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INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

3 Months Ended

Mar. 31, 2025

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES

5. INVESTMENTS 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		2025		2024		2025			2024
Fontana Self Storage, LLC ("Fontana") ⁽¹⁾		50%		1		1		$	13,109		$	13,200
Rancho Cucamonga Self Storage, LLC ("RCSS") ⁽¹⁾		50%		1		1			19,972			20,107
191 V CUBE LLC ("HVP V")		20%		6		6			10,931			11,353
191 IV CUBE LLC ("HVP IV")⁽²⁾		20%		-		28			—			14,591
CUBE HHF Northeast Venture LLC ("HHFNE")		10%		13		13			1,316			1,469
CUBE HHF Limited Partnership ("HHF")		50%		28		28			30,714			31,253
				49		77		$	76,042		$	91,973

(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. These differences are being amortized over the expected useful life of the self-storage properties owned by the ventures. As of March 31, 2025, the remaining unamortized difference was $12.3 million for Fontana and $18.4 million for RCSS.

(2)

On February 20, 2025, the Company purchased the remaining 80% interest in HVP IV for $452.8 million and consolidated the venture’s assets and liabilities. The $452.8 million purchase price included $44.4 million to repay the Company’s portion of the venture’s existing indebtedness, which was repaid in full at the time of the transaction (see note 4).

The Company determined that Fontana, RCSS, HVP V, HVP IV, HHFNE and HHF (collectively, 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 (except for HVP IV, which was consolidated as of the Company’s purchase of the remaining 80% interest on February 20, 2025). 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 within the Company’s consolidated statements of operations.

The amounts reflected in the following table are based on the historical financial information of the Ventures. The following is a summary of the financial position of the Ventures as of March 31, 2025 and December 31, 2024.


		March 31,			December 31,
		2025			2024

Assets		(in thousands)
Storage properties, net		$	377,400		$	684,067
Other assets			13,352			17,126
Total assets		$	390,752		$	701,193

Liabilities and equity
Debt		$	251,633		$	472,633
Other liabilities			6,067			17,462
Equity
CubeSmart			45,278			60,993
Joint venture partners			87,774			150,105
Total liabilities and equity		$	390,752		$	701,193

The following is a summary of results of operations of the Ventures for the three months ended March 31, 2025 and 2024.


		Three Months Ended March 31,
		2025 ⁽¹⁾			2024

		(in thousands)
Total revenues		$	20,122		$	24,586
Operating expenses			(8,917)			(10,375)
Other expenses			(110)			(106)
Interest expense, net			(4,928)			(4,658)
Depreciation and amortization			(6,296)			(7,532)
Net (loss) income		$	(129)		$	1,915
Company’s share of net (loss) income		$	379		$	845

(1)

HVP IV’s results of operations are included through February 20, 2025 (date of consolidation).