XML 26 R13.htm IDEA: XBRL DOCUMENT

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

6 Months Ended

Jun. 30, 2021

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

The Company’s investments in unconsolidated real estate ventures, in which it holds common ownership interests, are summarized as follows (in thousands):


		CubeSmart		Number of Stores as of				Carrying Value of Investment as of
		Ownership		June 30,		December 31,		June 30,			December 31,
Unconsolidated Real Estate Ventures		Interest		2021		2020		2021			2020
191 V CUBE LLC ("HVP V") ⁽¹⁾		20%		2		-		$	7,364		$	-
191 IV CUBE Southeast LLC ("HVPSE") ⁽²⁾		10%		14		14			4,872			5,015
191 IV CUBE LLC ("HVP IV") ⁽³⁾		20%		27		21			25,141			21,760
CUBE HHF Northeast Venture LLC ("HHFNE") ⁽⁴⁾		10%		13		13			1,448			1,628
CUBE HHF Limited Partnership ("HHF") ⁽⁵⁾		50%		35		35			58,476			63,668
				91		83		$	97,301		$	92,071

(1)

On March 17, 2021, the Company invested a 20% ownership interest in a newly-formed real estate venture that acquired its initial self-storage property located in Florida. A second self-storage property in Florida was purchased by HVP V on June 29, 2021. HVP V paid an aggregate of $37.0 million for these stores, of which $1.5 million was allocated to the value of the in-place lease intangible. The purchase price was contributed pro-rata by the Company and its unaffiliated joint venture partner. The Company’s total contribution to HVP V related to these acquisitions was $7.4 million.

(2)

On March 19, 2020, the Company invested a 10% ownership interest in a newly-formed real estate venture that acquired 14 self-storage properties located in Florida (2), Georgia (8) and South Carolina (4). HVPSE paid $135.3 million for these stores, of which $7.7 million was allocated to the value of the in-place lease intangible. The acquisition was funded primarily through the venture’s $81.6 million secured term loan. The remainder of the purchase price was contributed pro-rata by the Company and its unaffiliated joint venture partner. The Company’s total contribution to HVPSE related to this portfolio acquisition was $5.6 million. The secured loan bears interest at LIBOR plus 1.60% and matures on March 19, 2023 with options to extend the maturity date through March 19, 2025, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement.

(3)

The stores owned by HVP IV are located in Arizona (2), Connecticut (3), Florida (4), Georgia (2), Illinois (4), Maryland (2), Minnesota (1), Pennsylvania (1) and Texas (8). The Company’s total contribution to HVP IV in connection with these store acquisitions was $30.6 million. During the three months ended June 30, 2021, HVP IV entered into a new $212.3 million secured loan, which bears interest at LIBOR plus 1.95% per annum, and matures on April 19, 2025. HVP IV used the proceeds from this loan to repay its existing loans (totaling $137.7 million) in full.

(4)

The stores owned by HHFNE are located in Connecticut (3), Massachusetts (6), Rhode Island (2) and Vermont (2). The Company’s total contribution to HHFNE in connection with these store acquisitions was $3.8 million. As of June 30, 2021, HHFNE had an outstanding $45.0 million secured loan facility, which bears interest at LIBOR plus 1.20% per annum and matures on December 16, 2024.

(5)

The stores owned by HHF are located in North Carolina (1) and Texas (34). On January 21, 2021, HHF entered into a new $105.0 million secured loan, which bears interest at 2.58% per annum and matures on February 5, 2028. HHF used the proceeds from this loan to repay its existing outstanding $100.0 million loan in full.

Based upon the facts and circumstances at formation of HVP V, HVPSE, HVP IV, HHFNE and HHF (the “Ventures”), the Company determined that the Ventures are not VIEs in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate the Ventures. Based upon each member's substantive participating rights over the activities of each entity as stipulated in the operating agreements, the Ventures are not consolidated by the Company and are accounted for under the equity method of accounting. The Company’s investments in the Ventures are included in Investment in real estate ventures, at equity on the Company’s consolidated balance

sheets and the Company’s earnings from its investments in the Ventures are presented in Equity in earnings (losses) of real estate ventures on the Company’s consolidated statements of operations.

The following is a summary of the financial position of the Ventures as of June 30, 2021 and December 31, 2020.


		June 30,			December 31,
		2021			2020

Assets		(in thousands)
Storage properties, net		$	780,772		$	662,833
Other assets			30,537			18,112
Total assets		$	811,309		$	680,945

Liabilities and equity
Debt		$	439,155		$	359,985
Other liabilities			22,650			11,588
Equity
CubeSmart			97,301			92,071
Joint venture partners			252,203			217,301
Total liabilities and equity		$	811,309		$	680,945

The following is a summary of results of operations of the Ventures for the three and six months ended June 30, 2021 and 2020.


		Three Months Ended June 30,						Six Months Ended June 30,
		2021			2020			2021			2020

		(in thousands)
Total revenues		$	21,240		$	16,797		$	40,063		$	31,402
Operating expenses			(9,492)			(7,978)			(18,097)			(14,920)
Other expenses			(854)			(121)			(851)			(234)
Interest expense, net			(2,673)			(2,985)			(6,208)			(5,705)
Depreciation and amortization			(9,008)			(9,100)			(17,720)			(15,523)
Net loss		$	(787)		$	(3,387)		$	(2,813)		$	(4,980)
Company’s share of net income (loss)		$	316		$	(174)		$	336		$	(179)