guardian 2014 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $212 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014, $275 for the year ended December 31, 2013, and $279 for the year ended December 31, 2012.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Guardian 2014 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $79 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014, $106 for the year ended December 31, 2013, and $101 for the year ended December 31, 2012.
F-22
Guardian 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. UNAUDITED INTERIM OPERATING RESULTS BY NSA ACQUISITION DATE
Presented below is the unaudited revenue and certain expenses for each group of acquisitions for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014:
NSA Acquisition Date |
|||||||||||||||||||||||||||
April 1, 2014 |
May 31, 2014 |
July 1, 2014 |
September 17, 2014 |
October 1, 2014 |
October 8, 2014 |
Total |
|||||||||||||||||||||
Number of properties |
2 |
2 |
2 |
7 |
5 |
1 |
19 |
||||||||||||||||||||
Revenue |
|||||||||||||||||||||||||||
Rental revenue |
$ |
404 |
$ |
278 |
$ |
482 |
$ |
5,205 |
$ |
2,772 |
$ |
1,120 |
$ |
10,261 |
|||||||||||||
Other property-related revenue |
21 |
23 |
43 |
267 |
179 |
72 |
605 |
||||||||||||||||||||
Total revenue |
425 |
301 |
525 |
5,472 |
2,951 |
1,192 |
10,866 |
||||||||||||||||||||
Certain Expenses |
|||||||||||||||||||||||||||
Property operating expenses |
87 |
126 |
168 |
1,115 |
731 |
169 |
2,396 |
||||||||||||||||||||
Real estate taxes |
39 |
17 |
38 |
464 |
216 |
108 |
882 |
||||||||||||||||||||
Supervisory and administrative fees |
22 |
18 |
31 |
368 |
174 |
72 |
685 |
||||||||||||||||||||
Total certain expenses |
148 |
161 |
237 |
1,947 |
1,121 |
349 |
3,963 |
||||||||||||||||||||
Revenue in excess of certain expenses |
$ |
277 |
$ |
140 |
$ |
288 |
$ |
3,525 |
$ |
1,830 |
$ |
843 |
$ |
6,903 |
|||||||||||||
(a) |
Represents properties that NSA has a contractual right to acquire. See also Note 6. |
4. RELATED PARTY TRANSACTIONS
The Guardian 2014 Properties are subject to agreements entered into with Guardian for supervisory, administrative, leasing and related services. The fees range from approximately 4.0% to 6.5% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses.
The employees responsible for operation of the Guardian 2014 Properties are employees of Guardian. The amounts charged by Guardian for salaries, wages and benefits for the Guardian 2014 Properties are included in property operating expenses and amounted to $1,106 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014, $1,810 for the year ended December 31, 2013, and $1,796 for the year ended December 31, 2012.
F-23
Guardian 2014 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
5. COMMITMENTS
One self-storage property included in the Guardian 2014 Properties is subject to a long-term ground lease agreement that is classified as an operating lease. This agreement provides for a minimum lease term that expires in 2045. The lease agreement provides for six 5-year extension options that, if exercised, would extend the lease expiration until 2075. The ground lease agreement provides for fixed increases of 10% after every 5-year period and, accordingly, Guardian has recognized lease expense on a straight-line basis over the entire minimum lease term. Rent expense under this ground lease agreement is included in property operating expenses and amounted to $67 (unaudited) for the interim period from January 1, 2014 through the earlier of the respective acquisition dates by NSA or October 8, 2014, $94 for the year ended December 31, 2013, and $94 for the year ended December 31, 2012.
Future minimum cash payments under this ground lease are as follows:
Year Ending December 31: |
|||
2015 |
$ |
77 |
|
2016 |
80 |
||
2017 |
80 |
||
2018 |
80 |
||
2019 |
80 |
||
Thereafter |
2,715 |
||
Total |
$ |
3,112 |
|
6. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through March 23, 2015, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-24
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of the Guardian 2015 Properties for the years ended December 31, 2014, 2013 and 2012, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of the Guardian 2015 Properties for the years ended December 31, 2014, 2013 and 2012, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the Guardian 2015 Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
March 23, 2015
March 23, 2015
F-25
Guardian 2015 Properties
Combined Statements of Revenue and Certain Expenses
For the Years Ended December 31, 2014, 2013 and 2012
(dollars in thousands)
2014 |
2013 |
2012 |
|||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
4,744 |
$ |
4,588 |
$ |
4,505 |
|||||
Other property-related revenue |
217 |
251 |
114 |
||||||||
Total revenue |
4,961 |
4,839 |
4,619 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
1,945 |
1,834 |
1,870 |
||||||||
Real estate taxes |
187 |
184 |
184 |
||||||||
Supervisory and administrative fees |
257 |
248 |
237 |
||||||||
Total certain expenses |
2,389 |
2,266 |
2,291 |
||||||||
Revenue in excess of certain expenses |
$ |
2,572 |
$ |
2,573 |
$ |
2,328 |
|||||
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-26
Guardian 2015 Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") acquired six self-storage properties during January 2015 (collectively, the "Guardian 2015 Properties") through Guardian Storage Centers, LLC ("Guardian"). Guardian is one of NSA's participating regional operators.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Guardian 2015 Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Guardian 2015 Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Guardian 2015 Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the customer leases associated with the Guardian 2015 Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $87, $76 and $63 for the years ended December 31, 2014, 2013 and 2012, respectively.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Guardian 2015 Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $44, $42 and $39 for the years ended December 31, 2014, 2013, and 2012, respectively.
3. RELATED PARTY TRANSACTIONS
The Guardian 2015 Properties are subject to agreements entered into with Guardian for supervisory, administrative, leasing and related services. The fees range from approximately 4.0% to 6.5% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses.
The employees responsible for operation of the Guardian 2015 Properties are employees of Guardian. The amounts charged by Guardian for salaries, wages and benefits for the Guardian 2015 Properties are included in property operating expenses and amounted to $520, $549, and $599 for the years ended December 31, 2014, 2013, and 2012, respectively.
F-27
Guardian 2015 Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
4. COMMITMENTS
Three self-storage properties included in the Guardian 2015 Properties are subject to long-term ground lease agreements that are classified as operating leases. These agreements provide for minimum lease terms that expire between 2024 and 2031. The lease agreements provide for extension options that if exercised would extend the lease expirations between 2034 and 2051. Two of the three ground lease agreements provide for fixed rental increases between 12.0% and 12.5% after every five year period and, accordingly, Guardian has recognized lease expense on a straight-line basis over the entire minimum lease terms.
One of the ground lease agreements provides for fixed annual rentals of $250 over the entire lease term plus contingent rentals to the extent that 20% of gross annual revenue from the property exceeds fixed annual rentals of $250. For the year ended December 31, 2014, contingent rentals amounted to $30.
Rent expense under all three ground lease agreements is included in property operating expenses and amounted to $665 (including contingent rentals of $30) for each of the years ended December 31, 2014, 2013, and 2012.
Future minimum cash payments (exclusive of contingent rentals) under ground leases are as follows:
Year Ending December 31: |
|||
2015 |
$ |
735 |
|
2016 |
744 |
||
2017 |
752 |
||
2018 |
752 |
||
2019 |
766 |
||
Thereafter |
5,833 |
||
Total |
$ |
9,582 |
|
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through March 23, 2015, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-28
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of the All Stor Properties for the period from the later of January 1, 2014 or All Stor's respective acquisition date (as set forth in Note 3) through December 31, 2014, and for the period from the later of March 14, 2013 or All Stor's respective acquisition dates (as set forth in Note 4) through December 31, 2013, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of the All Stor Properties for the period from the later of January 1, 2014 or All Stor's respective acquisition date (as set forth in Note 3) through December 31, 2014, and for the period from the later of March 14, 2013 or All Stor's respective acquisition dates (as set forth in Note 4) through December 31, 2013, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the All Stor Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
March 23, 2015
March 23, 2015
F-29
All Stor Properties
Combined Statements of Revenue and Certain Expenses
For the Period from the Later of January 1, 2014 or All Stor's Respective Acquisition Date Through
December 31, 2014, and the Period from the Later of March 14, 2013 or All Stor's Respective
Acquisition Dates Through December 31, 2013
December 31, 2014, and the Period from the Later of March 14, 2013 or All Stor's Respective
Acquisition Dates Through December 31, 2013
(dollars in thousands)
2014(a)
|
2013(b)
|
||||||
Revenue |
|||||||
Rental revenue |
$ |
6,168 |
$ |
3,698 |
|||
Other property-related revenue |
373 |
131 |
|||||
Total revenue |
6,541 |
3,829 |
|||||
Certain Expenses |
|||||||
Property operating expenses |
1,741 |
996 |
|||||
Real estate taxes |
404 |
220 |
|||||
Supervisory and administrative fees |
392 |
230 |
|||||
Total certain expenses |
2,537 |
1,446 |
|||||
Revenue in excess of certain expenses |
$ |
4,004 |
$ |
2,383 |
|||
(a) |
See Note 3 for the number of properties and the related periods presented. |
(b) |
See Note 4 for the number of properties and the related periods presented. |
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-30
All Stor Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") is under contract to acquire 12 self-storage properties (collectively, the "All Stor Properties") from All Stor Storage, LLC ("All Stor"). All Stor purchased these properties on various dates between March 14, 2013 and February 6, 2014.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the All Stor Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the All Stor Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the All Stor Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the All Stor Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $108 for the period from the later of January 1, 2014 or All Stor's respective acquisition date (as set forth in Note 3) through December 31, 2014, and $66 for the period from the later of March 14, 2013 or All Stor's respective acquisition dates (as set forth in Note 4) through December 31, 2013.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the All Stor Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $122 for the period from the later of January 1, 2014 or All Stor's respective acquisition date (as set forth in Note 3) through December 31, 2014, and $89 for the period from the later of March 14, 2013 or All Stor's respective acquisition dates (as set forth in Note 4) through December 31, 2013.
F-31
All Stor Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
3. OPERATING RESULTS FOR 2014 BY ALL STOR ACQUISITION DATE
Presented below is the revenue and certain expenses for 11 properties acquired by All Stor in 2013, which are included for the entire period from January 1, 2014 through December 31, 2014, and the acquisition completed by All Stor on February 6, 2014, which is included for the period from February 6, 2014 through December 31, 2014:
Acquisition Date by All Stor |
|||||||||||
Various Dates 2013 |
February 6, 2014 |
Total |
|||||||||
Number of properties |
11 |
1 |
12 |
||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
5,779 |
$ |
389 |
$ |
6,168 |
|||||
Other property-related revenue |
345 |
28 |
373 |
||||||||
Total revenue |
6,124 |
417 |
6,541 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
1,610 |
131 |
1,741 |
||||||||
Real estate taxes |
382 |
22 |
404 |
||||||||
Supervisory and administrative fees |
367 |
25 |
392 |
||||||||
Total certain expenses |
2,359 |
178 |
2,537 |
||||||||
Revenue in excess of certain expenses |
$ |
3,765 |
$ |
239 |
$ |
4,004 |
|||||
4. OPERATING RESULTS FOR 2013 BY ALL STOR ACQUISITION DATE
Presented below is the revenue and certain expenses for 11 properties acquired by All Stor in 2013, which are included for the period from the later of March 14, 2013 or All Stor's respective acquisition dates through December 31, 2013:
Date Acquired by All Stor |
|||||||||||||||||||||||
March 14, 2013 |
April 4, 2013 |
May 9, 2013 |
May 23, 2013 |
August 28, 2013 |
Total |
||||||||||||||||||
Number of properties |
2 |
4 |
1 |
3 |
1 |
11 |
|||||||||||||||||
Revenue |
|||||||||||||||||||||||
Rental revenue |
$ |
508 |
$ |
1,593 |
$ |
380 |
$ |
1,026 |
$ |
191 |
$ |
3,698 |
|||||||||||
Other property-related revenue |
9 |
101 |
3 |
18 |
— |
131 |
|||||||||||||||||
Total revenue |
517 |
1,694 |
383 |
1,044 |
191 |
3,829 |
|||||||||||||||||
Certain Expenses |
|||||||||||||||||||||||
Property operating expenses |
179 |
427 |
85 |
267 |
38 |
996 |
|||||||||||||||||
Real estate taxes |
40 |
114 |
24 |
38 |
4 |
220 |
|||||||||||||||||
Supervisory and administrative fees |
31 |
102 |
23 |
63 |
11 |
230 |
|||||||||||||||||
Total certain expenses |
250 |
643 |
132 |
368 |
53 |
1,446 |
|||||||||||||||||
Revenue in excess of certain expenses |
$ |
267 |
$ |
1,051 |
$ |
251 |
$ |
676 |
$ |
138 |
$ |
2,383 |
|||||||||||
F-32
All Stor Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
5. RELATED PARTY TRANSACTIONS
The All Stor Properties are subject to agreements that provide for a fee equal to 6% of gross revenue (as defined in the agreements). These agreements were entered into with Square Foot Management Company, LLC ("Square Foot"), an affiliate of All Stor. The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Square Foot consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the All Stor Properties are employees of Square Foot. The amounts charged by Square Foot for salaries, wages and benefits for the All Stor Properties are included in property operating expenses and amounted to $781 for the period from the later of January 1, 2014 or All Stor's respective acquisition date (as set forth in Note 3) through December 31, 2014, and $432 for the period from the later of March 14, 2013 or All Stor's respective acquisition dates (as set forth in Note 4) through December 31, 2013.
6. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through March 23, 2015, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-33
REPORT OF INDEPENDENT AUDITORS
To National Storage Affiliates Trust:
We have audited the accompanying combined statements of revenue and certain expenses of the Move It Properties for the year ended December 31, 2013, and the related notes to the financial statements.
Management's Responsibility for Financial Statements
Management is responsible for the preparation and fair presentation of these financial statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement of revenue and certain expenses. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statement of the Move It Properties for the year ended December 31, 2013, in accordance with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of revenue and expenses of the Move It Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
November 21, 2014
November 21, 2014
F-34
Move It Properties
Combined Statements of Revenue and Certain Expenses
Interim Period from January 1, 2014 Through September 4, 2014 (Unaudited), and
for the Year Ended December 31, 2013
for the Year Ended December 31, 2013
(dollars in thousands)
2014 |
2013 |
||||||
(Unaudited) |
|||||||
Revenue |
|||||||
Rental revenue |
$ |
3,951 |
$ |
5,501 |
|||
Other property-related revenue |
55 |
81 |
|||||
Total revenue |
4,006 |
5,582 |
|||||
Certain Expenses |
|||||||
Property operating expenses |
1,262 |
2,189 |
|||||
Real estate taxes |
390 |
499 |
|||||
Total certain expenses |
1,652 |
2,688 |
|||||
Revenue in excess of certain expenses |
$ |
2,354 |
$ |
2,894 |
|||
The accompanying notes are an integral part of these combined statements of revenue and
certain expenses.
certain expenses.
F-35
Move It Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust ("NSA") acquired nine self-storage properties on September 4, 2014 (collectively, the "Move It Properties") through Move It Self Storage, LP ("Move It"). Move It is one of NSA's participating regional operators.
The accompanying combined statements of revenue and certain expenses (the "Statements") of the Move It Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Move It Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Move It Properties.
The unaudited interim combined statement of revenue and certain expenses for the period from January 1, 2014 through September 4, 2014, was prepared on the same basis as the combined statement of revenue and certain expenses for the year ended December 31, 2013, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Move It Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $44 (unaudited) for the interim period from January 1, 2014 through September 4, 2014, and $160 for the year ended December 31, 2013.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Move It Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $61 (unaudited) for the interim period from January 1, 2014 through September 4, 2014, and $125 for the year ended December 31, 2013.
4. RELATED PARTY TRANSACTIONS
The employees responsible for operation of the Move It Properties are employees of Move It. The amounts charged by Move It for salaries, wages and benefits for the Move It Properties are included in property operating expenses and amounted to $622 (unaudited) for the interim period from January 1, 2014 through September 4, 2014, and $987 for the year ended December 31, 2013.
F-36
Move It Properties
Notes to Combined Statements of Revenue and Certain Expenses (Continued)
(dollars in thousands)
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through November 21, 2014, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-37
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying combined statements of revenue and certain expenses of the Hide-Away Properties for the year ended December 31, 2015, and the related notes to the combined financial statements.
MANAGEMENT'S RESPONSIBILITY FOR COMBINED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of the Hide-Away Properties for the year ended December 31, 2015, in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the combined financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the Hide-Away Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-38
Hide-Away Properties
Combined Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
2016 |
2015 |
||||||
(Unaudited) |
|||||||
Revenue |
|||||||
Rental revenue |
$ |
3,492 |
$ |
12,837 |
|||
Other property-related revenue |
14 |
89 |
|||||
Total revenue |
3,506 |
12,926 |
|||||
Certain Expenses |
|||||||
Property operating expenses |
971 |
4,121 |
|||||
Real estate taxes |
212 |
847 |
|||||
Supervisory and administrative fees |
206 |
753 |
|||||
Total certain expenses |
1,389 |
5,721 |
|||||
Revenue in excess of certain expenses |
$ |
2,117 |
$ |
7,205 |
|||
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-39
Hide-Away Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired twelve self-storage properties and two warehouses that support the mobile storage business on April 1, 2016 (the “Hide-Away Properties”) from parties related to Hide-Away Storage Services, Inc. (“Hide-Away”). Hide-Away is one of NSA’s participating regional operators.
The accompanying combined statements of revenue and certain expenses (the “Statements”) of the Hide-Away Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Hide-Away Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Hide-Away Properties.
The unaudited interim combined statements of revenue and certain expenses for the period from January 1, 2016 through March 31, 2016, were prepared on the same basis as the combined statements of revenue and certain expenses for the year ended December 31, 2015, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Hide-Away Properties are operating leases. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $35 (unaudited) and $181 for the three months ended March 31, 2016 and for the year ended December 31, 2015, respectively.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Hide-Away Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $59 (unaudited) and $297 for the three months ended March 31, 2016 and for the year ended December 31, 2015, respectively.
3. OPERATING LEASE AGREEMENTS
Leases associated with the self storage properties and the mobile storage business may generally be terminated on a month-to-month basis. Certain leases with customers for use of space in the warehouses or real property used for cellular towers and billboards have multi-year terms.
The following table summarizes the minimum lease payments for leases with lease periods greater than one year at December 31, 2015:
F-40
2016 |
$ |
237 |
|
2017 |
281 |
||
2018 |
284 |
||
2019 |
279 |
||
2020 |
115 |
||
Thereafter |
169 |
||
Total |
$ |
1,365 |
|
These amounts do not reflect future rental revenues from the renewal or replacement of existing leases and exclude reimbursements of operating expenses.
4. RELATED PARTY TRANSACTIONS
The Hide-Away Properties are subject to agreements entered into with Hide-Away that provide for a fee equal to 6% of gross revenue and a monthly accounting fee (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by Hide-Away consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Hide-Away Properties are employees of Hide-Away. The amounts charged by Hide-Away for salaries, wages and benefits for the Hide-Away Properties are included in property operating expenses and amounted to $413 (unaudited) and $1,744 for the three months ended March 31, 2016 and for the year ended December 31, 2015, respectively.
5. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-41
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying combined statements of revenue and certain expenses of the SecurCare Oklahoma Properties for the years ended December 31, 2015, 2014 and 2013 and the related notes to the combined financial statements.
MANAGEMENT'S RESPONSIBILITY FOR COMBINED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined financial statements that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these combined financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the combined financial statements of the SecurCare Oklahoma Properties for the years ended December 31, 2015, 2014 and 2013 in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the combined financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the SecurCare Oklahoma Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-42
SecurCare Oklahoma Properties
Combined Statements of Revenue and Certain Expenses
For the Years Ended December 31, 2015, 2014 and 2013
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
For the Years Ended December 31, 2015, 2014 and 2013
(dollars in thousands)
2015 |
2014 |
2013 |
|||||||||
Revenue |
|||||||||||
Rental revenue |
$ |
1,327 |
$ |
1,102 |
$ |
1,043 |
|||||
Other property-related revenue |
24 |
19 |
9 |
||||||||
Total revenue |
1,351 |
1,121 |
1,052 |
||||||||
Certain Expenses |
|||||||||||
Property operating expenses |
354 |
343 |
327 |
||||||||
Real estate taxes |
126 |
126 |
86 |
||||||||
Supervisory and administrative fees |
74 |
61 |
55 |
||||||||
Total certain expenses |
554 |
530 |
468 |
||||||||
Revenue in excess of certain expenses |
$ |
797 |
$ |
591 |
$ |
584 |
|||||
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-43
SecurCare Oklahoma Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired three self storage properties on January 1, 2016 (the “SecurCare Oklahoma Properties” or “Oklahoma Properties”) through SecurCare Self Storage, Inc. (“SecurCare”). The properties have been owned and managed by SecurCare from 2012 through the date that NSA acquired the properties. One of the properties was destroyed by a tornado during 2013 and subsequently reconstructed, with operations re-commencing in late 2013.
The accompanying combined statements of revenue and certain expenses (the “Statements”) of the SecurCare Oklahoma Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the SecurCare Oklahoma Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the SecurCare Oklahoma Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the SecurCare Oklahoma Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $25, $26 and $25 for the years ended December 31, 2015, 2014 and 2013, respectively.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the SecurCare Oklahoma Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $9, $11 and $7 for the years ended December 31, 2015, 2014 and 2013, respectively.
3. RELATED PARTY TRANSACTIONS
The SecurCare Oklahoma Properties are subject to agreements entered into with SecurCare that provide for a fee equal to 5% to 6% of gross revenue (as defined in the agreements). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by SecurCare consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Oklahoma Properties are employees of SecurCare. The amounts charged by SecurCare for salaries, wages and benefits for the Oklahoma Properties are included in property operating expenses and amounted to $141, $134 and $128 for the years ended December 31, 2015, 2014 and 2013, respectively.
4. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.
F-44
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying statement of revenue and certain expenses of the Fondren Self Storage Property for the year ended December 31, 2015, and the related notes to the financial statement.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined statement of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statement of the Fondren Self Storage Property for the year ended December 31, 2015, in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the financial statement, the statement of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of revenue and expenses of the Fondren Self Storage Property. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-45
Fondren Self Storage Property
Statement of Revenue and Certain Expenses
For the Year Ended December 31, 2015
Statement of Revenue and Certain Expenses
For the Year Ended December 31, 2015
(dollars in thousands)
2015 |
|||
Revenue |
|||
Rental revenue |
$ |
530 |
|
Other property-related revenue |
16 |
||
Total revenue |
546 |
||
Certain Expenses |
|||
Property operating expenses |
195 |
||
Real estate taxes |
64 |
||
Supervisory and administrative fees |
32 |
||
Total certain expenses |
291 |
||
Revenue in excess of certain expenses |
$ |
255 |
|
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-46
Fondren Self Storage Property
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired one self-storage property on January 22, 2016 (the “Fondren Self Storage Property” or “Fondren”) through Move It Self Storage, LP (“Move It”). The property has been managed by Move It from 2002 through the date that NSA acquired the property. Move It is one of NSA’s participating regional operators.
The accompanying statement of revenue and certain expenses (the “Statement”) of the Fondren Self Storage Property has been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statement is not representative of the entire operations of the Fondren Self Storage Property for the period presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Fondren Self Storage Property.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Fondren Self Storage Property are operating leases, which generally may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $18 for the year ended December 31, 2015.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Fondren Self Storage Property were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $15 for the year ended December 31, 2015.
3. RELATED PARTY TRANSACTIONS
The Fondren Self Storage Property is subject to an agreement entered into with Move It that provides for a fee equal to 6% of gross revenue (as defined in the agreement and subject to a minimum). The amounts incurred under the agreement are included in supervisory and administrative fees in the accompanying statement of revenue and certain expenses. The services provided by Move It consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of Fondren are employees of Move It. The amounts charged by Move It for salaries, wages and benefits for Fondren are included in property operating expenses and amounted to $57 for the year ended December 31, 2015.
4. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statement was available to be issued, and noted no items requiring adjustment of the Statement or additional disclosure.
F-47
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying statement of revenue and certain expenses of the Granite Clover Self Storage Properties for the year ended December 31, 2015, and the related notes to the financial statement.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the financial statement in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined statement of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statement of the Granite Clover Self Storage Properties for the year ended December 31, 2015, in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the financial statement, the statement of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of revenue and expenses of the Granite Clover Self Storage properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-48
Granite Clover Self Storage Properties
Combined Statement of Revenue and Certain Expenses
For the Year Ended December 31, 2015
Combined Statement of Revenue and Certain Expenses
For the Year Ended December 31, 2015
(dollars in thousands)
2015 |
|||
Revenue |
|||
Rental revenue |
$ |
2,226 |
|
Other property-related revenue |
3 |
||
Total revenue |
2,229 |
||
Certain Expenses |
|||
Property operating expenses |
645 |
||
Real estate taxes |
242 |
||
Total certain expenses |
887 |
||
Revenue in excess of certain expenses |
$ |
1,342 |
|
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-49
Granite Clover Self Storage Properties
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired five self-storage properties in New Hampshire on February 22, 2016 (the “Granite Clover Self Storage Properties” or “Granite Clover”) from an unrelated third-party (the “Seller”).
The accompanying combined statement of revenue and certain expenses (the “Statement”) of the Granite Clover Self Storage Properties has been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statement is not representative of the entire operations of the Granite Clover Self Storage Properties for the period presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Granite Clover Self Storage Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Granite Clover Self Storage Properties are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $36 for the year ended December 31, 2015.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Granite Clover Self Storage Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $21 for the year ended December 31, 2015.
3. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statement was available to be issued, and noted no items requiring adjustment of the Statement or additional disclosure.
F-50
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying combined statements of revenue and certain expenses of the Gulf Coast Properties for the year ended December 31, 2015, and the related notes to the financial statements.
MANAGEMENT'S RESPONSIBILITY FOR COMBINED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined financial statements that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the combined financial statements of the Gulf Coast Properties for the year ended December 31, 2015, in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the combined financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and are not intended to be a complete presentation of revenue and expenses of the Gulf Coast Properties. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-51
Gulf Coast Properties
Combined Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
Combined Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
2016 |
2015 |
||||||
(Unaudited) |
|||||||
Revenue |
|||||||
Rental revenue |
$ |
770 |
$ |
3,000 |
|||
Other property-related revenue |
10 |
46 |
|||||
Total revenue |
780 |
3,046 |
|||||
Certain Expenses |
|||||||
Property operating expenses |
201 |
982 |
|||||
Real estate taxes |
50 |
201 |
|||||
Supervisory and administrative fees |
40 |
155 |
|||||
Total certain expenses |
291 |
1,338 |
|||||
Revenue in excess of certain expenses |
$ |
489 |
$ |
1,708 |
|||
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-52
Gulf Coast Properties
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statements of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired five self-storage properties located in Louisianna, Mississippi, and Alabama on April 12, 2016 (the “Gulf Coast Properties” or “Gulf Coast”) from and unrelated third party (the “Seller”).
The accompanying combined statements of revenue and certain expenses (the “Statements”) of the Gulf Coast Properties have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Gulf Coast Properties for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Gulf Coast Properties.
The unaudited interim combined statements of revenue and certain expenses for the period from January 1, 2016 through March 31, 2016, were prepared on the same basis as the combined statements of revenue and certain expenses for the year ended December 31, 2015, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Gulf Coast Properties are operating leases, which generally may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $1 (unaudited) and $19 for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Gulf Coast Properties were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $5 (unaudited) and $40 for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively.
3. RELATED PARTY TRANSACTIONS
The Gulf Coast Properties are subject to agreements entered into with CubeSmart Asset Management, LLC (“CubeSmart”) that provide for a fee equal to 5% of gross revenue (as defined in the agreements and subject to a minimum). The amounts incurred under these agreements are included in supervisory and administrative fees in the accompanying combined statements of revenue and certain expenses. The services provided by CubeSmart consist of supervisory, administrative, leasing and related services.
The employees responsible for operation of the Gulf Coast Properties are employees of CubeSmart. The amounts charged by CubeSmart for salaries, wages and benefits for Gulf Coast are included in property operating expenses and amounted to $91 (unaudited) and $356 for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively.
F-53
4. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statements was available to be issued, and noted no items requiring adjustment of the Statement or additional disclosure.
F-54
INDEPENDENT AUDITORS REPORT
To National Storage Affiliates Trust
We have audited the accompanying statement of revenue and certain expenses of the Storage Central Property for the year ended December 31, 2015, and the related notes to the financial statements.
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements of revenue and certain expenses. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 to the financial statements of the Storage Central Property for the year ended December 31, 2015, in accordance with U.S. generally accepted accounting principles.
BASIS OF ACCOUNTING
As described in Note 1 to the financial statements, the statements of revenue and certain expenses have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of revenue and expenses of the Storage Central Property. Our opinion is not modified with respect to this matter.
/s/ EKS&H LLLP
Denver, Colorado
May 24, 2016
F-55
Storage Central Property
Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2016 (Unaudited),
and for the Year Ended December 31, 2015
(dollars in thousands)
2016 |
2015 |
||||||
(Unaudited) |
|||||||
Revenue |
|||||||
Rental revenue |
$ |
262 |
$ |
969 |
|||
Other property-related revenue |
9 |
49 |
|||||
Total revenue |
271 |
1,018 |
|||||
Certain Expenses |
|||||||
Property operating expenses |
36 |
170 |
|||||
Real estate taxes |
12 |
50 |
|||||
Total certain expenses |
48 |
220 |
|||||
Revenue in excess of certain expenses |
$ |
223 |
$ |
798 |
|||
The accompanying notes are an integral part of these statements of revenue and certain expenses.
F-56
Storage Central Property
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
Notes to Combined Statement of Revenue and Certain Expenses
(dollars in thousands)
1. BASIS OF PRESENTATION
National Storage Affiliates Trust (“NSA”) acquired one self-storage property located in Oregon on April 15, 2016 (the “Storage Central Property” or “Storage Central”) from an unrelated third party (the “Seller”).
The accompanying statements of revenue and certain expenses (the “Statements”) of the Storage Central Property have been prepared pursuant to Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission. Accordingly, the Statements are not representative of the entire operations of the Storage Central Property for the periods presented as certain items are excluded. Such omitted items consist of depreciation and amortization, interest expense, and administrative costs not directly related to the future operations of the Storage Central Property.
The unaudited interim statement of revenue and certain expenses for the period from January 1, 2016 through March 31, 2016, was prepared on the same basis as the statements of revenue and certain expenses for the year ended December 31, 2015, and reflects all adjustments, consisting of only normal recurring adjustments, which are, in the opinion of management necessary for a fair presentation of the results of the unaudited interim period. The results of the unaudited interim period are not necessarily indicative of the expected results for the entire fiscal year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Management has determined that all of the leases associated with the Storage Central Property are operating leases, which may be terminated on a month-to-month basis. Rental income is recognized ratably over the lease term using the straight-line method. Rents received in advance are deferred and recognized on a straight-line basis over the related lease term associated with the prepayment. Promotional discounts and other incentives are recognized as a reduction to rental income over the applicable lease term. Other property-related revenue consists of ancillary revenues such as tenant insurance commissions and sales of storage supplies, which are recognized in the period earned.
Advertising Costs. Advertising costs are primarily attributable to internet, directory and other advertising. Advertising costs were expensed in the period in which the cost was incurred. Advertising costs amounted to $2 (unaudited) and $8 for the three months ended March 31, 2016 and for the year ended December 31, 2015, respectively.
Repairs and Maintenance. Major replacements and betterments that improved or extended the life of the Storage Central Property were capitalized. Expenditures for ordinary repairs and maintenance were expensed as incurred. Repairs and maintenance amounted to $0 (unaudited) and $19 for the three months ended March 31, 2016 and for the year ended December 31, 2015, respectively.
3. SUBSEQUENT EVENTS
Management has evaluated the events and transactions that have occurred through May 24, 2016, the date that the Statements were available to be issued, and noted no items requiring adjustment of the Statement or additional disclosure.
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