XML 25 R13.htm IDEA: XBRL DOCUMENT

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

3 Months Ended

Mar. 31, 2023

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 are summarized as follows (dollars in thousands):


		CubeSmart		Number of Stores as of				Carrying Value of Investment as of
		Ownership		March 31,		December 31,		March 31,			December 31,
Unconsolidated Real Estate Ventures		Interest		2023		2022		2023			2022
Fontana Self Storage, LLC ("Fontana") ⁽¹⁾		50%		1		1		$	13,745		$	13,789
Rancho Cucamonga Self Storage, LLC ("RCSS") ⁽¹⁾		50%		1		1			20,972			20,994
191 V CUBE LLC ("HVP V")		20%		6		6			13,916			14,318
191 IV CUBE LLC ("HVP IV")		20%		28		28			18,998			19,853
CUBE HHF Northeast Venture LLC ("HHFNE")		10%		13		13			1,070			1,101
CUBE HHF Limited Partnership ("HHF")		50%		28		28			34,986			35,938
				77		77		$	103,687		$	105,993

(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 March 31, 2023, this difference was $13.0 million and $19.5 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.

As of March 31, 2023, the Company also held a 10% interest in 191 IV CUBE Southeast LLC ("HVPSE"). 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. During the three months ended March 31, 2023, the Company received distributions of $1.7 million in excess of its investment in HVPSE from proceeds that were held back at the time of the sale. These distributions are included in Equity in earnings of real estate ventures within the consolidated statements of operations. As of March 31, 2023, HVPSE had no significant assets or liabilities and was winding down its operations.

The Company determined that Fontana, RCSS, HVP V, HVPSE, HVP IV, HHFNE and HHF (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 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 March 31, 2023 and December 31, 2022.


		March 31,			December 31,
		2023			2022

Assets		(in thousands)
Storage properties, net		$	734,604		$	741,563
Other assets			10,033			11,708
Total assets		$	744,637		$	753,271

Liabilities and equity
Debt		$	469,230		$	468,783
Other liabilities			19,260			16,626
Equity
CubeSmart			71,199			73,289
Joint venture partners			184,948			194,573
Total liabilities and equity		$	744,637		$	753,271

The following is a summary of results of operations of the Ventures for the three months ended March 31, 2023 and 2022.


		Three Months Ended March 31,
		2023			2022

		(in thousands)
Total revenues		$	24,064		$	24,965
Operating expenses			(10,519)			(10,743)
Other expenses			(69)			(114)
Interest expense, net			(4,084)			(3,852)
Depreciation and amortization			(7,772)			(10,388)
Net income (loss)		$	1,620		$	(132)
Company’s share of net income (loss)		$	2,551		$	294