Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.19.3
Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

7. Related party transactions

We manage certain industrial, office and retail facilities in the United States for PS under either the “Public Storage” or “PS Business Parks” names (the “PS Management Agreement”). Under PS’s supervision, we coordinate and assist in rental and marketing activities, property maintenance and other operational activities, including the selection of vendors, suppliers, employees and independent contractors. We receive a management fee based upon a percentage of revenues, which is included in “interest and other income” on our consolidated statements of income. Management fee revenues were $71,000 and $93,000 for the three months ended September 30, 2019 and 2018, respectively, and $221,000 and $331,000 for the nine months ended September 30, 2019 and 2018, respectively. We allocate certain operating expenses to PS related to the management of these properties, including payroll and other business expenses, totaling $89,000 and $101,000 for the three months ended September 30, 2019 and 2018, respectively, and $282,000 and $376,000 for the nine months ended September 30, 2019 and 2018, respectively.

The PS Business Parks name and logo are owned by PS and licensed to us under a non-exclusive, royalty-free license agreement. The license can be terminated by either party for any reason with six months written notice.

PS provides us property management services for the self-storage component of two assets we own and operates them under the “Public Storage” name. Either the Company or PS can cancel the property management contract upon 60 days’ notice. Under our supervision, PS coordinates and assists in rental and marketing activities, and property maintenance and other operational activities, including the selection of vendors, suppliers, employees and independent contractors. Management fee expenses were $25,000 and $24,000 for the three months ended September 30, 2019 and 2018, respectively, and $74,000 and $72,000 for the nine months ended September 30, 2019 and 2018, respectively. Additionally, PS allocated certain operating expenses to us related to the management of these properties totaling $19,000 and $16,000 for the three months ended September 30, 2019 and 2018, respectively, and $56,000 and $51,000 for the nine months ended September 30, 2019 and 2018, respectively. These amounts are included under “cost of operations” on our consolidated statements of income.

Pursuant to a cost sharing agreement, we share certain administrative services, corporate office space, and certain other third party costs with PS which are allocated based upon fair and reasonable estimates of the cost of the services expected to be provided. We reimbursed PS $448,000 and $170,000 for costs PS incurred on our behalf for the three months ended September 30, 2019 and 2018, respectively, and $868,000 and $586,000 for the nine months ended September 30, 2019 and 2018, respectively. PS reimbursed us $9,000 and $10,000 for costs we incurred on their behalf for the three months ended September 30, 2019 and 2018, respectively, and $26,000 and $29,000 for the nine months ended September 30, 2019 and 2018, respectively.

The Company had net amounts due to PS of $152,000 at September 30, 2019 and due from PS of $43,000 at December 31, 2018 for these contracts, as well as certain operating expenses paid by the Company on behalf of PS.