Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 25, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | CubeSmart | |
Entity Central Index Key | 1,298,675 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 185,885,651 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Storage facilities | $ 4,237,717 | $ 4,161,715 |
Less: Accumulated depreciation | (807,625) | (752,925) |
Storage facilities, net (including VIE assets of $287,340 and $291,496, respectively) | 3,430,092 | 3,408,790 |
Cash and cash equivalents | 6,487 | 5,268 |
Restricted cash | 3,037 | 3,890 |
Loan procurement costs, net of amortization | 1,298 | 1,592 |
Investment in real estate venture, at equity | 100,614 | 91,206 |
Other assets, net | 43,232 | 34,590 |
Total assets | 3,584,760 | 3,545,336 |
LIABILITIES AND EQUITY | ||
Unsecured senior notes, net | 1,142,992 | 1,142,460 |
Revolving credit facility | 47,700 | 81,700 |
Unsecured term loans, net | 299,598 | 299,396 |
Mortgage loans and notes payable, net | 109,851 | 111,434 |
Accounts payable, accrued expenses and other liabilities | 146,223 | 143,344 |
Distributions payable | 56,442 | 55,297 |
Deferred revenue | 23,521 | 21,529 |
Security deposits | 483 | 486 |
Total liabilities | 1,826,810 | 1,855,646 |
Noncontrolling interests in the Operating Partnership | 64,512 | 54,320 |
Commitments and contingencies | ||
Equity | ||
Common shares $.01 par value, 400,000,000 shares authorized, 185,876,890 and 182,215,735 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 1,859 | 1,822 |
Additional paid in capital | 2,458,521 | 2,356,620 |
Accumulated other comprehensive income | 3 | |
Accumulated deficit | (773,849) | (729,311) |
Total CubeSmart shareholders' equity | 1,686,531 | 1,629,134 |
Noncontrolling interests in subsidiaries | 6,907 | 6,236 |
Total equity | 1,693,438 | 1,635,370 |
Total liabilities and equity | $ 3,584,760 | $ 3,545,336 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Storage facilities, net | $ 3,430,092 | $ 3,408,790 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized | 400,000,000 | 400,000,000 |
Common shares, shares issued | 185,876,890 | 182,215,735 |
Common shares, shares outstanding | 185,876,890 | 182,215,735 |
VIE | ||
Storage facilities, net | $ 287,340 | $ 291,496 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES | ||||
Rental income | $ 127,843 | $ 121,224 | $ 252,004 | $ 238,281 |
Other property related income | 15,047 | 13,880 | 29,294 | 26,863 |
Property management fee income | 4,925 | 3,455 | 9,394 | 6,452 |
Total revenues | 147,815 | 138,559 | 290,692 | 271,596 |
OPERATING EXPENSES | ||||
Property operating expenses | 49,528 | 44,821 | 98,282 | 89,695 |
Depreciation and amortization | 35,046 | 36,736 | 70,012 | 74,855 |
General and administrative | 8,341 | 8,800 | 17,085 | 18,294 |
Acquisition related costs | 668 | 827 | ||
Total operating expenses | 92,915 | 91,025 | 185,379 | 183,671 |
OPERATING INCOME | 54,900 | 47,534 | 105,313 | 87,925 |
Interest: | ||||
Interest expense on loans | (15,451) | (13,975) | (30,606) | (27,574) |
Loan procurement amortization expense | (578) | (776) | (1,157) | (1,482) |
Equity in losses of real estate ventures | (309) | (253) | (493) | (1,025) |
Other | 189 | 308 | 493 | 200 |
Total other expense | (16,149) | (14,696) | (31,763) | (29,881) |
NET INCOME | 38,751 | 32,838 | 73,550 | 58,044 |
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||||
Noncontrolling interests in the Operating Partnership | (426) | (427) | (809) | (704) |
Noncontrolling interest in subsidiaries | 85 | 47 | 92 | 104 |
NET INCOME ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS | $ 38,410 | $ 32,458 | $ 72,833 | $ 57,444 |
Basic earnings per share attributable to common shareholders (in dollars per share) | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 |
Diluted earnings per share attributable to common shareholders (in dollars per share) | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 |
Weighted-average basic shares outstanding (in shares) | 183,718 | 180,183 | 183,000 | 180,174 |
Weighted-average diluted shares outstanding (in shares) | 184,523 | 181,189 | 183,753 | 181,198 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
NET INCOME | $ 38,751 | $ 32,838 | $ 73,550 | $ 58,044 |
Other comprehensive (loss) income: | ||||
Unrealized (losses) gains on interest rate swaps | (4) | 60 | 137 | |
Reclassification of realized (gains) losses on interest rate swaps | (279) | 366 | (60) | 1,061 |
OTHER COMPREHENSIVE (LOSS) INCOME | (279) | 362 | 1,198 | |
COMPREHENSIVE INCOME | 38,472 | 33,200 | 73,550 | 59,242 |
Comprehensive income attributable to noncontrolling interests in the Operating Partnership | (427) | (432) | (813) | (718) |
Comprehensive loss attributable to noncontrolling interests in subsidiaries | 85 | 47 | 92 | 104 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ 38,130 | $ 32,815 | $ 72,829 | $ 58,628 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands | Total Shareholders' Equity | Common Shares | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Noncontrolling Interest in Subsidiaries | Noncontrolling Interests in Operating Partnership | Total |
Balance at Dec. 31, 2016 | $ 1,655,382 | $ 1,801 | $ 2,314,014 | $ (1,850) | $ (658,583) | $ 5,855 | $ 1,661,237 | |
Balance (in shares) at Dec. 31, 2016 | 180,083 | |||||||
Balance of Noncontrolling Interests in the Operating Partnership at Dec. 31, 2016 | $ 54,407 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Contributions from noncontrolling interests in subsidiaries | 545 | |||||||
Acquisition of noncontrolling interest in subsidiary | (8,626) | (8,626) | (407) | (9,033) | ||||
Issuance of common shares | (178) | (178) | (178) | |||||
Issuance of restricted shares | 1 | $ 1 | 1 | |||||
Issuance of restricted shares (in shares) | 104 | |||||||
Issuance of OP units | 12,324 | |||||||
Conversion from units to shares | 25 | 25 | (25) | 25 | ||||
Conversion from units to shares (in shares) | 1 | |||||||
Exercise of stock options | 94 | 94 | 94 | |||||
Exercise of stock options (in shares) | 9 | |||||||
Amortization of restricted shares | (7) | (7) | (7) | |||||
Share compensation expense | 764 | 764 | 764 | |||||
Adjustment for noncontrolling interest in the Operating Partnership | 6,793 | 6,793 | (6,793) | 6,793 | ||||
Net income (loss) | 57,444 | 57,444 | (104) | 57,340 | ||||
Net income (loss) | 704 | |||||||
Other comprehensive income, net | 1,184 | 1,184 | 1,184 | |||||
Other comprehensive income (loss), net | 14 | |||||||
Common share distributions | (97,432) | (97,432) | (1,215) | (97,432) | ||||
Balance at Jun. 30, 2017 | 1,615,444 | $ 1,802 | 2,306,086 | (666) | (691,778) | 5,889 | 1,621,333 | |
Balance (in shares) at Jun. 30, 2017 | 180,197 | |||||||
Balance of Noncontrolling Interests in the Operating Partnership at Jun. 30, 2017 | 59,416 | |||||||
Balance at Dec. 31, 2016 | 1,655,382 | $ 1,801 | 2,314,014 | (1,850) | (658,583) | 5,855 | 1,661,237 | |
Balance (in shares) at Dec. 31, 2016 | 180,083 | |||||||
Balance of Noncontrolling Interests in the Operating Partnership at Dec. 31, 2016 | 54,407 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Adjustment for noncontrolling interest in the Operating Partnership | (4,000) | |||||||
Balance at Dec. 31, 2017 | 1,629,134 | $ 1,822 | 2,356,620 | 3 | (729,311) | 6,236 | 1,635,370 | |
Balance (in shares) at Dec. 31, 2017 | 182,216 | |||||||
Balance of Noncontrolling Interests in the Operating Partnership at Dec. 31, 2017 | 54,320 | 54,320 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Contributions from noncontrolling interests in subsidiaries | 843 | 843 | ||||||
Distributions to noncontrolling interests in subsidiaries | (80) | (80) | ||||||
Issuance of common shares | 95,422 | $ 32 | 95,390 | 95,422 | ||||
Issuance of common shares (in shares) | 3,134 | |||||||
Issuance of restricted shares | 1 | $ 1 | 1 | |||||
Issuance of restricted shares (in shares) | 84 | |||||||
Issuance of OP units | 4,782 | |||||||
Conversion from units to shares | 1,342 | 1,342 | (1,342) | 1,342 | ||||
Conversion from units to shares (in shares) | 44 | |||||||
Exercise of stock options | 3,783 | $ 4 | 3,779 | 3,783 | ||||
Exercise of stock options (in shares) | 399 | |||||||
Amortization of restricted shares | 623 | 623 | 623 | |||||
Share compensation expense | 767 | 767 | 767 | |||||
Adjustment for noncontrolling interest in the Operating Partnership | (7,154) | (7,154) | 7,154 | (7,154) | ||||
Net income (loss) | 72,833 | 72,833 | (92) | 72,741 | ||||
Net income (loss) | 809 | |||||||
Other comprehensive income, net | 402 | $ (3) | 405 | 402 | ||||
Other comprehensive income (loss), net | 4 | |||||||
Common share distributions | (110,622) | (110,622) | (1,215) | (110,622) | ||||
Balance at Jun. 30, 2018 | $ 1,686,531 | $ 1,859 | $ 2,458,521 | $ (773,849) | $ 6,907 | 1,693,438 | ||
Balance (in shares) at Jun. 30, 2018 | 185,877 | |||||||
Balance of Noncontrolling Interests in the Operating Partnership at Jun. 30, 2018 | $ 64,512 | $ 64,512 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Activities | ||
Net income | $ 73,550 | $ 58,044 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 71,169 | 76,337 |
Equity in losses of real estate ventures | 493 | 1,025 |
Equity compensation expense | 2,814 | 2,773 |
Accretion of fair market value adjustment of debt | (369) | (225) |
Changes in other operating accounts: | ||
Other assets | (4,182) | (5,289) |
Accounts payable and accrued expenses | 10,316 | 12,773 |
Other liabilities | 1,891 | 1,610 |
Net cash provided by operating activities | 155,682 | 147,048 |
Investing Activities | ||
Acquisitions of storage facilities | (24,929) | (13,409) |
Additions and improvements to storage facilities | (12,659) | (15,370) |
Development costs | (53,201) | (24,752) |
Distributions Payable to Real Estate Partnerships | (14,147) | (123) |
Proceeds from Divestiture of Real Estate Partnership | 4,246 | 4,023 |
Net cash used in investing activities | (100,690) | (49,631) |
Cash distributed from real estate ventures | 4,246 | 4,023 |
Proceeds from: | ||
Unsecured senior notes | 103,192 | |
Revolving credit facility | 251,025 | 305,300 |
Principal payments on: | ||
Revolving credit facility | (285,025) | (288,600) |
Unsecured term loans | (100,000) | |
Mortgage loans and notes payable | (8,479) | (7,400) |
Loan procurement costs | (953) | |
Acquisition of noncontrolling interest in subsidiary | (7,533) | |
Proceeds from issuance of common shares, net | 95,423 | (177) |
Cash paid upon vesting of restricted shares | (1,424) | (2,016) |
Exercise of stock options | 3,783 | 94 |
Contributions from noncontrolling interests in subsidiaries | 843 | 545 |
Distributions paid to noncontrolling interests in subsidiaries | (80) | |
Distributions paid to common shareholders | (109,515) | (97,397) |
Distributions paid to noncontrolling interests in Operating Partnership | (1,177) | (1,097) |
Net cash used in financing activities | (54,626) | (96,042) |
Change in cash, cash equivalents, and restricted cash | 366 | 1,375 |
Cash, cash equivalents, and restricted cash at beginning of period | 9,158 | 10,866 |
Cash, cash equivalents, and restricted cash at end of period | 9,524 | 12,241 |
Supplemental Cash Flow and Noncash Information | ||
Cash paid for interest, net of interest capitalized | 33,101 | 31,410 |
Supplemental disclosure of noncash activities: | ||
Accretion of liability | 14,072 | 16,068 |
Derivative valuation adjustment | 406 | 1,198 |
Mortgage loan assumptions | 7,166 | 6,201 |
Issuance of OP units | $ 4,782 | 12,324 |
Liability for acquisition of storage property | 1,470 | |
Liability for acquisition of noncontrolling interest in subsidiary | $ 1,500 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 6 Months Ended |
Jun. 30, 2018 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
ORGANIZATION AND NATURE OF OPERATIONS | 1. ORGANIZATION AND NATURE OF OPERATIONS CubeSmart (the “Parent Company”) operates as a self-managed and self-administered real estate investment trust (“REIT”) with its operations conducted solely through CubeSmart, L.P. and its subsidiaries. CubeSmart, L.P., a Delaware limited partnership (the “Operating Partnership”), operates through an umbrella partnership structure, with the Parent Company, a Maryland REIT, as its sole general partner. In the notes to the consolidated financial statements, we use the terms “the Company”, “we” or “our” to refer to the Parent Company and the Operating Partnership together, unless the context indicates otherwise. As of June 30, 2018, the Company owned self-storage properties located in 23 states throughout the United States and the District of Columbia that are presented under one reportable segment: the Company owns, operates, develops, manages and acquires self-storage properties. As of June 30, 2018, the Parent Company owned approximately 98.9% of the partnership interests (“OP Units”) of the Operating Partnership. The remaining OP Units, consisting exclusively of limited partner interests, are held by persons who contributed their interests in properties to the Operating Partnership in exchange for OP Units. Under the partnership agreement, these persons have the right to tender their OP Units for redemption to the Operating Partnership at any time following a specified restricted period for cash equal to the fair value of an equivalent number of common shares of the Parent Company or, in the case of Class C OP Units, the stated value of such Class C OP Units (see note 16). In lieu of delivering cash, however, the Parent Company, as the Operating Partnership’s general partner, may, at its option, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units. If the Parent Company so chooses, its common shares will be exchanged for OP Units on a one-for-one basis or, in the case of Class C OP Units, for common shares with a fair value equal to the stated value of such Class C OP Units. This one-for-one exchange ratio is subject to adjustment to prevent dilution. With each such exchange or redemption, the Parent Company’s percentage ownership in the Operating Partnership will increase. In addition, whenever the Parent Company issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Parent Company an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued. This structure is commonly referred to as an umbrella partnership REIT or “UPREIT”. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting and, in the opinion of each of the Parent Company’s and Operating Partnership’s respective management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for each respective company for the interim periods presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Parent Company’s and the Operating Partnership’s audited financial statements prepared in accordance with GAAP, and the related notes thereto, for the year ended December 31, 2017, which are included in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The results of operations for the three and six months ended June 30, 2018 and 2017 are not necessarily indicative of the results of operations to be expected for any future period or the full year. The Operating Partnership meets the criteria as a variable interest entity. The Parent Company’s sole significant asset is its investment in the Operating Partnership. As a result, substantially all of the Parent Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Parent Company’s debt is an obligation of the Operating Partnership. Reclassifications Certain amounts from the prior year have been reclassified to conform to current year presentation as described below. On January 1, 2018, the Company adopted ASU No. 2016-15: Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments, which requires retrospective application for a number of cash flow classification items for which there was diversity in practice. See Recent Accounting Pronouncements below for the specific cash flow areas addressed by the new standard. As a result of adopting the new guidance, $0.4 million of proceeds received from the settlement of insurance claims during the six months ended June 30, 2017 have been reclassified from operating activities to investing activities within the consolidated statements of cash flows. On January 1, 2018, the Company also adopted ASU No. 2016-18: Statement of Cash Flows (Topic 230) – Restricted Cash, which requires restricted cash to be included with cash and cash equivalents as part of the reconciliation of beginning and end of period balances within the consolidated statements of cash flows. As a result of adopting the new guidance, $3.7 million of restricted cash, which was previously included as an investing cash inflow within the consolidated statements of cash flows for the six months ended June 30, 2017, has been removed and is now included in the cash, cash equivalents, and restricted cash line items at the beginning and the end of period. Restricted cash consists of purchase deposits and cash deposits required for debt service requirements, capital replacement, and expense reserves in connection with the requirements of the Company’s loan agreements. Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying the new guidance as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that the Company adopts the update. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements as the Company currently does not have any outstanding derivative financial instruments. In February 2017, as part of the new revenue standard, the FASB issued ASU No. 2017-05 – Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance, which focuses on recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. Specifically, the new guidance defines “in substance nonfinancial asset”, unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The new guidance became effective on January 1, 2018 when the Company adopted the new revenue standard. Upon adoption, the majority of the Company’s sale transactions are now treated as dispositions of nonfinancial assets rather than dispositions of a business given the FASB’s recently revised definition of a business (see ASU No. 2017-01 below). Additionally, in partial sale transactions where the Company sells a controlling interest in real estate but retains a noncontrolling interest, the Company will now fully recognize a gain or loss on the fair value measurement of the retained interest as the new guidance eliminates the partial profit recognition model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business, which changes the definition of a business to include an input and a substantive process that together significantly contribute to the ability to create outputs. A framework is provided to evaluate when an input and a substantive process are present. The new guidance also narrows the definition of outputs, which are defined as the results of inputs and substantive processes that provide goods or services to customers, other revenue, or investment income. The standard became effective on January 1, 2018. Upon adoption of the new guidance, the majority of the Company’s future property acquisitions will now be considered asset acquisitions, resulting in the capitalization of acquisition related costs incurred in connection with these transactions and the allocation of purchase price and acquisition related costs to the assets acquired based on their relative fair values. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations. In November 2016, the FASB issued ASU No. 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash, which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new guidance also requires entities to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. The standard became effective on January 1, 2018 and requires the use of the retrospective transition method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements as the update primarily relates to financial statement presentation and disclosures as discussed in “ Reclassifications ” above. In August 2016, the FASB issued ASU No. 2016-15 – Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The eight items that the ASU provides classification guidance on include (1) debt prepayment and extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows and application of the predominance principle. The standard became effective on January 1, 2018 and requires the use of the retrospective transition method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements as the update primarily relates to financial statement presentation and disclosures as discussed in “Reclassifications” above. In February 2016, the FASB issued ASU No. 2016-02 - Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The Company plans to adopt the standard on January 1, 2019, the date it becomes effective for public companies, using the modified retrospective approach. Upon adoption, the Company anticipates that it will elect the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. At this time, the primary impact is expected to be related to the Company’s ten ground leases in which it serves as lessee. In May 2014, the FASB issued ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance outlines a five-step process for customer contract revenue recognition that focuses on transfer of control as opposed to transfer of risk and rewards. The new guidance also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In May 2016, the FASB issued ASU No. 2016-12 - Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which amends ASU No. 2014-09 and is intended to address implementation issues that were raised by stakeholders. ASU No. 2016-12 provides practical expedients on collectability, noncash consideration, presentation of sales tax and contract modifications and completed contracts in transition. Both standards became effective on January 1, 2018. The Company finalized the impact of the adoption of ASU No. 2014-09 and ASU No. 2016-12 on the Company’s consolidated financial statements and related disclosures and adopted the standards using the modified retrospective transition method. The standards did not have a material impact on the Company’s consolidated statements of financial position or results of operations primarily because most of its revenue is derived from lease contracts, which are excluded from the scope of the new guidance. The Company’s insurance fee revenue, property management fee revenue, and merchandise sale revenue are included in the scope of the new guidance, however, the Company identified similar performance obligations under this standard as compared with deliverables and separate units of account identified under its previous revenue recognition methodology. Accordingly, revenue recognized under the new guidance does not differ materially from revenue recognized under previous guidance and there is no material prior year impact. |
STORAGE PROPERTIES
STORAGE PROPERTIES | 6 Months Ended |
Jun. 30, 2018 | |
STORAGE PROPERTIES | |
STORAGE FACILITIES | 3. STORAGE PROPERTIES The book value of the Company’s real estate assets is summarized as follows: June 30, December 31, 2018 2017 (in thousands) Land $ 723,851 $ 711,140 Buildings and improvements 3,153,744 3,086,252 Equipment 175,846 182,958 Construction in progress 184,276 181,365 Storage properties 4,237,717 4,161,715 Less: Accumulated depreciation (807,625) (752,925) Storage properties, net $ 3,430,092 $ 3,408,790 The following table summarizes the Company’s acquisition and disposition activity during the period beginning on January 1, 2017 through June 30, 2018: Number of Purchase / Sale Price Asset/Portfolio Market Transaction Date Stores (in thousands) 2018 Acquisitions: Texas Asset Texas Markets - Major January 2018 1 $ 12,200 Texas Asset Texas Markets - Major May 2018 1 19,000 2 $ 2017 Acquisitions: Illinois Asset Chicago April 2017 1 $ 11,200 Maryland Asset Baltimore / DC May 2017 1 18,200 California Asset Sacramento May 2017 1 3,650 Texas Asset Texas Markets - Major October 2017 1 4,050 Florida Asset Florida Markets - Other October 2017 1 14,500 Illinois Asset Chicago November 2017 1 11,300 Florida Asset Florida Markets - Other December 2017 1 17,750 7 $ |
INVESTMENT ACTIVITY
INVESTMENT ACTIVITY | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENT ACTIVITY | |
INVESTMENT ACTIVITY | 4. INVESTMENT ACTIVITY 2018 Acquisitions During the six months ended June 30, 2018, the Company acquired two stores located in Texas, for an aggregate purchase price of approximately $31.2 million. In connection with these acquisitions, the Company allocated the purchase price and acquisition related costs to the tangible and intangible assets acquired based on fair value. Intangible assets consist of in-place leases, which aggregated $0.8 million at the time of the acquisitions and prior to any amortization of such amounts. The estimated life of these in-place leases was 12 months, and the amortization expense that was recognized during the three and six months ended June 30, 2018 was approximately $0.1 million and $0.2 million, respectively. In connection with one of the acquired stores, the Company assumed a $7.2 million mortgage loan that was immediately repaid by the Company. The remainder of the purchase price was funded with $0.2 million of cash and $4.8 million through the issuance of 168,011 OP Units (see note 12). Following a 13-month lock-up period, the holder may tender the OP Units for redemption by the Operating Partnership for a cash amount per OP Unit equal to the market value of an equivalent number of common shares of the Company. The Company has the right, but not the obligation, to assume and satisfy the redemption obligation of the Operating Partnership by issuing one common share in exchange for each OP Unit tendered for redemption. The following table summarizes the Company’s revenue and earnings associated with the 2018 acquisitions from the acquisition date, that are included in the consolidated statements of operations for the three and six months ended June 30, 2018: Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 (in thousands) Total revenue $ 318 $ 468 Net loss (199) (289) As of June 30, 2018, the Company was under contract and had made aggregate deposits of $6.8 million associated with four stores, including two stores to be acquired after the completion of construction and the issuance of the certificate of occupancy, for an aggregate acquisition price of $111.2 million. The deposits are reflected in Other assets, net on the Company’s consolidated balance sheets. The purchase of the two stores under construction is expected to occur by the fourth quarter of 2018 after the completion of construction and the issuance of a certificate of occupancy. These acquisitions are subject to due diligence and other customary closing conditions and no assurance can be provided that these acquisitions will be completed on the terms described, or at all. 2017 Acquisitions During the year ended December 31, 2017, the Company acquired six stores located throughout the United States, including two stores upon completion of construction and the issuance of a certificate of occupancy, for an aggregate purchase price of approximately $69.5 million. In connection with these acquisitions, the Company allocated a portion of the purchase price to the tangible and intangible assets acquired based on fair value. Intangible assets consist of in-place leases, which aggregated $3.2 million at the time of the acquisitions and prior to any amortization of such amounts. The estimated life of these in-place leases was 12 months, and the amortization expense that was recognized during the three and six months ended June 30, 2018 was approximately $0.5 million and $1.3 million, respectively. In connection with one of the acquired stores, the Company assumed mortgage debt that was recorded at a fair value of $6.2 million, which fair value includes an outstanding principal balance totaling $5.9 million and a net premium of $0.3 million to reflect the estimated fair value of the debt at the time of assumption. As part of the acquisition of that same store, the Company issued OP Units that were valued at approximately $12.3 million as consideration for the remainder of the purchase price (see note 12). During the year ended December 31, 2017, the Company also acquired a store in Illinois upon completion of construction and the issuance of a certificate of occupancy for $11.2 million. The purchase price was satisfied with $9.7 million of cash and 58,400 newly created Class C OP Units. Each Class C OP Unit has a stated value of $25 and bears an annual distribution rate of 3% of the stated value. The holder has the option to tender the Class C OP Units to the Operating Partnership at any time, and as of April 12, 2018, the Operating Partnership has the option to redeem the Class C OP Units, in each case at a redemption price of $25 per Class C OP Unit. The Company has the right to settle the redemption in cash or, at the Company’s option, common shares of the Company, or a combination of cash and common shares of the Company, with the common shares of the Company valued at their closing price as of the redemption date (see note 16). Because the Class C OP Units represent an unconditional obligation that the Company may settle by issuing a variable number of its common shares with a monetary value that is known at inception, they have been classified as a liability in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. Development As of June 30, 2018, the Company had invested in joint ventures to develop seven self-storage properties located in Massachusetts (2), New Jersey (1), and New York (4). Construction for all projects is expected to be completed by the fourth quarter of 2019 (see note 12). As of June 30, 2018, development costs incurred to date for these projects totaled $165.5 million. Total construction costs for these projects are expected to be $252.7 million. These costs are capitalized to construction in progress while the projects are under development and are reflected in Storage properties on the Company’s consolidated balance sheets. The Company has completed the construction and opened for operation the following stores during the period beginning on January 1, 2017 through June 30, 2018. The costs associated with the construction of these stores are capitalized to land, building, and improvements as well as equipment and are reflected in Storage properties on the Company’s consolidated balance sheets. CubeSmart Number of Ownership Total Store Location Stores Date Opened Interest Construction Costs (in thousands) Brooklyn, NY (1) 1 Q4 2017 100% $ 49,300 Washington, D.C. 1 Q3 2017 100% 27,800 New York, NY 1 Q3 2017 90% 81,200 North Palm Beach, FL 1 Q1 2017 100% 9,700 4 $ 168,000 (1) This property was previously owned by a consolidated joint venture, in which the Company had a 51% ownership interest. On March 28, 2018, the noncontrolling member in the venture put its 49% interest in the venture to the Company for $20.4 million, which is included in Development costs in the consolidated statements of cash flows. During the fourth quarter of 2015, the Company, through a joint venture in which the Company owned a 90% interest and previously consolidated, completed the construction and opened for operation a store located in Brooklyn, NY. On June 2, 2017, the Company acquired the noncontrolling member’s 10% interest in the venture for $9.0 million, of which $7.5 million was initially paid. The remaining $1.5 million was paid upon completion of certain development obligations during the third quarter of 2017. Prior to this transaction, the noncontrolling member’s interest was reported in Noncontrolling interests in subsidiaries on the consolidated balance sheets. Since the Company retained its controlling interest in the joint venture and the store is now wholly owned, this transaction was accounted for as an equity transaction. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase, and the $8.6 million difference between the purchase price paid by the Company and the carrying amount of the noncontrolling interest was recorded as an adjustment to equity attributable to the Company. In conjunction with the Company’s acquisition of the noncontrolling interest, the $9.8 million related party loan extended by the Company to the venture during the construction period was repaid in full. |
INVESTMENT IN UNCONSOLIDATED RE
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | |
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | 5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES 191 IV CUBE LLC (“HVP IV”) On October 16, 2017, the Company acquired a self-storage property located in Texas for $9.4 million, which it then contributed to a newly-formed joint venture on November 1, 2017. In return for contributing the property to HVP IV, the Company received approximately $7.5 million in cash and a 20% ownership interest in the venture. During the six months ended June 30, 2018, HVP IV acquired eight additional stores located in Arizona (2), Florida (2), Georgia (1), Maryland (1), and Texas (2) for an aggregate purchase price of $93.9 million, of which the Company has contributed $14.1 million. On May 16, 2018, HVP IV received a $43.7 million initial advance on its $107.0 million loan facility, which encumbers the first six stores that were acquired by the venture. The loan bears interest at LIBOR plus 1.70% and matures on May 16, 2021 with options to extend the maturity date through May 16, 2023, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement. CUBE HHF Northeast Venture LLC (“HHFNE”) On December 15, 2016, the Company invested a 10% ownership interest in a newly-formed joint venture that acquired 13 self-storage properties located in Connecticut (3), Massachusetts (6), Rhode Island (2), and Vermont (2). HHFNE paid $87.5 million for these stores, of which $6.0 million was allocated to the value of the in-place lease intangible. The acquisition was funded primarily through an advance totaling $44.5 million on the venture’s loan facility. 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 HHFNE related to this portfolio acquisition was $3.8 million. The loan bears interest at LIBOR plus 1.90% and matures on December 15, 2019 with options to extend the maturity date through December 15, 2021, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement. 191 III CUBE LLC (“HVP III”) During the fourth quarter of 2015, the Company invested a 10% ownership interest in a newly-formed joint venture that agreed to acquire a property portfolio comprised of 37 self-storage properties located in Michigan (17), Tennessee (10), Massachusetts (7), and Florida (3). HVP III paid $242.5 million for these 37 stores, of which $18.9 million was allocated to the value of the in-place lease intangible. HVP III acquired 30 of the stores on December 8, 2015 for $193.7 million, one of the stores on January 26, 2016 for $5.7 million, five of the stores on April 21, 2016 for $36.1 million, and one store on June 15, 2016 for $7.0 million. In connection with six of the acquired stores, HVP III assumed mortgage debt that was recorded at a fair value of $25.3 million, which includes an outstanding principal balance totaling $23.7 million and a net premium of $1.6 million to reflect the estimated fair value of the debt at the time of assumption. The remainder of the purchase price was funded through advances totaling $116.0 million on the venture’s $122.0 million loan facility and amounts contributed pro-rata by the Company and its unaffiliated joint venture partner. The Company’s total contribution to HVP III related to this portfolio acquisition was $10.7 million. The loan facility bears interest at LIBOR plus 2.00% per annum and matures on December 7, 2018 with options to extend the maturity date through December 7, 2020, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement. During the first quarter of 2016, HVP III agreed to acquire a property portfolio comprised of 31 self-storage properties located in South Carolina (22), Georgia (5), and North Carolina (4) that were previously managed by the Company. HVP III paid $115.5 million for these 31 stores, of which $10.6 million was allocated to the value of the in-place lease intangible. HVP III acquired 30 of the stores on March 30, 2016 for $112.8 million and one of the stores on November 2, 2016 for $2.7 million. In conjunction with the acquisitions, HVP III refinanced its existing loan facility by entering into an increased amended and restated loan facility not to exceed $185.5 million. The acquisitions were funded primarily through advances totaling $63.5 million on the venture’s amended and restated loan facility. 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 HVP III related to this portfolio acquisition was $5.4 million, bringing its total investment in HVP III to $16.1 million as of September 30, 2017. The amended and restated loan facility bears interest at LIBOR plus 2.00% per annum. The initial maturity date was extended to March 30, 2019 with options to extend through March 30, 2021, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the amended and restated loan agreement. CUBE HHF Limited Partnership (“HHF”) On December 10, 2013, the Company invested a 50% ownership interest in a newly-formed joint venture that acquired 35 self-storage properties located in Texas (34) and North Carolina (1). HHF paid $315.7 million for these stores, of which $12.1 million was allocated to the value of the in-place lease intangible. The Company and the unaffiliated joint venture partner, collectively the “HHF Partners”, each contributed cash equal to 50% of the capital required to fund the acquisition. On May 1, 2014, HHF obtained a $100.0 million loan secured by the 34 self-storage properties located in Texas that are owned by the venture. There is no recourse to the Company, subject to customary exceptions to non-recourse provisions. The loan bears interest at 3.59% per annum and matures on April 30, 2021. This financing completed the planned capital structure of HHF and proceeds (net of closing costs) of $99.2 million were distributed proportionately to the partners. Based upon the facts and circumstances at formation of HVP IV, HHFNE, HVP III, 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 losses of real estate ventures on the Company’s consolidated statements of operations. The amounts reflected in the following table are based on the historical financial information of the real estate ventures. The following is a summary of the financial position of the Ventures as of June 30, 2018 and December 31, 2017 (in thousands): June 30, December 31, 2018 2017 Assets Storage properties, net $ 722,609 $ 647,668 Other assets 33,258 8,284 Total assets $ 755,867 $ 655,952 Liabilities and equity Other liabilities $ 11,198 $ 6,853 Debt 389,299 346,475 Equity CubeSmart 100,614 91,206 Joint venture partners 254,756 211,418 Total liabilities and equity $ 755,867 $ 655,952 The following is a summary of results of operations of the Ventures for the three and six months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Total revenues $ 22,291 $ 20,196 $ 43,201 $ 39,618 Operating expenses 9,482 8,410 18,686 16,977 Other expenses 372 143 566 543 Interest expense, net 3,123 2,919 6,021 5,818 Depreciation and amortization 10,369 10,682 19,818 24,400 Net loss $ (1,055) $ (1,958) $ (1,890) $ (8,120) Company’s share of net loss $ (309) $ (253) $ (493) $ (1,025) |
UNSECURED SENIOR NOTES
UNSECURED SENIOR NOTES | 6 Months Ended |
Jun. 30, 2018 | |
UNSECURED SENIOR NOTES | |
UNSECURED SENIOR NOTES | 6. UNSECURED SENIOR NOTES The Company’s unsecured senior notes are summarized as follows (collectively referred to as the “Senior Notes”): June 30, December 31, Effective Issuance Maturity Unsecured Senior Notes 2018 2017 Interest Rate Date Date (in thousands) $250M 4.800% Guaranteed Notes due 2022 $ 250,000 $ 250,000 4.82 % Jun-12 Jul-22 $300M 4.375% Guaranteed Notes due 2023 (1) 300,000 300,000 4.33 % Various (1) Dec-23 $300M 4.000% Guaranteed Notes due 2025 (2) 300,000 300,000 3.99 % Various (2) Nov-25 $300M 3.125% Guaranteed Notes due 2026 300,000 300,000 3.18 % Aug-16 Sep-26 Principal balance outstanding 1,150,000 Less: Discount on issuance of unsecured senior notes, net (593) (617) Less: Loan procurement costs, net (6,415) (6,923) Total unsecured senior notes, net $ 1,142,992 $ 1,142,460 (1) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.375% senior notes due 2023, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.375% senior notes due December 15, 2023 issued on December 17, 2013. The $50.0 million and $250.0 million traunches were priced at 105.040% and 98.995%, respectively, of the principal amount to yield 3.495% and 4.501%, respectively, to maturity. The combined weighted-average effective interest rate of the 2023 notes is 4.330%. (2) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.000% senior notes due 2025, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.000% senior notes due November 15, 2025 issued on October 26, 2015. The $50.0 million and $250.0 million traunches were priced at 101.343% and 99.735%, respectively, of the principal amount to yield 3.811% and 4.032%, respectively, to maturity. The combined weighted-average effective interest rate of the 2025 notes is 3.994%. 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 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 June 30, 2018, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes. |
REVOLVING CREDIT FACILITY AND U
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS | 6 Months Ended |
Jun. 30, 2018 | |
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS | |
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS | 7. REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS On December 9, 2011, the Company entered into a credit agreement (the “Credit Facility”), which was subsequently amended on April 5, 2012, June 18, 2013, and April 22, 2015 to provide for, amongst other things, a $500.0 million unsecured revolving facility (the “Revolver”) with a maturity date of April 22, 2020. Pricing on the Revolver is dependent on the Company’s unsecured debt credit ratings. At the Company’s current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.25% over LIBOR, inclusive of a facility fee of 0.15%. As of June 30, 2018, $451.6 million was available for borrowing under the Revolver. The available balance under the Revolver is reduced by an outstanding letter of credit of $0.7 million. As of June 30, 2018, the Company also had a $200.0 million unsecured term loan outstanding under the Credit Facility, which is included in the table below. On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”), which was subsequently amended on June 18, 2013 and August 5, 2014, consisting of a $100.0 million unsecured term loan with a five-year maturity and a $100.0 million unsecured term loan with a seven-year maturity. On April 6, 2017, the Company used the net proceeds from the issuance of $50.0 million of its 4.375% Senior Notes due 2023 and $50.0 million of its 4.000% Senior Notes due 2025 to repay all of the outstanding indebtedness under its five-year $100.0 million unsecured term loan that was scheduled to mature in June 2018. The Company’s unsecured term loans under the Credit Facility and Term Loan Facility are summarized below: Carrying Value as of: Effective Interest June 30, December 31, Rate as of Maturity Unsecured Term Loans 2018 2017 June 30, 2018 (1) Date (in thousands) Credit Facility Unsecured term loan $ 200,000 $ 200,000 3.39 % Jan-19 Term Loan Facility Unsecured term loan 100,000 100,000 3.24 % Jan-20 Principal balance outstanding 300,000 300,000 Less: Loan procurement costs, net (402) (604) Total unsecured term loans, net $ 299,598 $ (1) Pricing on the Term Loan Facility and the unsecured term loan under the Credit Facility is dependent on the Company’s unsecured debt credit ratings. At the Company’s current Baa2/BBB level, amounts drawn under the term loan scheduled to mature in January 2019 are priced at 1.30% over LIBOR, while amounts drawn under the term loan scheduled to mature in January 2020 are priced at 1.15% over LIBOR. As of June 30, 2018, borrowings under the Credit Facility, inclusive of the Revolver, and Term Loan Facility, as amended, had an effective weighted average interest rate of 3.34%. The Term Loan Facility and the unsecured term loan under the Credit Facility were fully drawn at June 30, 2018 and no further borrowings may be made under the term loans. The Company’s ability to borrow under the Revolver is subject to ongoing compliance with certain financial covenants which include: · Maximum total indebtedness to total asset value of 60.0% at any time; · Minimum fixed charge coverage ratio of 1.50:1.00; and · Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010. Further, under the Credit Facility and Term Loan Facility, the Company is restricted from paying distributions on the Parent Company’s common shares in excess of the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status. As of June 30, 2018, the Company was in compliance with all of its financial covenants and anticipates being in compliance with all of its financial covenants through the terms of the Credit Facility and Term Loan Facility. |
MORTGAGE LOANS AND NOTES PAYABL
MORTGAGE LOANS AND NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
MORTGAGE LOANS AND NOTES PAYABLE | |
MORTGAGE LOANS AND NOTES PAYABLE | 8. MORTGAGE LOANS AND NOTES PAYABLE The Company’s mortgage loans and notes payable are summarized as follows: Carrying Value as of: June 30, December 31, Effective Maturity Mortgage Loans and Notes Payable 2018 2017 Interest Rate Date (in thousands) YSI 33 $ 9,383 $ 9,547 6.42 % Jul-19 YSI 26 8,126 8,228 4.56 % Nov-20 YSI 57 2,853 2,889 4.61 % Nov-20 YSI 55 22,276 22,508 4.85 % Jun-21 YSI 24 25,300 25,700 4.64 % Jun-21 YSI 65 2,387 2,411 3.85 % Jun-23 YSI 66 31,450 31,727 3.51 % Jun-23 YSI 68 5,707 5,786 3.78 % May-24 Principal balance outstanding 107,482 108,796 Plus: Unamortized fair value adjustment 2,918 3,286 Less: Loan procurement costs, net (549) (648) Total mortgage loans and notes payable, net $ 109,851 $ As of June 30, 2018 and December 31, 2017, the Company’s mortgage loans payable were secured by certain of its self-storage properties with net book values of approximately $233.8 million and $236.9 million, respectively. The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable as of June 30, 2018 (in thousands): 2018 $ 1,336 2019 11,652 2020 12,791 2021 45,057 2022 923 2023 and thereafter 35,723 Total mortgage payments 107,482 Plus: Unamortized fair value adjustment 2,918 Less: Loan procurement costs, net (549) Total mortgage loans and notes payable, net $ 109,851 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended |
Jun. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9. ACCUMULATED OTHER COMPREHENSIVE INCOME The following table summarizes the changes in accumulated other comprehensive income by component for the six months ended June 30, 2018 (in thousands): Unrealized Gains (Losses) on Interest Rate Swaps Other comprehensive gain before reclassifications $ 59 Amounts reclassified from accumulated other comprehensive income (62) (1) Net current-period other comprehensive loss (3) Balance at December 31, 2017 3 Balance at June 30, 2018 $ — (1) See note 10 for additional information about the effects of the amounts reclassified. |
RISK MANAGEMENT AND USE OF FINA
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2018 | |
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS | |
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS | 10. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS The Company’s use of derivative instruments is limited to the utilization of interest rate swap agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its subsidiaries may also have other financial relationships. The Company is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks. The Company entered into interest rate swap agreements that qualified and were designated as cash flow hedges designed to reduce the impact of interest rate changes on its variable rate debt. Therefore, the interest rate swaps were recorded in the consolidated balance sheet at fair value and the related gains or losses are deferred in shareholders’ equity as accumulated other comprehensive income. These deferred gains and losses were amortized into interest expense during the period or periods in which the related interest payments affected earnings. The Company formally assessed, both at inception of a hedge and on an on-going basis, whether each derivative was highly-effective in offsetting changes in cash flows of the hedged item. If management determined that a derivative was highly-effective as a hedge, then the Company accounted for the derivative using hedge accounting, pursuant to which gains or losses inherent in the derivative did not impact the Company’s results of operations. If management determined that a derivative was not highly-effective as a hedge or if a derivative ceased to be a highly-effective hedge, the Company discontinued hedge accounting prospectively and reflected in its statement of operations realized and unrealized gains and losses in respect of the derivative. The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of June 30, 2018 and December 31, 2017, respectively (dollars in thousands): Hedge Hedge Notional Amount Effective Fair Value Product Type (1) June 30, 2018 December 31, 2017 Strike Date Maturity June 30, 2018 December 31, 2017 Swap Cash flow $ — $ 40,000 % 6/20/2011 6/20/2018 $ — $ (161) Swap Cash flow — 40,000 % 6/20/2011 6/20/2018 — (163) Swap Cash flow — 20,000 % 6/20/2011 6/20/2018 — (82) $ — $ 100,000 $ — $ (406) (1) Hedging unsecured variable rate debt by fixing 30-day LIBOR. The Company measured its derivative instruments at fair value and recorded them in the balance sheet as either an asset or liability. As of June 30, 2018, all derivative instruments had reached maturity. As of December 31, 2017, all derivative instruments were included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets. The effective portions of changes in the fair value of the derivatives were reported in accumulated other comprehensive income. Amounts reported in accumulated other comprehensive income related to derivatives were reclassified to interest expense as interest payments were made on the Company’s variable-rate debt. The change in unrealized losses on interest rate swaps reflects a reclassification of $0.3 million of unrealized losses from accumulated other comprehensive income as an increase to interest expense during the six months ended June 30, 2018. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS The Company applies the methods of determining fair value as described in authoritative guidance, to value its financial assets and liabilities. As defined in the guidance, fair value is based on the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible, as well as considering counterparty credit risk in its assessment of fair value. There were no financial assets or liabilities carried at fair value as of June 30, 2018. Financial assets and liabilities carried at fair value as of December 31, 2017 are classified in the table below in one of the three categories described above (in thousands): Level 1 Level 2 Level 3 Interest rate swap derivative liabilities $ — $ 406 $ — Total liabilities at fair value $ — $ 406 $ — Financial assets and liabilities carried at fair value were classified as Level 2 inputs. For financial liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including LIBOR yield curves, bank price quotes for forward starting swaps, NYMEX futures pricing and common stock price quotes. Below is a summary of valuation techniques for Level 2 financial liabilities: · Interest rate swap derivative assets and liabilities – valued using LIBOR yield curves at the reporting date. Counterparties to these contracts are most often highly rated financial institutions, none of which experienced any significant downgrades that would reduce the amount owed by the Company. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the counterparties. However, as of the reporting dates, the Company has assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The fair values of financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their respective carrying values at June 30, 2018 and December 31, 2017. The aggregate carrying value of the Company’s debt was $1.6 billion at June 30, 2018 and December 31, 2017. The estimated fair value of the Company’s debt was $1.6 billion and $1.7 billion at June 30, 2018 and December 31, 2017, respectively. These estimates were based on a discounted cash flow analysis assuming market interest rates for comparable obligations at June 30, 2018 and December 31, 2017. The Company estimates the fair value of its fixed rate debt and the credit spreads over variable market rates on its variable rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of the debt obligation with similar credit policies, which is classified within level 2 of the fair value hierarchy. Rates and credit spreads take into consideration general market conditions and maturity. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 6 Months Ended |
Jun. 30, 2018 | |
NONCONTROLLING INTERESTS | |
NONCONTROLLING INTERESTS | 12. NONCONTROLLING INTERESTS Interests in Consolidated Real Estate Joint Ventures Noncontrolling interests in subsidiaries represent the ownership interests of third parties in the Company’s consolidated real estate ventures. The Company has determined that these ventures are variable interest entities, and that the Company is the primary beneficiary. Accordingly, the Company consolidates the assets, liabilities, and results of operations of the real estate ventures in the table below (dollars in thousands): Date Opened / CubeSmart Number Estimated Ownership June 30, 2018 Development Ventures of Stores Location Opening Interest Total Assets Total Liabilities CS SDP Newtonville, LLC ("Newton”) (3) 1 Newton, MA Q4 2019 (est.) 90% $ 6,855 $ 324 CS 1158 McDonald Ave, LLC ("McDonald Ave") (1) 1 Brooklyn, NY Q3 2019 (est.) 51% 22,304 5,074 CS SJM E 92nd Street, LLC ("92nd St") (3) 1 New York, NY Q3 2019 (est.) 90% 3,247 2,077 CS 160 East 22nd St, LLC ("22nd St") (1) 1 Bayonne, NJ Q1 2019 (est.) 51% 11,004 7,657 CS SDP Waltham, LLC ("Waltham") (3) 1 Waltham, MA Q1 2019 (est.) 90% 8,685 2,944 2225 46th St, LLC ("46th St") (1) 1 Queens, NY Q1 2019 (est.) 51% 33,486 12,023 2880 Exterior St, LLC ("Exterior St") (1) 1 Bronx, NY Q3 2018 (est.) 51% 81,095 38,815 444 55 th Street Holdings, LLC ("55th St") (2) 1 New York, NY Q3 2017 90% 80,365 33,407 186 Jamaica Avenue, LLC ("Jamaica Ave") (3) 1 Queens, NY Q4 2015 90% 18,035 12,484 Shirlington Rd, LLC ("SRLLC") (3) 1 Arlington, VA Q2 2015 90% 15,915 12,672 10 $ 280,991 $ 127,477 (1) The noncontrolling members of McDonald Ave, 22nd St, 46th St, and Exterior St have the option to put their ownership interest in the ventures to the Company for $10.0 million, $11.5 million, $14.2 million, and $37.8 million, respectively, within the one-year period after construction of each store is substantially complete. Additionally, the Company has a one-year option to call the ownership interest of the noncontrolling members of McDonald Ave, 22nd St, 46th St, and Exterior St for $10.0 million, $11.5 million, $14.2 million, and $37.8 million, respectively, beginning on the second anniversary of the respective store’s construction being substantially complete. The Company is accreting the respective liabilities during the development periods and, as of June 30, 2018, has accrued $4.4 million, $6.6 million, $10.8 million and $34.8 million related to McDonald Ave, 22 nd St, 46th St, and Exterior St, respectively. (2) In connection with the acquired property, 55th St assumed mortgage debt that was recorded at a fair value of $35.0 million, which fair value includes an outstanding principal balance totaling $32.5 million and a net premium of $2.5 million to reflect the estimated fair value of the debt at the time of assumption. The loan accrues interest at a fixed rate of 4.68%, matures on June 7, 2023, and is fully guaranteed by the Company. (3) The Company has a related party loan commitment to these ventures to fund all or a portion of the construction costs. As of June 30, 2018, the Company has funded $0.3 million of a total $12.1 million loan commitment to Newton, $0.7 million of a total $6.9 million loan commitment to 92 nd St, $2.4 million of a total $10.8 million loan commitment to Waltham, $12.4 million of a total $12.8 million loan commitment to Jamaica Ave, and $12.5 million of a total $14.6 million loan commitment to SRLLC, which are included in the total liability amounts within the table above. These loans and related interest were eliminated during consolidation. Operating Partnership Ownership The Company follows guidance regarding the classification and measurement of redeemable securities. Under this guidance, securities that are redeemable for cash or other assets, at the option of the holder and not solely within the control of the issuer, must be classified outside of permanent equity/capital. This classification results in certain outside ownership interests being included as redeemable noncontrolling interests outside of permanent equity/capital in the consolidated balance sheets. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to redeemable ownership interests in the Operating Partnership held by third parties for which CubeSmart has a choice to settle the redemption by delivery of its own shares, the Operating Partnership considered the guidance regarding accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own shares, to evaluate whether CubeSmart controls the actions or events necessary to presume share settlement. The guidance also requires that noncontrolling interests classified outside of permanent capital be adjusted each period to the greater of the carrying value based on the accumulation of historical cost or the redemption value. Approximately 1.1% and 1.0% of the outstanding OP Units as of June 30, 2018 and December 31, 2017, respectively, were not owned by CubeSmart, the sole general partner. The interests in the Operating Partnership represented by these OP Units were a component of the consideration that the Operating Partnership paid to acquire certain self-storage properties. The holders of the OP Units are limited partners in the Operating Partnership and have the right to require CubeSmart to redeem all or part of their OP Units for, at the general partner’s option, an equivalent number of common shares of CubeSmart or cash based upon the fair value of an equivalent number of common shares of CubeSmart. However, the partnership agreement contains certain provisions that could result in a settlement outside the control of CubeSmart and the Operating Partnership, as CubeSmart does not have the ability to settle in unregistered shares. Accordingly, consistent with the guidance, the Operating Partnership will record the OP Units owned by third parties outside of permanent capital in the consolidated balance sheets. Net income or loss related to the OP Units owned by third parties is excluded from net income or loss attributable to Operating Partner in the consolidated statements of operations. On January 31, 2018, the Company acquired a store in Texas for $12.2 million and assumed an existing mortgage loan with an outstanding balance of approximately $7.2 million and immediately repaid the loan. In conjunction with the closing, the Company paid $0.2 million in cash and issued 168,011 OP Units, valued at approximately $4.8 million, to pay the remaining consideration. On April 12, 2017, the Company acquired a store in Illinois for $11.2 million. In conjunction with the closing, the Company paid $9.7 million and issued 58,400 Class C OP units to pay the remaining consideration (see note 16). On May 9, 2017, the Company acquired a store in Maryland for $18.2 million and assumed an existing mortgage loan with an outstanding balance of approximately $5.9 million. In conjunction with the closing, the Company issued 440,160 OP Units, valued at approximately $12.3 million, to pay the remaining consideration. As of June 30, 2018 and December 31, 2017, 2,002,248 and 1,878,253 OP units, respectively, were held by third parties. The per unit cash redemption amount of the outstanding OP units was calculated based upon the average of the closing prices of the common shares of CubeSmart on the New York Stock Exchange for the final 10 trading days of the quarter. Based on the Company’s evaluation of the redemption value of the redeemable noncontrolling interest, the Company has reflected these interests at their redemption value at June 30, 2018 and December 31, 2017. As of June 30, 2018 and December 31, 2017, the Operating Partnership recorded increases to OP Units owned by third parties and corresponding decreases to capital of $7.2 million and $4.0 million, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES The Company is involved in claims from time to time, which arise in the ordinary course of business. In accordance with applicable accounting guidance, management establishes an accrued liability for litigation when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be exposure to loss in excess of those amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions, and known and unknown uncertainties. In the opinion of management, the Company has made adequate provisions for potential liabilities, arising from any such matters, which are included in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. However, litigation is inherently unpredictable, and the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims, and changes in any such matters, could have a material adverse effect the Company’s business, financial condition, and operating results. On July 13, 2015, a putative class action was filed against the Company in the Federal District Court of New Jersey seeking to obtain declaratory, injunctive and monetary relief for a class of New Jersey consumers based upon alleged violations by the Company of the New Jersey Truth in Customer Contract, Warranty and Notice Act and the New Jersey Consumer Fraud Act. On April 19, 2018, the court granted final approval of a settlement for the class action. The settlement and associated expenses, which were previously reserved for, did not have a material impact on the Company’s consolidated financial position or results of operations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS The Company provides management services to certain joint ventures and other related parties. Management agreements provide for fee income to the Company based on a percentage of revenues at the managed stores. Total management fees for unconsolidated joint ventures or other entities in which the Company held an ownership interest for the three and six months ended June 30, 2018 totaled $1.1 million and $2.1 million, respectively. Total management fees for unconsolidated joint ventures or other entities in which the Company held an ownership interest for the three and six months ended June 30, 2017 totaled $0.9 million and $1.8 million, respectively. The management agreements for certain joint ventures, other related parties and third-party stores provide for the reimbursement to the Company for certain expenses incurred to manage the stores. These amounts consist of amounts due for management fees, payroll, and other store expenses. The amounts due to the Company were $9.6 million and $7.5 million as of June 30, 2018 and December 31, 2017, respectively, and are reflected in Other assets, net on the Company’s consolidated balance sheets. Additionally, as discussed in note 12, the Company had outstanding mortgage loans receivable from consolidated joint ventures of $28.3 million and $25.5 million as of June 30, 2018 and December 31, 2017, respectively, which are eliminated for consolidation purposes. The Company believes that all of these related-party receivables are fully collectible. The HVP III, HVP IV, and HHFNE operating agreements provide for acquisition fees payable from HVP III, HVP IV, and HHFNE to the Company in an amount equal to 0.5% of the purchase price upon the closing of an acquisition by HVP III, HVP IV, and HHFNE, or any of their subsidiaries and completion of certain measures as defined in the operating agreements. During the three and six months ended June 30, 2018, the Company recognized $0.2 million and $0.5 million, respectively, in acquisition fees. During the three and six months ended June 30, 2017, the Company recognized $0.4 million in acquisition fees. Acquisition fees are included in Other income on the consolidated statements of operations. |
PRO FORMA FINANCIAL INFORMATION
PRO FORMA FINANCIAL INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
PRO FORMA FINANCIAL INFORMATION | |
PRO FORMA FINANCIAL INFORMATION | 15. PRO FORMA FINANCIAL INFORMATION During the six months ended June 30, 2018 and the year ended December 31, 2017, the Company acquired two stores for an aggregate purchase price of $31.2 million (see note 4) and seven stores for an aggregate purchase price of approximately $80.7 million, respectively. The condensed consolidated pro forma financial information set forth below reflects adjustments to the Company’s historical financial data to give effect to each of the acquisitions and related financing activity (including the issuance of common shares) that occurred during 2018 and 2017 as if each had occurred as of January 1, 2017 and 2016, respectively. The unaudited pro forma information presented below does not purport to represent what the Company’s actual results of operations would have been for the periods indicated, nor does it purport to represent the Company’s future results of operations. The following table summarizes, on a pro forma basis, the Company’s consolidated results of operations for the six months ended June 30, 2018 and 2017 based on the assumptions described above: Six Months Ended June 30, 2018 2017 (in thousands, except per share data) Pro forma revenues $ 291,123 $ 274,042 Pro forma net income $ 74,861 $ 64,545 Earnings per share attributable to common shareholders: Basic - as reported $ 0.40 $ 0.32 Diluted - as reported $ 0.40 $ 0.32 Basic - as pro forma $ 0.41 $ 0.35 Diluted - as pro forma $ 0.40 $ 0.35 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS On July 10, 2018, the Company acquired one self-storage property in Washington, D.C. for a purchase price of $34.2 million. On July 23, 2018, the Company exercised its right to require redemption of the 58,400 Class C OP Units that were originally issued on April 12, 2017. The redemption was satisfied through the issuance of 46,322 common units of the Operating Partnership in lieu of cash or common shares of the Parent Company. |
SUMMARY OF SIGNIFICANT ACCOUN24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting and, in the opinion of each of the Parent Company’s and Operating Partnership’s respective management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for each respective company for the interim periods presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Parent Company’s and the Operating Partnership’s audited financial statements prepared in accordance with GAAP, and the related notes thereto, for the year ended December 31, 2017, which are included in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The results of operations for the three and six months ended June 30, 2018 and 2017 are not necessarily indicative of the results of operations to be expected for any future period or the full year. The Operating Partnership meets the criteria as a variable interest entity. The Parent Company’s sole significant asset is its investment in the Operating Partnership. As a result, substantially all of the Parent Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Parent Company’s debt is an obligation of the Operating Partnership. |
Reclassifications | Reclassifications Certain amounts from the prior year have been reclassified to conform to current year presentation as described below. On January 1, 2018, the Company adopted ASU No. 2016-15: Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments, which requires retrospective application for a number of cash flow classification items for which there was diversity in practice. See Recent Accounting Pronouncements below for the specific cash flow areas addressed by the new standard. As a result of adopting the new guidance, $0.4 million of proceeds received from the settlement of insurance claims during the six months ended June 30, 2017 have been reclassified from operating activities to investing activities within the consolidated statements of cash flows. On January 1, 2018, the Company also adopted ASU No. 2016-18: Statement of Cash Flows (Topic 230) – Restricted Cash, which requires restricted cash to be included with cash and cash equivalents as part of the reconciliation of beginning and end of period balances within the consolidated statements of cash flows. As a result of adopting the new guidance, $3.7 million of restricted cash, which was previously included as an investing cash inflow within the consolidated statements of cash flows for the six months ended June 30, 2017, has been removed and is now included in the cash, cash equivalents, and restricted cash line items at the beginning and the end of period. Restricted cash consists of purchase deposits and cash deposits required for debt service requirements, capital replacement, and expense reserves in connection with the requirements of the Company’s loan agreements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying the new guidance as an adjustment to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that the Company adopts the update. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements as the Company currently does not have any outstanding derivative financial instruments. In February 2017, as part of the new revenue standard, the FASB issued ASU No. 2017-05 – Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance, which focuses on recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. Specifically, the new guidance defines “in substance nonfinancial asset”, unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures. The new guidance became effective on January 1, 2018 when the Company adopted the new revenue standard. Upon adoption, the majority of the Company’s sale transactions are now treated as dispositions of nonfinancial assets rather than dispositions of a business given the FASB’s recently revised definition of a business (see ASU No. 2017-01 below). Additionally, in partial sale transactions where the Company sells a controlling interest in real estate but retains a noncontrolling interest, the Company will now fully recognize a gain or loss on the fair value measurement of the retained interest as the new guidance eliminates the partial profit recognition model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations. In January 2017, the FASB issued ASU 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business, which changes the definition of a business to include an input and a substantive process that together significantly contribute to the ability to create outputs. A framework is provided to evaluate when an input and a substantive process are present. The new guidance also narrows the definition of outputs, which are defined as the results of inputs and substantive processes that provide goods or services to customers, other revenue, or investment income. The standard became effective on January 1, 2018. Upon adoption of the new guidance, the majority of the Company’s future property acquisitions will now be considered asset acquisitions, resulting in the capitalization of acquisition related costs incurred in connection with these transactions and the allocation of purchase price and acquisition related costs to the assets acquired based on their relative fair values. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position or results of operations. In November 2016, the FASB issued ASU No. 2016-18 - Statement of Cash Flows (Topic 230): Restricted Cash, which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new guidance also requires entities to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. The standard became effective on January 1, 2018 and requires the use of the retrospective transition method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements as the update primarily relates to financial statement presentation and disclosures as discussed in “ Reclassifications ” above. In August 2016, the FASB issued ASU No. 2016-15 – Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The eight items that the ASU provides classification guidance on include (1) debt prepayment and extinguishment costs, (2) settlement of zero-coupon debt instruments, (3) contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows and application of the predominance principle. The standard became effective on January 1, 2018 and requires the use of the retrospective transition method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements as the update primarily relates to financial statement presentation and disclosures as discussed in “Reclassifications” above. In February 2016, the FASB issued ASU No. 2016-02 - Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The Company plans to adopt the standard on January 1, 2019, the date it becomes effective for public companies, using the modified retrospective approach. Upon adoption, the Company anticipates that it will elect the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. At this time, the primary impact is expected to be related to the Company’s ten ground leases in which it serves as lessee. In May 2014, the FASB issued ASU No. 2014-09 - Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance outlines a five-step process for customer contract revenue recognition that focuses on transfer of control as opposed to transfer of risk and rewards. The new guidance also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. In May 2016, the FASB issued ASU No. 2016-12 - Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which amends ASU No. 2014-09 and is intended to address implementation issues that were raised by stakeholders. ASU No. 2016-12 provides practical expedients on collectability, noncash consideration, presentation of sales tax and contract modifications and completed contracts in transition. Both standards became effective on January 1, 2018. The Company finalized the impact of the adoption of ASU No. 2014-09 and ASU No. 2016-12 on the Company’s consolidated financial statements and related disclosures and adopted the standards using the modified retrospective transition method. The standards did not have a material impact on the Company’s consolidated statements of financial position or results of operations primarily because most of its revenue is derived from lease contracts, which are excluded from the scope of the new guidance. The Company’s insurance fee revenue, property management fee revenue, and merchandise sale revenue are included in the scope of the new guidance, however, the Company identified similar performance obligations under this standard as compared with deliverables and separate units of account identified under its previous revenue recognition methodology. Accordingly, revenue recognized under the new guidance does not differ materially from revenue recognized under previous guidance and there is no material prior year impact. |
STORAGE PROPERTIES (Tables)
STORAGE PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
STORAGE PROPERTIES | |
Summary of real estate assets | June 30, December 31, 2018 2017 (in thousands) Land $ 723,851 $ 711,140 Buildings and improvements 3,153,744 3,086,252 Equipment 175,846 182,958 Construction in progress 184,276 181,365 Storage properties 4,237,717 4,161,715 Less: Accumulated depreciation (807,625) (752,925) Storage properties, net $ 3,430,092 $ 3,408,790 |
Schedule of acquisitions and dispositions of real estate assets | Number of Purchase / Sale Price Asset/Portfolio Market Transaction Date Stores (in thousands) 2018 Acquisitions: Texas Asset Texas Markets - Major January 2018 1 $ 12,200 Texas Asset Texas Markets - Major May 2018 1 19,000 2 $ 2017 Acquisitions: Illinois Asset Chicago April 2017 1 $ 11,200 Maryland Asset Baltimore / DC May 2017 1 18,200 California Asset Sacramento May 2017 1 3,650 Texas Asset Texas Markets - Major October 2017 1 4,050 Florida Asset Florida Markets - Other October 2017 1 14,500 Illinois Asset Chicago November 2017 1 11,300 Florida Asset Florida Markets - Other December 2017 1 17,750 7 $ |
INVESTMENT ACTIVITY (Tables)
INVESTMENT ACTIVITY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENT ACTIVITY | |
Schedule of revenue and earnings from acquisitions since the acquisition dates included in consolidated statement of operations | Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 (in thousands) Total revenue $ 318 $ 468 Net loss (199) (289) |
Schedule of capitalized costs for investments in storage properties | CubeSmart Number of Ownership Total Store Location Stores Date Opened Interest Construction Costs (in thousands) Brooklyn, NY (1) 1 Q4 2017 100% $ 49,300 Washington, D.C. 1 Q3 2017 100% 27,800 New York, NY 1 Q3 2017 90% 81,200 North Palm Beach, FL 1 Q1 2017 100% 9,700 4 $ 168,000 (1) This property was previously owned by a consolidated joint venture, in which the Company had a 51% ownership interest. On March 28, 2018, the noncontrolling member in the venture put its 49% interest in the venture to the Company for $20.4 million, which is included in Development costs in the consolidated statements of cash flows. |
INVESTMENT IN UNCONSOLIDATED 27
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES | |
Summary of the financial position of the ventures | June 30, December 31, 2018 2017 Assets Storage properties, net $ 722,609 $ 647,668 Other assets 33,258 8,284 Total assets $ 755,867 $ 655,952 Liabilities and equity Other liabilities $ 11,198 $ 6,853 Debt 389,299 346,475 Equity CubeSmart 100,614 91,206 Joint venture partners 254,756 211,418 Total liabilities and equity $ 755,867 $ 655,952 |
Summary of results of operations of the ventures | Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Total revenues $ 22,291 $ 20,196 $ 43,201 $ 39,618 Operating expenses 9,482 8,410 18,686 16,977 Other expenses 372 143 566 543 Interest expense, net 3,123 2,919 6,021 5,818 Depreciation and amortization 10,369 10,682 19,818 24,400 Net loss $ (1,055) $ (1,958) $ (1,890) $ (8,120) Company’s share of net loss $ (309) $ (253) $ (493) $ (1,025) |
UNSECURED SENIOR NOTES (Tables)
UNSECURED SENIOR NOTES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Senior Notes | |
Summary of debt | June 30, December 31, Effective Issuance Maturity Unsecured Senior Notes 2018 2017 Interest Rate Date Date (in thousands) $250M 4.800% Guaranteed Notes due 2022 $ 250,000 $ 250,000 4.82 % Jun-12 Jul-22 $300M 4.375% Guaranteed Notes due 2023 (1) 300,000 300,000 4.33 % Various (1) Dec-23 $300M 4.000% Guaranteed Notes due 2025 (2) 300,000 300,000 3.99 % Various (2) Nov-25 $300M 3.125% Guaranteed Notes due 2026 300,000 300,000 3.18 % Aug-16 Sep-26 Principal balance outstanding 1,150,000 Less: Discount on issuance of unsecured senior notes, net (593) (617) Less: Loan procurement costs, net (6,415) (6,923) Total unsecured senior notes, net $ 1,142,992 $ 1,142,460 (1) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.375% senior notes due 2023, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.375% senior notes due December 15, 2023 issued on December 17, 2013. The $50.0 million and $250.0 million traunches were priced at 105.040% and 98.995%, respectively, of the principal amount to yield 3.495% and 4.501%, respectively, to maturity. The combined weighted-average effective interest rate of the 2023 notes is 4.330%. (2) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.000% senior notes due 2025, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.000% senior notes due November 15, 2025 issued on October 26, 2015. The $50.0 million and $250.0 million traunches were priced at 101.343% and 99.735%, respectively, of the principal amount to yield 3.811% and 4.032%, respectively, to maturity. The combined weighted-average effective interest rate of the 2025 notes is 3.994%. |
REVOLVING CREDIT FACILITY AND29
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Credit Facility and Term Loan Facility | |
Summary of debt | Carrying Value as of: Effective Interest June 30, December 31, Rate as of Maturity Unsecured Term Loans 2018 2017 June 30, 2018 (1) Date (in thousands) Credit Facility Unsecured term loan $ 200,000 $ 200,000 3.39 % Jan-19 Term Loan Facility Unsecured term loan 100,000 100,000 3.24 % Jan-20 Principal balance outstanding 300,000 300,000 Less: Loan procurement costs, net (402) (604) Total unsecured term loans, net $ 299,598 $ (1) Pricing on the Term Loan Facility and the unsecured term loan under the Credit Facility is dependent on the Company’s unsecured debt credit ratings. At the Company’s current Baa2/BBB level, amounts drawn under the term loan scheduled to mature in January 2019 are priced at 1.30% over LIBOR, while amounts drawn under the term loan scheduled to mature in January 2020 are priced at 1.15% over LIBOR. As of June 30, 2018, borrowings under the Credit Facility, inclusive of the Revolver, and Term Loan Facility, as amended, had an effective weighted average interest rate of 3.34%. |
MORTGAGE LOANS AND NOTES PAYA30
MORTGAGE LOANS AND NOTES PAYABLE (Tables) - Mortgages | 6 Months Ended |
Jun. 30, 2018 | |
Summary of debt | Carrying Value as of: June 30, December 31, Effective Maturity Mortgage Loans and Notes Payable 2018 2017 Interest Rate Date (in thousands) YSI 33 $ 9,383 $ 9,547 6.42 % Jul-19 YSI 26 8,126 8,228 4.56 % Nov-20 YSI 57 2,853 2,889 4.61 % Nov-20 YSI 55 22,276 22,508 4.85 % Jun-21 YSI 24 25,300 25,700 4.64 % Jun-21 YSI 65 2,387 2,411 3.85 % Jun-23 YSI 66 31,450 31,727 3.51 % Jun-23 YSI 68 5,707 5,786 3.78 % May-24 Principal balance outstanding 107,482 108,796 Plus: Unamortized fair value adjustment 2,918 3,286 Less: Loan procurement costs, net (549) (648) Total mortgage loans and notes payable, net $ 109,851 $ |
Schedule of the future principal payment requirements on the outstanding mortgage loans and notes payable | The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable as of June 30, 2018 (in thousands): 2018 $ 1,336 2019 11,652 2020 12,791 2021 45,057 2022 923 2023 and thereafter 35,723 Total mortgage payments 107,482 Plus: Unamortized fair value adjustment 2,918 Less: Loan procurement costs, net (549) Total mortgage loans and notes payable, net $ 109,851 |
ACCUMULATED OTHER COMPREHENSI31
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
Summary of changes in accumulated other comprehensive income by component | The following table summarizes the changes in accumulated other comprehensive income by component for the six months ended June 30, 2018 (in thousands): Unrealized Gains (Losses) on Interest Rate Swaps Other comprehensive gain before reclassifications $ 59 Amounts reclassified from accumulated other comprehensive income (62) (1) Net current-period other comprehensive loss (3) Balance at December 31, 2017 3 Balance at June 30, 2018 $ — See note 10 for additional information about the effects of the amounts reclassified. |
RISK MANAGEMENT AND USE OF FI32
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS | |
Summary of terms and fair values of the derivative financial instruments | The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of June 30, 2018 and December 31, 2017, respectively (dollars in thousands): Hedge Hedge Notional Amount Effective Fair Value Product Type (1) June 30, 2018 December 31, 2017 Strike Date Maturity June 30, 2018 December 31, 2017 Swap Cash flow $ — $ 40,000 % 6/20/2011 6/20/2018 $ — $ (161) Swap Cash flow — 40,000 % 6/20/2011 6/20/2018 — (163) Swap Cash flow — 20,000 % 6/20/2011 6/20/2018 — (82) $ — $ 100,000 $ — $ (406) (1) Hedging unsecured variable rate debt by fixing 30-day LIBOR. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial assets and liabilities carried at fair value | Level 1 Level 2 Level 3 Interest rate swap derivative liabilities $ — $ 406 $ — Total liabilities at fair value $ — $ 406 $ — |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
NONCONTROLLING INTERESTS | |
Schedule of noncontrolling interests in subsidiaries | Date Opened / CubeSmart Number Estimated Ownership June 30, 2018 Development Ventures of Stores Location Opening Interest Total Assets Total Liabilities CS SDP Newtonville, LLC ("Newton”) (3) 1 Newton, MA Q4 2019 (est.) 90% $ 6,855 $ 324 CS 1158 McDonald Ave, LLC ("McDonald Ave") (1) 1 Brooklyn, NY Q3 2019 (est.) 51% 22,304 5,074 CS SJM E 92nd Street, LLC ("92nd St") (3) 1 New York, NY Q3 2019 (est.) 90% 3,247 2,077 CS 160 East 22nd St, LLC ("22nd St") (1) 1 Bayonne, NJ Q1 2019 (est.) 51% 11,004 7,657 CS SDP Waltham, LLC ("Waltham") (3) 1 Waltham, MA Q1 2019 (est.) 90% 8,685 2,944 2225 46th St, LLC ("46th St") (1) 1 Queens, NY Q1 2019 (est.) 51% 33,486 12,023 2880 Exterior St, LLC ("Exterior St") (1) 1 Bronx, NY Q3 2018 (est.) 51% 81,095 38,815 444 55 th Street Holdings, LLC ("55th St") (2) 1 New York, NY Q3 2017 90% 80,365 33,407 186 Jamaica Avenue, LLC ("Jamaica Ave") (3) 1 Queens, NY Q4 2015 90% 18,035 12,484 Shirlington Rd, LLC ("SRLLC") (3) 1 Arlington, VA Q2 2015 90% 15,915 12,672 10 $ 280,991 $ 127,477 (1) The noncontrolling members of McDonald Ave, 22nd St, 46th St, and Exterior St have the option to put their ownership interest in the ventures to the Company for $10.0 million, $11.5 million, $14.2 million, and $37.8 million, respectively, within the one-year period after construction of each store is substantially complete. Additionally, the Company has a one-year option to call the ownership interest of the noncontrolling members of McDonald Ave, 22nd St, 46th St, and Exterior St for $10.0 million, $11.5 million, $14.2 million, and $37.8 million, respectively, beginning on the second anniversary of the respective store’s construction being substantially complete. The Company is accreting the respective liabilities during the development periods and, as of June 30, 2018, has accrued $4.4 million, $6.6 million, $10.8 million and $34.8 million related to McDonald Ave, 22 nd St, 46th St, and Exterior St, respectively. (2) In connection with the acquired property, 55th St assumed mortgage debt that was recorded at a fair value of $35.0 million, which fair value includes an outstanding principal balance totaling $32.5 million and a net premium of $2.5 million to reflect the estimated fair value of the debt at the time of assumption. The loan accrues interest at a fixed rate of 4.68%, matures on June 7, 2023, and is fully guaranteed by the Company. (3) The Company has a related party loan commitment to these ventures to fund all or a portion of the construction costs. As of June 30, 2018, the Company has funded $0.3 million of a total $12.1 million loan commitment to Newton, $0.7 million of a total $6.9 million loan commitment to 92 nd St, $2.4 million of a total $10.8 million loan commitment to Waltham, $12.4 million of a total $12.8 million loan commitment to Jamaica Ave, and $12.5 million of a total $14.6 million loan commitment to SRLLC, which are included in the total liability amounts within the table above. These loans and related interest were eliminated during consolidation. |
PRO FORMA FINANCIAL INFORMATI35
PRO FORMA FINANCIAL INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
PRO FORMA FINANCIAL INFORMATION | |
Schedule of consolidated results of operations on a pro forma basis | Six Months Ended June 30, 2018 2017 (in thousands, except per share data) Pro forma revenues $ 291,123 $ 274,042 Pro forma net income $ 74,861 $ 64,545 Earnings per share attributable to common shareholders: Basic - as reported $ 0.40 $ 0.32 Diluted - as reported $ 0.40 $ 0.32 Basic - as pro forma $ 0.41 $ 0.35 Diluted - as pro forma $ 0.40 $ 0.35 |
ORGANIZATION AND NATURE OF OP36
ORGANIZATION AND NATURE OF OPERATIONS (Details) | 6 Months Ended |
Jun. 30, 2018statesegment | |
ORGANIZATION AND NATURE OF OPERATIONS | |
Number of states in which self-storage facilities are located | state | 23 |
Number of reportable segments | segment | 1 |
Percentage of the entity's partnership interest in Operating Partnership | 98.90% |
Common stock, conversion ratio | 1 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reclassifications (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Investing cash flows | $ (100,690) | $ (49,631) |
Cash, cash equivalents, and restricted cash at beginning of period | 9,158 | 10,866 |
Cash, cash equivalents, and restricted cash at end of period | 9,524 | 12,241 |
Accounting Standards Update 2016-18 | Reclassifications | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cash, cash equivalents, and restricted cash at end of period | 3,700 | |
Accounting Standards Update 2016-15 | Reclassifications | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Investing cash flows | 400 | |
Cubesmart, L P and Subsidiaries [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Investing cash flows | (100,690) | (49,631) |
Cash, cash equivalents, and restricted cash at beginning of period | 9,158 | 10,866 |
Cash, cash equivalents, and restricted cash at end of period | $ 9,524 | $ 12,241 |
STORAGE PROPERTIES - Summary (D
STORAGE PROPERTIES - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
STORAGE FACILITIES | ||
Storage facilities | $ 4,237,717 | $ 4,161,715 |
Less: Accumulated depreciation | (807,625) | (752,925) |
Storage facilities, net (including VIE assets of $287,340 and $291,496, respectively) | 3,430,092 | 3,408,790 |
Land | ||
STORAGE FACILITIES | ||
Storage facilities | 723,851 | 711,140 |
Buildings and improvements | ||
STORAGE FACILITIES | ||
Storage facilities | 3,153,744 | 3,086,252 |
Equipment | ||
STORAGE FACILITIES | ||
Storage facilities | 175,846 | 182,958 |
Construction in progress | ||
STORAGE FACILITIES | ||
Storage facilities | $ 184,276 | $ 181,365 |
STORAGE PROPERTIES - Activity (
STORAGE PROPERTIES - Activity (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($)facility | Jun. 30, 2017USD ($)facility | |
2018 Acquisitions | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 2 | |
Purchase Price | $ | $ 31,200 | |
2018 Acquisitions | Texas Asset January 2018 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 12,200 | |
2018 Acquisitions | Texas Asset May 2018 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 19,000 | |
2017 Acquisitions | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 7 | |
Purchase Price | $ | $ 80,650 | |
2017 Acquisitions | Illinois Asset April 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 11,200 | |
2017 Acquisitions | Maryland Asset May 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 18,200 | |
2017 Acquisitions | California Asset May 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 3,650 | |
2017 Acquisitions | Texas Asset October 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 4,050 | |
2017 Acquisitions | Florida Asset October 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 14,500 | |
2017 Acquisitions | Illinois Asset November 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 11,300 | |
2017 Acquisitions | Florida Asset December 2017 | ||
STORAGE FACILITIES | ||
Number of Facilities, acquisitions (in properties) | facility | 1 | |
Purchase Price | $ | $ 17,750 |
INVESTMENT ACTIVITY (Details)
INVESTMENT ACTIVITY (Details) $ / shares in Units, $ in Thousands | Mar. 28, 2018USD ($) | Jan. 31, 2018USD ($)shares | Jun. 02, 2017USD ($) | Apr. 12, 2017USD ($)shares | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2015 | Jun. 30, 2018USD ($)propertyfacilityshares | Jun. 30, 2017USD ($)facility | Dec. 31, 2017USD ($)propertyfacility$ / sharesshares | Mar. 31, 2018USD ($)facility |
Self-storage facilities | |||||||||||
Storage facilities | $ 4,237,717 | $ 4,237,717 | $ 4,161,715 | ||||||||
Restricted cash | 3,037 | $ 3,037 | $ 3,890 | ||||||||
Issuance of OP Shares | $ 12,324 | ||||||||||
Common stock, conversion ratio | 1 | ||||||||||
Acquisition of noncontrolling interest | $ 9,033 | ||||||||||
Self storage in operation | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 4 | ||||||||||
Total Construction Costs | $ 168,000 | ||||||||||
Self-storage Facility in Washington DC | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 1 | ||||||||||
Ownership interest held by the entity (as a percent) | 100.00% | ||||||||||
Total Construction Costs | $ 27,800 | ||||||||||
Self-storage Facility In North Palm Beach, FL | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 1 | ||||||||||
Ownership interest held by the entity (as a percent) | 100.00% | ||||||||||
Total Construction Costs | $ 9,700 | ||||||||||
Self-storage Facility in Brooklyn, NY | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 1 | ||||||||||
Ownership interest held by the entity (as a percent) | 90.00% | ||||||||||
Total Construction Costs | $ 81,200 | ||||||||||
Self Storage Facility in Brooklyn, NY I | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 1 | ||||||||||
Cash paid for acquisition | $ 7,500 | $ 1,500 | |||||||||
Ownership interest held by the entity (as a percent) | 90.00% | 51.00% | 100.00% | ||||||||
Total Construction Costs | $ 49,300 | ||||||||||
Minority ownership interest (as a percent) | 0.00% | ||||||||||
Acquisition of remaining interest in real estate ventures (as a percent) | 49.00% | 10.00% | |||||||||
Total consideration | $ 9,000 | ||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | 7,500 | $ 1,500 | |||||||||
Acquisition of noncontrolling interest | $ 20,400 | 8,600 | |||||||||
Repayments of debt | $ 9,800 | ||||||||||
2018 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | facility | 2 | ||||||||||
Aggregate purchase price | $ 31,200 | ||||||||||
Summary of the amounts of revenue and earnings of the 2016 and 2015 acquisitions since the acquisition dates | |||||||||||
Total revenue | 318 | 468 | |||||||||
Net loss | (199) | $ (289) | |||||||||
2018 Acquisitions | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities | facility | 4 | ||||||||||
Deposit | 6,800 | $ 6,800 | |||||||||
Expected aggregate purchase or sales price | 111,200 | 111,200 | |||||||||
2017 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | facility | 7 | ||||||||||
Aggregate purchase price | $ 80,650 | ||||||||||
2017 Acquisitions | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | 2 | ||||||||||
2017 Acquisitions | Self-storage facilities located in US | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | facility | 6 | ||||||||||
Aggregate purchase price | $ 69,500 | ||||||||||
Intangible value of the in-place leases | $ 3,200 | ||||||||||
Estimated life | 12 months | ||||||||||
Amortization expense | 500 | $ 1,300 | |||||||||
Number of properties, assumed mortgage | facility | 1 | ||||||||||
Assumed mortgage debt, at fair value | $ 6,200 | ||||||||||
Outstanding principal balance of mortgage debt assumed on acquisitions | 5,900 | ||||||||||
Premium on debt assumed on acquisitions | 300 | ||||||||||
Issuance of OP Shares | $ 12,300 | ||||||||||
Real Estate Acquisitions Expected in 2019 | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | 7 | ||||||||||
Development costs | 165,500 | $ 165,500 | |||||||||
Expected construction cost | $ 252,700 | ||||||||||
Self-storage facilities | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | property | 2 | 7 | |||||||||
Aggregate purchase price | $ 31,200 | $ 80,700 | |||||||||
Texas | |||||||||||
Self-storage facilities | |||||||||||
Cash paid for acquisition | $ 200 | ||||||||||
OP units issued (in shares) | shares | 168,011 | ||||||||||
Issuance of OP Shares | $ 4,800 | ||||||||||
Total consideration | 12,200 | ||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | $ 200 | ||||||||||
Texas | Self-storage facilities | 2018 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | property | 2 | ||||||||||
Aggregate purchase price | $ 3,120,000 | ||||||||||
Cash paid for acquisition | $ 200 | ||||||||||
Redemption period, holder | 13 months | ||||||||||
Intangible value of the in-place leases | 80,000 | $ 80,000 | |||||||||
Estimated life | 12 months | ||||||||||
Amortization expense | 10,000 | $ 20,000 | |||||||||
Assumed mortgage debt, at fair value | $ 7,200 | $ 7,200 | |||||||||
Common stock, conversion ratio | 1 | ||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | $ 200 | ||||||||||
New York | Real Estate Acquisitions Expected in 2019 | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | 4 | ||||||||||
Massachusetts | Self storage under construction | PSI | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | 2 | ||||||||||
Massachusetts | Real Estate Acquisitions Expected in 2019 | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | (2) | ||||||||||
New Jersey | Real Estate Acquisitions Expected in 2019 | Self storage under construction | |||||||||||
Self-storage facilities | |||||||||||
Number of facilities under contract | facility | 1 | ||||||||||
Illinois | |||||||||||
Self-storage facilities | |||||||||||
Cash paid for acquisition | $ 9,700 | ||||||||||
Units issued (in shares) | shares | 58,400 | ||||||||||
Total consideration | $ 11,200 | ||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | $ 9,700 | ||||||||||
Illinois | Self-storage facilities | 2017 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Number of self-storage facilities acquired | facility | 1 | ||||||||||
Cash paid for acquisition | $ 9,700 | ||||||||||
Contract amount to purchase real estate | 11,200 | ||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | $ 9,700 | ||||||||||
Capital Unit Class C | Texas | Self-storage facilities | 2018 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Issuance of OP Units (in shares) | shares | 168,011 | ||||||||||
Issuance of OP Shares | $ 4,800 | ||||||||||
Capital Unit Class C | Illinois | Self-storage facilities | 2017 Acquisitions | |||||||||||
Self-storage facilities | |||||||||||
Stated value (in dollars per share) | $ / shares | $ 25 | ||||||||||
Distribution rate (as a percent) | 3.00% | ||||||||||
Redemption price (in dollars per share) | $ / shares | $ 25 | ||||||||||
Issuance of OP Units (in shares) | shares | 58,400 |
INVESTMENT IN UNCONSOLIDATED 41
INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURE (Details) $ in Thousands | May 16, 2018USD ($) | Jan. 31, 2018USD ($) | Nov. 01, 2017USD ($) | Oct. 16, 2017USD ($) | Dec. 15, 2016USD ($)facility | Jun. 15, 2016USD ($)facility | Apr. 21, 2016USD ($)facility | Mar. 30, 2016USD ($)facility | Jan. 26, 2016USD ($)facility | Dec. 08, 2015USD ($)facility | May 01, 2014USD ($)property | Dec. 10, 2013USD ($)property | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2015USD ($)facility | Jun. 30, 2018USD ($)facility | Jun. 30, 2017USD ($)facility | Dec. 31, 2017USD ($) | Mar. 31, 2016USD ($)facility |
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Investment in real estate entities | $ 100,614 | $ 100,614 | $ 91,206 | ||||||||||||||||
Acquisitions of storage facilities | 24,929 | $ 13,409 | |||||||||||||||||
Summary of results of operations of the real estate venture | |||||||||||||||||||
Company’s share of net income (loss) | (309) | $ (253) | (493) | (1,025) | |||||||||||||||
HVP and HHF | |||||||||||||||||||
Assets | |||||||||||||||||||
Storage facilities, net | 722,609 | 722,609 | 647,668 | ||||||||||||||||
Other assets | 33,258 | 33,258 | 8,284 | ||||||||||||||||
Total Assets | 755,867 | 755,867 | 655,952 | ||||||||||||||||
Liabilities and equity | |||||||||||||||||||
Other liabilities | 11,198 | 11,198 | 6,853 | ||||||||||||||||
Debt | 389,299 | 389,299 | 346,475 | ||||||||||||||||
Equity | |||||||||||||||||||
CubeSmart | 100,614 | 100,614 | 91,206 | ||||||||||||||||
Joint venture partner | 254,756 | 254,756 | 211,418 | ||||||||||||||||
Total liabilities and equity | 755,867 | 755,867 | $ 655,952 | ||||||||||||||||
Summary of results of operations of the real estate venture | |||||||||||||||||||
Total revenues | 22,291 | 20,196 | 43,201 | 39,618 | |||||||||||||||
Operating expenses | 9,482 | 8,410 | 18,686 | 16,977 | |||||||||||||||
Other expenses | 372 | 143 | 566 | 543 | |||||||||||||||
Interest expense, net | 3,123 | 2,919 | 6,021 | 5,818 | |||||||||||||||
Depreciation and amortization | 10,369 | 10,682 | 19,818 | 24,400 | |||||||||||||||
Net income (loss) | (1,055) | (1,958) | (1,890) | (8,120) | |||||||||||||||
Company’s share of net income (loss) | (309) | (253) | $ (493) | $ (1,025) | |||||||||||||||
HHFNE | LIBOR | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Interest rate (as percentage) | 1.90% | ||||||||||||||||||
HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Ownership interest in partnership (as a percent) | 10.00% | ||||||||||||||||||
Number of self-storage facilities acquired | facility | 1 | 5 | 30 | 1 | 30 | 8 | 1 | ||||||||||||
Number of self-storage facilities acquired, assumed mortgage debt | facility | 6 | ||||||||||||||||||
Acquisitions of storage facilities | $ 7,000 | $ 36,100 | $ 112,800 | $ 5,700 | $ 193,700 | $ 93,900 | $ 2,700 | ||||||||||||
Number of properties to be acquired under the contract | facility | 37 | 31 | |||||||||||||||||
Contract amount to purchase real estate | $ 242,500 | $ 115,500 | |||||||||||||||||
Intangible value of the in-place leases | $ 18,900 | ||||||||||||||||||
Assumed mortgage debt, at fair value | 25,300 | 25,300 | |||||||||||||||||
Outstanding principal balance of mortgage debt assumed on acquisitions | 23,700 | 23,700 | |||||||||||||||||
Premium on debt assumed on acquisitions | $ 1,600 | $ 1,600 | |||||||||||||||||
Interest on real estate venture debt | 1.70% | ||||||||||||||||||
Principal amount of debt | $ 107,000 | ||||||||||||||||||
Proceeds from debt | $ 43,700 | ||||||||||||||||||
Percentage of capital that is required to be contributed to fund the acquisition | 50.00% | ||||||||||||||||||
HVP | Affiliated Real Estate Investment Transactions | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of properties to be acquired under the contract | facility | 4 | ||||||||||||||||||
Arizona | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 2 | ||||||||||||||||||
Maryland | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 1 | ||||||||||||||||||
Michigan | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of properties to be acquired under the contract | facility | 17 | ||||||||||||||||||
Connecticut | HHFNE | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 3 | ||||||||||||||||||
Massachusetts | HHFNE | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 6 | ||||||||||||||||||
Massachusetts | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of properties to be acquired under the contract | facility | 7 | ||||||||||||||||||
Rhode Island | HHFNE | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 2 | ||||||||||||||||||
Vermont | HHFNE | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | 2 | ||||||||||||||||||
Florida | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | (2) | ||||||||||||||||||
Number of properties to be acquired under the contract | facility | 3 | ||||||||||||||||||
Texas | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Acquisitions of storage facilities | $ 9,400 | ||||||||||||||||||
Cash paid for acquisition of remaining interest in real estate ventures | $ 200 | ||||||||||||||||||
Texas | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Ownership interest in partnership (as a percent) | 20.00% | ||||||||||||||||||
Number of self-storage facilities acquired | facility | 2 | ||||||||||||||||||
South Carolina | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of properties to be acquired under the contract | facility | 22 | ||||||||||||||||||
Georgia | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of self-storage facilities acquired | facility | (1) | ||||||||||||||||||
Number of properties to be acquired under the contract | facility | 5 | ||||||||||||||||||
HHFNE | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Ownership interest in partnership (as a percent) | 10.00% | ||||||||||||||||||
Number of self-storage facilities acquired | facility | 13 | ||||||||||||||||||
Acquisitions of storage facilities | $ 87,500 | ||||||||||||||||||
Intangible value of the in-place leases | 6,000 | ||||||||||||||||||
Investment in joint venture | 3,800 | ||||||||||||||||||
Payment to acquire ownership interest in joint venture | $ 44,500 | ||||||||||||||||||
HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Investment in real estate entities | $ 16,100 | $ 16,100 | |||||||||||||||||
Payment made for acquisition of interest in real estate ventures | $ 14,100 | ||||||||||||||||||
Intangible value of the in-place leases | $ 10,600 | ||||||||||||||||||
Investment in joint venture | 5,400 | $ 10,700 | |||||||||||||||||
Payment to acquire ownership interest in joint venture | 63,500 | 116,000 | |||||||||||||||||
Venture's loan | $ 122,000 | ||||||||||||||||||
HVP | Maximum | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Venture's loan | $ 185,500 | ||||||||||||||||||
HVP | LIBOR | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Interest rate (as percentage) | 2.00% | 2.00% | |||||||||||||||||
HVP | HVP | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Proceeds from venture related to real estate contribution | $ 7,500 | ||||||||||||||||||
HVP | Tennessee | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of properties to be acquired under the contract | facility | 10 | ||||||||||||||||||
HVP | Texas | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Contribution of storage property to real estate venture | $ 9,400 | ||||||||||||||||||
HHF | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Ownership interest in partnership (as a percent) | 50.00% | ||||||||||||||||||
Number of storage facilities owned by investee | property | 35 | ||||||||||||||||||
Payment made for acquisition of interest in real estate ventures | $ 315,700 | ||||||||||||||||||
Intangible value of the in-place leases | $ 12,100 | ||||||||||||||||||
Proceeds after closing costs distributed proportionately to partners | $ 99,200 | ||||||||||||||||||
HHF | Secured loan 3.59% due April 30, 2021 | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Amount of loan obtained | $ 100,000 | ||||||||||||||||||
Interest on real estate venture debt | 3.59% | ||||||||||||||||||
HHF | Texas | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of storage facilities owned by investee | property | 34 | 34 | |||||||||||||||||
HHF | North Carolina | |||||||||||||||||||
Investment in Unconsolidated Real Estate Venture | |||||||||||||||||||
Number of storage facilities owned by investee | property | 1 |
UNSECURED SENIOR NOTES (Details
UNSECURED SENIOR NOTES (Details) $ in Thousands | Apr. 04, 2017USD ($) | Oct. 26, 2015USD ($) | Dec. 17, 2013USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Mortgage loans and Notes payable | |||||
Less: Loan procurement costs, net | $ (1,298) | $ (1,592) | |||
Total unsecured senior notes, net | 1,142,992 | 1,142,460 | |||
Cubesmart, L P and Subsidiaries [Member] | |||||
Mortgage loans and Notes payable | |||||
Less: Loan procurement costs, net | (1,298) | (1,592) | |||
Total unsecured senior notes, net | 1,142,992 | 1,142,460 | |||
Senior Notes | |||||
Mortgage loans and Notes payable | |||||
Carrying value | 1,150,000 | 1,150,000 | |||
Less: Discount on issuance of notes, net | (593) | (617) | |||
Less: Loan procurement costs, net | (6,415) | (6,923) | |||
Total unsecured senior notes, net | $ 1,142,992 | 1,142,460 | |||
Senior Notes | Maximum | |||||
Mortgage loans and Notes payable | |||||
Consolidated leverage ratio | 0.60 | ||||
Secured debt leverage ratio | 0.40 | ||||
Senior Notes | Minimum | |||||
Mortgage loans and Notes payable | |||||
Consolidated interest coverage ratio | 1.50 | ||||
Financial and customary covenant, minimum unencumbered asset (as a percent) | 150.00% | ||||
Senior notes 4.800% due 2022 | |||||
Mortgage loans and Notes payable | |||||
Senior notes, principal amount | $ 250,000 | ||||
Interest rate (as a percent) | 4.80% | ||||
Carrying value | $ 250,000 | 250,000 | |||
Effective interest rate (as a percent) | 4.82% | ||||
Senior notes 4.375% due 2023 | |||||
Mortgage loans and Notes payable | |||||
Senior notes, principal amount | $ 300,000 | ||||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | ||
Carrying value | $ 300,000 | 300,000 | |||
Effective interest rate (as a percent) | 3.495% | 4.501% | 4.33% | ||
Effective weighted average interest rate (as a percent) | 4.33% | ||||
Proceeds from senior notes | $ 50,000 | $ 250,000 | |||
Debt instrument, redemption percentage | 105.04% | 98.995% | |||
Senior notes 4.000% due 2025 | |||||
Mortgage loans and Notes payable | |||||
Senior notes, principal amount | $ 300,000 | ||||
Interest rate (as a percent) | 4.00% | 4.00% | 4.00% | ||
Carrying value | $ 300,000 | 300,000 | |||
Effective interest rate (as a percent) | 3.811% | 4.032% | 3.99% | ||
Effective weighted average interest rate (as a percent) | 3.994% | ||||
Proceeds from senior notes | $ 50,000 | $ 250,000 | |||
Debt instrument, redemption percentage | 101.343% | 99.735% | |||
Senior Notes 3.125% Due 2026 | |||||
Mortgage loans and Notes payable | |||||
Senior notes, principal amount | $ 300,000 | ||||
Interest rate (as a percent) | 3.125% | ||||
Carrying value | $ 300,000 | 300,000 | |||
Effective interest rate (as a percent) | 3.18% | ||||
Credit Facility | |||||
Mortgage loans and Notes payable | |||||
Less: Loan procurement costs, net | $ (402) | $ (604) | |||
Effective weighted average interest rate (as a percent) | 3.34% |
REVOLVING CREDIT FACILITY AND43
REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS (Details) | Apr. 06, 2017USD ($) | Apr. 04, 2017USD ($) | Oct. 26, 2015USD ($) | Dec. 17, 2013USD ($) | Jun. 20, 2011USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Apr. 22, 2015USD ($) |
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Loan procurement costs, net of amortization | $ 1,298,000 | $ 1,592,000 | ||||||
Unsecured term loan | 299,598,000 | 299,396,000 | ||||||
Less: Loan procurement costs, net | (1,298,000) | (1,592,000) | ||||||
Term Loan B | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Unsecured term loan | $ 100,000,000 | 100,000,000 | ||||||
Effective interest rate (as a percent) | 3.24% | |||||||
Term Loan Facility | Maximum | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Total indebtedness to total asset value ratio (as a percent) | 60.00% | |||||||
Percentage of funds from operations that can be distributed on common shares | 95.00% | |||||||
Term Loan Facility | Term Loan A | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Maximum borrowing capacity | $ 100,000,000 | |||||||
Term of debt instrument | 5 years | |||||||
Variable interest rate basis | LIBOR | |||||||
Repayment of outstanding debt | $ 100,000,000 | |||||||
Term Loan Facility | Term Loan A | Baa2/BBB | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Interest rate, basis spread (as a percent) | 1.30% | |||||||
Term Loan Facility | Term Loan B | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Maximum borrowing capacity | $ 100,000,000 | |||||||
Term of debt instrument | 7 years | |||||||
Variable interest rate basis | LIBOR | |||||||
Term Loan Facility | Term Loan B | Baa2/BBB | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Interest rate, basis spread (as a percent) | 1.15% | |||||||
Credit Facility | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Loan procurement costs, net of amortization | $ 402,000 | 604,000 | ||||||
Unsecured term loan | 300,000,000 | 300,000,000 | ||||||
Less: Loan procurement costs, net | (402,000) | (604,000) | ||||||
Total unsecured term loans, net | $ 299,598,000 | 299,396,000 | ||||||
Effective weighted average interest rate (as a percent) | 3.34% | |||||||
Tangible net worth | $ 821,211,200 | |||||||
Net proceeds from equity issuances added to minimum tangible net worth (as a percent) | 75.00% | |||||||
Credit Facility | Minimum | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Fixed charge coverage ratio | 1.50 | |||||||
Credit Facility | Maximum | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Total indebtedness to total asset value ratio (as a percent) | 60.00% | |||||||
Percentage of funds from operations that can be distributed on common shares | 95.00% | |||||||
Credit Facility | Revolver | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Maximum borrowing capacity | $ 500,000,000 | |||||||
Interest rate, basis spread (as a percent) | 1.25% | |||||||
Facility fee (as a percent) | 0.15% | |||||||
Remaining borrowing capacity | $ 451,600,000 | |||||||
Outstanding letter of credit | 700,000 | |||||||
Credit Facility | Unsecured term loan | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Unsecured term loan | $ 200,000,000 | $ 200,000,000 | ||||||
Effective interest rate (as a percent) | 3.39% | |||||||
Senior notes 4.375% due 2023 | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Proceeds from senior notes | $ 50,000,000 | $ 250,000,000 | ||||||
Interest rate (as a percent) | 4.375% | 4.375% | 4.375% | |||||
Effective interest rate (as a percent) | 3.495% | 4.501% | 4.33% | |||||
Effective weighted average interest rate (as a percent) | 4.33% | |||||||
Senior notes 4.000% due 2025 | ||||||||
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS | ||||||||
Proceeds from senior notes | $ 50,000,000 | $ 250,000,000 | ||||||
Interest rate (as a percent) | 4.00% | 4.00% | 4.00% | |||||
Effective interest rate (as a percent) | 3.811% | 4.032% | 3.99% | |||||
Effective weighted average interest rate (as a percent) | 3.994% |
MORTGAGE LOANS AND NOTES PAYA44
MORTGAGE LOANS AND NOTES PAYABLE - Summary (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Mortgage loans and Notes payable | ||
Less: Loan procurement costs, net | $ (1,298) | $ (1,592) |
Total mortgage loans and notes payable | 109,851 | 111,434 |
Net book value of self-storage facilities | 3,430,092 | 3,408,790 |
Mortgages | ||
Mortgage loans and Notes payable | ||
Carrying value | 107,482 | 108,796 |
Plus: Unamortized fair value adjustment | 2,918 | 3,286 |
Less: Loan procurement costs, net | (549) | (648) |
Total mortgage loans and notes payable | 109,851 | 111,434 |
Net book value of self-storage facilities | 233,800 | 236,900 |
YSI 33 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 9,383 | 9,547 |
Effective interest rate (as a percent) | 6.42% | |
YSI 26 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 8,126 | 8,228 |
Effective interest rate (as a percent) | 4.56% | |
YSI 57 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 2,853 | 2,889 |
Effective interest rate (as a percent) | 4.61% | |
YSI 55 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 22,276 | 22,508 |
Effective interest rate (as a percent) | 4.85% | |
YSI 24 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 25,300 | 25,700 |
Effective interest rate (as a percent) | 4.64% | |
YSI 65 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 2,387 | 2,411 |
Effective interest rate (as a percent) | 3.85% | |
YSI 66 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 31,450 | 31,727 |
Effective interest rate (as a percent) | 3.51% | |
YSI 68 | ||
Mortgage loans and Notes payable | ||
Carrying value | $ 5,707 | $ 5,786 |
Effective interest rate (as a percent) | 3.78% |
MORTGAGE LOANS AND NOTES PAYA45
MORTGAGE LOANS AND NOTES PAYABLE - Future Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Future principal payment requirements on the outstanding mortgage loans and notes payable at year end | ||
Less: Loan procurement costs, net | $ (1,298) | $ (1,592) |
Total mortgage loans and notes payable, net | 109,851 | 111,434 |
Mortgages | ||
Future principal payment requirements on the outstanding mortgage loans and notes payable at year end | ||
2,018 | 1,336 | |
2,019 | 11,652 | |
2,020 | 12,791 | |
2,021 | 45,057 | |
2,022 | 923 | |
2023 and thereafter | 35,723 | |
Total mortgage payments | 107,482 | 108,796 |
Plus: Unamortized fair value adjustment | 2,918 | 3,286 |
Less: Loan procurement costs, net | (549) | (648) |
Total mortgage loans and notes payable, net | $ 109,851 | $ 111,434 |
ACCUMULATED OTHER COMPREHENSI46
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Changes in accumulated other comprehensive income by component | |
Beginning balance | $ 3 |
Unrealized losses on interest rate swaps | |
Changes in accumulated other comprehensive income by component | |
Beginning balance | 3 |
Other comprehensive loss before reclassifications | 59 |
Amounts reclassified from accumulated other comprehensive loss | (62) |
Net current-period other comprehensive income (loss) | $ (3) |
RISK MANAGEMENT AND USE OF FI47
RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Derivative financial instruments | |||
Unrealized losses reclassified from accumulated other comprehensive loss | $ 300 | ||
Designated | Cash flow | |||
Derivative financial instruments | |||
Notional Amount | $ 100,000 | ||
Fair Value | (406) | ||
Maximum number of days outstanding to have the option to borrow at the LIBOR | 30 days | ||
Designated | Cash flow | Hedge Product, Swap one | |||
Derivative financial instruments | |||
Notional Amount | 40,000 | ||
Swap, Strike rate (as a percent) | 2.459% | ||
Fair Value | (161) | ||
Designated | Cash flow | Hedge Product, Swap two | |||
Derivative financial instruments | |||
Notional Amount | 40,000 | ||
Swap, Strike rate (as a percent) | 2.4725% | ||
Fair Value | (163) | ||
Designated | Cash flow | Hedge Product, Swap three | |||
Derivative financial instruments | |||
Notional Amount | 20,000 | ||
Swap, Strike rate (as a percent) | 2.475% | ||
Fair Value | $ (82) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Fair value of financial assets and liabilities carried at fair value | ||
Aggregate carrying value of total debt | $ 1,600 | $ 1,600 |
Estimated fair value of total debt | $ 1,600 | 1,700 |
Interest rate swap | ||
Fair value of financial assets and liabilities carried at fair value | ||
Number of counterparties to derivative contracts who experienced significant downgrades in 2017 | item | 0 | |
Level 2 | ||
Fair value of financial assets and liabilities carried at fair value | ||
Total liabilities at fair value | 406 | |
Level 2 | Interest rate swap | ||
Fair value of financial assets and liabilities carried at fair value | ||
Derivative Liabilities | $ 406 |
NONCONTROLLING INTERESTS - Inte
NONCONTROLLING INTERESTS - Interests in Consolidated Real Estate Joint Ventures (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018USD ($)facility | Jun. 30, 2017USD ($) | Dec. 31, 2015USD ($) | |
Interests in Consolidated Real Estate Joint Ventures | |||
Elimination of noncontrolling interest in subsidiaries due to acquisition | $ 9,033 | ||
Reduction to additional paid in capital | $ 843 | $ 545 | |
CS 1158 McDonald Ave LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Option to call ownership interest of another member | 10,000 | ||
Accretion liability | 4,400 | ||
CS 160 East 22nd Street LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Option to call ownership interest of another member | 11,500 | ||
2225 46th Street LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Option to call ownership interest of another member | 14,200 | ||
Accretion liability | 6,600 | ||
2880 Exterior St. LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Option to call ownership interest of another member | 37,800 | ||
Accretion liability | 10,800 | ||
3068 Cropsey Ave LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Accretion liability | $ 34,800 | ||
VIE | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 10 | ||
Total assets | $ 280,991 | ||
Total liabilities | $ 127,477 | ||
Period of option to call ownership interest of another member | 1 year | ||
Period of option to put ownership interest in venture | 1 year | ||
VIE | CS SDP Newtonville LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 6,855 | ||
Total liabilities | 324 | ||
Carrying amount of mortgage loans | 300 | ||
Amount of mortgage loan commitment | $ 12,100 | ||
VIE | CS 1158 McDonald Ave LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 51.00% | ||
Total assets | $ 22,304 | ||
Total liabilities | 5,074 | ||
Option to put ownership interest in the venture | $ 10,000 | ||
VIE | CS SJM E 92nd Street LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 3,247 | ||
Total liabilities | 2,077 | ||
Carrying amount of mortgage loans | 700 | ||
Amount of mortgage loan commitment | $ 6,900 | ||
VIE | CS 160 East 22nd Street LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 51.00% | ||
Total assets | $ 11,004 | ||
Total liabilities | 7,657 | ||
Option to put ownership interest in the venture | $ 11,500 | ||
VIE | 2225 46th Street LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 51.00% | ||
Total assets | $ 33,486 | ||
Total liabilities | 12,023 | ||
Option to put ownership interest in the venture | $ 14,200 | ||
VIE | CS SDP Waltham LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 8,685 | ||
Total liabilities | 2,944 | ||
Carrying amount of mortgage loans | 2,400 | ||
Amount of mortgage loan commitment | $ 10,800 | ||
VIE | 2880 Exterior St. LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 51.00% | ||
Total assets | $ 81,095 | ||
Total liabilities | 38,815 | ||
Option to put ownership interest in the venture | $ 37,800 | ||
VIE | 444 55th Street Holdings, LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 80,365 | ||
Total liabilities | 33,407 | ||
Assumed mortgage debt, at fair value | 35,000 | ||
Outstanding principal balance of mortgage debt assumed on acquisitions | 32,500 | ||
Premium on debt assumed on one of the acquisitions | $ 2,500 | ||
Interest rate (as a percent) | 4.68% | ||
VIE | 186 Jamaica Ave LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 18,035 | ||
Total liabilities | 12,484 | ||
Carrying amount of mortgage loans | 12,400 | ||
Amount of mortgage loan commitment | $ 12,800 | ||
VIE | Shirlington Rd LLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Number of self-storage facilities owned and operated | facility | 1 | ||
Ownership interest held by the entity (as a percent) | 90.00% | ||
Total assets | $ 15,915 | ||
Total liabilities | 12,672 | ||
SRLLC | |||
Interests in Consolidated Real Estate Joint Ventures | |||
Carrying amount of mortgage loans | 12,500 | ||
Amount of mortgage loan commitment | $ 14,600 |
NONCONTROLLING INTERESTS - Oper
NONCONTROLLING INTERESTS - Operating Partnership Ownership (Details) - USD ($) $ in Thousands | Jan. 31, 2018 | May 09, 2017 | Apr. 12, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Operating Partnership Ownership | ||||||
OP Units outstanding which are not owned by the general partner (as a percent) | 1.10% | 1.00% | ||||
Issuance of OP Shares | $ 12,324 | |||||
Adjustment for noncontrolling interest in the Operating Partnership | $ (7,154) | 6,793 | $ (4,000) | |||
Illinois | ||||||
Operating Partnership Ownership | ||||||
Total consideration | $ 11,200 | |||||
Cash paid for acquisition | $ 9,700 | |||||
Units issued (in shares) | 58,400 | |||||
Maryland | ||||||
Operating Partnership Ownership | ||||||
Total consideration | $ 18,200 | |||||
Amount of mortgage loan commitment | $ 5,900 | |||||
Units issued (in shares) | 440,160 | |||||
Units issued | $ 12,300 | |||||
Texas | ||||||
Operating Partnership Ownership | ||||||
OP units issued (in shares) | 168,011 | |||||
Issuance of OP Shares | $ 4,800 | |||||
Total consideration | 12,200 | |||||
Cash paid for acquisition | 200 | |||||
Amount of mortgage loan commitment | $ 7,200 | |||||
Cubesmart, L P and Subsidiaries [Member] | ||||||
Operating Partnership Ownership | ||||||
OP units outstanding (in shares) | 2,002,248 | 1,878,253 | ||||
Number of trading days used to determine average of the closing prices of the shares | 10 days | |||||
Adjustment for noncontrolling interest in the Operating Partnership | $ (7,154) | $ 6,793 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | ||||||
Acquisition fees | $ 0.4 | $ 0.4 | ||||
Affiliated Real Estate Investment Transactions | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Management fees | $ 0.9 | 1.8 | ||||
Joint ventures related to affiliated real estate investments | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Management fees | $ 1.1 | $ 2.1 | ||||
Amounts due to the Company from related parties | $ 9.6 | 9.6 | $ 7.5 | |||
Mortgage loans receivable from consolidated joint ventures | 28.3 | $ 28.3 | $ 25.5 | |||
Joint ventures related to affiliated real estate investments | Ventures | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Acquisition fee (as a percent) | 0.50% | |||||
Acquisition fees | $ 0.2 | $ 0.5 |
PRO FORMA FINANCIAL INFORMATI52
PRO FORMA FINANCIAL INFORMATION (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018$ / shares | Jun. 30, 2017$ / shares | Jun. 30, 2018USD ($)property$ / shares | Jun. 30, 2017USD ($)$ / shares | Dec. 31, 2017USD ($)property | |
Consolidated results of operations on a pro forma basis | |||||
Pro forma revenue | $ | $ 291,123 | $ 274,042 | |||
Pro forma income | $ | $ 74,861 | $ 64,545 | |||
Earnings per share from continuing operations: | |||||
Basic - as reported (in dollars per share) | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 | |
Diluted - as reported (in dollars per share) | $ 0.21 | $ 0.18 | 0.40 | 0.32 | |
Basic - as pro forma (in dollars per share) | 0.41 | 0.35 | |||
Diluted - as pro forma (in dollars per share) | $ 0.40 | $ 0.35 | |||
Self-storage facilities | |||||
Self-storage facilities | |||||
Number of self-storage facilities acquired | property | 2 | 7 | |||
Aggregate purchase price | $ | $ 31,200 | $ 80,700 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | Jul. 23, 2018shares | Jul. 10, 2018USD ($)facility |
Subsequent Events | ||
Issuance of common OP units (in units) | 46,322 | |
Subsequent event | Washington | ||
Subsequent Events | ||
Number of self-storage facilities acquired | facility | 1 | |
Total consideration | $ | $ 34.2 | |
Subsequent event | Capital Unit Class C | ||
Subsequent Events | ||
Units redeemed | 58,400 |
CONSOLIDATED BALANCE SHEETS (LP
CONSOLIDATED BALANCE SHEETS (LP cube) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
ASSETS | ||
Storage facilities | $ 4,237,717 | $ 4,161,715 |
Less: Accumulated depreciation | (807,625) | (752,925) |
Storage facilities, net (including VIE assets of $287,340 and $291,496, respectively) | 3,430,092 | 3,408,790 |
Cash and cash equivalents | 6,487 | 5,268 |
Restricted cash | 3,037 | 3,890 |
Loan procurement costs, net of amortization | 1,298 | 1,592 |
Investment in real estate venture, at equity | 100,614 | 91,206 |
Other assets, net | 43,232 | 34,590 |
Total assets | 3,584,760 | 3,545,336 |
LIABILITIES AND CAPITAL | ||
Unsecured senior notes, net | 1,142,992 | 1,142,460 |
Revolving credit facility | 47,700 | 81,700 |
Unsecured term loan | 299,598 | 299,396 |
Mortgage loans and notes payable, net | 109,851 | 111,434 |
Accounts payable, accrued expenses and other liabilities | 146,223 | 143,344 |
Distributions payable | 56,442 | 55,297 |
Deferred revenue | 23,521 | 21,529 |
Security deposits | 483 | 486 |
Total liabilities | 1,826,810 | 1,855,646 |
Limited Partnership interests of third parties | 64,512 | 54,320 |
Commitments and contingencies | ||
Capital | ||
Accumulated other comprehensive income | 3 | |
Total liabilities and equity | 3,584,760 | 3,545,336 |
Cubesmart, L P and Subsidiaries [Member] | ||
ASSETS | ||
Storage facilities | 4,237,717 | 4,161,715 |
Less: Accumulated depreciation | (807,625) | (752,925) |
Storage facilities, net (including VIE assets of $287,340 and $291,496, respectively) | 3,430,092 | 3,408,790 |
Cash and cash equivalents | 6,487 | 5,268 |
Restricted cash | 3,037 | 3,890 |
Loan procurement costs, net of amortization | 1,298 | 1,592 |
Investment in real estate venture, at equity | 100,614 | 91,206 |
Other assets, net | 43,232 | 34,590 |
Total assets | 3,584,760 | 3,545,336 |
LIABILITIES AND CAPITAL | ||
Unsecured senior notes, net | 1,142,992 | 1,142,460 |
Revolving credit facility | 47,700 | 81,700 |
Unsecured term loan | 299,598 | 299,396 |
Mortgage loans and notes payable, net | 109,851 | 111,434 |
Accounts payable, accrued expenses and other liabilities | 146,223 | 143,344 |
Distributions payable | 56,442 | 55,297 |
Deferred revenue | 23,521 | 21,529 |
Security deposits | 483 | 486 |
Total liabilities | 1,826,810 | 1,855,646 |
Limited Partnership interests of third parties | 64,512 | 54,320 |
Capital | ||
Operating Partner | 1,686,531 | 1,629,131 |
Accumulated other comprehensive income | 3 | |
Total CubeSmart, L.P. capital | 1,686,531 | 1,629,134 |
Noncontrolling interests in subsidiaries | 6,907 | 6,236 |
Total capital | 1,693,438 | 1,635,370 |
Total liabilities and equity | $ 3,584,760 | $ 3,545,336 |
CONSOLIDATED BALANCE SHEETS (55
CONSOLIDATED BALANCE SHEETS (Parenthetical) (LP cube) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Storage facilities, net | $ 3,430,092 | $ 3,408,790 |
VIE | ||
Storage facilities, net | 287,340 | 291,496 |
Cubesmart, L P and Subsidiaries [Member] | ||
Storage facilities, net | 3,430,092 | 3,408,790 |
Cubesmart, L P and Subsidiaries [Member] | VIE | ||
Storage facilities, net | $ 287,340 | $ 291,496 |
CONSOLIDATED STATEMENTS OF OP56
CONSOLIDATED STATEMENTS OF OPERATIONS (LP cube) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES | ||||
Rental income | $ 127,843 | $ 121,224 | $ 252,004 | $ 238,281 |
Other property related income | 15,047 | 13,880 | 29,294 | 26,863 |
Property management fee income | 4,925 | 3,455 | 9,394 | 6,452 |
Total revenues | 147,815 | 138,559 | 290,692 | 271,596 |
OPERATING EXPENSES | ||||
Property operating expenses | 49,528 | 44,821 | 98,282 | 89,695 |
Depreciation and amortization | 35,046 | 36,736 | 70,012 | 74,855 |
General and administrative | 8,341 | 8,800 | 17,085 | 18,294 |
Acquisition related costs | 668 | 827 | ||
Total operating expenses | 92,915 | 91,025 | 185,379 | 183,671 |
OPERATING INCOME | 54,900 | 47,534 | 105,313 | 87,925 |
Interest: | ||||
Interest expense on loans | (15,451) | (13,975) | (30,606) | (27,574) |
Loan procurement amortization expense | (578) | (776) | (1,157) | (1,482) |
Equity in losses of real estate ventures | (309) | (253) | (493) | (1,025) |
Other | 189 | 308 | 493 | 200 |
Total other expense | (16,149) | (14,696) | (31,763) | (29,881) |
NET INCOME | 38,751 | 32,838 | 73,550 | 58,044 |
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||||
Noncontrolling interest in subsidiaries | 85 | 47 | 92 | 104 |
Operating Partnership interests of third parties | (426) | (427) | (809) | (704) |
NET INCOME ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS | $ 38,410 | $ 32,458 | $ 72,833 | $ 57,444 |
Diluted earnings per share attributable to common shareholders (in dollars per share) | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 |
Weighted-average basic units outstanding (in units) | 183,718 | 180,183 | 183,000 | 180,174 |
Weighted-average diluted units outstanding (in units) | 184,523 | 181,189 | 183,753 | 181,198 |
Cubesmart, L P and Subsidiaries [Member] | ||||
REVENUES | ||||
Rental income | $ 127,843 | $ 121,224 | $ 252,004 | $ 238,281 |
Other property related income | 15,047 | 13,880 | 29,294 | 26,863 |
Property management fee income | 4,925 | 3,455 | 9,394 | 6,452 |
Total revenues | 147,815 | 138,559 | 290,692 | 271,596 |
OPERATING EXPENSES | ||||
Property operating expenses | 49,528 | 44,821 | 98,282 | 89,695 |
Depreciation and amortization | 35,046 | 36,736 | 70,012 | 74,855 |
General and administrative | 8,341 | 8,800 | 17,085 | 18,294 |
Acquisition related costs | 668 | 827 | ||
Total operating expenses | 92,915 | 91,025 | 185,379 | 183,671 |
OPERATING INCOME | 54,900 | 47,534 | 105,313 | 87,925 |
Interest: | ||||
Interest expense on loans | (15,451) | (13,975) | (30,606) | (27,574) |
Loan procurement amortization expense | (578) | (776) | (1,157) | (1,482) |
Equity in losses of real estate ventures | (309) | (253) | (493) | (1,025) |
Other | 189 | 308 | 493 | 200 |
Total other expense | (16,149) | (14,696) | (31,763) | (29,881) |
NET INCOME | 38,751 | 32,838 | 73,550 | 58,044 |
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ||||
Noncontrolling interest in subsidiaries | 85 | 47 | 92 | 104 |
NET INCOME ATTRIBUTABLE TO CUBESMART L.P. | 38,836 | 32,885 | 73,642 | 58,148 |
Operating Partnership interests of third parties | (426) | (427) | (809) | (704) |
NET INCOME ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS | $ 38,410 | $ 32,458 | $ 72,833 | $ 57,444 |
Basic earnings per unit attributable to common unitholders | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 |
Diluted earnings per share attributable to common shareholders (in dollars per share) | $ 0.21 | $ 0.18 | $ 0.40 | $ 0.32 |
Weighted-average basic units outstanding (in units) | 183,718 | 180,183 | 183,000 | 180,174 |
Weighted-average diluted units outstanding (in units) | 184,523 | 181,189 | 183,753 | 181,198 |
CONSOLIDATED STATEMENTS OF CO57
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (LP cube) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
NET INCOME | $ 38,751 | $ 32,838 | $ 73,550 | $ 58,044 |
Other comprehensive (loss) income: | ||||
Unrealized (losses) gains on interest rate swaps | (4) | 60 | 137 | |
Reclassification of realized (gains) losses on interest rate swaps | (279) | 366 | (60) | 1,061 |
OTHER COMPREHENSIVE (LOSS) INCOME | (279) | 362 | 1,198 | |
COMPREHENSIVE INCOME | 38,472 | 33,200 | 73,550 | 59,242 |
Comprehensive income attributable to Operating Partnership interests of third parties | (427) | (432) | (813) | (718) |
Comprehensive loss attributable to noncontrolling interests in subsidiaries | 85 | 47 | 92 | 104 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | 38,130 | 32,815 | 72,829 | 58,628 |
Cubesmart, L P and Subsidiaries [Member] | ||||
NET INCOME | 38,751 | 32,838 | 73,550 | 58,044 |
Other comprehensive (loss) income: | ||||
Unrealized (losses) gains on interest rate swaps | (4) | 60 | 137 | |
Reclassification of realized (gains) losses on interest rate swaps | (279) | 366 | (60) | 1,061 |
OTHER COMPREHENSIVE (LOSS) INCOME | (279) | 362 | 1,198 | |
COMPREHENSIVE INCOME | 38,472 | 33,200 | 73,550 | 59,242 |
Comprehensive income attributable to Operating Partnership interests of third parties | (427) | (432) | (813) | (718) |
Comprehensive loss attributable to noncontrolling interests in subsidiaries | 85 | 47 | 92 | 104 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $ 38,130 | $ 32,815 | $ 72,829 | $ 58,628 |
CONSOLIDATED STATEMENTS OF CAPI
CONSOLIDATED STATEMENTS OF CAPITAL (LP cube) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Increase (Decrease) in Partners' Capital | |||
Balance of Noncontrolling Interests in the Operating Partnership | $ 54,320 | ||
Contributions from noncontrolling interests in subsidiaries | 843 | ||
Distributions to noncontrolling interests in subsidiaries | (80) | ||
Acquisition of noncontrolling interest in subsidiary | $ (9,033) | ||
Issuance of OP units | 12,324 | ||
Adjustment for Operating Partnership interests of third parties | (7,154) | 6,793 | $ (4,000) |
Net income (loss) | 72,741 | 57,340 | |
Other comprehensive income, net | 402 | 1,184 | |
Balance of Noncontrolling Interests in the Operating Partnership | 64,512 | 54,320 | |
Noncontrolling Interests in Operating Partnership | |||
Increase (Decrease) in Partners' Capital | |||
Balance of Noncontrolling Interests in the Operating Partnership | 54,320 | 54,407 | 54,407 |
Issuance of OP units | 4,782 | ||
Adjustment for Operating Partnership interests of third parties | 7,154 | (6,793) | |
Net income (loss) | 809 | 704 | |
Other comprehensive income (loss), net | 4 | 14 | |
Balance of Noncontrolling Interests in the Operating Partnership | 64,512 | 59,416 | 54,320 |
Cubesmart, L P and Subsidiaries [Member] | |||
Increase (Decrease) in Partners' Capital | |||
Balance | 1,635,370 | 1,661,237 | 1,661,237 |
Balance of Noncontrolling Interests in the Operating Partnership | 54,320 | ||
Contributions from noncontrolling interests in subsidiaries | 843 | 545 | |
Distributions to noncontrolling interests in subsidiaries | (80) | ||
Acquisition of noncontrolling interest in subsidiary | (9,033) | ||
Issuance of common OP units | (178) | ||
Issuance of common OP units | 95,422 | ||
Issuance of restricted OP units | 1 | 1 | |
Conversion from OP units to shares | 1,342 | 25 | |
Exercise of OP unit options | 3,783 | 94 | |
Amortization of restricted OP units | 623 | (7) | |
OP unit compensation expense | 767 | 764 | |
Adjustment for Operating Partnership interests of third parties | (7,154) | 6,793 | |
Net income (loss) | 72,741 | 57,340 | |
Other comprehensive income, net | 402 | 1,184 | |
Common OP unit distributions | (110,622) | (97,432) | |
Balance | 1,693,438 | 1,621,333 | 1,635,370 |
Balance of Noncontrolling Interests in the Operating Partnership | 64,512 | 54,320 | |
Cubesmart, L P and Subsidiaries [Member] | Noncontrolling Interests in Operating Partnership | |||
Increase (Decrease) in Partners' Capital | |||
Balance of Noncontrolling Interests in the Operating Partnership | 54,320 | 54,407 | 54,407 |
Issuance of OP units | 4,782 | 12,324 | |
Conversion from OP units to shares | (1,342) | (25) | |
Adjustment for Operating Partnership interests of third parties | 7,154 | (6,793) | |
Net income (loss) | 809 | 704 | |
Other comprehensive income (loss), net | 4 | 14 | |
Common OP unit distributions | (1,215) | (1,215) | |
Balance of Noncontrolling Interests in the Operating Partnership | 64,512 | 59,416 | 54,320 |
Cubesmart, L P and Subsidiaries [Member] | Total Shareholders' Equity | |||
Increase (Decrease) in Partners' Capital | |||
Balance | 1,629,134 | 1,655,382 | 1,655,382 |
Acquisition of noncontrolling interest in subsidiary | (8,626) | ||
Issuance of common OP units | (178) | ||
Issuance of common OP units | 95,422 | ||
Issuance of restricted OP units | 1 | 1 | |
Conversion from OP units to shares | 1,342 | 25 | |
Exercise of OP unit options | 3,783 | 94 | |
Amortization of restricted OP units | 623 | (7) | |
OP unit compensation expense | 767 | 764 | |
Adjustment for Operating Partnership interests of third parties | (7,154) | 6,793 | |
Net income (loss) | 72,833 | 57,444 | |
Other comprehensive income, net | 402 | 1,184 | |
Common OP unit distributions | (110,622) | (97,432) | |
Balance | 1,686,531 | 1,615,444 | 1,629,134 |
Cubesmart, L P and Subsidiaries [Member] | Operating Partner | |||
Increase (Decrease) in Partners' Capital | |||
Balance | $ 1,629,131 | $ 1,657,232 | $ 1,657,232 |
Balance (in units) | 182,216,000 | 180,083,000 | 180,083,000 |
Acquisition of noncontrolling interest in subsidiary | $ (8,626) | ||
Issuance of common OP units | (178) | ||
Issuance of common OP units | $ 95,422 | ||
Issuance of common OP units (in units) | 3,134,000 | ||
Issuance of restricted OP units | $ 1 | $ 1 | |
Issuance of restricted OP units (in units) | 84,000 | 104,000 | |
Conversion from OP units to shares | $ 1,342 | $ 25 | |
Conversion from OP units to shares (in units) | 44,000 | 1,000 | |
Exercise of OP unit options | $ 3,783 | $ 94 | |
Exercise of OP unit options (in units) | 399,000 | 9,000 | |
Amortization of restricted OP units | $ 623 | $ (7) | |
OP unit compensation expense | 767 | 764 | |
Adjustment for Operating Partnership interests of third parties | (7,154) | 6,793 | |
Net income (loss) | 72,833 | 57,444 | |
Other comprehensive income, net | 405 | ||
Common OP unit distributions | (110,622) | (97,432) | |
Balance | $ 1,686,531 | $ 1,616,110 | $ 1,629,131 |
Balance (in units) | 185,877,000 | 180,197,000 | 182,216,000 |
Cubesmart, L P and Subsidiaries [Member] | Accumulated Other Comprehensive (Loss) Income | |||
Increase (Decrease) in Partners' Capital | |||
Balance | $ 3 | $ (1,850) | $ (1,850) |
Other comprehensive income, net | (3) | 1,184 | |
Balance | (666) | 3 | |
Cubesmart, L P and Subsidiaries [Member] | Noncontrolling Interest in Subsidiaries | |||
Increase (Decrease) in Partners' Capital | |||
Balance | 6,236 | 5,855 | 5,855 |
Contributions from noncontrolling interests in subsidiaries | 843 | 545 | |
Distributions to noncontrolling interests in subsidiaries | (80) | ||
Acquisition of noncontrolling interest in subsidiary | (407) | ||
Net income (loss) | (92) | (104) | |
Balance | $ 6,907 | $ 5,889 | $ 6,236 |
CONSOLIDATED STATEMENTS OF CA59
CONSOLIDATED STATEMENTS OF CASH FLOWS (LP cube) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Activities | ||
Net income | $ 73,550 | $ 58,044 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 71,169 | 76,337 |
Equity in losses of real estate ventures | 493 | 1,025 |
Equity compensation expense | 2,814 | 2,773 |
Accretion of fair market value adjustment of debt | (369) | (225) |
Changes in other operating accounts: | ||
Other assets | (4,182) | (5,289) |
Accounts payable and accrued expenses | 10,316 | 12,773 |
Other liabilities | 1,891 | 1,610 |
Net cash provided by operating activities | 155,682 | 147,048 |
Investing Activities | ||
Acquisitions of storage facilities | (24,929) | (13,409) |
Additions and improvements to storage facilities | (12,659) | (15,370) |
Development costs | (53,201) | (24,752) |
Investment in real estate ventures, at equity | (14,147) | (123) |
Cash distributed from real estate ventures | 4,246 | 4,023 |
Net cash used in investing activities | (100,690) | (49,631) |
Proceeds from: | ||
Unsecured senior notes | 103,192 | |
Revolving credit facility | 251,025 | 305,300 |
Principal payments on: | ||
Revolving credit facility | (285,025) | (288,600) |
Unsecured term loans | (100,000) | |
Mortgage loans and notes payable | (8,479) | (7,400) |
Loan procurement costs | (953) | |
Acquisition of noncontrolling interest in subsidiary | (7,533) | |
Cash paid upon vesting of restricted OP units | (1,424) | (2,016) |
Contributions from noncontrolling interests in subsidiaries | 843 | 545 |
Distributions paid to noncontrolling interests in subsidiaries | (80) | |
Distributions paid to common OP unitholders | (109,515) | (97,397) |
Net cash used in financing activities | (54,626) | (96,042) |
Cash paid for acquisition of noncontrolling interest | (7,533) | |
Change in cash, cash equivalents, and restricted cash | 366 | 1,375 |
Cash, cash equivalents, and restricted cash at beginning of period | 9,158 | 10,866 |
Cash, cash equivalents, and restricted cash at end of period | 9,524 | 12,241 |
Supplemental Cash Flow and Noncash Information | ||
Cash paid for interest, net of interest capitalized | 33,101 | 31,410 |
Supplemental disclosure of noncash activities: | ||
Accretion of liability | 14,072 | 16,068 |
Derivative valuation adjustment | 406 | 1,198 |
Mortgage loan assumptions | 7,166 | 6,201 |
Issuance of OP units | 4,782 | 12,324 |
Liability for acquisition of storage property | 1,470 | |
Liability for acquisition of noncontrolling interest in subsidiary | 1,500 | |
Cubesmart, L P and Subsidiaries [Member] | ||
Operating Activities | ||
Net income | 73,550 | 58,044 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 71,169 | 76,337 |
Equity in losses of real estate ventures | 493 | 1,025 |
Equity compensation expense | 2,814 | 2,773 |
Accretion of fair market value adjustment of debt | (369) | (225) |
Changes in other operating accounts: | ||
Other assets | (4,182) | (5,289) |
Accounts payable and accrued expenses | 10,316 | 12,773 |
Other liabilities | 1,891 | 1,610 |
Net cash provided by operating activities | 155,682 | 147,048 |
Investing Activities | ||
Acquisitions of storage facilities | (24,929) | (13,409) |
Additions and improvements to storage facilities | (12,659) | (15,370) |
Development costs | (53,201) | (24,752) |
Investment in real estate ventures, at equity | (14,147) | (123) |
Cash distributed from real estate ventures | 4,246 | 4,023 |
Net cash used in investing activities | (100,690) | (49,631) |
Proceeds from: | ||
Unsecured senior notes | 103,192 | |
Revolving credit facility | 251,025 | 305,300 |
Principal payments on: | ||
Revolving credit facility | (285,025) | (288,600) |
Unsecured term loans | (100,000) | |
Mortgage loans and notes payable | (8,479) | (7,400) |
Loan procurement costs | (953) | |
Acquisition of noncontrolling interest in subsidiary | (7,533) | |
Proceeds from issuance of common OP units | 95,423 | (177) |
Cash paid upon vesting of restricted OP units | (1,424) | (2,016) |
Exercise of OP unit options | 3,783 | 94 |
Contributions from noncontrolling interests in subsidiaries | 843 | 545 |
Distributions paid to noncontrolling interests in subsidiaries | (80) | |
Distributions paid to common OP unitholders | (110,692) | (98,494) |
Net cash used in financing activities | (54,626) | (96,042) |
Cash paid for acquisition of noncontrolling interest | (7,533) | |
Change in cash, cash equivalents, and restricted cash | 366 | 1,375 |
Cash, cash equivalents, and restricted cash at beginning of period | 9,158 | 10,866 |
Cash, cash equivalents, and restricted cash at end of period | 9,524 | 12,241 |
Supplemental Cash Flow and Noncash Information | ||
Cash paid for interest, net of interest capitalized | 33,101 | 31,410 |
Supplemental disclosure of noncash activities: | ||
Accretion of liability | 14,072 | 16,068 |
Derivative valuation adjustment | 406 | 1,198 |
Mortgage loan assumptions | 7,166 | 6,201 |
Issuance of OP units | $ 4,782 | 12,324 |
Liability for acquisition of storage property | 1,470 | |
Liability for acquisition of noncontrolling interest in subsidiary | $ 1,500 |