CubeSmart

Previous wording

We are an integrated self-storage real estate company, and as such we have in-house capabilities in the operation, design, development, leasing, management and acquisition of self-storage properties. The Parent Company’s operations are conducted solely through the Operating Partnership and its subsidiaries. The Parent Company has elected to be taxed as a REIT for U.S. federal income tax purposes. As of June 30, 2024 and December 31, 2023, we owned (or partially owned and consolidated) 615 self-storage properties containing an aggregate of approximately 44.4 million rentable square feet and 611 self-storage properties containing an aggregate of approximately 44.1 million rentable square feet, respectively. As of June 30, 2024, we owned stores in the District of Columbia and the following 24 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah and Virginia. In addition, as of June 30, 2024, we managed 879 stores for third parties (including 77 stores containing an aggregate of approximately 5.6 million rentable square feet as part of six separate unconsolidated real estate ventures) bringing the total number of stores we owned and/or managed to 1,494. As of June 30, 2024, we managed stores for third parties in the District of Columbia and the following 39 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington and Wisconsin.

Current wording

We are an integrated self-storage real estate company, and as such we have in-house capabilities in the operation, design, development, leasing, management and acquisition of self-storage properties. The Parent Company’s operations are conducted solely through the Operating Partnership and its subsidiaries. The Parent Company has elected to be taxed as a REIT for U.S. federal income tax purposes. As of September 30, 2024 and December 31, 2023, we owned (or partially owned and consolidated) 615 self-storage properties containing an aggregate of approximately 44.4 million rentable square feet and 611 self-storage properties containing an aggregate of approximately 44.1 million rentable square feet, respectively. As of September 30, 2024, we owned stores in the District of Columbia and the following 24 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah and Virginia. In addition, as of September 30, 2024, we managed 893 stores for third parties (including 77 stores containing an aggregate of approximately 5.6 million rentable square feet as part of six separate unconsolidated real estate ventures) bringing the total number of stores we owned and/or managed to 1,508. As of September 30, 2024, we managed stores for third parties in the District of Columbia and the following 40 states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington and Wisconsin.

Previous wording

Our self-storage properties are located in major metropolitan and suburban areas and have numerous customers per store. No single customer represents a significant concentration of our revenues. Our stores in New York, Florida, California and Texas provided approximately 18%, 14%, 11% and 9%, respectively, of total revenues for the six months ended June 30, 2024.

Current wording

Our self-storage properties are located in major metropolitan and suburban areas and have numerous customers per store. No single customer represents a significant concentration of our revenues. Our stores in New York, Florida, California and Texas provided approximately 18%, 14%, 11% and 9%, respectively, of total revenues for the nine months ended September 30, 2024.

Previous wording

Long-lived assets classified as “held for use” are reviewed for impairment when events and circumstances such as declines in occupancy and operating results indicate that there may be an impairment. The carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value, attributable to the assets to determine if the store’s basis is recoverable. If a store’s basis is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset. There were no impairment losses recognized in accordance with these procedures during the three and six months ended June 30, 2024 and 2023.

Current wording

Long-lived assets classified as “held for use” are reviewed for impairment when events and circumstances such as declines in occupancy and operating results indicate that there may be an impairment. The carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value, attributable to the assets to determine if the store’s basis is recoverable. If a store’s basis is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset. There were no impairment losses recognized in accordance with these procedures during the three and nine months ended September 30, 2024 and 2023.

Previous wording

The Company accounts for its investments in unconsolidated real estate ventures under the equity method of accounting when it is determined that the Company has the ability to exercise significant influence over the venture. Under the equity method, investments in unconsolidated real estate ventures are recorded initially at cost, as investments in real estate entities, and subsequently adjusted for equity in earnings (losses) and cash contributions, less cash distributions and impairments. On a periodic basis, management also assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated real estate entities may be other than temporarily impaired. An investment is impaired only if the fair value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment that is other than temporary has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. Fair value is determined through various valuation techniques, including but not limited to, discounted cash flow models, quoted market values and third-party appraisals. There were no impairment losses related to the Company’s investments in unconsolidated real estate ventures recognized during the three and six months ended June 30, 2024 or 2023.

Current wording

The Company accounts for its investments in unconsolidated real estate ventures under the equity method of accounting when it is determined that the Company has the ability to exercise significant influence over the venture. Under the equity method, investments in unconsolidated real estate ventures are recorded initially at cost, as investments in real estate entities, and subsequently adjusted for equity in earnings (losses) and cash contributions, less cash distributions and impairments. On a periodic basis, management also assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated real estate entities may be other than temporarily impaired. An investment is impaired only if the fair value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment that is other than temporary has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. Fair value is determined through various valuation techniques, including but not limited to, discounted cash flow models, quoted market values and third-party appraisals. There were no impairment losses related to the Company’s investments in unconsolidated real estate ventures recognized during the three and nine months ended September 30, 2024 or 2023.

Previous wording

Differences between the Company’s net investment in unconsolidated real estate ventures and its underlying equity in the net assets of the ventures are primarily a result of the Company acquiring interests in existing unconsolidated real estate ventures. The Company’s net investment in unconsolidated real estate ventures was greater than its underlying equity in the net assets of the unconsolidated real estate ventures by an aggregate of $31.4 million and $31.8 million as of June 30, 2024 and December 31, 2023, respectively. These differences are amortized over the lives of the self-storage properties owned by the real estate ventures. This amortization is included in Equity in earnings of real estate ventures within our consolidated statements of operations.

Current wording

Differences between the Company’s net investment in unconsolidated real estate ventures and its underlying equity in the net assets of the ventures are primarily a result of the Company acquiring interests in existing unconsolidated real estate ventures. The Company’s net investment in unconsolidated real estate ventures was greater than its underlying equity in the net assets of the unconsolidated real estate ventures by an aggregate of $31.2 million and $31.8 million as of September 30, 2024 and December 31, 2023, respectively. These differences are amortized over the lives of the self-storage properties owned by the real estate ventures. This amortization is included in Equity in earnings of real estate ventures within our consolidated statements of operations.

Previous wording

Revenues increased from $260.8 million for the three months ended June 30, 2023 to $266.2 million for the three months ended June 30, 2024, an increase of $5.4 million, or 2.1%. This increase was primarily attributable to additional revenues from stores acquired or opened in 2023 and 2024 included in our non same-store portfolio, additional other property related income due to increased customer storage protection plan participation at our owned and managed stores, and an increase in property management fee income due to an increase in the number of stores under management.

Current wording

Revenues increased from $267.9 million for the three months ended September 30, 2023 to $270.9 million for the three months ended September 30, 2024, an increase of $3.0 million, or 1.1%. This increase was primarily attributable to additional revenues from stores acquired or opened in 2023 and 2024 included in our non same-store portfolio, an increase in fee income, increased customer storage protection plan participation at our owned and managed stores, and an increase in property management fee income due to an increase in the number of stores under management.

Previous wording

Interest expense on loans decreased from $23.5 million during the three months ended June 30, 2023 to $22.8 million during the three months ended June 30, 2024, a decrease of $0.8 million, or 3.3%. The decrease was attributable to a decrease in the average outstanding debt balance and lower interest rates during the 2024 period compared to the 2023 period. The average outstanding debt balance decreased to $2.96 billion during the three months ended June 30, 2024 as compared to $3.04 billion during the three months ended June 30, 2023. The weighted average effective interest rate on our outstanding debt decreased to 3.01% for the three months ended June 30, 2024 compared to 3.05% during the three months ended June 30, 2023.

Current wording

Interest expense on loans decreased from $23.2 million during the three months ended September 30, 2023 to $22.8 million during the three months ended September 30, 2024, a decrease of $0.5 million, or 2.0%. The decrease was attributable to a decrease in the average outstanding debt balance and lower interest rates during the 2024 period compared to the 2023 period. The average outstanding debt balance decreased from $3.00 billion during the three months ended September 30, 2023 to $2.94 billion during the three months ended September 30, 2024. The weighted average effective interest rate on our outstanding debt decreased from 3.04% during the three months ended September 30, 2023 to 2.99% for the three months ended September 30, 2024.

Previous wording

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023 (in thousands)

Current wording

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023 (in thousands)

Previous wording

Revenues increased from $517.3 million for the six months ended June 30, 2023 to $527.6 million for the six months ended June 30, 2024, an increase of $10.3 million, or 2.0%. This increase was primarily attributable to additional revenues from stores acquired or opened in 2023 and 2024 included in our non same-store portfolio, additional other property related income due to increased customer storage protection plan participation at our owned and managed stores, and an increase in property management fee income due to an increase in the number of stores under management.

Current wording

Revenues increased from $785.2 million for the nine months ended September 30, 2023 to $798.5 million for the nine months ended September 30, 2024, an increase of $13.3 million, or 1.7%. This increase was primarily attributable to additional revenues from stores acquired or opened in 2023 and 2024 included in our non same-store portfolio, an increase in fee income, increased customer storage protection plan participation at our owned and managed stores, and an increase in property management fee income due to an increase in the number of stores under management.

Previous wording

Property operating expenses increased from $74.8 million for the three months ended June 30, 2023 to $83.1 million for the three months ended June 30, 2024, an increase of $8.3 million, or 11.1%. This increase was primarily attributable to an increase in employee medical coverage as well as increases in property insurance and property taxes within the same-store portfolio and increased expenses associated with the growth in our third-party management program.

Current wording

Property operating expenses increased from $223.5 million for the nine months ended September 30, 2023 to $242.0 million for the nine months ended September 30, 2024, an increase of $18.5 million, or 8.3%. This increase was primarily attributable to an increase in employee medical coverage, additional expenses from stores acquired or opened in 2023 and 2024 included in our non same-store portfolio, and increases in property taxes and insurance as well as advertising and personnel expense within our same-store portfolio.

Previous wording

Interest expense on loans decreased from $47.2 million during the six months ended June 30, 2023 to $45.7 million during the six months ended June 30, 2024, a decrease of $1.5 million, or 3.3%. The decrease was attributable to a decrease in the average outstanding debt balance and lower interest rates during the 2024 period compared to the 2023 period. The average outstanding debt balance decreased to $2.98 billion during the six months ended June 30, 2024 as compared to $3.05 billion during the six months ended June 30, 2023. The weighted average effective interest rate on our outstanding debt decreased to 3.02% for the six months ended June 30, 2024 compared to 3.05% during the six months ended June 30, 2023.

Current wording

Interest expense on loans decreased from $70.4 million during the nine months ended September 30, 2023 to $68.4 million during the nine months ended September 30, 2024, a decrease of $2.0 million, or 2.8%. The decrease was attributable to a decrease in the average outstanding debt balance and lower interest rates during the 2024 period compared to the 2023 period. The average outstanding debt balance decreased from $3.03 billion during the nine months ended September 30, 2023 to $2.97 billion during the nine months ended September 30, 2024. The weighted average effective interest rate on our outstanding debt decreased from 3.05% during the nine months ended September 30, 2023 to 3.01% for the nine months ended September 30, 2024.

Previous wording

Equity in earnings of real estate ventures decreased from $3.3 million during the six months ended June 30, 2023 to $1.3 million for the six months ended June 30, 2024, a decrease of $2.1 million, or 62.0%. The decrease was primarily due to distributions in excess of our equity investment in 191 IV CUBE Southeast LLC (“HVPSE”) during the six months ended June 30, 2023. There were no such distributions during the 2024 period.

Current wording

Equity in earnings of real estate ventures decreased from $4.5 million during the nine months ended September 30, 2023 to $1.7 million for the nine months ended September 30, 2024, a decrease of $2.8 million, or 62.3%. The decrease was primarily due to distributions in excess of our equity investment in 191 IV CUBE Southeast LLC (“HVPSE”) during the nine months ended September 30, 2023. There were no such distributions during the 2024 period.

Previous wording

A comparison of cash flow from operating, investing and financing activities for the six months ended June 30, 2024 and 2023 is as follows:

Current wording

A comparison of cash flows from operating, investing and financing activities for the nine months ended September 30, 2024 and 2023 is as follows:

Previous wording

Cash used in investing activities increased from $47.5 million for the six months ended June 30, 2023 to $54.6 million for the six months ended June 30, 2024, reflecting an increase of $7.1 million. This change was primarily the result of a $20.1 million increase in acquisitions of storage properties. We acquired two stores during the six months ended June 30, 2024, with no acquisitions during the corresponding 2023 period. This increase was partially offset by an $11.2 million decrease in development costs, primarily due to the payment during the 2023 period of a put liability associated with a previously consolidated joint venture.

Current wording

Cash used in investing activities increased from $58.5 million for the nine months ended September 30, 2023 to $72.9 million for the nine months ended September 30, 2024, reflecting an increase of $14.3 million. This change was primarily the result of a $20.6 million increase in acquisitions of storage properties. We acquired two stores during the nine months ended September 30, 2024, with no acquisitions during the corresponding 2023 period. This increase was partially offset by a $10.7 million decrease in development costs, primarily due to the payment during the 2023 period of a put liability associated with a previously consolidated joint venture.

Previous wording

Cash used in financing activities increased from $249.4 million for the six months ended June 30, 2023 to $267.4 million for the six months ended June 30, 2024, reflecting an increase of $18.0 million. This change was primarily the result of a $9.8 million reduction in net proceeds from our revolving credit facility during the 2024 period as compared to the corresponding 2023 period. The change was also the result of a $9.4 million increase in cash distributions paid to common shareholders and noncontrolling interests in the Operating Partnership due to an increase in the common divided per share/unit.

Current wording

Cash used in financing activities decreased from $409.3 million for the nine months ended September 30, 2023 to $356.4 million for the nine months ended September 30, 2024, reflecting a decrease of $52.9 million. This change was primarily the result of a $32.9 million increase in proceeds received from the issuance of common shares due to the sale of 0.6 million common shares through our at-the-market equity program during the 2024 period. There were no such transactions during the 2023 period. The change was also due to a $27.6 million reduction in net repayments on our revolving credit facility during the 2024 period as compared to the corresponding 2023 period. These changes were partially offset by a $14.2 million increase in cash distributions paid to common shareholders and noncontrolling interests in the Operating Partnership due to an increase in the common divided per share/unit.

Previous wording

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our stores, refinancing of certain indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders, capital expenditures and the acquisition and development of new stores. These funding requirements will vary from year to year, in some cases significantly. For the remainder of the 2024 fiscal year, we expect recurring capital expenditures to be approximately $9.0 million to $14.0 million, planned capital improvements and store upgrades to be approximately $8.0 million to $13.0 million and costs associated with the development of new stores to be approximately $7.0 to $17.0 million. Our currently scheduled principal payments on our outstanding debt are approximately $0.5 million for the remainder of 2024.

Current wording

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our stores, refinancing of certain indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders, capital expenditures and the acquisition and development of new stores. These funding requirements will vary from year to year, in some cases significantly. For the remainder of the 2024 fiscal year, we expect recurring capital expenditures to be approximately $3.0 million to $8.0 million, planned capital improvements and store upgrades to be approximately $1.5 million to $6.5 million and costs associated with the development of new stores to be approximately $2.0 to $7.0 million. Our currently scheduled principal payments on our outstanding debt are approximately $0.2 million for the remainder of 2024.

Previous wording

As of June 30, 2024, we had approximately $5.7 million in available cash and cash equivalents. In addition, we had approximately $838.8 million of availability for borrowings under our Revolver.

Current wording

As of September 30, 2024, we had approximately $43.5 million in available cash and cash equivalents. In addition, we had approximately $849.4 million of availability for borrowings under our Revolver.

Previous wording

The indenture under which the Senior Notes were issued restricts the ability of the Operating Partnership and its subsidiaries to incur debt unless the Operating Partnership and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1.0 after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Operating Partnership and its subsidiaries to incur secured debt unless the Operating Partnership and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Operating Partnership and its consolidated subsidiaries. As of and for the three and six months ended June 30, 2024, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes.

Current wording

The indenture under which the Senior Notes were issued restricts the ability of the Operating Partnership and its subsidiaries to incur debt unless the Operating Partnership and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1.0 after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Operating Partnership and its subsidiaries to incur secured debt unless the Operating Partnership and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Operating Partnership and its consolidated subsidiaries. As of and for the three and nine months ended September 30, 2024, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes.

Previous wording

As of June 30, 2024, borrowings under the Revolver had an interest rate of 6.36%. Additionally, as of June 30, 2024, $838.8 million was available for borrowing under the Revolver. The available balance under the Revolver is reduced by an outstanding letter of credit of $0.6 million.

Current wording

As of September 30, 2024, borrowings under the Revolver had an interest rate of 5.99%. Additionally, as of September 30, 2024, $849.4 million was available for borrowing under the Revolver. The available balance under the Revolver is reduced by an outstanding letter of credit of $0.6 million.

Previous wording

three and six months ended June 30, 2024, the Operating Partnership was in compliance with all financial covenants of the Second Amended and Restated Credit Facility.

Current wording

three and nine months ended September 30, 2024, the Operating Partnership was in compliance with all financial covenants of the Second Amended and Restated Credit Facility.

Previous wording

We did not sell any common shares under the Equity Distribution Agreements during the three or six months ended June 30, 2024. As of June 30, 2024, 5.8 million common shares remained available for issuance under the Equity Distribution Agreements.

Current wording

During the three months ended September 30, 2024, we sold a total of 0.6 million common shares at an average sales price of $54.20 per share, resulting in net proceeds of $32.8 million, after deducting offering costs. We expect that the proceeds from the 2024 sales under the program will be used to fund the acquisition and development of self-storage properties and for general corporate purposes. As of September 30, 2024, 5.2 million common shares remained available for issuance under the Equity Distribution Agreements.

Previous wording

The following table presents a reconciliation of net income attributable to the Company’s common shareholders to FFO attributable to the Company’s common shareholders and third-party OP unitholders for the three and six months ended June 30, 2024 and 2023.

Current wording

The following table presents a reconciliation of net income attributable to the Company’s common shareholders to FFO attributable to the Company’s common shareholders and third-party OP unitholders for the three and nine months ended September 30, 2024 and 2023.