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INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURE (Tables)

9 Months Ended

Sep. 30, 2022

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

Schedule of investments in real estate ventures


		CubeSmart		Number of Stores as of				Carrying Value of Investment as of
		Ownership		September 30,		December 31,		September 30,			December 31,
Unconsolidated Real Estate Ventures		Interest		2022		2021		2022			2021
Fontana Self Storage, LLC ("Fontana") ⁽¹⁾		50%		1		1		$	13,929		$	14,225
Rancho Cucamonga Self Storage, LLC ("RCSS") ⁽¹⁾		50%		1		1			21,159			21,536
191 V CUBE LLC ("HVP V") ⁽²⁾		20%		6		5			14,703			16,080
191 IV CUBE Southeast LLC ("HVPSE") ⁽³⁾		10%		-		14			—			4,541
191 IV CUBE LLC ("HVP IV") ⁽⁴⁾		20%		28		28			20,488			23,223
CUBE HHF Northeast Venture LLC ("HHFNE") ⁽⁵⁾		10%		13		13			1,158			1,291
CUBE HHF Limited Partnership ("HHF") ⁽⁶⁾		50%		28		28			36,318			38,855
				77		90		$	107,755		$	119,751

(1)

On December 9, 2021, the Company completed the acquisition of LAACO, which included a 50% interest in Fontana and RCSS, each of which owns one self-storage property in California. As of the date of acquisition, the Company recognized differences between the Company’s equity investment in Fontana and RCSS and the

underlying equity reflected at the venture level. As of September 30, 2022, this difference was $13.2 million and $19.7 million for Fontana and RCSS, respectively. These differences are being amortized over the expected useful life of the self-storage properties owned by the ventures.

(2)

The stores owned by HVP V are located in Florida (2), New Jersey (3) and New York (1). HVP V paid an aggregate of $176.9 million for these properties, of which $2.2 million was allocated to the value of the in-place leases. These acquisitions were funded through pro-rata contributions by the Company and its unaffiliated joint venture partner as well as by the venture’s secured term loan. The Company’s total contribution to HVP V related to these acquisitions was $22.7 million. As of September 30, 2022, HVP V had an outstanding $101.8 million secured term loan, which bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.05% and matures on September 30, 2025 with an option to extend the maturity date through September 30, 2026, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement.

(3)

On August 30, 2022, HVPSE sold all 14 of its stores to an unaffiliated third-party buyer for an aggregate sales price of $235.0 million. These stores were located in Florida (2), Georgia (8) and South Carolina (4). As of the transaction date, HVPSE had an $81.6 million secured term loan, which was repaid in full at the time of the sale. Net proceeds to the venture from the transaction totaled $150.1 million, of which $49.9 million were distributed to the Company. The venture recorded gains which aggregated to approximately $114.1 million in connection with the sale. As of September 30, 2022, the venture retained cash of $3.5 million to pay venture-level expenses. After such expenses are paid, any remaining proceeds will be distributed to the venture’s partners per the terms of the operating agreement.

(4)

The stores owned by HVP IV are located in Arizona (2), Connecticut (3), Florida (4), Georgia (2), Illinois (5), Maryland (2), Minnesota (1), Pennsylvania (1) and Texas (8). The Company’s total contribution to HVP IV in connection with these store acquisitions was $32.0 million. As of September 30, 2022, HVP IV had an outstanding $221.6 million secured loan, which bears interest at LIBOR plus 1.95% per annum, and matures on April 19, 2025.

(5)

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 September 30, 2022, 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.

(6)

The stores owned by HHF are located in North Carolina (1) and Texas (27). On October 5, 2021, HHF sold seven stores in Texas for an aggregate sales price of approximately $85.0 million. The venture recorded gains which aggregated to approximately $46.9 million in connection with the sale. As of September 30, 2022, HHF had an outstanding $105.0 million secured loan, which bears interest at a fixed rate of 2.58% per annum and matures on February 5, 2028.

Summary of the financial position of the ventures


		September 30,			December 31,
		2022			2021

Assets		(in thousands)
Storage properties, net		$	747,745		$	850,250
Other assets			17,362			34,760
Total assets		$	765,107		$	885,010

Liabilities and equity
Debt		$	468,335		$	526,972
Other liabilities			22,240			14,500
Equity
CubeSmart			74,836			86,083
Joint venture partners			199,696			257,455
Total liabilities and equity		$	765,107		$	885,010

Summary of results of operations of the ventures


		Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021

		(in thousands)
Total revenues		$	26,915		$	24,273		$	78,511		$	64,337
Operating expenses			(11,340)			(10,368)			(33,321)			(28,464)
Other expenses			(137)			(138)			(375)			(988)
Interest expense, net			(4,225)			(2,714)			(11,678)			(8,922)
Depreciation and amortization			(9,124)			(9,719)			(29,052)			(27,439)
Gains from sale of real estate, net			114,107			—			114,107			—
Net income (loss)		$	116,196		$	1,334		$	118,192		$	(1,476)
Company’s share of net income (loss)		$	46,558		$	816		$	47,532		$	1,152